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): October 29, 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 October 29, 1996, the Registrant entered into a Securities Purchase
Agreement with Pacific USA Holdings Corp. ("Pacific") whereby Pacific agreed
to purchase a total of 3,800,000 shares of the Registrant's Class A Common
Stock for a cash purchase price of $3.25 per share, or total consideration of
$12,350,000. In connection with the purchase of Class A Common Stock, Pacific
received for no additional consideration a five-year warrant to purchase
6,000,000 additional shares of Class A Common Stock at exercise prices ranging
from $4.50 to $7.00 per share, which warrant will be effective as of the
closing of the transaction contemplated by the Securities Purchase Agreement.
For financial reporting purposes, the Registrant will be required to allocate
a portion of the purchase price for the Class A Common Stock to the warrant.
Pacific or its affiliates are entitled to receive a 3.0% commission in
connection with the purchase of the 3,800,000 shares of Class A Common Stock
pursuant to the Securities Purchase Agreement.
In connection with the Securities Purchase Agreement, Pacific received a
three-year option to purchase a total of 830,000 shares of the Registrant's
outstanding Class B Common Stock beneficially owned by Morris Ginsburg and
Irwin Sandler, executive officers of the Registrant, at an exercise price of
$4.00 per share. Pursuant to the Option Agreement, which is effective as of
the closing under the Securities Purchase Agreement, Messrs. Ginsburg and
Sandler have the right to require Pacific to purchase such shares in two equal
installments on the first and second anniversaries of closing and have granted
to Pacific an irrevocable proxy with respect to such shares. Also, in
connection with the Securities Purchase Agreement, Messrs. Ginsburg and
Sandler entered into new employment agreements with the Registrant, which
agreements will replace such officers' existing employment agreements
effective as of the closing.
Concurrently with the execution of the Securities Purchase Agreement, the
Registrant entered into a Loan Agreement with Pacific whereby Pacific agreed
to loan the Registrant $3.0 million on or prior to November 1, 1996, which
loan would be repaid with the proceeds of the issuance of Class A Common Stock
under the Securities Purchase Agreement.
Pursuant to the Securities Purchase Agreement, the Registrant has agreed,
among other things, to elect designees of the Purchaser to a majority of the
seats on the Registrant's Board of Directors effective as of the closing.
Consummation of the transactions contemplated by the Securities Purchase
Agreement may be deemed to result in a change in control of the Registrant.
Consummation of the transactions contemplated by the Securities Purchase
Agreement is subject to numerous conditions customary in transactions of this
type, including approval by a special committee of the Registrant's Board of
Directors comprised of non-employee directors, receipt of a fairness opinion
from an independent financial advisor and the approval of the Registrant's
stockholders at a special meeting expected to be held in December 1996.
Messrs. Ginsburg and Sandler have agreed to vote all shares beneficially owned
by them in favor of approval of the Securities Purchase Agreement.
The foregoing description of the Securities Purchase Agreement, Stock
Purchase Warrant, Shareholder Option Agreement, Executive Employment
Agreements and Loan Agreement is qualified in its entirety by the texts of
such agreements attached as exhibits hereto.
ITEM 7. FINANCIAL STATEMENTS ,PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
The following documents, each dated as of October 29,1996, are filed as
exhibits to this Current Report on Form 8-K.
Exhibit 10.44 -- Securities Purchase Agreement between the Registrant and
Pacific USA Holdings Corp.
Exhibit 10.45 -- Stock Purchase Warrant in favor of Pacific USA Holdings Corp.
Exhibit 10.46-- Shareholder option Agreement among Pacific USA Holdings
Corp. and Morris Ginsburg, Irwin Sandler and Sandler Family Partners, Ltd.
Exhibit 10.47 -- Executive Employment Agreement between the Registrant
and Morris Ginsburg.
Exhibit 10.48--Executive Employment Agreement between the Registrant and
Irwin Sandler.
Exhibit 10.49 --Loan Agreement between Pacific USA Holdings Corp. and the
Registrant.
Exhibit 10.50 --Press Release of the Registrant.
<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: October 31, 1996 By: /s/ Morris Ginsburg
-------------------
Morris Ginsburg, President
<PAGE>
EXHIBIT 10.44
SECURITIES PURCHASE AGREEMENT
AGREEMENT, made and entered into as of the 29th day of October, 1996 (the
"Agreement"), between MONACO FINANCE, INC., a Colorado corporation (the
"Company"), and PACIFIC USA HOLDINGS CORP., a Texas corporation (the
"Purchaser").
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and the Purchaser agree as follows:
1. Authorization of Securities.
(a) The Company proposes to issue and sell an aggregate of 3,800,000
shares of its Class A Common Stock, par value $.01 per share (the "Class A
Common Stock"). The terms, limitations and relative rights of the Class A
Common Stock are set forth in the Articles of Incorporation of the Company, a
copy of which is attached hereto as Exhibit A. As used in this Agreement, the
term "Purchased Shares" shall mean the shares of the Company's Class A Common
Stock to be sold pursuant to this Agreement.
(b) The Company has authorized the issuance of a warrant to purchase
6,000,000 shares of Class A Common Stock (the "Warrant"). The terms and
limitations of the Warrant are set forth in the Warrant to Purchase Shares of
Common Stock, a copy of which is attached hereto as Exhibit C.
(c) Concurrently with the execution hereof, the Purchaser has placed into
escrow the sum of $500,000 (the "Deposit") pursuant to the Escrow Agreement
attached hereto as Exhibit D.
(d) Concurrently with the execution of this Agreement by the parties
hereto, the Purchaser has issued its commitment to provide the Company with
non-recourse bridge financing in the principal amount of $3 million (the
"Bridge Loan") which Bridge Loan shall be evidenced by a non-negotiable
installment promissory note and secured by the Company's pledge of all of the
issued and outstanding capital stock of MF Receivables Corp. I, the Company's
wholly-owned subsidiary and such other security as may be identified in a
pledge and security agreement in form and substance satisfactory to the
parties hereto.
2. Sale and Purchase of Securities. Subject to the terms and
conditions hereof, and in reliance upon the Company's and the Purchaser's
representations and warranties set forth below, the Company agrees to sell to
the Purchaser, and the Purchaser agrees to purchase from the Company on the
Closing Date (as defined below), 3,800,000 shares of Class A Common Stock and
the Warrant for an aggregate cash purchase price equal to $12,350,000.00.
3. Closing
(a) The closing of the transactions contemplated by Article 2 shall take
place at the offices of Dorsey & Whitney LLP, 370 17th Street, Suite 4400,
Denver, Colorado 80220, at 10:00 A.M., Denver time, no later than the third
business day after all of the conditions set forth herein have been satisfied
or waived, or such other date as the Purchaser and the Company shall agree to
in writing (the "Closing Date").
(b) At the closing of the transactions contemplated by Article 2, the
Company shall execute and deliver to the Purchaser, in each case registered in
the name of the Purchaser (or in the name of an affiliate of Purchaser
designated in accordance with Section 13(f)): (i) a certificate, dated such
Closing Date, representing the Purchased Shares purchased by the Purchaser on
the Closing Date, and (ii) the Warrant, against payment of $12,350,000.00
(less the amount of the Deposit, including interest thereon, which shall be
retained by the Company) by wire transfer of immediately available funds to
such account as the Company shall designate not fewer than three business days
prior to the Closing Date.
4. Representations and Warranties by the Company. In order to induce
the Purchaser to enter into this Agreement and to purchase the Purchased
Shares and the Warrant, the Company hereby represents and warrants to the
Purchaser that, except as set forth on the Company Disclosure Schedule
attached hereto, referencing to the applicable Section the exceptions to such
Section:
(a) Organization, Standing, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Colorado and has the requisite corporate power and authority to own its
properties and to carry on its business in all material respects as it is now
being conducted. The Company has the requisite corporate power and authority
to issue the Purchased Shares, the Warrant and the shares of its Class A
Common Stock into which the Warrant is exercisable (the "Warrant Shares") and
to otherwise perform its obligations under this Agreement.
(b) Governing Instruments; Corporate Proceedings. Annexed hereto as
Exhibits A and B are true and complete copies of the duly and legally adopted
Articles of Incorporation and bylaws of the Company, respectively, in effect
as of the date of this Agreement. The Articles of Incorporation and bylaws of
the Company will not be amended by the Company prior to the Closing Date,
except as provided in Section 7(g) of this Agreement. The minute books of the
Company are accurate in all material respects and reflect all material actions
and proceedings taken at meetings or by written consent of the shareholders or
the Board of Directors of the Company or any committee thereof.
(c) Subsidiaries, Etc. Except as set forth on the Company Disclosure
Schedule, the Company does not have any direct or indirect ownership interest
in any corporation, partnership, joint venture, limited liability company,
association or other business enterprise.
(d) Qualification. The Company is duly qualified as a foreign
corporation in good standing in each jurisdiction wherein the nature of its
activities or the properties owned or leased by it makes such qualification
necessary and in which failure to so qualify would have a material adverse
impact upon its business.
(e) SEC Filings. The Company has made, or will make, available to the
Purchaser (i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, including all exhibits thereto and items incorporated
therein by reference, (ii) the Company's Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1996 and June 30, 1996, including all exhibits
thereto and items incorporated therein by reference, and (iii) the definitive
proxy statement relating to the Company's Annual Meeting of Stockholders held
on September 10, 1996, and (iv) the definitive proxy statement relating to the
Company's Special Meeting of Stockholders to be held to consider the
transactions contemplated by this Agreement and the amendment to the Company's
Articles of Incorporation described in Section 7(g) (items (i) through (iv) in
this sentence being referred to collectively as the "Company SEC Reports").
As of their respective dates, the Company SEC Reports did not contain, and in
the case of the proxy statement described in clause (iv), will not contain,
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Since
December 31, 1995, the Company has filed all forms, reports and documents with
the Securities and Exchange Commission (the "SEC") required to be filed by it
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), and
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations promulgated thereunder, each of which complied as to
form, at the time such form, document or report was filed, in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act and the applicable rules and regulations promulgated thereunder.
Except as disclosed in the Company Disclosure Schedule, the Company SEC
Reports have not been the subject of any comments or inquiries made by the SEC
on or prior to the date hereof.
(f) Financial Statements. The Company has delivered to Purchaser
copies of (i) the unaudited consolidated balance sheet, as of June 30, 1996,
of the Company (the "Latest Balance Sheet") and the unaudited consolidated
statements of earnings, shareholders' equity and cash flows of the Company for
the six-month period ended June 30, 1996 (such statements and the Latest
Balance Sheet being herein referred to as the "Latest Financial Statements")
and (ii) the audited consolidated balance sheets, as of December 31, 1995 and
1994, of the Company and the audited consolidated statements of earnings,
shareholders' equity and cash flows of the Company for each of the years ended
December 31, 1995 and 1994 (collectively, the "Annual Financial Statements").
The Latest Financial Statements and the Annual Financial Statements are based
upon the information contained in the books and records of the Company and
fairly present in all material respects the financial condition of the Company
as of the dates thereof and results of operations for the periods referred to
therein and include provisions for loss reserves which are reasonable in light
of the Company's operating history and are consistent with generally accepted
accounting principles. The Annual Financial Statements have been prepared in
accordance with generally accepted accounting principles, consistently applied
throughout the periods indicated. The Latest Financial Statements have been
prepared in accordance with generally accepted accounting principles
applicable to unaudited interim financial statements (and thus may not contain
all notes and may not contain prior period comparative data which are required
to be prepared in accordance with generally accepted accounting principles)
consistently with the Annual Financial Statements and reflect all adjustments
(exclusive of normal year-end adjustments) necessary to a fair statement of
the results for the interim period(s) presented. The "static" loan pool
information dated as of June 30, 1996 and presented by the Company to the
Purchaser in connection with the Purchaser's due diligence investigation of
the Company accurately sets forth the information it purports to present in
all material respects.
(g) Tax Returns and Audits. All required federal, state and local tax
returns or appropriate extension requests of the Company have been filed, and
all federal, state and local taxes required to be paid with respect to such
returns that are material in amount have been paid or due provision for the
payment thereof has been made. The Company is not delinquent in the payment
of any such tax or in the payment of any assessment or governmental charge.
The Company has not received notice of any tax deficiency proposed or assessed
against it, and it has not executed any waiver of any statute of limitations
on the assessment or collection of any tax. None of the Company's tax returns
has been audited by governmental authorities in a manner to bring such audits
to the Company's attention. The Company does not have any tax liabilities,
except those reflected on the Annual Financial Statements or incurred in the
ordinary course of business since December 31, 1995.
(h) Changes, Dividends, etc. Except for the transactions contemplated
by this Agreement, since June 30, 1996, the Company has not: (i) incurred any
debts, obligations or liabilities, absolute, accrued or contingent and whether
due or to become due, except liabilities incurred in the ordinary course of
business which (individually or in the aggregate) will not materially and
adversely affect the business, properties or prospects of the Company; (ii)
paid any obligation or liability, or discharged or satisfied any liens or
encumbrances, other than in the ordinary course of business; (iii) declared or
made any payment to or distribution to its shareholders as such, or purchased
or redeemed any of its shares of capital stock, or obligated itself to do so;
(iv) issued or sold any shares of capital stock or other securities or granted
any options, warrants, or other purchase rights with respect thereto other
than pursuant to this Agreement, the exercise of outstanding options, warrants
or rights, or the grant of stock options to employees, all of which are
described in the Company Disclosure Schedule; (v) made any acquisition or
disposition of any material assets or became involved in any other material
transaction, other than for fair value in the ordinary course of business; or
(vi) agreed to do any of the foregoing other than pursuant hereto. There has
been no material adverse change in the financial condition, operations,
results of operations, assets or business of the Company since June 30, 1996,
it being understood that the Company continues to report losses from
operations.
(i) Litigation; Governmental Proceedings. There are no legal actions,
suits, arbitrations or other legal, administrative or governmental proceedings
or investigations pending or, to the knowledge of the Company, threatened
against the Company, or its properties or business, that questions the
validity of this Agreement, the Company's Articles of Incorporation, the
Purchased Shares or the Warrant or any action taken or to be taken pursuant
hereto or thereto, or, except as set forth in the Company SEC Reports, that is
reasonably likely to result in any material adverse change in the business or
financial condition of the Company, and the Company is not aware of any facts
which are likely to result in or form the basis for any such action, suit or
other proceeding. The Company has not received notice of any threatened
action or proceeding under any business or zoning ordinance, law or regulation
that could have a material adverse effect on the financial condition,
operations, results of operations, assets or business of the Company.
(j) Compliance With Applicable Laws and Other Instruments. The
business and operations of the Company have been and are being conducted in
all material respects in accordance with all applicable laws, rules and
regulations of all governmental authorities. Neither the execution nor
delivery of, nor the performance of or compliance with, this Agreement nor the
consummation of the transactions contemplated hereby will, with or without the
giving of notice or passage of time, result in any breach of, or constitute a
default under, or result in the imposition of any lien or encumbrance upon any
asset or property of the Company pursuant to, any material agreement or other
instrument to which the Company is a party or by which it or any of its
properties, assets or rights is bound or affected, and will not violate the
Articles of Incorporation or bylaws of the Company or the laws of the State of
Colorado or the federal laws of the United States of America, assuming
compliance with the Hart-Scott-Rodino Anti-Trust Improvements Act of 1974, as
amended (the "Hart-Scott-Rodino Act"). The Company is not in violation of its
Articles of Incorporation or bylaws nor in material violation of, or in
default under, any lien, indenture, mortgage, lease, agreement, instrument,
commitment or arrangement that could have a material adverse effect on the
financial condition, operations, results of operations, assets or business of
the Company. The Company is not subject to any restriction which would
prohibit it from entering into or performing its obligations under this
Agreement, assuming compliance with the Hart-Scott-Rodino Act.
(k)Purchased Shares and Warrant Shares. The Purchased Shares, when
issued and paid for pursuant to the terms of this Agreement, will be duly
authorized, validly issued and outstanding, fully paid, nonassessable shares
and shall be free and clear of all pledges, liens, encumbrances and
restrictions, except as set forth in Article 12 of this Agreement or in the
Company's Articles of Incorporation. The Warrant Shares have been reserved
for issuance and, when issued upon conversion of the Warrant, will be duly
authorized, validly issued and outstanding, fully paid, nonassessable and free
and clear of all pledges, liens, encumbrances and restrictions, except as set
forth in Article 12 of this Agreement.
(l) Securities Laws. Based in part upon the representations of the
Purchaser in Article 5 of this Agreement, no consent, authorization, approval,
permit or order of or filing with any governmental or regulatory authority is
required under current laws and regulations in connection with the execution
and delivery of this Agreement or the offer, issuance, sale or delivery of the
Purchased Shares or the Warrant, other than the qualification thereof, if
required, under applicable state securities laws, which qualification has been
or will be effected as a condition of these sales. Except as described in the
Company Disclosure Schedule, during the past twelve months the Company has
not, directly or through an agent, offered the Purchased Shares or any similar
securities for sale to, or solicited any offers to acquire such securities
from, persons other than the Purchaser and other accredited investors. Under
the circumstances contemplated by this Agreement and assuming the accuracy of
the representations of the Purchaser in Article 5 of this Agreement, the
offer, issuance, sale and delivery of the Purchased Shares and the Warrant
will not, under current laws and regulations, require compliance with the
prospectus delivery or registration requirements of the Securities Act.
(m) Capital Stock. At the date hereof, the authorized capital stock of
the Company consists of 17,750,000 shares of Class A Common Stock, of which
5,640,379 shares are issued and outstanding, 2,250,000 shares of Class B
Common Stock, of which 1,311,715 shares are issued and outstanding, and
1,000,000 shares of preferred stock, $.01 par value, of which no shares are
issued and outstanding. All of the outstanding shares of the Company were
duly authorized, validly issued and are fully paid and nonassessable. There
are no outstanding subscriptions, options, warrants, calls, contracts,
demands, commitments, convertible securities or other agreements or
arrangements of any character or nature whatever, other than pursuant to this
Agreement and as issued or issuable in connection with the transaction
described in Section 7(m), under which the Company is obligated to issue any
securities of any kind representing an ownership interest in the Company.
Neither the offer nor the issuance or sale of the Purchased Shares constitutes
an event, under any anti-dilution provisions of any securities issued or
issuable by the Company or any agreements with respect to the issuance of
securities by the Company, which will either increase the number of shares
issuable pursuant to such provisions or decrease the consideration per share
to be received by the Company pursuant to such provisions. All outstanding
securities of the Company have been issued in full compliance with the
registration and prospectus delivery requirements of the Securities Act, or
exemption(s) therefrom, and from the registration and qualification
requirements of all applicable state securities laws, or exemption(s)
therefrom.
(n) Corporate Acts and Proceedings. Subject to the approval of the
Company's shareholders and any special independent committee of the Company's
Board of Directors organized to review this Agreement and the transactions
contemplated hereby (the "Special Committee"), this Agreement has been duly
authorized by all necessary corporate action on behalf of the Company has been
duly executed and delivered by authorized officers of the Company, and is a
valid and binding agreement on the part of the Company that is enforceable
against the Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors' rights generally and to judicial limitations on the enforcement of
the remedy of specific performance and other equitable remedies.
(o) Registration Rights. Other than under this Agreement and as
described in the Company Disclosure Schedule, the Company has not agreed to
register any of its authorized or outstanding securities under the Securities
Act.
(p) ERISA.
(i) As used in this Section 4(p), the term "Plan" shall mean an
"employee pension benefit plan" as such term is defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"); and the
term "multiemployer plan" shall have the meaning set forth in the definition
thereof in Section 3(37) of ERISA. To the extent required (either as a matter
of law or to obtain the intended tax treatment and tax benefit), all employee
benefit plans which the Company maintains or to which it contributes
(collectively, the "Plans") comply in all material respects with the
requirements of ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"). With respect to the Plans, (A) all required contributions which are
due have been made and a proper accrual has been made for all contributions
due in the current fiscal year; (B) there are no actions, suits or claims
pending, other than routine uncontested claims for benefits; (C) there have
been no prohibited transactions (as defined in Section 406 of ERISA or Section
4975 of the Code); and (iv) the Company has delivered or caused to be
delivered to every participant, beneficiary and other party entitled to such
materials, all material Plan descriptions, returns, reports (including
financial statements), schedules, notices, statements and similar materials,
including, without limitation, summary plan descriptions, summaries of
material modifications and summary annual reports, as are required, including
audited financial statements, required by any federal, state or local law or
governmental agency (including, without limitation, the Internal Revenue
Service, the United States Department of Labor, the Pension Benefit Guaranty
Corporation and the Securities and Exchange Commission) with respect to each
such Plan, and the Company has no material liability in connection with the
inadequacy, inaccuracy or untimeliness of such deliveries.
(ii) The Company does not contribute (and has not ever contributed)
to any multiemployer plan, as defined in Section 3(37) of ERISA. The Company
has no actual or potential liabilities under Section 4201 of ERISA for any
complete or partial withdrawal from a multiemployer plan.
(q) Licenses. The Company is duly licensed as required by the consumer
finance laws of the states of Colorado and all other states in which the
Company conducts its business. All such licenses are in full force, and there
is no pending or, to the Company's knowledge, threatened proceeding by any
agency or authority in any such jurisdiction, which, if determined adversely
to the Company, would result in the forfeiture, suspension or revocation of
any such license.
(r) No Brokers or Finders. No person, firm or corporation has or will
have, as a result of any act or omission of the Company, any right, interest
or valid claim against the Company or the Purchaser for any commission, fee or
other compensation as a finder or broker in connection with the transactions
contemplated by this Agreement, except the Purchaser or its affiliate
designee, which has the right to receive three percent (3%) commission from
the gross proceeds payable by the Purchaser to the Company for the Purchased
Shares and the Warrant. The Company will indemnify and hold the Purchaser
harmless against any and all liability with respect to any such commission,
fee or other compensation which may be payable or determined to be payable in
connection with the transactions contemplated by this Agreement. As used in
this Agreement, the term "affiliate" shall have the meaning ascribed to such
term in Rule 405 promulgated under the Securities Act.
(s) Disclosure. The Company has not knowingly withheld from the
Purchaser any material facts relating to the assets, business, operations,
financial condition or prospects of the Company. No representation or
warranty in this Agreement or in any certificate, schedule, statement or other
document furnished or to be furnished to the Purchaser pursuant hereto or in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact or omits or will omit to state any
material fact required to be stated herein or therein or necessary to make the
statements herein or therein (taken as a whole) not misleading.
5. Representations of the Purchaser. The Purchaser represents as follows:
(a) Organization, Standing, etc. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Texas, and has the requisite corporate power and authority to own its
properties and to carry on its business in all material respects as it is now
being conducted.
(b) Investment Intent. The Purchaser is acquiring the Purchased Shares
and the Warrant (and will acquire the Warrant Shares upon exercise of the
Warrant) for investment for the Purchaser's own account and not with the view
to, or for resale in connection with, any distribution or public offering
thereof except for a private transfer to a permissible assignee under Section
13(f) of this Agreement. The Purchaser understands that the Purchased Shares,
the Warrant and the Warrant Shares have not been registered under the
Securities Act or any state securities laws by reason of their contemplated
issuance in transactions exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof and applicable state
securities laws, and that the reliance of the Company and others upon these
exemptions is predicated in part upon this representation by each Purchaser.
The Purchaser further understands that the Purchased Shares, the Warrant and
the Warrant Shares may not be transferred or resold without (i) registration
under the Securities Act and any applicable state securities laws, or (ii) an
exemption from the requirements of the Securities Act and applicable state
securities laws. The Purchaser understands that an exemption from such
registration is not presently available pursuant to Rule l44 promulgated under
the Securities Act by the Securities and Exchange Commission and that in any
event the Purchaser may not sell any securities pursuant to Rule l44 prior to
the expiration of a two-year period after the Purchaser has acquired such
securities. The Purchaser understands that any sales pursuant to Rule l44 can
be made only in full compliance with the provisions of Rule l44.
(c) Qualification as an Accredited Investor, Etc. The Purchaser
qualifies, and any permissible assignee of Purchaser pursuant to Section 13(f)
will qualify, as an "accredited investor" for purposes of Regulation D
promulgated under the Securities Act. The Purchaser (a) is able to bear the
loss of its entire investment in the Purchased Shares without any material
adverse effect on its business, operations or prospects, and (b) has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of the investment to be made by it pursuant
to this Agreement.
(d) Acts and Proceedings. This Agreement has been duly authorized by
all necessary action on the part of the Purchaser, has been duly executed and
delivered by the Purchaser, and is a valid and binding agreement of the
Purchaser that is enforceable against the Purchaser in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance or transfer or
other similar laws affecting the enforcement of creditors' rights generally
and to judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies.
(e) Compliance With Applicable Laws and Other Instruments. The
business and operations of the Purchaser have been and are being conducted in
all material respects in accordance with all applicable laws, rules and
regulations of all governmental authorities. Neither the execution nor
delivery of, nor the performance of or compliance with, this Agreement nor the
consummation of the transactions contemplated hereby will, with or without the
giving of notice or passage of time, result in any material breach of, or
constitute a default under, or result in the imposition of any lien or
encumbrance upon any asset or property of the Company pursuant to, any
agreement or other instrument to which the Company is a party or by which it
or any of its properties, assets or rights is bound or affected, and will not
violate the Articles of Incorporation or bylaws of the Purchaser or any
applicable law, assuming compliance with the Hart-Scott-Rodino Act). The
Purchaser is not in violation of its Articles of Incorporation or bylaws nor
in material violation of, or in default under, any lien, indenture, mortgage,
lease, agreement, instrument, commitment or arrangement. The Purchaser is not
subject to any restriction which would prohibit it from entering into or
performing its obligations under this Agreement, other than the expiration of
all required waiting periods under the Hart-Scott-Rodino Act.
(f) No Brokers or Finders. No person, firm or corporation has or will
have, as a result of any act or omission by such Purchaser, any right,
interest or valid claim against the Company for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, in connection
with the transactions contemplated by this Agreement, except the Purchaser or
its affiliate designee, which has the right to receive a three percent (3%)
commission from the gross proceeds payable by the Purchaser to the Company for
the Purchased Shares and the Warrant. The Purchaser will indemnify and hold
the Company harmless against any and all liability with respect to any such
commission, fee or other compensation which may be payable or determined to be
payable as a result of the actions of such Purchaser in connection with the
transactions contemplated by this Agreement, other than the Commission payable
to Pacific Consumer Finance, LLC or its affiliate designee.
(g) Ability to Consummate Transactions. The Purchaser has, or at the
Closing will have, sufficient cash on hand to enable it to consummate the
transactions contemplated hereby to occur on the Closing Date.
6. Covenants of the Parties prior to Closing.
(a) The Company covenants and agrees as follows:
(i) Covenants Pending Closing. Pending the closing of the sale
and purchase of the Purchased Shares and the Warrant, the Company shall not,
without the Purchaser's prior written consent, take any action or permit any
subsidiary to take any action that would result in any of the representations
and warranties made by the Company in this Agreement to not be true at and as
of the time immediately after such action, or in any of the covenants
contained in this Agreement becoming incapable of performance. The Company
shall promptly advise the Purchaser of any action or event of which it becomes
aware that has, or could reasonably be expected to have, the effect of making
incorrect any such representations or warranties in any material respect or
which has the effect of rendering any of such covenants incapable of
performance.
(ii) Access to Books and Records. Between the date hereof and the
Closing Date, the Company shall afford to the Purchaser and its authorized
representatives full access at all reasonable times and upon reasonable notice
to the books, records, officers, employees and other items of the Company,
and otherwise provide such assistance as is reasonably requested by the
Purchaser in order that the Purchaser may have a full opportunity to make such
investigation and evaluation as it shall reasonably desire to make of the
business and affairs of the Company. In addition, the Company shall cause its
officers and directors to cooperate fully (including providing introductions
where necessary) with the Purchaser to enable the Purchaser to contact such
third parties, including customers, prospective customers, specifying
agencies, vendors or suppliers of the Company, as the Purchaser deems
reasonably necessary to complete its due diligence; provided, that the
Purchaser agrees not to initiate such contacts without the prior approval of
the Company, which approval shall not be unreasonably withheld.
(iii) Shareholders' Meeting. The Company, acting through its
Board of Directors shall, as soon as practicable and in accordance with its
Articles of Incorporation and bylaws and applicable law:
(1) prepare and distribute proxy materials (the "Proxy Statement") in
compliance with applicable law for, and duly call, give notice of, convene and
hold, a special meeting (the "Special Meeting") of its shareholders as soon as
practicable after the date hereof, but not later than 20 days after the date
of the Proxy Statement, for the purposes of considering and voting upon this
Agreement in accordance with the rules of the Nasdaq National Market;
(2) include in the Proxy Statement the recommendation of the Board that
stockholders of the Company vote in favor of the approval and adoption of this
Agreement and in favor of an amendment to the Company's Articles of
Incorporation which increases the Company's outstanding Common Stock to
30,000,000 shares and which provides, in substance, that the Company shall
have no authority to conduct or engage in any business other than originating,
investing in, selling, purchasing, servicing or otherwise dealing in motor
vehicle loans and consumer loans;
(3) use its best efforts (A) to obtain and furnish the information
required to be included by it in the Proxy Statement, (B) to file a
preliminary version of the Proxy Statement with the SEC not later than five
(5) days after receipt of oral advice as to the substance of the Fairness
Opinion (as hereinafter defined) after execution of this Agreement, furnish
copies thereof to the Purchaser and, after consultation with the Purchaser,
respond promptly to any comments made by the SEC with respect to the Proxy
Statement and any preliminary version thereof, (C) to cause the Proxy
Statement to be mailed to its stockholders as early as practicable after the
date hereof, and (D) to obtain the necessary approval of this Agreement and
the transactions contemplated hereby, and of the amendment to the Company's
Articles of Incorporation referenced in the immediately preceding paragraph
(2), by its stockholders. Notwithstanding any consultation with the Purchaser
in connection with the Proxy Statement, neither the Purchaser nor any of its
officers, directors, employees or affiliates shall incur any liability to the
Company or its shareholders with respect thereto, except with respect to any
information contained in the Proxy Statement which any of them has furnished,
or confirmed the accuracy of, in writing to the Company; and
(4) amend, supplement or revise the Proxy Statement as may from time to
time be necessary in order to ensure that the Proxy Statement does not contain
any statement which, at the time and in the light of the circumstances under
which it is made, is false or misleading with respect to any material fact, or
omits to state any material fact necessary in order to make the statements
therein not false or misleading. Prior to submitting any such amendment,
supplement or revision of the Proxy Statement to the stockholders of the
Company, such amendment, supplement or revision shall be submitted to the
Purchaser for its approval, which approval shall not be unreasonably withheld.
Notwithstanding such approval, neither the Purchaser nor any of its officers,
directors, employees or affiliates shall incur any liability to the Company or
its shareholders with respect thereto, except with respect to any information
contained in such amendment, supplement or revision which any of them has
furnished, or confirmed the accuracy of, in writing to the Company.
Notwithstanding the covenants set forth in this subsection (iii), the Company
shall not be in breach of any such covenants by the failure of the Company or
its Board of Directors to fulfill the terms thereof if the Company or the
Board of Directors has been advised by legal counsel to the Company or to the
Board of Directors (or the Special Committee) (which advice shall be confirmed
to the Purchaser in writing by such legal counsel), that the Board of
Directors' fiduciary obligations to the stockholders of the Company require
the Company or the Board of Directors to refrain from so acting.
(iv) Fairness Opinion. The Company or the Special Committee shall
forthwith engage an investment banking firm of national reputation to evaluate
and deliver a written opinion as to the fairness, from a financial point of
view, to the Shareholders of the Company, of the transactions contemplated
herein (the "Fairness Opinion"). The Company shall promptly submit this
Agreement and all other materials reasonably required to evaluate the
transactions contemplated herein to the Special Committee and shall promptly
deliver the Fairness Opinion to the Special Committee upon receipt.
(v) Regulatory Filings. As promptly as practicable after the execution
of this Agreement, and, in the case of the filing with respect to the
Hart-Scott-Rodino Act, no later than five days after the Purchaser's filing
under the Hart-Scott-Rodino Act, the Company shall make or cause to be made
all filings and submissions under any laws or regulations applicable to the
Company for the consummation of the transactions contemplated herein. The
Company shall coordinate and cooperate with the Purchaser in exchanging such
information, shall not make any such filing without providing to the Purchaser
a final copy thereof for its review and consent at least two full business
days in advance of the proposed filing and shall provide such reasonable
assistance as Purchaser may request in connection with all of the foregoing.
(vi) Conditions. The Company shall use its best efforts to take, or
cause to be taken, all commercially reasonable action, and to use their best
efforts to do, or cause to be done, all things necessary or desirable to
fulfill the conditions set forth in Article 7 as promptly as practicable and
to consummate the transactions contemplated herein as soon as reasonably
possible after the satisfaction thereof (but in any event within three
business days after such date). Notwithstanding the covenants set forth in
this subsection (v), the Company shall not be in breach of any such covenants
by the failure of the Company or its Board of Directors to fulfill the terms
thereof if the Company or the Board of Directors has been advised by legal
counsel to the Company or to the Board of Directors (or the Special Committee)
(which advice shall be confirmed to Purchaser in writing by such legal
counsel), that the Board of Directors would be in violation of its fiduciary
obligations to the stockholders of the Company by the Company or the Board of
Directors so acting.
(vii) No Negotiations, etc. The Company shall not, directly or
indirectly, through any officer, director, agent or otherwise, solicit,
initiate or encourage submission of any proposal or offer from any person or
entity (including any of its or their officers or employees) relating to any
liquidation, dissolution, recapitalization, merger, consolidation or
acquisition or purchase of all or a material portion of the assets of, or any
equity interest in, the Company or other similar transaction or business
combination involving the Company except with the Purchaser (for purposes of
this Section 6(a)(vii), a "Disposition"), or participate in any negotiations
regarding, or furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate
or encourage, any effort or attempt by any other person or entity to do or
seek any Disposition, unless, with respect to any of the foregoing, the
Company has been advised by legal counsel to the Company or to the Board of
Directors (or the Special Committee) (which advice shall be confirmed to the
Purchaser in writing by such legal counsel), that the Board of Directors would
be in violation of its fiduciary obligations to the stockholders of the
Company by the Company's failure to so act. The Company shall promptly notify
the Purchaser if any such proposal or offer, or any inquiry from or contact
with any person with respect thereto, is made and shall promptly provide the
Purchaser with such information regarding such proposal, offer, inquiry or
contact as the Purchaser may request.
(viii) Board of Directors. Effective as of the Closing, the Company,
acting through its Board of Directors and in accordance with its Articles of
Incorporation and bylaws and applicable law, shall adopt an amendment to the
Company's bylaws fixing the number of directors at eleven and shall appoint,
effective as of Closing, five designees of the Purchaser to the Company's
Board of Directors (which shall constitute a majority of the nine directors
then sitting on the Board of Directors). Notwithstanding anything herein to
the contrary, the Company, acting through its Board of Directors and in
accordance with its Articles of Incorporation and bylaws and applicable law,
shall, in the event that Black Diamond Advisors, Inc. exercises any right to
appoint an additional director to the Company's Board of Directors in
connection with its purchase of additional Company indebtedness pursuant to
its option described in Section 7(m), take such action as the Purchaser may
request in order to preserve the Purchaser's majority and percentage
membership on the Company's Board of Directors in effect immediately prior to
such appointment, including, without limitation, appointing to the Company's
Board of Directors such other designees of the Purchaser as may be required
for the Purchaser to control the Company's Board of Directors.
(6) The Purchaser covenants and agrees as follows:
(i) Regulatory Approvals, etc. As promptly as practicable after
the execution of this Agreement, and, in the case of a filing required by the
Hart-Scott-Rodino Act, within 10 days after the execution of this Agreement,
the Purchaser shall make or cause to be made all filings and submissions under
any laws or regulations applicable to the Purchaser and any of the affiliates
of the Purchaser for the consummation of the transactions contemplated herein.
The Purchaser shall advise the Company from time to time upon request as to
the status of such filings and submission and shall give the Company notice of
the (i) approval of, or non-objection to, the transactions contemplated herein
by appropriate regulatory authorities or (ii) the expiration of any waiting
periods required by applicable laws or regulations in connection with the
transactions contemplated herein.
(ii) Conditions. The Purchaser shall use its best efforts to
take, or cause to be taken, all commercially reasonable action, and to use its
best efforts to do, or cause to be done, all things necessary or desirable to
fulfill the conditions set forth in Article 8 as promptly as practicable and
to consummate the transactions contemplated herein as soon as reasonably
possible after the satisfaction thereof (but in any event within three
business days after such date).
(7) Conditions of Purchaser's Obligation. The obligation to purchase
and pay for the Purchased Shares and the Warrant that the Purchaser has agreed
to purchase on the Closing Date is subject to the fulfillment prior to or on
the Closing Date of the conditions set forth in this Article 7. In the event
that any such condition is not satisfied to the reasonable satisfaction of the
Purchaser, then the Purchaser shall not be obligated to proceed with the
purchase of the Purchased Shares and the Warrant.
(a) No Errors, etc. The representations and warranties of the Company
under this Agreement shall be true in all material respects as of the Closing
Date with the same effect as though made on and as of the Closing Date.
(b) Compliance with Agreement. The Company shall have performed and
complied in all material respects with all agreements or conditions required
by this Agreement to be performed and complied with by it prior to or as of
the Closing Date.
(c) Certificate of Officers. The Company shall have delivered to the
Purchaser a certificate, dated the Closing Date, executed by the President and
the Treasurer of the Company and certifying to the satisfaction of the
conditions specified in Sections 7(a) and 7(b).
(d) Opinion of the Company's Counsel. The Company shall have delivered
to the Purchaser an opinion, satisfactory to the Purchaser, of Brownstein
Hyatt Farber & Strickland, P.C., counsel for the Company, dated the Closing
Date, substantially to the effect that:
(i) The Company is a corporation duly organized and validly existing
in good standing under the laws of the state of its incorporation and has the
corporate power and authority to own and hold the properties owned and leased
by it and to carry on the business in which it is engaged. The Company has
the corporate power and authority to enter into this Agreement, to issue and
sell the Purchased Shares, the Warrant and the Warrant Shares and to carry out
the provisions of this Agreement.
(ii) This Agreement has been duly authorized, executed and delivered
by the Company, is the legal, valid and binding agreement of the Company and
is enforceable against the Company in accordance with its terms, subject, as
to the enforcement of remedies, to limitations under applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization, and other laws
affecting the rights of creditors generally and to judicial limitations on the
enforcement of the remedy of specific performance and other equitable
remedies.
(iii) The Purchased Shares and the Warrant being purchased on the
Closing Date have been duly authorized, validly issued and delivered by the
Company. The Purchased Shares are fully paid and nonassessable, and are
entitled to the rights, preferences and provisions of the Company's Articles
of Incorporation and the benefits of the provisions of this Agreement
applicable thereto. The certificates evidencing the Purchased Shares are in
valid and sufficient form.
(iv) All corporate proceedings required by law or by the provisions
of this Agreement to be taken by the Board of Directors and shareholders of
the Company on or prior to such Closing Date in connection with the execution
and delivery of this Agreement, the offer, issuance and sale of the Purchased
Shares and the Warrant and the consummation of the transactions contemplated
by this Agreement, have been duly and validly taken.
(v) The requisite number of Warrant Shares have been validly
authorized and reserved for issuance upon conversion of the Warrant and, when
issued upon such conversion, will be authorized, validly issued and
outstanding, fully paid and nonassessable.
(vi) Assuming the accuracy of the representations made by the
Purchaser in Article 5 of this Agreement, the Company has obtained the
approval or consent of all governmental agencies or bodies required as of the
Closing Date pursuant to the laws of the State of Colorado or federal laws of
the United States for the legal and valid execution and delivery of this
Agreement and the legal and valid offer, issuance and sale of the Purchased
Shares, the Warrant and the Warrant Shares and for the performance of the
obligations of the Company under all provisions of this Agreement. The
Company is not in violation of any term, provision or condition of its
Articles of Incorporation or bylaws. Assuming the accuracy of the
representations made by the Purchaser in Article 5 of this Agreement, the
execution, delivery and performance of this Agreement, the offer, issuance and
sale of the Purchased Shares, the Warrant and the Warrant Shares and the
consummation of the transactions contemplated by this Agreement will not
result in any breach or violation of the terms or provisions of, or constitute
a default under, the Articles of Incorporation or the bylaws of the Company,
any laws of the State of Colorado or the federal laws of the United States
affecting the Company or its business or any agreement known to such counsel
to which the Company is a party with any of its shareholders.
(vii) Assuming the accuracy of the representations made by the
Purchaser in Article 5 of this Agreement, the offer, sale, issuance and
delivery of the Purchased Shares, the Warrant and the Warrant Shares to the
Purchaser under the circumstances contemplated by this Agreement are exempt
from the registration and prospectus delivery requirements of the Securities
Act and applicable securities laws of the State of Colorado.
(e) Supporting Documents. The Purchaser shall have received the following:
(i) A copy of resolutions of the Board of Directors of the Company
certified by the secretary of the Company authorizing and approving the
execution, delivery and performance of this Agreement, approving the
amendments to the Company's Articles of Incorporation and bylaws described in
Section 7(g) and appointing five designees of the Purchaser to the Board;
(ii) A certificate of incumbency executed by the Secretary of the
Company certifying the names, titles and signatures of the officers authorized
to execute this Agreement and further certifying that the Articles of
Incorporation and bylaws of the Company delivered to the Purchaser have been
validly adopted and have not been amended or modified; and
(iii) Such additional supporting documentation and other information
with respect to the transactions contemplated hereby as legal counsel for the
Purchaser may reasonably request.
(f) Proceedings and Documents. All corporate and other proceedings and
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transaction shall be reasonably satisfactory in form
and substance to legal counsel for the Purchaser.
(g) Shareholder Approvals; Board Approvals. This Agreement and the
transactions contemplated hereby shall have been approved by the requisite
vote of the shareholders of the Company, and the shareholders of the Company
shall have approved the amendment to the Articles of Incorporation of the
Company described in Section 6(a)(iii)(2). The Board of Directors shall have
adopted the amendment to the bylaws of the Company described in Section
6(a)(viii). The Purchaser shall have received evidence of the filing of the
amendment to the Company's Articles of Incorporation described in Section
6(a)(iii)(2) with the Secretary of State of the State of Colorado and a copy
of the amendment to the Company's bylaws and the resolution described in
Section 6(a)(viii), certified by the Company's secretary.
(h) Injunction. There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature issued by a court of
competent jurisdiction directing that the transactions provided for herein or
any of them not be consummated as provided in this Agreement.
(i) Adverse Development. There shall have been no developments in the
business of the Company since June 30, 1996 (other than on-going operating
losses in amounts not materially greater than that experienced by the Company
during the six-month period ended June 30, 1996) which, in the reasonable
opinion of the Purchaser, would have a material adverse effect upon the value
of such business or on the financial condition of the Company.
(j) Consents by Significant Shareholders. On the date hereof, each of
Morris Ginsburg, Sandler Family Partners, Ltd., and Irwin L. Sandler shall
have waived any rights under Section 7 of the Buy-Sell Agreement, dated as of
May 14, 1993, that arise as a result of this Agreement and the transactions
contemplated hereby, and shall otherwise consent to such transactions, and
such waiver and consent shall be in effect on the Closing Date.
(k) Option Agreement. Each of Morris Ginsburg and Irwin L. Sandler and
Sandler Family Partners, Ltd. shall have executed and delivered to the
Purchaser the Shareholder Option Agreement on the date hereof, substantially
in the form attached hereto as Exhibit E, and such agreement shall be in
effect on the Closing Date.
(l) Executive Employment Agreements. Each of Morris Ginsburg and Irwin
L. Sandler shall have executed and delivered to the Company an Employment and
Noncompetition Agreement on the date hereof, substantially in the form
attached hereto as Exhibit F-1 and F-2, respectively, and each such agreement
shall have become effective on the Closing Date.
(m) Grant of Additional Purchase Right. The Company shall have entered
into the investment letter granting to the Purchaser and its affiliates the
right to purchase from the Company, subject to approval by the holders of the
Company's outstanding subordinated debt as required by the indenture(s) or
other governing instrument(s) for such subordinated debt, during the 12-month
period following the Closing Date, $5 million in principal amount of the
Company's 12% Senior Subordinated Notes, convertible at $4.00 per share and
otherwise on substantially the same terms as set forth in the Subordinated
Note Purchase Agreement, dated January 9, 1996, among the Company, Black
Diamond Advisors, Inc. and the other parties thereto, and such letter
agreement shall be in effect on the Closing Date.
(n) Intellectual Property Agreements. There shall have been executed
and delivered to the Company by such of the Company's officers as shall be
reasonably identified by the Purchaser in a writing delivered to the Company
within 10 days after the date hereof, an agreement pursuant to which each such
identified employee acknowledges that each invention, discovery, improvement,
software development, device, design, apparatus, practice, process, method or
product or the like, whether patentable, copyrightable or not, made,
developed, perfected, devised, conceived or first reduced to practice by such
employee, either solely or in collaboration with others, whether or not during
regular working hours, relating either directly or indirectly to the business,
products, practices or techniques of the Company (collectively, the
"Developments") during the employee's employment with the Company prior to the
Closing Date, is the property of the Company. Such agreement shall also
identify all Developments in which the employee has participated in the
development, perfection, devising, conception or first reducing to practice.
(o) Hart-Scott-Rodino Act. All waiting periods after the required
filings by the parties hereto under the Hart-Scott-Rodino Act shall have
expired without objection to the transaction contemplated hereby by the U.S.
Department of Justice or the Federal Trade Commission.
8. Conditions of Company's Obligation. The obligation of the Company
to issue and deliver the Purchased Shares and the Warrant that the Company has
agreed to sell on the Closing Date is subject to the fulfillment prior to or
on the Closing Date of the conditions set forth in this Article 8. In the
event that any such condition is not satisfied to the reasonable satisfaction
of the Company, then the Company shall not be obligated to proceed with the
sale of the Purchased Shares and the Warrant.
(a) No Errors, etc. The representations and warranties of the
Purchaser in this Agreement shall be true in all material respects as of the
Closing Date with the same effect as though made on and as of the Closing
Date.
(b) Compliance with Agreement. The Purchaser shall have performed and
complied in all material respects with all agreements or conditions required
by this Agreement to be performed and complied with by it prior to or as of
the Closing Date.
(c) Certificate of Officers. The Purchaser shall have delivered to the
Company a certificate, dated the Closing Date, executed by an executive
officer of the Purchaser and certifying to the satisfaction of the conditions
specified in Sections 8(a) and 8(b).
(d) Opinion of the Purchaser's Counsel. The Purchaser shall have
delivered to the Company an opinion, satisfactory to the Company, of Blank,
Rome, Comisky & McCauley, counsel for the Purchaser, dated the Closing Date,
substantially to the effect that:
(i) The Purchaser is a corporation duly organized and validly
existing in good standing under the laws of the state of its organization and
has the power and authority to enter into this Agreement and to carry out the
provisions of this Agreement.
(ii) This Agreement has been duly authorized, executed and delivered
by the Purchaser, is the legal, valid and binding agreement of the Purchaser
and is enforceable against the Purchaser in accordance with its terms,
subject, as to the enforcement of remedies, to limitations under applicable
bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization, and
other laws affecting the rights of creditors generally and to judicial
limitations on the enforcement of the remedy of specific performance and other
equitable remedies.
(iii) The Purchaser has obtained the approval or consent of all
governmental agencies or bodies required as of the Closing Date pursuant to
applicable laws for the legal and valid execution and delivery of this
Agreement and for the performance of the obligations of the Purchaser under
all provisions of this Agreement. The execution, delivery and performance of
this Agreement by Purchaser will not violate any term, provision or condition
of its articles of incorporation or other governing instrument or any
judgment, decree or order or any applicable law.
(e) Supporting Documents. The Company shall have received the following:
(i) A certified copy of resolutions of the board of directors of
the Purchaser authorizing and approving the execution, delivery and
performance of this Agreement;
(ii) A certificate of incumbency executed by the Secretary of the
Purchaser certifying the names, titles and signatures of the officers
authorized to execute this Agreement and further certifying that the Articles
of Incorporation and bylaws of the Purchaser delivered to the Company have
been validly adopted and have not been amended or modified; and
(iii) Such additional supporting documentation and other information
with respect to the transactions contemplated hereby as legal counsel for the
Purchaser may reasonably request.
(f) Proceedings and Documents. All corporate and other proceedings and
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transaction shall be satisfactory in form and
substance to legal counsel for the Company and the Special Committee.
(g) Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the requisite vote of the
shareholders of the Company in accordance with the Company's Articles of
Incorporation and applicable law.
(h) Injunction. There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature issued by a court of
competent jurisdiction directing that the transactions provided for herein or
any of them not be consummated as provided in this Agreement.
(i) Fairness Opinion and Special Committee Approval. The Company shall
have received the Fairness Opinion, and the Fairness Opinion shall not have
been withdrawn or adversely modified. The Special Committee shall have
approved and authorized the execution, delivery and performance of this
Agreement and the transactions contemplated herein.
(j) Hart-Scott-Rodino Act. All waiting periods after the required
filings by the parties hereto under the Hart-Scott-Rodino Act have expired
without objection to the transaction contemplated hereby by the U.S.
Department of Justice of the Federal Trade Commission.
9. Termination.
(a) Termination of Agreement. This Agreement may be terminated at any
time prior to the Closing:
(i) by the mutual consent of the Company and the Purchaser;
(ii) by the Company if there has been an intentional material breach
in any representation, warranty or covenant of the Purchaser set forth in this
Agreement, which breach is not cured within 15 days after receipt of notice
thereof;
(iii) by the Purchaser if there has been an intentional material
breach in any representation, warranty or covenant of the Company set forth in
this Agreement, which breach is not cured within 15 days after receipt of
notice thereof;
(iv) by the Company if there has been an unintentional material
breach in any representation, warranty or covenant of the Purchaser set forth
in this Agreement, which breach is not cured within 15 days after receipt of
notice thereof;
(v) by the Purchaser if there has been an unintentional material
breach in any representation, warranty or covenant of the Company set forth in
this Agreement, which breach is not cured within 15 days after receipt of
notice thereof;
(vi) by the Purchaser in the event of the Company's refusal to
effect the Closing despite the satisfaction of the conditions set forth in
Article 8 in breach of its obligations hereunder;
(vii) by the Company in the event of the Purchaser's refusal to
effect the Closing despite the satisfaction of the conditions set forth in
Article 7 in breach of its obligations hereunder;
(viii) by the Purchaser if, after the date hereof, there shall have
been a material adverse change in the financial condition or business of the
Company (other than on-going operating losses in amounts not materially
greater than that experienced by the Company during the six-month period ended
June 30, 1996) or if, after the date hereof, an event specific to the Company
(as opposed to its industry generally) shall have occurred which, so far as
reasonably can be foreseen, would result in any such change, except to the
extent such change is directly caused by the Purchaser;
(ix) by the Company if, prior to the Closing Date, the Board of
Directors (or the Special Committee) of the Company shall have, upon the basis
of advice of its legal counsel as to the fiduciary obligations of such Board
of Directors (which advice shall be confirmed to Purchaser in writing by such
legal counsel) or for any reason other than the circumstances set forth in
this Article 9, (A) withdrawn (or modified in a manner adverse to the
Purchaser) its recommendation to the Company's shareholders to approve the
transactions contemplated by this Agreement in order to permit the Company, in
response to an unsolicited offer, to pursue a Disposition, or to approve a
tender offer for the outstanding Class A Common Stock, in either case on terms
determined by the Board of Directors of the Company, after consultation with
its legal and financial advisors, to be more favorable to the shareholders of
the Company than the acquisition of the Purchased Shares and the Warrant
contemplated by this Agreement, or (B) recommended a Disposition or such
offer;
(x) by the Company if the Purchaser has failed to consummate the
transactions contemplated hereby by the date which is the later of (i) 60 days
from the date of this Agreement, if the shareholders of the Company have
approved at a meeting of such shareholders the transactions contemplated
hereby, or (ii) three business days following the date of such shareholder
approval; provided, however, that the Company shall not be entitled to
terminate this Agreement pursuant to this Section 9(a)(x) if its intentional
breach of this Agreement has prevented the consummation of the transactions
contemplated hereby; provided further, however, that any of such dates may be
extended for a period of 30 days with the consent of the Company, which
consent shall be granted by the Company unless it is not reasonably satisfied
with the Purchaser's progress toward effecting the Closing and reasonably
believes that the Purchaser cannot effect the Closing by the end of the 30-day
extension period, it being understood and acknowledged by the Company that it
shall not be entitled to terminate this Agreement pursuant to this Section
9(a)(x) prior to the expiration of such 30-day extension solely by virtue of
the pendency of any waiting period under the Hart-Scott-Rodino Act;
(xi) by the Purchaser if the Company has failed to consummate the
transactions contemplated hereby by the date which is the later of (i) 60 days
from the date of this Agreement, if the shareholders of the Company have
approved at a meeting of such shareholders the transactions contemplated
hereby, or (ii) three business days following the date of such shareholder
approval; provided, however, that the Purchaser shall not be entitled to
terminate this Agreement pursuant to this Section 9(a)(xi) if its intentional
breach of this Agreement has prevented the consummation of the transactions
contemplated hereby; provided further, however, that any of such dates may be
extended for a period of 30 days with the consent of the Purchaser, which
consent shall be granted by the Purchaser unless it is not reasonably
satisfied with the Company's progress toward effecting the Closing and
reasonably believes that the Company cannot effect the Closing by the end of
the 30-day extension period, it being understood and acknowledged by the
Purchaser that it shall not be entitled to terminate this Agreement pursuant
to this Section 9(a)(xi) prior to the expiration of such 30-day extension
solely by virtue of the pendency of any waiting period under the
Hart-Scott-Rodino Act;
(xii) by the Purchaser if the Company has failed to obtain the
required approval of the transactions contemplated hereby from the Company's
shareholders at the Special Meeting; and
(xiii) by the Company if the definitive loan agreement for the
Bridge Loan has not been executed by the Purchaser prior to the close of
business on November 1, 1996 for reasons other than circumstances under the
Company's reasonable control.
(b) Effect of Termination. In the event of termination of this
Agreement as provided in Section 9(a), this Agreement shall become void, and
there shall be no liability on the part of either the Purchaser or Company, or
their respective officers, directors, employees or agents. The parties hereto
acknowledge and agree that the remedies provided in this Section 9(b) shall be
the sole and exclusive remedies for termination and that the provisions of
this Section 9(b) survive any such termination. The parties hereto also
acknowledge and agree that the payments described as liquidated damages are
liquidated damages and not penalties and are reasonable in the light of the
consequences to the respective parties in the event of termination.
Notwithstanding the foregoing, this Section 9(b) shall not bar claims for a
material and intentional breach of this Agreement; provided, however, that the
maximum amount that may be recovered in connection with any such claim shall
be $500,000 plus any amounts paid as liquidated damages in connection
therewith in accordance with this Section 9(b). A termination shall have no
effect upon the Bridge Loan, which shall remain outstanding in accordance with
its terms, except that the Bridge Loan shall be mandatorily prepaid by the
Company in the event of a termination pursuant to Section 9(a)(vi) and in the
event that the Company defaults on its obligation to pay $500,000 in
liquidated damages as provided in Sections 9(b)(iii), (v), (vi), (ix), (xi)
and (xii). A termination pursuant to Section 9(a) shall also have the
following effects upon the Deposit (which, for purposes of this Section 9,
shall be deemed to consist of $500,000 provided by the Purchaser upon the
execution of this Agreement, together with any interest accrued thereon from
the date of providing the Deposit to the Closing Date):
(i) in the event of termination pursuant to Section 9(a)(i), the
Deposit shall forthwith be disbursed to the Purchaser;
(ii) in the event of termination pursuant to Section 9(a)(ii), the
Deposit shall forthwith be disbursed to the Company as liquidated damages;
(iii) in the event of termination pursuant to Section 9(a)(iii), the
Deposit shall forthwith be disbursed to the Purchaser, and the Company shall
forthwith pay to the Purchaser the sum of $500,000 as liquidated damages;
(iv) in the event of termination pursuant to Section 9(a)(iv), the
Deposit shall be forthwith disbursed to the Company as liquidated damages;
(v) in the event of termination pursuant to Section 9(a)(v), the
Deposit shall forthwith be disbursed to the Purchaser as liquidated damages,
and the Company shall forthwith pay to the Purchaser the sum of $500,000 as
liquidated damages;
(vi) in the event of termination pursuant to Section 9(a)(vi), the
Deposit shall forthwith be disbursed to the Purchaser, and the Company shall
forthwith pay to the Purchaser the sum of $500,000 as liquidated damages;
(vii) in the event of termination pursuant to Section 9(a)(vii), and
the Deposit shall forthwith be disbursed to the Company as liquidated damages;
(viii) in the event of termination pursuant to Section 9(a)(viii),
and the Deposit shall forthwith be disbursed to the Purchaser;
(ix) in the event of termination pursuant to Section 9(a)(ix), the
Deposit shall forthwith be disbursed to the Purchaser, and the Company shall
forthwith pay to the Purchaser the sum of $500,000 as liquidated damages;
(x) in the event of termination pursuant to Section 9(a)(x), the
Deposit shall forthwith be disbursed to the Company as liquidated damages;
(xi) in the event of termination pursuant to Section 9(a)(xi), the
Deposit shall forthwith be disbursed to the Purchaser, and the Company shall
forthwith pay to the Purchaser the sum of $500,000 as liquidated damages;
provided, however, that, if the Company's failure to close is attributable to
the non-satisfaction of any condition set forth in Article 8 other than the
conditions set forth in Section 8(g), (h) (to the extent attributable to the
Company) or (i), then, in such case, the Company shall not make such $500,000
payment to the Company;
(xii) in the event of termination pursuant to Section 9(a)(xii), the
Deposit shall forthwith be disbursed to the Purchaser, and the Company shall
forthwith pay to the Purchaser the sum of $500,000 as liquidated damages; and
(xiii) in the event of termination pursuant to Section 9(a)(xiii),
the Deposit shall forthwith be disbursed to the Company.
Nothing in this Article 9 is intended, nor shall anything in this Article 9 be
construed, to give to any party to the Bridge Loan any additional rights or
remedies, or impose on any party to the Bridge Loan any additional
obligations, relating to the subject matter of the Bridge Loan. In the event
of any conflict or perceived conflict between this Article 9 and the Bridge
Loan relating to the subject matter of the Bridge Loan, the definitive
documents for the Bridge Loan shall control. In addition, it is acknowledged
and understood by the parties hereto that, except as expressly provided for
herein, the Bridge Loan and the transactions contemplated by this Agreement
are independent transactions, with the effects that (i) except as expressly
provided for herein, there shall be no cross-default between the Bridge Loan,
on one hand, and the transactions contemplated by this Agreement, on the other
hand, and (ii) under no circumstances shall the proceeds of the Bridge Loan be
available for offset, or shall the Company be relieved of any payment or other
obligation under the Bridge Loan, by reason of any termination or breach by
the Purchaser of its obligations hereunder.
10. Registration Rights .
(a) Definitions. As used in this Section 10, the term "Registrable
Securities" means (i) the Purchased Shares, (ii) the shares of Class A Common
Stock issuable upon exercise of the Warrant, (iii) any shares of Class A
Common Stock which the Purchaser may hereafter acquire, (iv) the shares of
Class A Common Stock issuable upon conversion of any subordinated
indebtedness of the Company or exercise of any rights issued in connection
with the transactions described in Section 7(m), (v) any shares of Class A
Common Stock acquired by the Purchaser other than in an open market purchase;
and (vi) any capital stock of the Company issued as a dividend or other
distribution with respect thereto, or in exchange for or in replacement of,
the shares of Class A Common Stock referred to in clauses (i), (ii), (iii),
(iv), (v) and (vi) above.
(b) Required Registration. If, at any time after the first anniversary
of the Closing Date, the Company receives a written request therefor from the
Purchaser (so long as it owns at least 25% of the Registrable Securities), the
Company shall prepare and file a registration statement under the Securities
Act covering the Registrable Securities which are the subject of such request
and shall use its reasonable best efforts to cause such registration statement
to become effective. The Company shall be obligated to prepare, file and
cause to become effective only one registration statement pursuant to this
Section 10(b). Notwithstanding the foregoing obligation of the Company, if
either (i) in the good faith judgment of the Company's Board of Directors, the
registration of the Registrable Securities would at such time interfere with a
primary offering of securities or a sale or acquisition transaction material
to the Company, require the disclosure of material information that the
Company has a bona fide business purpose for preserving as confidential, or
require the Company to provide information required by the SEC or the
Securities Act, such as pro forma information, that at such time the Company
would be unable to provide, then the Company's obligation to prepare and file
a registration statement in connection with the Registrable Securities which
are the subject of the Purchaser's request shall be suspended for a reasonable
period (not to exceed 90 days) until the Company consummates or abandons such
primary offering or other transaction, determines that such confidential
information may be disclosed or is able to provide any such information
required by the SEC or the Securities Act, provided that the Company may
exercise the right to suspension of an offering under this Section 10(b) no
more than one time in any twelve-month period.
In the event that the Purchaser shall determine for any reason not to
proceed with a registration at any time before the registration statement has
been declared effective by the SEC, and (i) the Purchaser requests the Company
to withdraw such registration statement, if theretofore filed with the SEC,
with respect to the Registrable Securities covered thereby, or if the offering
is not consummated for any reason and (ii) the Purchaser agrees to bear its
expenses incurred in connection therewith and to reimburse the Company for the
expenses incurred by it attributable to the registration of such Registrable
Securities, then the Purchaser shall not be deemed to have exercised its right
to require the Company to register Registrable Securities pursuant to this
Section 10(b).
Without the written consent of the Purchaser, neither the Company nor any
other holder of securities of the Company may include securities in such
registration if in the good faith judgment of the managing underwriter of such
public offering the inclusion of such securities would interfere with the
successful marketing of the Registrable Securities or require the exclusion of
any portion of the Registrable Securities to be registered.
(c) Incidental Registration. Each time the Company shall determine to
proceed with the actual preparation and filing of a registration statement
under the Securities Act on any form (other than Form S-4 or Form S-8) that
would permit the inclusion of the Registrable Securities in connection with
the proposed offer and sale for money of any of its securities by it or any of
its security holders, the Company will give written notice of its
determination to the Purchaser. Upon the written request of the Purchaser
given within 30 days after receipt of any such notice from the Company, the
Company will, except as herein provided, cause all such shares of Registrable
Securities for which the Purchaser have so requests registration, to be
included in such registration statement, all to the extent requisite to permit
the sale or other disposition by the Purchaser to be so registered; provided,
however, that nothing herein shall prevent the Company from, at any time,
abandoning or delaying any such registration initiated by it. If any
registration pursuant to this Section 10(c) shall be underwritten in whole or
in part, the Company may require that the Registrable Securities requested for
inclusion pursuant to this Section be included in the underwriting on the same
terms and conditions as the securities otherwise being sold through the
underwriters. If, in the good faith judgment of the managing underwriter of
such public offering, the inclusion of all of the Registrable Securities
originally covered by a request for registration would reduce the number of
shares to be offered by the Company or its securityholders exercising demand
registration rights, or interfere with the successful marketing of the shares
of stock offered by the Company or its securityholders exercising demand
registration rights, the number of shares of Registrable Securities otherwise
to be included in the underwritten public offering may be reduced pro rata
among the holders thereof requesting such registration. Those shares of
Registrable Securities which are thus excluded from the underwritten public
offering shall be withheld from the market by the holders thereof for a
period, not to exceed 180 days, which the managing underwriter reasonably
determines is necessary in order to effect the underwritten public offering.
(d) Registration Procedures. If and whenever the Company is required
by the provisions of Sections 10(b) or 10(c) to effect the registration of any
Registrable Securities under the Securities Act, the Company will:
(i) prepare and file with the SEC a registration statement with
respect to such securities, and use its reasonable best efforts to cause such
registration statement to become and remain effective for such period as may
be reasonably necessary to effect the sale of such securities, not to exceed
three months;
(ii) prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for such period
as may be reasonably necessary to effect the sale of such securities, not to
exceed three months;
(iii) furnish to the security holders participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such security holders
and underwriters may reasonably request in order to facilitate the public
offering of such securities;
(iv) use its reasonable best efforts to register or qualify the
securities covered by such registration statement under such state securities
or blue sky laws of such jurisdictions as such participating holders may
reasonably request within 20 days following the original filing of such
registration statement, except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to
do business as a foreign corporation in any jurisdiction wherein it is not so
qualified;
(v) notify the security holders participating in such registration,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed;
(vi) notify such holders promptly of any request by the SEC for the
amending or supplementing of such registration statement or prospectus or for
additional information;
(vii) prepare and file with the SEC, promptly upon the request of
any such holders, any amendments or supplements to such registration statement
or prospectus which, in the opinion of counsel for such holders (and concurred
in by counsel for the Company), is required under the Securities Act or the
rules and regulations thereunder in connection with the distribution of the
Registrable Securities by such holder;
(viii) prepare and promptly file with the SEC and promptly notify
such holders of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading;
(ix) advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement (during which
period of suspension the holders of the Registrable Securities shall not be
permitted to dispose of such securities pursuant to such registration) or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued;
(x) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such holders shall
have reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act or the rules and regulations thereunder, after having been furnished with
a copy thereof at least five business days prior to the filing thereof, unless
in the opinion of counsel for the Company the filing of such amendment or
supplement is reasonably necessary to protect the Company from any liabilities
under any applicable federal or state law and such filing will not violate
applicable law; and
(xi) at the request of any such holder, furnish on the effective
date of the registration statement and, if such registration includes an
underwritten public offering, at the closing provided for in the underwriting
agreement: (A) opinions, dated such respective dates, of the counsel
representing the Company for the purposes of such registration, addressed to
the underwriters, if any, and to the holder or holders making such request,
covering such matters as such underwriters and holder or holders may
reasonably request, in which opinion such counsel shall state (without
limiting the generality of the foregoing) that (1) such registration statement
has become effective under the Securities Act; (2) to the best of such
counsel's knowledge no stop order suspending the effectiveness thereof has
been issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act; (3) the registration
statement and each amendment or supplement thereto comply as to form in all
material respects with the requirements of the Securities Act and the
applicable rules and regulations of the SEC thereunder (except that such
counsel need express no opinion as to financial statements contained therein);
(4) to the best of the knowledge of such counsel neither the registration
statement nor any amendment nor supplement thereto contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading
(except that such counsel need express no opinion as to financial statements
contained therein); (5) the description in the registration statement or any
amendment or supplement thereto of legal and governmental proceedings and
contracts are accurate and fairly present the information required to be
shown; and (6) such counsel does not know of any legal or governmental
proceedings, pending or threatened, required to be described in the
registration statement or any amendment or supplement thereto which are not
described as required nor of any contracts or documents or instruments of the
character required to be described in the registration statement or amendment
or supplement thereto or to be filed as exhibits to the registration
statement, which are not described or filed as required; and (B) letters,
dated such respective dates, from the independent certified public accountants
of the Company, addressed to the underwriters, if any, and to the holder or
holders making such request, covering such matters as such underwriters and
holder or holders may reasonably request, in which letters such accountants
shall state (without limiting the generality of the foregoing) that they are
independent certified public accountants within the meaning of the Securities
Act and that in the opinion of such accountants the financial statements and
other financial data of the Company included in the registration statement or
any amendment or supplement thereto comply in all material respects with the
applicable accounting requirements of the Securities Act.
(e) Expenses. With respect to any registration requested pursuant to
Section 10(b) (except as otherwise provided in such Section with respect to
registrations voluntarily terminated at the request of the requesting security
holders) and with respect to each inclusion of shares of Registrable
Securities in a registration statement pursuant to Section 10(c), the Company
shall bear the following fees, costs and expenses: all registration, filing
and NASD fees, printing expenses, fees and disbursements of counsel and
accountants for the Company and one counsel for the selling security holders,
fees and disbursements of counsel for the underwriter or underwriters of such
securities (if the Company and/or selling security holders are required to
bear such fees and disbursements), all internal Company expenses, the premiums
and other costs of policies of insurance against liability arising out of the
public offering, and all legal fees and disbursements and other expenses of
complying with state securities or blue sky laws of jurisdictions in which the
securities to be offered are to be registered or qualified. Underwriting
discounts and commissions and transfer taxes for selling security holders and
any other expenses incurred by the selling security holders not expressly
included above shall be borne by the selling security holders.
(f) Indemnification. In the event that any Registrable Securities are
included in a registration statement under Sections 10(b) or 10(c):
(i) The Company will indemnify and hold harmless the Purchaser and
any underwriter (as defined in the Securities Act) for such holder and each
person, if any, who controls such holder or such underwriter within the
meaning of the Securities Act, from and against any and all loss, damage,
liability, cost and expense to which such holder or any such underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any 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 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, damage, liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by such holder in writing,
such underwriter or such controlling person.
(ii) The Purchaser will indemnify and hold harmless the Company, any
controlling person and any underwriter from and against any and all loss,
damage, liability, cost or expense to which the Company or any controlling
person and/or any underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with information furnished in writing by such holder.
(iii) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (i) or (ii) of this Section of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
paragraph (i) or (ii), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to participate in, and,
to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory
to such indemnified party; provided, however, if the defendants in any action
include both the indemnified party and the indemnifying party and there is a
conflict of interest which would prevent counsel for the indemnifying party
from also representing the indemnified party, the indemnified party or parties
shall have the right to select separate counsel to participate in the defense
of such action on behalf of such indemnified party or parties. 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 pursuant to the provisions of said paragraph (i) or (ii) for
any legal or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (A) the indemnified party shall have employed counsel in
accordance with the proviso of the preceding sentence, (B) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the notice of
the commencement of the action, or (C) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party.
(g) Registration Rights of Transferees. The registration rights
granted to the holders of Registrable Securities pursuant to this Article 10
shall also be for the benefit of, and enforceable by, any subsequent holder of
Registrable Securities, whether or not any express assignment of such rights
to any such subsequent holder is made, so long as such subsequent holder
acquires at least twenty-five percent (25%) of the Registrable Securities then
outstanding.
11. Additional Covenants of the Company. Subject to the provisions
of Section 12(d), the Company covenants and agrees as follows:
(a) Corporate Existence. The Company will maintain its corporate
existence in good standing and comply with all applicable laws and regulations
of the United States or of any state or political subdivision thereof and of
any government authority where failure to so comply would have a material
adverse impact on the Company or its business or operations.
(b) Books of Account and Reserves. The Company will keep books of
record and account in which full, true and correct entries are made of all of
its dealings, business and affairs, in accordance with generally accepted
accounting principles. The Company will employ certified public accountants
selected by the Board of Directors of the Company who are "independent" within
the meaning of the accounting regulations of the SEC. The Company will have
annual audits made by such independent public accountants in the course of
which such accountants shall make such examinations, in accordance with
generally accepted auditing standards, as will enable them to give such
reports or opinions with respect to the financial statements of the Company as
will satisfy the requirements of the SEC in effect at such time with respect
to reports or opinions of accountants. The Company will cooperate with all
reasonable requests from the Purchaser for information and access thereto
which are required for the Purchaser to discharge its obligations to agencies
and authorities which regulate the business and affairs of the Purchaser and
its affiliates.
(c) Furnishing of Financial Statements and Information. The Company
will deliver to the Purchaser, so long as it owns at least 25% of the
Purchased Shares or 25% of the Warrant Shares):
(i) if prepared by the Company for internal use, as soon as
available, but in any event within 30 days after the close of each month, an
unaudited balance sheet of the Company as of the end of such month, together
with the related statements of consolidated operations for each such month,
which statements of consolidated operations shall include a comparison of
actual results of operations to budget on a monthly and a year-to-date basis
and shall include a reconciliation of changes in the Company's working capital
for such month;
(ii) as soon as available, but in any event within 45 days after the
close of each quarter, an unaudited balance sheet of the Company as of the end
of such quarter, together with the related statements of consolidated
operations for each such quarter, which statements of consolidated operations
shall include a comparison of actual results of operations to budget on a
quarterly and a year-to-date basis and shall include a reconciliation of
changes in the Company's working capital for such quarter;
(iii) as soon as available, but in any event within 90 days after
the end of each fiscal year, a balance sheet of the Company, as of the end of
such fiscal year, together with the related statements of operations, retained
earnings and changes in financial position for such fiscal year, all in
reasonable detail and duly certified by the Company's independent public
accountants, which accountants shall have given the Company an opinion,
unqualified as to the scope of the audit, regarding such statements;
(iv) within 15 days after the Company learns of the commencement or
written threats of the commencement of any material suit, legal or equitable,
or of any material administrative, arbitration or other proceeding against the
Company or its business, assets or properties, written notice of the nature
and extent of such suit or proceeding;
(v) promptly after the submission thereof to the Company to the SEC,
copies of all filings and reports required to be filed by the Company under
the Securities Act of 1933 and the Exchange Act;
(vi) promptly after the submission thereof to the Company, copies of
all reports and recommendations submitted by independent public accountants in
connection with any annual or interim audit of the accounts of the Company
made by such accountants; and
(vii) with reasonable promptness, such other financial data relating
to the business, affairs and financial condition of the Company as is
available to the Company and as from time to time the Investor may reasonably
request.
(d) Inspection. The Company will permit the Purchaser, so long as it
owns at least 25% of the Purchased Shares, and any of its representatives
designated by it and reasonably satisfactory to the Company, to visit and
inspect, at the Purchaser's expense, any of the properties of the Company,
including its books and records (and to make photocopies thereof or make
extracts therefrom), and to discuss its affairs, finances and accounts with
its officers, lawyers and accountants, except with respect to engineering data
and other technical information that is not public knowledge, all to such
reasonable extent and at such reasonable times and intervals as the Purchaser
may reasonably request. The Purchaser shall maintain, and shall require their
representatives to maintain, all information obtained from the Company on a
confidential basis.
(e) Board Nominees. During the Option Term provided by the Shareholder
Option Agreement, by and among the Purchaser, Morris Ginsburg, Sandler Family
Partners, Ltd. and Irwin L. Sandler dated of even date herewith, the Board of
Directors of the Company shall be fixed at eleven members, and the Company
shall nominate and use its best efforts to have elected from and after Closing
and to remain on the Board (i) five members of the Board of Directors of the
Company designated by the Purchaser and reasonably acceptable to the Company
or such greater number of directors as shall be sufficient to provide the
Purchaser with a numerical majority of the directors (ii) Morris Ginsburg and
Irwin L Sandler, and (iii) two members of the Board of Directors who shall be
independent of the Purchaser and of Morris Ginsburg and Irwin L. Sandler and
who satisfy the requirements of the NASDAQ National Market System. In the
event of the death, resignation or removal of any such director so designated
by the Purchaser, the Purchaser shall be entitled to designate such director's
successor. The Company agrees that, in submitting to the Company's
shareholders or Board of Directors the names and nominees for election as
directors or in filling interim vacancies, it will use its reasonable best
efforts to cause any person designated by the Purchaser to be elected as a
director.
(f) Provision of Information and Filing of Reports. The Company shall,
from and after the Closing Date, deliver to any holder of Purchased Shares or
Warrant Shares upon request such information as may be required to be provided
to enable the holder of the Purchased Shares or Warrant Shares to comply with
Rule 144 or Rule 144A under the Securities Act in connection with the sale or
transfer of any of the Purchased Shares or the Warrant Shares.
(g) Covenants Regarding Warrant. The Company covenants and agrees that
all Warrant Shares that may be issued upon the exercise of the Warrant will,
upon issuance in accordance with the terms of the Warrant, be fully paid and
nonassessable and free from all taxes, liens and charges (except for taxes, if
any, upon the income of the holder and applicable transfer taxes, and taxes
payable in connection with the delivery of Warrant Shares to a person other
than the registered holder of the Warrant so exercised) with respect to the
issue thereof, and that the issuance thereof shall not give rise to any
preemptive rights on the part of any person which shall not have been waived.
The Company further covenants and agrees that the Company will at all times
have authorized and reserved a sufficient number of shares of its Class A
Common Stock for the purpose of issue upon the exercise of such conversion
privilege. The number of shares of Class A Common Stock issuable upon
exercise of the Warrant and the exercise price with respect thereto shall be
subject to adjustment from time to time as set forth in the Warrant.
(h) Payment of Taxes and Maintenance of Properties. The Company will:
(i) pay and discharge promptly, or cause to be paid and discharged
promptly when due and payable, all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or upon any of its properties,
other than such taxes, assessments, charges or levies as the Company is
contesting in good faith through appropriate proceedings; and
(ii) maintain and keep, or cause to be maintained and kept, its
properties in good repair, working order and condition.
(i) Insurance. The Company will obtain and maintain in force such
property damage, public liability, business interruption, worker's
compensation, indemnity bonds and other types of insurance as the Company's
executive officers, after consultation with an accredited insurance broker,
shall determine to be necessary or appropriate to protect the Company from the
insurable hazards or risks associated with the conduct of the Company's
business.
12. Restriction on Transfer or Purchase of Shares.
(a) Transfer Restrictions. Subject to applicable federal and state
securities laws, the Purchased Shares, Warrant and Warrant Shares may be
freely transferred, provided that no such transfer may be made, without the
Company's consent, to a direct competitor of the Company in the business of
originating, investing in, selling, purchasing, servicing, or otherwise
dealing in motor vehicle loans and consumer loans. In addition to the
foregoing, the Purchaser acknowledges that such securities are only
transferable pursuant to (i) a public offering registered under the Securities
Act, (ii) Rule 144 or Rule 144A of the SEC (or any similar rule then in
effect) if such rule is available, and (iii) subject to the conditions
specified elsewhere in this Article 12, any other legally available means of
transfer.
(b) Legend. Each certificate representing Purchased Shares shall be
endorsed with the following legend:
"The shares represented by this certificate may not be transferred
without (i) the opinion of counsel satisfactory to this corporation that such
transfer may lawfully be made without registration under the Securities Act of
1933 and all applicable state securities laws or (ii) such registration."
Upon the exercise of the Warrant, unless the Company receives an opinion of
counsel satisfactory to the Company to the effect that a transfer of the
Warrant Shares, as the case may be, may be made without registration or
further restriction or transfer, or unless such Warrant Shares are being
disposed of pursuant to a registration under the Securities Act, the same
legend shall be endorsed on the certificate evidencing such Warrant Shares.
(c) Removal of Legend. Any legend endorsed on a certificate evidencing
a security pursuant to Section 12(b) hereof shall be removed, and the Company
shall issue a certificate without such legend to the holder of such security,
if such security is being disposed of pursuant to a registration under the
Securities Act or pursuant to Rule 144 or any similar rule then in effect or
if such holder provides the Company with an opinion of counsel satisfactory to
the Company to the effect that a transfer of such security may be made without
registration. In addition, if the holder of such security delivers to the
Company an opinion of such counsel to the effect that no subsequent transfer
of such security will require registration under the Securities Act, the
Company will promptly upon such contemplated transfer deliver new certificates
evidencing such security that do not bear the legend set forth in Section
12(b).
(d) Termination of Certain Covenants. The obligations of the Company
under Article 11 of this Agreement, notwithstanding any provisions hereof
apparently to the contrary, shall terminate and shall be of no further force
or effect at the date that the Purchaser sells or transfers any Purchased
Shares or Warrant Shares, if following such sale or transfer the Purchaser
owns less than twenty-five percent (25%) of the then outstanding Class A
Common Stock.
(e) Standstill Restrictions. Other than pursuant to the exercise of
warrants, the Shareholder Option Agreement, or the conversion of the Company's
12% Senior Subordinated Notes held by the Purchaser at the time of conversion,
the Purchaser and its affiliates shall not acquire any additional securities
of the Company without the prior written consent of the Company.
13. Miscellaneous.
(a) Waivers, Amendments and Approvals. The obligations of the Company
under this Agreement may only be waived by the Purchaser in writing (either
generally or in a particular instance and either retroactively or
prospectively), and, with the written approval of the Purchaser, the Company
may enter into a supplementary agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of any supplemental agreement or modifying in any manner
the rights and obligations of the holders of the Purchased Shares or the
Warrant Shares; provided, however, that no such waiver or supplemental
agreement shall (i) amend the terms of the Purchased Shares or the Warrant
Shares as set forth in the Articles of Incorporation of the Company, (ii)
amend the provisions of this Agreement granting rights to the holders of the
Purchased Shares and the Warrant Shares (including, but not limited to,
registration rights under Article 10) without the written consent of the
holders of a majority of the Purchased Shares, or (iii) reduce the aforesaid
proportions of shares the holders of which are required to consent to any
waiver or supplemental agreement, without the consent of all of the record
holders of shares whose rights would be affected by such reduction. Written
notice of any such waiver, consent or agreement of amendment, modification or
supplement shall be given to the record holders of the Purchased Shares and
the Warrant Shares who have not previously consented thereto in writing. In
all cases in which the consent or approval of, or actions by, the Purchaser or
the holders of the Warrant Shares is required by the terms of this
Agreement, the number of Warrant Shares owned by such holder or the Purchaser
shall be determined on an as-if-exercised basis.
(b) Changes, Waivers, Etc. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, except to the extent
provided in Section 13(a).
(c) Fees and Expenses. Except as contemplated by Article 9 hereof and
Section 13(e), each of the parties shall be responsible for its own legal and
other expenses incurred in connection with the transactions contemplated by
this Agreement.
(d) Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be personally
delivered, transmitted via facsimile or overnight courier service or mailed
first-class postage prepaid, registered or certified mail,
(i) if to any holder of any Purchased Shares or Warrant Shares,
addressed to such holder at its address as shown on the books of the Company,
or at such other address or to such facsimile telephone number as such holder
may specify by written notice to the Company, with a copy to Cathryn L.
Porter, Esq., Pacific USA Holdings Corp., 3200 Southwest Freeway, Suite 1200,
Houston, Texas 77027, or
(ii) if to the Company, at 370 Seventeenth Street, Suite 5060,
Denver, Colorado 80202. Attention: President; or at such other address as the
Company may specify by written notice to the Purchaser,
and such notices and other communications shall for all purposes of this
Agreement be treated as being effective or having been given on the date when
personally delivered or when transmitted by facsimile (if confirmation of
facsimile receipt has been given), on the date after being deposited with an
overnight courier service, or, if sent by mail, four days after deposit in the
United States mail, postage prepaid.
(e) Arbitration of Disputes .
(i) Any controversy or claim arising out of this Agreement, or any
breach of this Agreement, shall be settled by arbitration in accordance with
the Rules of the American Arbitration Association then in effect, as modified
by this Section 13(e) or by the further agreement of the parties.
(ii) Such arbitration shall be conducted in Denver, Colorado.
(iii) Any judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The arbitrators shall not,
under any circumstances, have any authority to award punitive, exemplary or
similar damages, and may not, in any event, make any ruling, finding or award
that does not conform to the terms and conditions of this Agreement.
(iv) Nothing contained in this Section 13(e) shall limit or restrict
in any way the right or power of a party at any time to seek injunctive relief
in any court and to litigate the issues relevant to such request for
injunctive relief before such court (A) to restrain the other party from
breaching this Agreement or (B) for specific enforcement of this Section
13(e). The parties agree that any legal remedy available to a party with
respect to a breach of this Section 13(e) will not be adequate and that, in
addition to all other legal remedies, each party is entitled to an order
specifically enforcing this Section 13(e).
(v) The parties to this Agreement hereby consent to the jurisdiction
of the federal courts located within Denver, Colorado for all purposes.
(vi) Neither party nor the arbitrators may disclose the existence or
results of any arbitration under this Agreement or any evidence presented
during the course of the arbitration without the prior written consent of both
parties, except as required to fulfill applicable disclosure and reporting
obligations, or as otherwise required by law.
(vii) Each party shall bear its own costs incurred in the
arbitration, provided that, in any claim based on an allegation of fraud or
misrepresentation in connection with this Agreement, the attorneys' fees of
both parties shall be borne by the non-prevailing party. The arbitrator's
fees and expenses of any dispute submitted to arbitration hereunder shall be
allocated among the parties who are subject to the arbitration by arbitrator
so as to charge such fees and expenses proportionately to the party or parties
whose positions are not sustained, which allocation shall be determined by the
arbitrator as part of his decision. The parties agree that judgment may be
entered in any court of competent jurisdiction upon any award of the
arbitrator.
(viii) In the event that any party attempts to circumvent the
provisions of this Section 13(e) and institutes a legal proceeding other than
the arbitration contemplated by this Section 3(e), such party shall be liable
for the attorneys' fees and other expenses of the other party in responding to
and defending such legal proceeding and attempting to enforce the provisions
of this Section 13(e)
(f) Parties in Interest; Assignment. All the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors of the parties hereto, whether so
expressed or not, and, in particular, shall inure to the benefit of and be
enforceable by the holder or holders from time to time of any of the Purchased
Shares, the Warrant or the Warrant Shares. The Purchaser may assign this
Agreement to any of its direct or indirect majority-owned subsidiaries,
provided that no such assignment shall release the Purchaser from any of its
obligations hereunder. Except as set forth in the preceding sentence, no
party may assign its rights or obligations under this Agreement.
(g) Headings. The headings of the articles and sections of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
(h) Choice of Law. The substantive laws of Colorado and applicable
federal law shall govern the validity of this Agreement, the construction of
its terms and the interpretation of the rights and duties of the parties
hereunder.
(i) Counterparts. This Agreement may be executed concurrently in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(j) Survival of Representations and Warranties. All representations
and warranties contained herein shall survive the execution and delivery of
this Agreement for a period ending 30 days after the later to occur of (i) the
delivery to the Purchaser of the Company's audited financial statements for
the Company's fiscal year ended December 31, 1996 or (ii) the delivery to the
Purchaser by the Company's independent auditors of their "management letter"
in respect of such fiscal year relating to management accounting procedures,
financial controls and matters which occur during the course of preparation of
the audited financial statements referred to in clause (i); provided, however,
that the Company shall not be liable following the Closing Date for any breach
of a representation or warranty in this Agreement unless such breach involves
a material misrepresentation or omission concerning the financial condition,
business or operations of the Company and results in a material diminution in
the value of the Purchaser's equity interest in the Company, and in any event
the Company shall have no liability with respect to its representations and
warranties after the expiration of the survival period described above.
(k) Press Releases and Announcements. No party hereto shall issue any
press release (or make any other public announcement) regarding this Agreement
or the transactions contemplated hereby or make any public announcement
without the prior written approval of the other party as to the timing and
content of such press release or other announcement, provided that, if a press
release or public announcement is required by applicable law, the party
required to make such disclosure shall consult with the other party prior to
making such disclosure, and the parties shall use all reasonable efforts,
acting in good faith, to agree upon the contents for such disclosure which is
satisfactory to both parties.
(l) Further Assurances. The Company and the Purchaser will use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all without further consideration, all things, necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
(m) Entire Agreement. This Agreement, together with the Company
Disclosure Schedule and the Exhibits hereto, which are incorporated by
reference herein, constitute the entire agreement of the parties relating to
the subject matter hereof and supersede any prior understandings of the
parties relating to such subject matter.
IN WITNESS WHEREOF, each of the Company and the Purchaser has caused this
Agreement to be executed by its duly authorized representative.
MONACO FINANCE, INC.,
a Colorado corporation
By /s/Morris Ginsburg
Name: Morris Ginsburg
Title:President
Date: October, 29, 1996
PACIFIC USA HOLDINGS CORP.,
a Texas corporation
By /s/ Bill Bradley
Name: Bill Bradley
Title: President and Chief Executive Officer
Date: October 29, 1996
EXHIBIT 10.45
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN VIOLATION OF
SUCH ACT OR LAW OR THE PROVISIONS OF THIS WARRANT.
WARRANT TO PURCHASE
6,000,000 SHARES OF COMMON STOCK
OF
MONACO FINANCE, INC.
DATED AS OF OCTOBER 29, 1996
<PAGE>
TABLE OF CONTENTS
Page
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1. DEFINITIONS 2
SECTION 2. EXERCISE OF WARRANT 3
2.1 Exercise Generally 3
2.2 Holder Representations and Warranties 4
SECTION 3. PREEMPTIVE RIGHTS; ANTI-DILUTION 4
3.1 Preemptive Rights 4
3.2 Anti-Dilution Provisions 4
3.3 Notice of Certain Corporation Transactions 5
3.4 No Adjustment in Certain Circumstances 6
3.5 Certificate of Adjustment 6
3.6 Information to be Furnished Upon Request 6
SECTION 4. RESERVATIONS 6
SECTION 5. SALE OF THE COMPANY; REORGANIZATIONS 6
SECTION 6. DISSOLUTION OR LIQUIDATION 7
SECTION 7. NOTICE OF EXTRAORDINARY DIVIDENDS 7
SECTION 8. PROHIBITION ON ISSUANCE OF CLASS B COMMON STOCK 8
SECTION 9. FRACTIONAL SHARES 8
SECTION 10. FULLY PAID STOCK; TAXES 8
10.1 General 8
10.2 Taxes 8
SECTION 11. CLOSING OF TRANSFER BOOKS 8
SECTION 12 RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND
SHARES; COMPLIANCE WITH LAWS 9
12.1 In General 9
12.2 Restrictive Legends 9
12.3 Notice of Proposed Transfer; Registration Not Required 10
SECTION 13. REGISTRATION RIGHTS 10
SECTION 14. LOST, STOLEN WARRANTS, ETC. 10
SECTION 15. SEVERABILITY 11
SECTION 16. MISCELLANEOUS 11
16.1 Holder Not A Shareholder 11
16.2 Notices 11
16.3 Successors and Assigns 11
16.4 Amendments 12
16.5 Headings 12
16.6 Governing Law 12
16.7 Termination 12
<FN>
</TABLE>
<PAGE>
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN VIOLATION OF
SUCH ACT OR LAW OR THE PROVISIONS OF THIS WARRANT.
No. of Shares: 6,000,000 Dated as of October 29, 1996
WARRANT TO PURCHASE
SHARES OF CLASS A COMMON STOCK
OF
MONACO FINANCE, INC.
THIS IS TO CERTIFY that, for value received and subject to the provisions
hereinafter set forth,
PACIFIC USA HOLDINGS CORP.
or assigns
is entitled upon the due exercise hereof at any time during the Exercise
Period (as hereinafter defined) to purchase from Monaco Finance, Inc., a
Colorado corporation (the "Company"), up to 6,000,000 shares of Class A Common
Stock (as hereinafter defined and subject to adjustment as provided herein) of
the Company at the Exercise Price (as hereinafter defined and subject to
adjustment as provided herein) for each share of Common Stock so purchased and
to exercise the other rights, powers and privileges hereinafter provided, all
on the terms and conditions and pursuant to the provisions hereinafter set
forth.
Attest: MONACO FINANCE, INC.
/s/ Irwin L. Sandler By: /s/ Morris Ginsburg
Name: Irwin L. Sandler Name: Morris Ginsburg
Secretary Title: President
Additional provisions follow on the next pages and are incorporated in
this Warrant as if set forth on this page.
<PAGE>
SECTION 1. DEFINITIONS.
In addition to the terms defined elsewhere in this Warrant, the following
terms have the following respective meanings:
"Class A Common Stock" shall mean, collectively, the (a) the Company's
Class A Common Stock, par value $.01 per share, and (b) any successor security
to the Class A Common Stock.
"Class B Common Stock" shall mean, collectively, (a) the Company's Class
B Common Stock, par value $.01 per share, and (b) any successor security to
the Class B Common Stock.
"Closing Date" shall mean the date of closing of the transaction
contemplated by the Securities Purchase Agreement, dated as of October 29,
1996, between the Company and Pacific USA Holdings Corp.
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Company" shall mean Monaco Finance, Inc., a Colorado corporation, and
any successor to the Company in the circumstances contemplated by Section 5.
Unless the context otherwise indicates, the term "Company" shall also include
all Subsidiaries.
"Exercise Date" shall mean the date or dates on which this Warrant is
exercised.
"Exercise Period" shall mean the period commencing on the Closing Date
and terminating on the Expiration Date.
"Exercise Price" shall mean $4.50 per share for the first 2,500,000
shares of Class A Common Stock purchased upon exercise of this Warrant; $5.00
per share for the next 1,500,000 shares purchased upon exercise of this
Warrant; $6.00 per share for the next 1,000,000 shares purchased upon exercise
of this Warrant; and $7.00 per share for the remaining 1,000,000 shares
purchased upon exercise of this Warrant, adjustable as set forth in Section 3.
"Expiration Date" shall mean the fifth anniversary of the Closing Date.
"Fair Market Value" of the Class A Common Stock of the Company as of a
particular date (the "Determination Date") shall mean: (i) if the Company's
Common Stock is traded on an exchange or is quoted on the Nasdaq Stock Market,
then the average closing or last sale prices, respectively, reported for the
10 business days immediately preceding the Determination Date, and (ii) if the
Company's Common Stock is not traded on an exchange or on the Nasdaq Stock
Market, but is traded on the over-the-counter market, then the average closing
bid and asked prices reported for the 10 business days immediately preceding
the Determination Date.
"Holder" shall mean the registered holder of this Warrant, and, if the
context so indicates, the holder of Restricted Stock.
"Preferred Stock" shall mean, collectively, (a) the Company's Preferred
Stock, no par value, and (b) any successor security to the Preferred Stock.
"Restricted Stock" shall mean the shares of Class A Common Stock of the
Company issued upon the exercise of this Warrant.
"Sale of the Company" shall mean any change of control of the Company (as
the term 'control' is defined in Rule 405 of the Commission under the
Securities Act), whether such change of control occurs through merger,
consolidation, sale of assets or stock, exchange of securities, or otherwise.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Pacific USA Holdings Corp." shall mean Pacific USA Holdings Corp., a
Texas corporation.
"Underlying Shares" shall mean the shares of Class A Common Stock
issuable upon exercise of this Warrant.
"Warrant" or "this Warrant" as used herein shall mean this Warrant and
any warrant hereafter issued in exchange or substitution for this Warrant.
SECTION 2. EXERCISE OF WARRANT.
2.1 Exercise Generally. Subject to the conditions hereinafter set forth,
this Warrant may be exercised in whole or in part, during the Exercise Period,
but in no event subsequent to the end of the Exercise Period, by the
surrender of this Warrant (with the subscription form at the end hereof duly
completed and executed) at the principal office of the Company in Denver,
Colorado, and upon payment of the Exercise Price in immediately available
funds. This Warrant and all rights and options hereunder shall expire at the
Expiration Date, and shall be wholly null and void to the extent this Warrant
is not exercised before that time. The Company shall pay all expenses and
other charges payable in connection with the preparation, execution and
delivery of stock certificates under this Section 2.1.
2.2 Holder Representations and Warranties. In connection with any
exercise of this Warrant, the Holder agrees to make such representations and
warranties as may be necessary to demonstrate compliance with applicable
securities laws, as may be reasonably requested by the Company.
SECTION 3. PREEMPTIVE RIGHTS; ANTI-DILUTION.
3.1 Preemptive Rights. The Holder shall have a preemptive or similar
right to acquire or subscribe for any shares of Class A Common Stock,
Preferred Stock, rights, warrants, options to purchase Class A Common Stock or
Preferred Stock or scrip or securities of any kind convertible into Class A
Common Stock or Preferred Stock or carrying stock purchase warrants or
privileges, if any of the foregoing are issued after the date of this Warrant,
other than shares of Class A Common Stock or Preferred Stock, rights,
warrants, options to purchase Class A Common Stock or Preferred Stock or scrip
or securities of any kind convertible into Class A Common Stock or Preferred
Stock or carrying stock purchase warrants or privileges issued (i) as
consideration for the Company's acquisition of any assets or business owned by
any third party, (ii) to directors or employees of the Company pursuant to a
stock option or other incentive plan, (iii) pursuant to the exercise of
warrants, options, conversion rights or similar rights outstanding on the date
hereof, (iv) pursuant to a registered public offering, or (v) to lenders in
connection with bona fide financing transactions. The Company shall promptly
mail notice of any event or circumstance which gives rise to the rights
granted by this Section 3.1 to the Holder, and the Holder, not later than 30
days after the giving of such notice, shall make the payment to the Company as
shall be required to acquire or subscribe for the Company's capital stock in
the exercise of the Holder's rights under this Section 3.1.
3.2 Anti-Dilution Provisions. The Underlying Shares shall be subject to
change or adjustment as follows:
(a) Class A Common Stock Dividends, Subdivisions, Combinations. If
the Company shall (i) pay or make a dividend or other distribution to all
holders of its Class A Common Stock in shares of Class A Common Stock, (ii)
subdivide, split or reclassify the outstanding shares of its Class A Common
Stock into a larger number of shares, or (iii) combine or reclassify the
outstanding shares of its Class A Common Stock into a smaller number of
shares, then in each such case the Underlying Shares shall be adjusted to
equal the number of such shares to which the Holder of this Warrant would have
been entitled upon the occurrence of such event had this Warrant been
exercised immediately prior to the happening of such event or, in the case of
a stock dividend or other distribution, prior to the record date for
determination of such shareholder entitled thereto, and the Exercise Price
shall be proportionately adjusted. An adjustment made pursuant to this
paragraph (a) shall become effective immediately after such record date, in
the case of a dividend or distribution, and immediately after the effective
date, in the case of a subdivision, split, combination or reclassification.
(b) Reorganization or Reclassification. In case of any capital
reorganization or any reclassification of the Class A Common Stock of the
Company (whether pursuant to a merger, consolidation or otherwise), this
Warrant shall thereafter be exercisable for the number of shares of stock or
other securities or property receivable upon such capital reorganization or
reclassification of Class A Common Stock, as the case may be, by a holder of
the number of shares of Class A Common Stock into which this Warrant was
exercisable immediately prior to such capital reorganization or
reclassification of Class A Common Stock; and, in any case, appropriate
adjustment shall be made in the application of the provisions herein set forth
with respect to the rights and interests thereafter of the Holder of this
Warrant to the end that the provisions set forth herein shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares of stock
or other securities or property thereafter deliverable upon the exercise of
this Warrant.
(c) Distributions of Assets or Securities Other Than Class A Common
Stock. In case the Company shall, by dividend or otherwise, distribute to all
holders of its Class A Common Stock shares of any of its capital stock (other
than Class A Common Stock), rights or warrants to purchase any of its
securities, cash (other than dividends paid out of net surplus or current or
retained earnings), other assets or evidences of its indebtedness, then in
each such case the Exercise Price shall be reduced by the fair market value
(as determined in good faith by the Board of Directors of the Company) of the
portion of the securities, cash, assets or evidences of indebtedness so
distributed applicable to one share of Class A Common Stock. An adjustment
made pursuant to this paragraph (c) shall become effective immediately after
such distribution date.
(d) No Impairment. The Company shall not, without the prior consent
of the Holder, by amendment of its Articles of Incorporation or through any
reorganization, transfer of the assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but shall at all times in good faith
assist in the carrying out of all the provisions of this paragraph (d) and in
the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the Holder against impairment.
3.3 Notice of Certain Corporation Transactions. The Company shall
promptly mail to the Holder a notice of any proposed dividend, merger,
dissolution, liquidation or winding up of the Company, stating the proposed
record date (if any) or effective date for any such transaction and briefly
describing the transaction.
3.4 No Adjustment in Certain Circumstances. The Company shall not make
any adjustment of any of the Exercise Price or the number of Underlying Shares
in the case of (a) the exercise of this Warrant, or (b) the issuance or sale
by the Company of Class A Common Stock or rights or options pursuant to, or
the adjustment of the exercise price, or the exercise or termination, of
rights or options issued pursuant to, any employee stock option or similar
plan of the Company, or (c) except as specifically provided in this Section 3,
by reason of the issuance of shares of Class A Common Stock or any other
securities of the Company in exchange for cash, property or services or other
consideration.
3.5 Certificate of Adjustment. Upon the occurrence of each adjustment
pursuant to this Section 3, the Company, at its expense, shall as promptly as
practicable compute such adjustment in accordance with the provisions of this
Section 3, and prepare and furnish to the Holder a certificate setting forth
such adjustment and showing in reasonable detail the facts upon which such
adjustment is based.
3.6 Information to be Furnished Upon Request. Upon the request at any
time of the Holder, the Company shall as promptly as practicable furnish or
cause to be furnished, to the Holder, at its address set forth in such
request, a certificate setting forth the number of shares of Class A Common
Stock that at the time would be received upon the exercise of the Warrant and
the Exercise Price thereof.
SECTION 4. RESERVATIONS.
The Company shall at all times reserve and keep available such number of
authorized shares of its Class A Common Stock, solely for the purpose of issue
upon the exercise of the rights represented by this Warrant, as may at any
time be issuable upon the exercise of this Warrant. Such reserved shares of
Class A Common Stock shall at no time have an aggregate par value that is in
excess of the Exercise Price.
SECTION 5. SALE OF THE COMPANY; REORGANIZATIONS.
In the event that (i) a Sale of the Company, or (ii) any capital
reorganization or reclassification of the capital stock of the Corporation or
merger of the Company with or into another corporation or other entity
(collectively, a "Reorganization"), shall be effected in such a way that
holders of Class A Common Stock shall be entitled to receive stock, securities
or assets with respect to or in exchange for Class A Common Stock, then, as a
condition of such Sale of the Company or Reorganization, lawful and adequate
provision shall be made whereby the Holder shall thereafter have the right to
receive, upon the basis and upon the terms and conditions specified in this
Warrant, and in lieu of the Class A Common Stock immediately theretofore
receivable upon the exercise of this Warrant, such shares of stock, securities
or assets as would have been (by virtue of such Sale of the Company or
Reorganization) issued or payable with respect to or in exchange for a number
of outstanding shares of Class A Common Stock equal to the number of shares of
Class A Common Stock immediately theretofore receivable upon the exercise of
this Warrant, assuming such exercise had taken place immediately prior to such
Sale of the Company or Reorganization. In any such case, appropriate
provision shall be made with respect to the rights and interests of the Holder
to the end that the provisions hereof (including, without limitation,
provisions for adjustments of the number of shares of Class A Common Stock
receivable upon exercise of this Warrant) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter receivable upon the exercise of this Warrant. The Company shall
not effect any such Sale of the Company or Reorganization, unless, prior to or
simultaneously with the consummation thereof, the successor entity (if other
than the Company) resulting from such transaction shall assume by written
instrument, executed and mailed or delivered to the Holder, the obligation to
deliver to the Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the Holder may be entitled to
receive. Notice of any proposed Sale of the Company or Reorganization shall
be given by the Company to the Holder as promptly as practicable after such
transaction appears likely.
SECTION 6. DISSOLUTION OR LIQUIDATION.
Upon any proposed distribution of the assets of the Company in
dissolution or liquidation (except under circumstances when Section 5 shall be
applicable), the Company shall mail notice thereof to the Holder and shall
make no distribution to its shareholders until the expiration of 30 days from
the date of mailing of such notice and, in any such event, the Holder of this
Warrant may exercise this Warrant within 30 days from the date of mailing such
notice. All rights herein granted not so exercised within such 30-day period
shall thereafter become null and void.
SECTION 7. NOTICE OF EXTRAORDINARY DIVIDENDS.
If the board of directors of the Company shall declare any dividend or
other distribution on its Class A Common Stock (except out of earned surplus
or net profits or by way of a stock dividend payable on its Class A Common
Stock), the Company shall mail notice thereof to the Holder not less than 21
days prior to the record date fixed for determining shareholders entitled to
participate in such dividend or other distribution.
SECTION 8. PROHIBITION ON ISSUANCE OF CLASS B COMMON STOCK.
The Company shall not issue, or agree to issue, any shares of its Class B
Common Stock or grant any warrant, option or other right to acquire any shares
of Class B Common Stock or issue or sell any security convertible into
Class B Common Stock, without the prior written consent of Pacific USA
Holdings Corp. The Company shall not authorize any equity securities other
than the equity securities presently authorized, namely, the Class A Common
Stock, the Class B Common Stock and the Preferred Stock without the prior
written consent of Pacific USA Holdings Corp.
SECTION 9. FRACTIONAL SHARES.
Fractional shares shall be issued upon the exercise of this Warrant in
any case where the number of Underlying Shares at the time of exercise
includes fractional shares.
SECTION 10. FULLY PAID STOCK; TAXES.
10.1 General. The Company covenants and agrees that the shares of its
capital stock represented by each certificate to be delivered on the exercise
of this Warrant shall, at the time of such delivery, be validly issued and
outstanding, and be fully paid and nonassessable. The Company covenants and
agrees that, upon issuance of the Underlying Shares, the Underlying Shares
shall have voting rights equivalent to those of any other holder of Class A
Common Stock.
10.2 Taxes. The Company covenants and agrees that it shall pay, when due
and payable, any and all federal and state issuance or transfer taxes that may
be payable in respect of this Warrant or any Class A Common Stock or
certificates issued hereunder. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
transfer and delivery of stock certificates in the name other than that of the
Holder, and any such tax shall be paid by the Holder at the time of
presentation.
SECTION 11. CLOSING OF TRANSFER BOOKS.
The right to exercise this Warrant shall not be suspended during any
period that the stock transfer books of the Company for its Class A Common
Stock may be closed. The Company shall not be required, however, to deliver
stock certificates upon such exercise while such books are duly closed for any
purpose, but the Company may postpone the delivery of such certificates until
the opening of such books. In such case, the certificates shall be delivered
promptly after the books are opened.
SECTION 12. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS
AND SHARES; COMPLIANCE WITH LAWS.
Notwithstanding anything contained in this Warrant to the contrary, the
terms and provisions of this Section 12 shall remain in full force and effect
at all times up to and including the end of the Exercise Period and,
unless otherwise specified herein, the term "Warrant" shall include the
Underlying Shares, and the term "Restricted Stock" shall include such
Underlying Shares as if they had been issued.
12.1 In General. This Warrant and the Restricted Stock shall not be
transferable except upon the conditions hereinafter specified, which
conditions are intended to ensure compliance with the provisions of the
Securities Act (or any similar federal statute at the time in effect) and any
applicable state securities laws in respect of the transfer of this Warrant or
any Restricted Stock.
12.2 Restrictive Legends. Each certificate for Restricted Stock shall,
unless otherwise permitted by the provisions of this 12.2, bear on the face
thereof a legend reading substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT AND ANY STATE SECURITIES LAWS THAT MAY BE APPLICABLE
AND ARE TRANSFERABLE ONLY UPON THE CONDITIONS SPECIFIED IN THE WARRANT
PURSUANT TO WHICH SUCH SHARES WERE ISSUED.
If a registration statement covering this Warrant or the Restricted Stock
shall become effective under the Securities Act and under any applicable state
securities laws, or if the Company shall receive an opinion of counsel
reasonably satisfactory to the Company (which shall include counsel to the
Company and counsel to the original purchaser hereof) that, in the opinion of
such counsel, such legend is not, or is no longer, necessary or required
(including, without limitation, because of the availability of any exemption
afforded by Rule 144 of the Commission), the Company shall, or shall instruct
its transfer agents and registrars to, remove such legend from the
certificates evidencing the Restricted Stock or issue new certificates without
such legend. Upon the written request of the Holder of this Warrant or of the
Restricted Stock, the Company shall forthwith request independent counsel
experienced in such matters to render an opinion with respect to the matters
covered herein, and the Company shall bear all expenses in connection
therewith.
12.3 Notice of Proposed Transfer; Registration Not Required. Except as
set forth in this Section 12.3 and as restricted by federal and state
securities laws, this Warrant shall be freely transferable, provided that the
Holder of this Warrant or the Restricted Stock, by acceptance thereof, agrees
that it shall give prior notice to the Company of its intention to transfer
this Warrant or the Restricted Stock (or any portion thereof), describing
briefly the manner and circumstances of the proposed transfer and the identity
of the proposed transferee. The Company shall have the right, exercisable in a
writing delivered to Holder no later than three business days after the
receipt of the Holder's notice of intended transfer, to reject a proposed
transferee, provided that such right may be exercised only on the grounds that
the proposed transferee is a direct competitor of the Company engaged in the
business of originating, investing in, selling, purchasing, servicing, or
otherwise dealing in motor vehicle loans and consumer loans. Promptly after
receiving such notice, the Company shall present copies thereof to Company
counsel. If, in the opinion of such counsel, the proposed transfer may be
effected without registration or qualification under any federal or state law,
the Company, as promptly as practicable, shall notify such Holder of such
opinion and of the terms and conditions, if any, to be observed in connection
with such transfer, whereupon such Holder shall be entitled to transfer this
Warrant or such Restricted Stock, and to have a new Warrant or new stock
certificate(s) issued in the name of the transferee or its nominee. If such
counsel is unable to render such an opinion (in which case such counsel shall
set forth in writing the basis for the legal conclusions in this regard), the
proposed transfer described in the notice given pursuant to this Section 12.3
may not be effected except to the extent permitted by and upon such
registration and/or qualification or, in lieu thereof, compliance with the
conditions of an exemptive regulation of the Commission and/or any applicable
state securities regulatory authority, as the case may be. Thereupon, the
Company shall notify the Holder of such restrictions, and the Holder shall not
be entitled to effect such transfer until receipt of a contrary notice from
the Company or until such registration or qualification, filing or compliance
has become effective (and consistent with the terms thereof). All fees and
expenses of Company counsel in connection with the rendition of the opinion
provided for in this Section 12.3 shall be paid by the Company.
SECTION 13. REGISTRATION RIGHTS
The Holder shall have the rights with respect to registration of the
Underlying Shares as set forth in Article 9 of the Securities Purchase
Agreement, dated October 29, 1996, between the Company and Pacific USA
Holdings Corp.
SECTION 14. LOST, STOLEN WARRANTS, ETC.
If this Warrant shall be mutilated, lost, stolen or destroyed, the
Company shall issue a new Warrant of like date, tenor and denomination and
deliver the same in exchange and substitution for and upon surrender and
cancellation of the mutilated Warrant, or in lieu of the Warrant lost, stolen
or destroyed, upon receipt of evidence satisfactory to the Company of the
loss, theft or destruction of such Warrant, and upon receipt of indemnity
satisfactory to the Company.
SECTION 15. SEVERABILITY.
Should any part of this Warrant for any reason be declared invalid, such
decision shall not affect the validity of any remaining portion, which shall
remain in force and effect as if this Warrant had been executed with the
invalid portion thereof eliminated. It is hereby declared the intention of
the parties hereto that they would have executed and accepted the remaining
portion of this Warrant without including therein any such part, parts or
portion which may, for any reason, be hereafter declared invalid.
SECTION 16 MISCELLANEOUS.
16.1 Holder Not A Shareholder. Except as otherwise specifically provided
herein, prior to the exercise of this Warrant, the Holder shall not be
entitled to any of the rights of a shareholder of the Company.
16.2 Notices. Any notice, demand or delivery to be made pursuant to the
provisions of this Warrant shall be in writing and (a) shall be deemed to have
been given or made one day after the date sent (i) if by the Company, by
prepaid overnight delivery, addressed to the Holder at its last known address
appearing on the books of the Company maintained for such purpose, with a copy
to Alan L. Zeiger, Esq., Blank, Rome, Comisky & McCauley, Four Penn Center
Plaza, Philadelphia, Pennsylvania 19103, and Cathryn L. Porter, Esq., Pacific
USA Holdings Corp., 3200 Southwest Freeway, Suite 1200, Houston, Texas 77027
or (ii) if by the Holder, by prepaid overnight delivery addressed to the
Company at Suite 5060, 370 Seventeenth Street, Denver, Colorado 80202, with a
copy to John R. Garrett, Esq., at Brownstein Hyatt Farber & Strickland, P.C.,
410 Seventeenth Street, Denver, Colorado 80202; and (b) if given by courier,
confirmed telegram, confirmed facsimile transmission or confirmed telex shall
be deemed to have been made or given when received. The Holder and the
Company may each designate a different address by notice to the other in the
manner provided in this Section 16.2.
16.3 Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
permitted assigns of the Company and the Holder. The provisions of this
Warrant are intended to be for the benefit of the Holder of this Warrant or
the Restricted Stock and shall be enforceable by the Holder.
16.4 Amendments. This Warrant may not be modified, supplemented, varied
or amended except by an instrument in writing signed by the Company and the
Holder.
16.5 Headings. The index and the descriptive headings of sections of
this Warrant are provided solely for convenience of reference and shall not,
for any purpose, be deemed a part of this Warrant.
16.6 Governing Law. THIS WARRANT AND ALL MATTERS CONCERNING THIS WARRANT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF COLORADO FOR CONTRACTS ENTERED
INTO AND TO BE PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS, AND APPLICABLE FEDERAL LAW.
16.7 Termination. This Warrant shall terminate and shall be of no
further force and effect in the event that the Securities Purchase Agreement
by and between the Company and Pacific USA Holdings Corp., dated as of October
29, 1996, shall terminate prior to the consummation of the transactions
contemplated by such Securities Purchase Agreement.
<PAGE>
EXERCISE NOTICE
TO MONACO FINANCE, INC.:
The undersigned registered holder of the within Warrant
hereby irrevocably exercises the Warrant, purchases thereunder______ shares of
the Class A Common Stock of the Company, herewith makes payment of $________
therefor, and requests that the certificate(s) for such shares be issued in
the name of the undersigned Holder or its nominee and delivered to it at
Holder's address on the books of the Company.
PACIFIC USA HOLDINGS CORP.
By
Name:
Title:
Dated:
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered Holder of the within
Warrant hereby sells, assigns and transfers unto the Warrant and all rights
evidenced thereby and does irrevocably constitute and appoint attorney to
transfer the Warrant on the books of the Company.
PACIFIC USA HOLDINGS CORP.
By
Name:
Title:
Dated:
EXHIBIT 10.46
SHAREHOLDER OPTION AGREEMENT
BY AND AMONG
PACIFIC USA HOLDINGS CORP.
AND
MORRIS GINSBURG, SANDLER FAMILY PARTNERS, LTD., AND IRWIN L.SANDLER
OCTOBER 29, 1996
<PAGE>
SHAREHOLDER OPTION AGREEMENT
This SHAREHOLDER OPTION AGREEMENT (this "Agreement"), dated as of October 29,
1996, is made and entered into by and among Pacific USA Holdings Corp., a
Texas corporation ("Optionee"), and each of Morris Ginsburg ("Ginsburg"),
Sandler Family Partners, Ltd., a Colorado limited partnership ("Sandler
Partners"), and Irwin L. Sandler ("Sandler," and, together with Ginsburg and
Sandler Partners, the "Shareholders").
WHEREAS, Ginsburg and Sandler Partners are the owners of 580,000 and
250,000 shares, respectively, of Class B Common Stock, par value $0.01 per
share ("Class B Common Stock"), of Monaco Finance, Inc., a Colorado
corporation (the "Company"), constituting all of the issued and outstanding
shares of the Class B Common Stock of the Company (as defined herein, the
"Shares");
WHEREAS, Optionee desires to enter into the Securities Purchase Agreement
(as defined below), but only if Shareholders agree to grant the options to
purchase the Shares, and otherwise agree to the covenants, herein described;
and
WHEREAS, Shareholders desire to induce Optionee to enter into such an
agreement with the Company and, accordingly, Shareholders are willing to grant
to Optionee an option to purchase the Shares upon the terms of this Agreement
and to agree to the additional terms and conditions of this Agreement,
including the agreements regarding voting of the Shares contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. DEFINITIONS. The following terms when used in this Agreement shall
have the following meanings:
"Affiliate" means, with respect to a person, any corporation or other
entity in which such person has a direct or indirect controlling interest or
by which such person is directly or indirectly controlled or which is under
direct or indirect common control with such person.
"Business Day" means any day which is not a Saturday or a Sunday, or a
day on which banks in the State of Colorado are not authorized or required to
close.
"Common Stock" shall meaning the Company's Class A Common Stock, par
value $0.01 per share, and the Class B Common Stock.
"Effective Date" shall mean the date of closing of the transactions
contemplated by in the Securities Purchase Agreement.
"Lien or Other Encumbrance" means any lien, pledge, mortgage, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any shareholder or similar agreement or
encumbrance.
"Sale of the Company" means the acquisition of 100% of the outstanding
Common Stock (pursuant to a merger, consolidation, sale of stock or other
acquisition or business combination transaction) or of all or substantially
all the Company's assets by any person or group of related persons in a single
transaction or series of related transactions.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, of even date herewith, between Optionee and the Company, to which a
form of this Agreement is an exhibit.
"Shares" mean (i) the 830,000 shares of Class B Common Stock owned by
Shareholders, (ii) any shares of Common Stock issued in respect of any
subdivision, split or dividend on the shares of Class B Common Stock described
in subparagraph (i), and (iii) in the event the Company at any time shall be a
party to a recapitalization of the Class B Common Stock in which the
previously outstanding Class B Common Stock shall be changed into or exchanged
for different securities of the Company, any such other securities received in
respect of such shares of Class B Common Stock.
2. OPTION TO PURCHASE SHARES.
(a) Grant of Option; Exercise. Effective as of the Effective Date, each
of the Shareholders hereby grants to the Optionee an irrevocable option (the
"Option") to purchase that portion of the Shares held by such person at a
price of $4.00 per share, subject to adjustment as provided in Section 2(d)
(as adjusted, the "Option Price"). The Option shall be exercisable for a
period commencing on the Effective Date and ending on the third anniversary of
the Effective Date (the "Option Term"). In the event the Optionee elects to
exercise the Option, the Optionee shall notify the Shareholders of such
election by delivering a written notice to that effect setting forth the date
for the consummation of the purchase (such date being referred to as the
"Option Closing Date"), which date shall be not earlier than ten (10) days or
later than thirty (30) days from the date the notice is delivered. The
Optionee shall have the right to exercise the Option as to all, but not less
than all, of the Shares.
(b) Payment of Option Price. On the Option Closing Date, the Optionee
shall pay to each of the Shareholders an amount equal to the number of Shares
being sold by such person multiplied by the Option Price. Such amount shall be
paid by wire transfer of immediately available funds to such account or
accounts of the Shareholders as the Shareholders shall designate to the
Optionee, in the manner specified herein for the delivery of notices, not less
than three Business Days prior to the Option Closing Date. In the event that
the Optionee defaults on its obligation to pay the Option Price on the Option
Closing Date, Optionee shall have no further rights pursuant to this
Agreement.
(c) Delivery of Shares. On the Option Closing Date, the Shareholders
shall deliver to the Optionee stock certificates representing all of the
Shares being purchased by the Optionee, duly endorsed in blank or accompanied
by duly executed instruments of transfer, or registered in the name of the
Optionee.
(d) Option Price Adjustments. In the event the Company shall at any
time subdivide or split its outstanding shares of Class B Common Stock into a
greater number of shares or declare any dividend on the Class B Common Stock
payable in shares of Common Stock, the Option Price in effect immediately
prior to such subdivision, split, or dividend shall be proportionately
decreased, and conversely, in case the outstanding shares of Class B Common
Stock shall be combined into a smaller number of shares, the Option Price in
effect immediately prior to such combination shall be proportionately
increased.
(e) Sale or Transfer of Shares by Optionee. In the event that the
Optionee or any Affiliate of Optionee exercises the Option and, within 180
days of the Option Closing Date, Optionee or any Affiliate of Optionee sells,
or agrees to sell, all or any portion of the Shares to a person who is not an
Affiliate of the Optionee for a price per share greater than $4.00 per share,
Optionee or its Affiliate shall be obligated to pay to the Shareholders, in
proportion to the number of Shares previously held by them, 50% of such excess
purchase price per share. Such payment shall be made to the Shareholders
within two business days after receipt of the purchase price by Optionee or
its Affiliate from such third party purchaser. Optionee shall notify the
Shareholders in writing at least ten days prior to the consummation of any
such sale or agreement of the fact of such sale or agreement. Any sale of
Common Stock by Optionee or its Affiliate shall be deemed to include Shares in
the same proportion that the Shares bear to the aggregate amount of Common
Stock held by Optionee and its Affiliates immediately prior to such sale. The
provision of this Section 2(e) shall apply to any Affiliate of Optionee.
(f) Encumbrances on Shares. Until the expiration of the Option Term,
none of the Shareholders shall pledge or otherwise encumber the Shares or,
except as set forth in Section 3 hereof, sell, assign, transfer or grant any
other rights in the Shares or take any other action inconsistent with the
Option.
(g) Legend. On the Effective Date, the Shareholders shall deliver the
Shares to the Company and instruct the Company to place the following legend
on each certificate representing the Shares and record corresponding stop
transfer instructions to its transfer agent:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS
OF AN OPTION AGREEMENT DATED AS OF OCTOBER 29, 1996 BY AND AMONG PACIFIC USA
HOLDINGS CORP., MORRIS GINSBURG, SANDLER FAMILY PARTNERS, LTD., AND IRWIN L.
SANDLER, PURSUANT TO WHICH THESE SHARES ARE SUBJECT TO A SHAREHOLDER OPTION
AGREEMENT IN FAVOR OF PACIFIC USA HOLDINGS CORP. COPIES OF SUCH AGREEMENT ARE
ON FILE WITH THE SECRETARY OF MONACO FINANCE, INC.
The Optionee shall instruct the Company to return the legended Shares as
promptly as practicable to the Shareholders.
(h) Release from Option. Upon any Sale of the Company or any permitted
sale by the Shareholders under Section 3 hereof or upon expiration of the
Option granted hereunder, the shares of Class B Common Stock which are the
subject of such permitted sale shall be released from the terms of this
Option. From and after the date of any such permitted sale, the shares which
are the subject of such sale shall no longer be included within the definition
of Shares and the Shareholders shall be entitled to request the Company to
remove the legend called for by Section 2(g) from the certificates evidencing
such shares and terminate the stop transfer instructions in respect of such
shares. The certificate evidencing the balance of any unsold shares
represented by any certificate presented to the transfer agent upon such a
permitted sale shall, however, continue to bear such legend. Except as herein
expressly provided, none of the Shareholders shall take any action to remove
the legend described in Section 2(g) from the certificates evidencing the
Shares.
3. RIGHT TO SELL.
(a) Grant of Put. The Optionee hereby grants to the Shareholders,
severally and not jointly, an irrevocable option (the "Put") to sell that
portion of the Shares held by them at a price of $4.00 per share, subject to
adjustment as provided in Section 3(d) (as adjusted, the "Put Price"). The
Put shall be exercisable by a Shareholder with respect to (i) up to 50% of the
Shares held by such Shareholder as of the date hereof during the 30-day period
following the first anniversary of the Effective Date (the "First Put
Period"), and (ii) up to 50% of the Shares held by such Shareholder as of the
date hereof during the 30-day period following the second anniversary of the
Effective Date (the "Second Put Period"). In the event any Shareholder elects
to exercise the Put, such Shareholder shall notify the Optionee of such
election by delivering a written notice (the "Put Notice") to the Optionee
during the First Put Period or the Second Put Period, as the case may be,
which shall set forth the fact of such election.
(b) Payment of Put Price. On the date of the consummation of the
purchase of the Shares subject to a Put (such date being referred to as the
"Put Closing Date"), which date shall be not earlier than 10 days or later
than 30 days from the date of a Put Notice is delivered, as determined by the
Optionee, the Optionee shall pay to the Shareholder who has delivered such Put
Notice an amount equal to the number of Shares being put by such person
multiplied by the Put Price (the "Put Payment"). The Put Payment shall be
paid by wire transfer of immediately available funds to such account or
accounts of the Shareholders as the Shareholders shall designate to the
Optionee, in the manner specified herein for the delivery of notices, not less
than three (3) Business Days prior to the Put Closing Date.
(c) Delivery of Option Shares. On the Put Closing Date, the
Shareholder exercising the Put shall deliver to the Optionee stock
certificates representing all of the Shares being purchased by the Optionee,
duly endorsed in blank or accompanied by duly executed instruments of
transfer, or registered in the name of the Optionee.
(d) Put Price Adjustments. In the event the Company shall at any time
subdivide or split its outstanding shares of Class B Common Stock into a
greater number of shares or declare any dividend of the Class B Common Stock
payable in shares of Common Stock, the Put Price in effect immediately prior
to such subdivision, split, or dividend shall be proportionately decreased,
and conversely, in case the outstanding shares of Class B Common Stock shall
be combined into a smaller number of shares, the Put Price in effect
immediately prior to such combination shall be proportionately increased.
4. VOTING AGREEMENTS.
(a) Voting Agreement. Each Shareholder hereby grants Optionee the
right, for a period commencing on the Effective Date and ending on the third
anniversary of the Effective Date (the "Voting Period"), to vote the Option
Shares (on the basis of three votes per share rather than one vote per share
of the Company Class A Common Stock, par value $0.01 per share), at all
meetings of shareholders of the Company, to cause such Option Shares, and such
additional shares of capital stock of the Company to which he or the
Shareholders hold a proxy granted by a third party, to be counted as present
at any such meetings for purposes of establishing a quorum and to exercise all
consensual or other voting rights with respect to the Option Shares and
additional shares, in each case in such manner as Optionee, in its sole
discretion, shall determine by written notice to the Shareholders, provided
that voting any shares of capital stock as to which he or the Shareholders
hold a proxy granted by a third party in the manner directed by Optionee shall
be consistent with any fiduciary duty owed by him or the Shareholder to the
grantor of such proxy. Each of the Shareholders hereby acknowledges that the
grant of rights under this Section 4(a): (i) is consistent with Section
7-107-302 of the Colorado Business Corporation Act, and (ii) is coupled with
an interest and is thus irrevocable.
(b) Irrevocable Proxies. To secure each Shareholder's obligation to
vote that person's Option Shares in accordance with the provisions of this
Agreement, each Shareholder shall, simultaneously with the execution of this
Agreement, execute one, and thereafter if need be more than one, irrevocable
proxy, substantially in the form attached hereto, pursuant to Section
7-107-203 of the Colorado Business Corporation Act, in favor of Optionee or
its designee, permitting Optionee or its designee to vote all Option Shares
owned by such Shareholder during the Voting Period, and each such Shareholder
shall deliver such proxies to Optionee.
(c) Deposit with the Company. A counterpart of this Agreement shall be
deposited with the Company at its principal office and shall be subject to the
same rights of examination by a shareholder of the Company, in person or by
agent or attorney, as are the books and records of the Company. The
Shareholders covenant and agree that each certificate representing Option
Shares shall contain a statement that the shares represented by the
certificate are subject to the provisions of this Agreement, a counterpart of
which has been deposited with the Company at its principal office.
(d) Transfer of Option Shares. Any Option Shares purchased by, or
otherwise transferred to, a person other than Optionee as to which Optionee
has waived or failed to exercise its right of first refusal under the
Shareholder Option Agreement shall cease to be subject to the terms and
conditions of this Agreement. The statement referred in subsection (c) shall
be removed from any Option Shares purchased by such third party and shall be
removed from all Option Shares upon termination of the Voting Period.
(e) Economic Rights to Option Shares. Except for the voting rights
provided in this Agreement, and subject to the option of Optionee set forth in
Section 2 hereof, the Shareholders shall retain all incidents of ownership
with respect to the Option Shares, including, but not limited to, the right to
receive dividends.
(f) Board of Directors. Until the earlier of termination of this
Agreement or acquisition by Optionee of all the Option Shares pursuant to the
Shareholder Option Agreement, Optionee shall vote (and shall cause each of its
Affiliates to vote) its shares of capital stock of the Company, as well as the
Option Shares, to maintain Morris Ginsburg and Irwin J. Sandler as directors
of the Company.
5. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Each of the Shareholders hereby severally represents and warrants to
Optionee with respect to only those matters concerning such Shareholder that:
(a) Organization and Power. Sandler Partners is a partnership duly
organized, validly existing and in good standing under the laws of the State
of Colorado. Each of the Shareholders has all requisite power and authority
to execute and deliver this Agreement and to perform his or its obligations
hereunder (including, without limitation, the power to sell, transfer and
convey the Shares as provided by this Agreement).
(b) Execution, Delivery; Valid and Binding Agreements. The execution,
delivery and performance of this Agreement by Sandler Partners and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all requisite partnership action, and no other
partnership proceedings on its part are necessary to authorize the execution,
delivery and performance of this Agreement. This Agreement has been duly
executed and delivered by Shareholders and constitutes the valid and binding
obligation of Shareholders, enforceable in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights or by general principles of equity.
(c) No Breach. The execution, delivery and performance of this
Agreement by Shareholders and the consummation by Shareholders of the
transactions contemplated hereby do not conflict with or result in any breach
of any of the provisions of, constitute a default under, result in a violation
of, result in the creation of a right of termination or acceleration or any
lien, security interest, charge or encumbrance upon any of the Shares, or
require any authorization, consent, approval, exemption or other action by or
notice to any court or other governmental body, under the provisions of the
partnership agreement of Sandler Partners or any agreement or instrument by
which any of the Shareholders is bound or affected, or any law, statute, rule
or regulation or order, judgment or decree to which any of Shareholders or the
Company is subject.
(d) Governmental Authorities; Consents. Except for appropriate filings
on Schedule 13D and Form 4, none of the Shareholders is required to submit any
notice, report or other filing with any governmental authority in connection
with the execution or delivery by it of this Agreement or the consummation of
the transactions contemplated hereby. No consent, approval or authorization
of any governmental or regulatory authority or any other party or person is
required to be obtained by Shareholders or by the Company in connection with
its execution, delivery and performance of this Agreement or the transactions
contemplated hereby, except such as have been duly obtained or made, as the
case may be, and are in full force and effect on the date hereof and will
continue to be in full force and effect on the Closing Date.
(e) Ownership of Capital Stock. Shareholders own, beneficially and of
record, all right, title and interest in and to the Shares free and clear of
any Lien or Other Encumbrance, except the Buy-Sell Agreement dated May 14,
1993 among the Company, Sandler Partners and Ginsburg, which will remain in
effect subject to the Option granted hereby, and have full power and authority
to transfer good and valid title to the Shares to Optionee, free and clear of
any Lien or Other Encumbrance, and, upon delivery of any payment for such
Shares as provided herein, Optionee will acquire good title, thereto, free and
clear of any Lien or Other Encumbrance.
(f) Options or Other Rights. Except for the rights granted to Optionee
hereunder, there is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement of any kind to
purchase or otherwise receive from any of the Shareholders any of the Shares.
6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE. Optionee hereby
represents and warrants to Shareholders that:
(a) Organization and Power. Optionee is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas,
with the requisite power and authority to enter into this Agreement and
perform its obligations hereunder.
(b) Execution, Delivery; Valid and Binding Agreement. The execution,
delivery and performance of this Agreement by Optionee and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all requisite company action, and no other company proceedings on its part are
necessary to authorize the execution, delivery or performance of this
Agreement. This Agreement has been duly executed and delivered by Optionee
and constitutes the valid and binding obligation of Optionee, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights or by general
principles of equity.
(c) No Breach. The execution, delivery and performance of this
Agreement by Optionee and the consummation by Optionee of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under, result in a violation of, result in
the creation of a right of termination or acceleration or any lien, security
interest, charge or encumbrance upon any assets of Optionee, or require any
authorization, consent, approval, exemption or other action by or notice to
any court or other governmental body, under the provisions of the articles of
organization of Optionee or any indenture, mortgage, lease, loan agreement or
other agreement or instrument by which Optionee is bound or affected, or any
law, statute, rule or regulation or order, judgment or decree to which
Optionee is subject.
(d) Governmental Authorities; Consents. Optionee is not required to
submit any notice, report or other filing with any governmental authority in
connection with the execution or delivery by it of this Agreement or the
consummation of the transactions contemplated hereby. No consent, approval or
authorization of any governmental or regulatory authority or any other party
or person is required to be obtained by Optionee in connection with its
execution, delivery and performance of this Agreement or the transactions
contemplated hereby.
(e) Investment Intent. Optionee is purchasing the Shares for its own
account with the present intention of holding the Shares for investment
purposes and not with a view to or for sale in connection with any
distribution of the Shares in violation of any applicable securities law.
Optionee will refrain from transferring or otherwise disposing of any of the
Shares, or any interest therein, in such manner as to cause Shareholders to be
in violation of the registration requirements of the Securities Act of 1933,
as amended, or applicable state securities or blue sky laws.
7. COVENANTS OF THE PARTIES.
(a) Covenants Pending Closing. From the date hereof through the
Closing Date, each of Optionee and the Shareholders shall conduct its or his
affairs in such a manner so that, except as otherwise contemplated or
permitted by this Agreement, all of its representations and warranties in this
Agreement remain true and correct on and as of the Closing Date as if made on
and as of the Closing Date, and all its covenants contained in this Agreement
remain capable of performance. Optionee and Shareholders shall promptly
advise the other parties of any action or event of which any of them become
aware that has, or could have, the effect of making incorrect any of its
representations or warranties in any material respect or which has the effect
of rendering any of its covenants incapable of performance.
(b) Regulatory Filings. As promptly as practicable after the execution
of this Agreement, Optionee and Shareholders shall, and shall cause the
Company to, make or cause to be made all filings and submissions under any
laws or regulations applicable to Optionee, Shareholders and the Company for
the consummation of the transactions contemplated herein. Optionee and
Shareholders will coordinate and cooperate with each other in exchanging such
information and will provide such reasonable assistance as any party may
request in connection with all of the foregoing.
(c) Agreement to Vote Shares. Each of the Shareholders agrees to vote
all of the Option Shares, and all shares of capital stock of the Company as to
which they hold a proxy granted by third parties, in favor of the transactions
contemplated by the Securities Purchase Agreement and all agreements
contemplated thereby, including this Agreement, at any meeting of shareholders
of the Company at which such transactions are put to a vote of Shareholders of
the Company.
(d) Agreement regarding Milton Karsh. Following a written request from
the Shareholders to Optionee, each of the Shareholders agrees to use their
reasonable best efforts to obtain the agreement of Karsh to enter into an
agreement with Optionee with respect to all shares of Class B Common Stock
owned by Karsh substantially similar the agreements set forth herein between
Optionee and Shareholders.
(e) Support for Put Upon Certain Events. Optionee agrees to provide
security for its prompt performance of its obligations under Section 3 in the
form of a letter of credit issued by a commercial bank, selected by Optionee,
which bank shall also be reasonably acceptable to the Shareholders, in the
event that (i) Optionee defaults on any other indebtedness in excess of
$500,000 in outstanding principal amount, which default is not cured within 30
days after Optionee receives notice of default from the payee thereunder, or
(ii) Optionee's net worth (as shown on its quarterly financial statements and
as calculated in accordance with generally accepted accounting principles) is
less than $110 million. Optionee agrees to provide to each Shareholder a copy
of its quarterly financial statements, subject to Optionee's agreement to hold
such financial statements in the strictest confidence, no later than ten days
after such financial statements are made available to Optionee's management in
final form. Such letter of credit shall be an irrevocable standby letter of
credit in favor of the Shareholders in an amount equal to Optionee's maximum
remaining liability pursuant to Section 3 with a term that extends 90 days
beyond the expiration of the Second Put Period.
8. CONDITIONS TO OPTIONEE'S OBLIGATIONS.
The obligation of Optionee to consummate the transactions contemplated by
this Agreement with respect to a particular Shareholder is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) Accuracy of Representations and Warranties. The representations
and warranties of such Shareholder set forth in Section 5 hereof shall be true
and correct in all material respects at and as of the Closing Date as though
then made.
(b) Performance of Covenants. Such Shareholder shall have performed in
all material respects all of the covenants and agreements required to be
performed and complied with by it under this Agreement prior to the Closing
Date.
(c) Approvals. Such Shareholder shall have obtained, or caused to be
obtained, each consent and approval required to be obtained by them to
effectuate the transactions contemplated hereby.
(d) Governmental Filings. All material governmental filings,
authorizations and approvals that are required by such Shareholder for the
effectuation of the transactions contemplated hereby shall have been duly made
and obtained.
(e) Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by a majority of the shareholders
of the Company (it being understood that such approval shall be obtained in
connection with approval of the Securities Purchase Agreement).
(f) Injunction. There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature against Optionee
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as provided in this
Agreement.
(g) Closing of Securities Purchase Agreement. The closing shall have
occurred under the Securities Purchase Agreement.
(h) Evidence of Legending. The certificates representing the Shares
shall have been legended as required by Section 2(g) and corresponding stop
transfer instructions shall have been given to the Company's transfer agent.
9. CONDITIONS TO SHAREHOLDERS' OBLIGATIONS.
The obligation of the Shareholders to consummate the transactions
contemplated by this Agreement is subject to the satisfaction of the following
conditions on or before the Closing Date:
(a) Accuracy of Representations and Warranties. The representations
and warranties set forth in Section 6 hereof shall be true and correct in all
material respects at and as of the Closing Date as though then made.
(b) Performance of Covenants. Optionee shall have performed in all
material respects all of the covenants and agreements required to be performed
and complied with by it under this Agreement prior to the Closing Date.
(c) Approvals. Optionee shall have obtained, or caused to be obtained,
each consent and approval required to be obtained by Optionee to effectuate
the transactions contemplated hereby.
(d) Governmental Filings. All material governmental filings,
authorizations and approvals that are required by Optionee for the
effectuation of the transactions contemplated hereby shall have been duly made
and obtained.
(e) Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by a majority of the shareholders
of the Company (it being understood that such approval shall be obtained in
connection with approval of the Securities Purchase Agreement).
(f) Injunction. There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature against the
Shareholders issued by a court of competent jurisdiction directing that the
transactions provided for herein or any of them not be consummated as provided
in this Agreement.
(g) Closing of Securities Purchase Agreement. The closing shall have
occurred under the Securities Purchase Agreement.
10. MISCELLANEOUS.
(a) Waivers, Amendments and Approvals. This Agreement may be amended,
superseded, cancelled, renewed or extended, and the terms hereof may be
waived, only by a written instrument signed by the parties or, in the case of
waiver, by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right,
power or privilege, nor any single or partial exercise of such right, power or
privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
(b) Fees and Expenses. Each of the parties shall be responsible for
its own legal and other expenses incurred in connection with the transactions
contemplated by this Agreement.
(c) Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be personally
delivered, transmitted via facsimile or overnight courier service or mailed
first-class postage prepaid, registered or certified mail,
(i) if to any Shareholder, addressed to such holder at its address
as shown on the books of the Company, or at such other address or to such
facsimile telephone number as such holder may specify by written notice to the
Company, or;
(ii) if to Optionee, at 410 Seventeenth Street, Suite 410, Denver,
Colorado 80202, Attention: President; or at such other address as the
Optionee may specify by written notice to the Shareholders;
and such notices and other communications shall for all purposes of this
Agreement be treated as being effective or having been given on the date when
personally delivered, or when transmitted by facsimile (if confirmation of
facsimile receipt has been given), or on the date after being deposited with
an overnight courier service, or, if sent by mail, four days after deposit in
the United States mail, postage prepaid.
(d) Specific Performance. Subsequent to the Effective Date, Optionee
shall be entitled to specific enforcement of its rights under Sections 2 and 4
of this Agreement, to recover damages by reason of any breach of any provision
thereof and to exercise all other rights existing in their favor. The
Shareholders agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of such sections and that Optionee
may, in its sole discretion, apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.
(e) Arbitration of Disputes.
(i) Any controversy or claim arising out of this Agreement other than
under Sections 2 or 4 of this Agreement, or any breach of this Agreement other
than under Sections 2 or 4 of this Agreement, shall be settled by
arbitration in accordance with the Rules of the American Arbitration
Association then in effect, as modified by this Section 10(e) or by the
further agreement of the parties.
(ii) Such arbitration shall be conducted in Denver, Colorado.
(iii) Any judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof. The arbitrators shall
not, under any circumstances, have any authority to award punitive, exemplary
or similar damages, and may not, in any event, make any ruling, finding or
award that does not conform to the terms and conditions of this Agreement.
(iv) Nothing contained in this Section 10(e) shall limit or
restrict in any way the right or power of a party at any time to seek
injunctive relief in any court and to litigate the issues relevant to such
request for injunctive relief before such court (A) to restrain the other
party from breaching this Agreement or (B) for specific enforcement of this
Section 10(e). The parties agree that any legal remedy available to a party
with respect to a breach of this Section 10(e) will not be adequate and that,
in addition to all other legal remedies, each party is entitled to an order
specifically enforcing this Section 10(e).
(v) The parties to this Agreement hereby consent to the
jurisdiction of the federal courts located within Denver, Colorado for all
purposes.
(vi) Neither party nor the arbitrators may disclose the existence
or results of any arbitration under this Agreement or any evidence presented
during the course of the arbitration without the prior written consent of both
parties, except as required to fulfill applicable disclosure and reporting
obligations, or as otherwise required by law.
(vii) Each party shall bear its own costs incurred in the
arbitration, provided that, in any claim based on an allegation of fraud or
misrepresentation in connection with this Agreement, the attorneys' fees of
both parties shall be borne by the non-prevailing party. The arbitrator's
fees and expenses of any dispute submitted to arbitration hereunder shall be
allocated among the parties who are subject to the arbitration by arbitrator
so as to charge such fees and expenses proportionately to the party or parties
whose positions are not sustained, which allocation shall be determined by the
arbitrator as part of his decision. The parties agree that judgment may be
entered in any court of competent jurisdiction upon any award of the
arbitrator.
(f) Parties in Interest; Assignment. All the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors of the parties hereto, whether so
expressed or not, Optionee may assign this Agreement to any of its direct or
indirect majority-owned subsidiaries, provided that any such assignment will
not release Optionee from its obligations under Section 3 hereof. Except as
set forth in the preceding sentence, no party may assign its rights or
obligations under this Agreement.
(g) Headings. The headings of the articles and sections of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
(h) Choice of Law. The substantive laws of Colorado and applicable
federal law shall govern the validity of this Agreement, the construction of
its terms and the interpretation of the rights and duties of the parties
hereunder.
(i) Counterparts. This Agreement may be executed concurrently in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, each of the Optionee and the Shareholders has caused this
Agreement to be executed by its duly authorized representative.
PACIFIC USA HOLDINGS CORP. ,
a Texas corporation
By /s/Bill C. Bradley
Name: Bill C. Bradley
Title: President and Chief Executive Officer
Date: October 29, 1996
/s/Morris Ginsburg
Morris Ginsburg
/s/ Irwin L. Sandler
Irwin L. Sandler
SANDLER PARTNERS FAMILY PARTNERS, LTD.
By /s/ Irwin L. Sandler
Irwin L. Sandler, General Partner
<PAGE>
Consent of the Company
The Company hereby acknowledges receipt of a copy of the foregoing
Agreement.
MONACO FINANCE, INC.
By /s/ Morris Ginsburg
Name: Morris Ginsburg
Title:President
EXHIBIT 10.47
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this "Agreement") is entered into as
of the 29th day of October, 1996 by and between Monaco Finance, Inc., a
Colorado corporation ("Employer"), and Morris Ginsburg ("Executive").
RECITALS:
WHEREAS, the Employer has entered into a Securities Purchase Agreement,
dated the date hereof (the "Purchase Agreement"), with Pacific USA Holdings
Corp., a Texas corporation ("Pacific USA Holdings Corp."), and Pacific USA
Holdings Corp. has required the execution and delivery of this Agreement as a
condition to the consummation of the transactions contemplated by the Purchase
Agreement.
WHEREAS, the Employer desires to retain the services of Executive, and
Executive desires to be employed by the Employer, on the terms and subject to
the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the respective
undertakings of the Employer and Executive set forth below, and as an
inducement to Pacific USA Holdings Corp. to consummate the transactions
contemplated by the Purchase Agreement, the Employer and Executive agree as
follows:
1. Employment. Effective as of the date of closing of the transactions
contemplated by the Purchase Agreement (the "Effective Date"), the Employer
hereby employs Executive on a full-time basis as a senior executive officer,
and Executive accepts such employment and agrees to perform services for the
Employer, for the period and upon the other terms and conditions set forth in
this Agreement. During the Term (as defined in Section 2), Executive's
day-to-day employment duties and responsibilities shall be substantially
similar to Executive's employment duties and responsibilities prior to the
execution of this Agreement, provided that Executive agrees to perform such
employment duties as the Board of Directors or President of the Employer shall
reasonably assign to him from time to time, consistent with his senior
executive position with Employer. In addition, Employer shall nominate
Executive to serve as a member of Employer's Board of Directors during the
Term (as defined below). Executive agrees that he shall at all times
faithfully, and to the best of his abilities, experience and talents, perform
all the duties that may be required of and from him pursuant to this
Agreement.
2. Term of Employment. Subject to the provisions of termination as
hereinafter provided, the term of this Agreement shall begin as of the
Effective Date and terminate on the third anniversary of the Effective Date
(the "Term").
3. Extent of Service. Unless otherwise approved in writing by
Employer, Executive shall exclusively devote his reasonable best efforts
during the Term to his duties in connection with Employer. Executive agrees
to serve Employer diligently and faithfully to advance its best interests.
Executive shall not, without the express permission of Employer, engage in any
substantial private business activities (whether or not entered into for
profit) outside or separate from his employment with Employer in any field
that would interfere in any material respect with the performance of his
duties hereunder.
4. Compensation. Unless otherwise increased by the Board of Directors
of Employer, Employer shall pay to Executive the following compensation:
(a) Base Salary. As base compensation for all services to be rendered
by the Executive under this Agreement during the Term, the Employer shall pay
to Executive a salary at an annual rate of $320,000 ("Base Salary"), which
Base Salary shall be paid in accordance with the Employer's normal payroll
procedures and policies, and which Base Salary shall be increased to $370,000
in the second year of the Term and to $420,000 in the third year of the Term.
(b) Participation in Benefit Plans. During the Term, Executive shall
be entitled to receive such medical and hospitalization insurance and other
fringe benefits as are being provided to the Employer's other executive-level
employees from time to time to the extent that Executive's age, position or
other factors qualify him for such fringe benefits, which benefits shall in
any case be no less favorable than the benefits currently received by
Executive, including the right to use a 1996 or newer model Jeep Cherokee
Limited (or substantial equivalent) and an annual allowance of $2,500 for the
operation of such automobile. Without limiting the foregoing, during the
Term, Executive shall be eligible to participate in stock option grants on a
level commensurate with other senior executives of the Company.
(c) Expenses. The Employer shall pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the presentment of
appropriate vouchers in accordance with the Employer's normal policies for
expense verification.
(d) Life Insurance. To induce Executive to enter into this Agreement,
Employer agrees to provide Executive with life insurance coverage during the
Term and the Noncompetition Period (as defined below) equal to the remaining
unpaid noncompetition payment contemplated by Section 11(c) hereof.
5. Termination. The rights and obligations of the parties under this
Agreement are subject to termination prior to the expiration of the Term as
follows:
(a) Termination for Cause. Employer and Executive agree that no
further salary or other benefits shall be payable to the Executive by the
Employer, and the employment relationship between the parties shall terminate
immediately, upon written notice by the Company to Executive following the
occurrence of any one or more of the following events of termination
(hereinafter referred to as "Cause"):
(i) Executive willfully and materially fails to exercise good faith
efforts to perform his reasonably assigned duties as an executive officer of
the Employer, and such breach is not cured within 15 days after Executive has
received written notice of such breach from Employer.
(ii) Executive is convicted of (A) a felony, (B) gross misdemeanor,
or (C) acts of dishonesty or moral turpitude that result in damage to
Employer.
The determination of "Cause" shall be made in good faith by the Board of
Directors of Employer after notice to Executive and after Executive has had an
opportunity to address the Board regarding the events giving rise thereto.
(b) Death or Disability. If Executive should die or be Disabled (as
defined below) during the Term, the parties agree that the employment
relationship between the parties shall terminate automatically. For purposes
of this Agreement, "Disabled" means the inability of Executive (as determined
in good faith by the Board of Directors of the Employer), resulting from
disease, injury or mental condition, to perform the essential functions of his
position, with or without reasonable accommodation by the Employer, required
under the terms of this Agreement for a period in excess of 90 consecutive
days or more than 180 calendar days in any consecutive twelve month period.
If the Executive cannot perform his duties because he is Disabled, the
Executive shall receive from Employer disability payments equal to the Base
Salary (including all annual increases) during the remainder of the original
Term. If the Executive dies during the Term, Employer shall pay to
Executive's estate a death benefit equal to the remaining Base Salary
(including all annual increases) that would have been paid to Executive during
the remainder of the original Term.
(c) Voluntary Termination. Executive shall have the right to
voluntarily terminate his employment relationship with Employer without Good
Reason (as defined in Section 4(d) below) at any time upon ninety (90) days
written notice to Employer. Upon a termination by Executive without Good
Reason, Executive shall continue to render his services and shall be paid his
Base Salary, and be entitled to any other employment benefit(s) received by
Executive in the ordinary course pursuant to the Employer's standard employee
benefit plans, up to the date of termination pursuant to the terms of this
Agreement. On and after such date, no salary or other benefits shall be
payable to the Executive by the Employer and the employment relationship
between the parties shall cease.
(d) Termination by Employer without Cause; Termination by Executive for
Good Reason.
(i) Employer shall have the right to terminate the employment
relationship between Employer and Executive without Cause upon ninety (90)
days written notice to Executive.
(ii) Executive shall have the right to terminate the employment
relationship between Employer and Executive upon ninety (90) days written
notice to Employer due to (A) a substantial diminution in the nature or scope
of his duties from those contemplated by Section 1, (B) a reduction in
Executive's Base Salary or benefits without Executive's consent, (C) a
material breach by Employer of any provision of this Agreement which has not
been cured within 10 days after Employer has received written notice of such
breach from Executive, or (D) a requirement by Employer without Executive's
consent that Executive perform his services outside the Denver, Colorado
metropolitan area for more than twenty-five days in any 12-month period (each
such event referred to as "Good Reason").
(iii) Upon any termination of the employment relationship between
Employer and Executive (A) by Employer without Cause, or (B) by Executive for
Good Reason, (I) Employer shall continue to pay to Executive, as a severance
allowance, Executive's Base Salary (including all annual increases) until the
end of the original Term, and (II) Executive shall continue to receive his
existing employee benefits during the remainder of the original Term at
Employer's expense, if Employer's benefit plans permit Executive's continued
enrollment subsequent to termination of Executive's employment with Employer
or, in the event such plans do not permit Executive's continued enrollment,
Employer shall provide equivalent benefits to Executive. Any severance
allowance payable under this provision shall be paid on a monthly basis with
appropriate withholdings.
6. Vacation. The Executive shall be entitled to four weeks of paid
vacation during the first year of the Term, increasing to five weeks during
the second year of the Term and six weeks during the third year of the Term.
7. Assistance in Litigation. During the Term and at any time
thereafter, the Executive shall, upon reasonable notice, furnish such
information and proper assistance to the Employer as it may reasonably require
in connection with any litigation in which it is, or may become, a party.
8. Confidential Information. Except as permitted or directed by
Employer's Board of Directors, during the Term or at any time thereafter,
Executive shall not divulge, furnish, make accessible to anyone, lay claim to,
attempt to lay claim to or use, or attempt to use, in any way (other than in
the ordinary course of the business of the Employer) any confidential or
secret knowledge or information of the Employer which Executive has acquired
or become acquainted with or will acquire or become acquainted with during the
period of his employment by the Employer, whether developed by himself or by
others, concerning any trade secrets, confidential or secret designs,
processes, formulae, plans, devices or material (whether or not patented or
patentable) directly or indirectly useful in any aspect of the business of the
Employer, any customer or supplier lists of the Employer, any confidential or
secret development or research work of the Employer, or any other confidential
information or secret aspects of the business of the Employer (collectively,
"Confidential Information"). Executive acknowledges that the Confidential
Information constitutes a unique and valuable asset of the Employer and
represents a substantial investment of time and expense by the Employer, and
that any disclosure or other use of the Confidential Information other than
for the sole benefit of the Employer would be wrongful and would cause
irreparable harm to the Employer. The foregoing obligations of
confidentiality shall not apply to any knowledge or information in the public
domain, other than as a direct or indirect result of the breach of this
Agreement by Executive.
9. Ventures. If, during the term of this Agreement, Executive is
engaged in or associated with the planning or implementing of any project,
program or venture involving the Employer and a third party or parties, all
rights in such project, program or venture shall belong to the Employer.
Except as formally approved by the Employer's Board of Directors, Executive
shall not be entitled to any interest in such project, program or venture or
to any commission, finder's fee or other compensation in connection therewith
other than the salary to be paid to Executive as provided in this Agreement.
10. Intellectual Property.
(a) Disclosure and Assignment. Executive shall promptly disclose in
writing to the Employer complete information concerning each and every
invention, discovery, improvement, device, design, apparatus, practice,
process, method or product, whether patentable or not, made, developed,
perfected, devised, conceived or first reduced to practice by Executive,
either solely or in collaboration with others, during the term of this
Agreement, or within six months thereafter, whether or not during regular
working hours, relating either directly or indirectly to the business,
products, practices or techniques of the Employer (hereinafter referred to as
"Developments"). Executive hereby acknowledges that any and all of such
Developments, and any Developments made, developed, perfected, devised,
conceived or first reduced to practice by Executive, either solely or in
collaboration with others during his employment with the Company prior to the
Term, are the property of the Employer and, in consideration of this Agreement
and for no compensation other than that provided by this Agreement, hereby
assigns and agrees to assign to the Employer any and all of Executive's right,
title and interest in and to any and all of such Developments.
(b) Future Developments. As to any future Developments made by
Executive which relate to the business, products or practices of the Employer
and which are first conceived or reduced to practice during the term of this
Agreement, or within six months thereafter, but which are claimed for any
reason to belong to an entity or person other than the Employer, Executive
shall promptly disclose the same in writing to the Employer and shall not
disclose the same to others if the Employer, within 20 days thereafter, shall
claim ownership of such Developments under the terms of this Agreement. If
the Employer makes such claim, Executive agrees that, insofar as the rights
(if any) of Executive are involved, it shall be settled by arbitration in
accordance with the rules then obtaining of the American Arbitration
Association. The locale of the arbitration shall be Denver, Colorado (or
other locale convenient to the Employer's principal executive offices). If
the Employer makes no such claim, Executive hereby acknowledges that the
Employer has made no promise to receive and hold in confidence any such
information disclosed by Executive.
(c) Assistance of Executive. Upon request and without further
compensation therefor, but at no expense to Executive, and whether during the
term of this Agreement or thereafter, Executive shall do all lawful acts,
including, but not limited to, the execution of papers and lawful oaths and
the giving of testimony, that in the opinion of the Employer, its successors
and assigns, may be necessary or desirable in obtaining, sustaining,
reissuing, extending and enforcing United States and foreign Letters Patent,
including, but not limited to, design patents, on any and all of such
Developments, and for perfecting, affirming and recording the Employer's
complete ownership and title thereto, and to cooperate otherwise in all
proceedings and matters relating thereto.
(d) Records. Executive shall keep complete, accurate and authentic
accounts, notes, data and records of all Developments in the manner and form
requested by the Employer. Such accounts, notes, data and records shall be
the property of the Employer, and, upon its request, Executive shall promptly
surrender same to it or, if not previously surrendered upon its request or
otherwise, Executive shall surrender the same, and all copies thereof, to the
Employer upon the conclusion of his employment.
11. Noncompetition.
(a) Agreement not to Compete. Executive understands and agrees that,
in addition to Executive's exposure to Employer's Confidential Information,
Executive may, in his capacity as an Executive, at times meet with companies
or persons who do business with Employer, and that as a consequence of using
or associating himself with Employer's name, goodwill, and professional
reputation, Executive's employment shall place him in a position where
Executive can develop personal and professional relationships of value to
Employer. Executive understands and agrees that this goodwill and reputation,
as well as Executive's knowledge of Confidential Information, could be used
unfairly in competition against Employer. Accordingly, in consideration for
the noncompetition payment set forth in Section 11(c) below, and as an
inducement to Pacific USA Holdings Corp. to consummate the transactions
contemplated by the Purchase Agreement, Executive agrees that, during the
Noncompetition Period (as defined in Section 11(b) below), Executive shall
not:
(i) Directly or indirectly, individually or collectively in
conjunction with others, engage in activities that compete with Employer's
business as it is described in Employer's periodic reports filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934 or as otherwise conducted at the expiration or earlier termination of
Executive's employment (the "Business"). Without limiting the generality of
the foregoing, Executive specifically agrees not to solicit, serve, contract
with or otherwise engage any existing or prospective customer, client, or
account who then has a relationship with Employer for current or prospective
business related in any manner to the Business. Executive and Employer agree
that this provision is reasonably enforced with reference to whatever
geographic area Employer is then doing or planning to do business, it being
agreed and understood between the parties that Employer conducts a nation-wide
business and any such restriction might reasonably include the entire United
States.
(ii) Cause or attempt to cause any existing or prospective customer,
client or account who then has a relationship with Employer for current or
prospective business to divert, terminate, limit or in any manner modify, or
fail to enter into any actual or potential business relationship with
Employer. Executive and Employer agree that this provision is reasonably
enforced with reference to any geographic area applicable to such
relationships with Employer.
(iii)Directly or indirectly solicit for employment, employ or
conspire or act in concert with others to solicit for employment or employ any
of Employer's employees or otherwise interfere with Employer's relationships
with any of its Executives. The term "employ" for purposes of this paragraph
means to enter into an arrangement for services as a full-time or part-time
Executive, independent contractor, agent or otherwise. Executive and Employer
agree that this provision is reasonably enforced as to any geographic area.
Executive further agrees that, during the Noncompetition Period, to
inform any new employer or other person or entity with whom Executive enters
into a business relationship, before accepting employment or entering into a
business relationship, the existence of this Agreement and give such employer,
person other entity a copy of this Section 11.
(b) Noncompetition Period. As used in this Section 11,
"Noncompetition Period" means the period of four years following the
expiration of Executive's employment for any reason other than the death of
Executive.
(c) Noncompetition Payment. Employer agrees to pay Executive the sum
of $800,000 in consideration of Executive entering into the noncompetition
covenants set forth in this Section 11(a). Such amount shall be payable in
four equal installments in arrears (without interest), with the first such
installment due on the first anniversary of the date of commencement of the
Noncompetition Period and each additional installment due on the second,
third, and fourth anniversaries thereof. Upon execution of this Agreement,
the payments specified in this subsection 2(c) shall be deemed earned and
payable according to the terms hereof in all events.
12. General Provisions.
(a) Notices. All notices, requests and other communications from any
of the parties hereto to another shall be in writing and shall be personally
served or sent by registered or certified mail, return receipt requested, and
shall be deemed to have been given on the day when deposited in the United
States mail addressed to the other party as follows, provided that either
party may from time-to-time change the address to which notices to it are to
be sent by giving written notice to the other in accordance herewith. Notices
to Employer shall be given to Employer at its corporate headquarters which as
of the date of this Agreement is: Monaco Finance, Inc., 370 17th Street,
Suite 5060, Denver, Colorado 80202. Notices to Executive shall be addressed
to Executive at Executive's residence address as the same appears on
Employer's records.
(b) Entirety of Agreement. This Agreement constitutes the final
expression of the parties' agreement, and it is a complete and exclusive
statement of the terms of that agreement. There are no agreements or
understandings between Employer and Executive with respect to the subject
matter hereof except as expressly herein stated. This Agreement supersedes
and replaces any prior employment agreement between the parties whether oral
or written relating generally to the same subject matter, any of which are
hereby terminated.
(c) Withholding Taxes; Offset. The Employer may withhold from any
compensation or other benefits payable under this Agreement all federal,
state, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling. The Employer may also offset any sums that
are owed by Executive to Employer against any of the amounts payable by
Employer to Executive under this Agreement.
(d) Amendments. This Agreement may be modified or rescinded only by
an instrument in writing signed by Employer and Executive. No amendment,
alteration or modification of the express terms of this Agreement shall be
binding unless set forth in an instrument in writing signed by the Employer
and Executive.
(e) Waiver. Waiver by either Employer or Executive of a breach of any
provision, term or condition hereof shall not be deemed or construed as a
further or continuing waiver thereof or a waiver of any breach of any other
provision, term or condition of this Agreement.
(f) Assignment. In the event of a merger, sale, transfer,
consolidation, or reorganization involving Employer, this Agreement shall
continue in full force and effect. The rights and obligations of Employer
hereunder may be transferred or assigned to any successor, representative or
assign of Employer. Employer's obligations under this Agreement shall not be
affected or diminished by any such transfer or assignment or by any change in
the equity ownership of employer. No assignment of this Agreement shall be
made by Executive, and any purported assignment by Executive shall be null and
void. All obligations of Employer and Executive arising out of this Agreement
shall be binding upon their heirs, spouses, legal representatives, successors
and permitted assigns.
(g) Injunctive Relief. Executive agrees that it would be difficult to
compensate the Employer fully for damages for any violation of the provisions
of this Agreement, including, without limitation the provisions of Sections 9,
10 and 11. Accordingly, Executive specifically agrees that the Employer shall
be entitled to temporary and permanent injunctive relief to enforce the
provisions of this Agreement and that such relief may be granted without the
necessity of proving actual damages. This provision with respect to
injunctive relief shall not, however, diminish the right of the Employer to
claim and recover damages in addition to injunctive relief.
(h) Agreement to Arbitrate; Expenses. Except with respect to the
provisions of Sections 8, 9, 10 and 11 of this Agreement, any controversy or
claim arising out of or relating to this Agreement or the formation, breach or
interpretation hereof, will be settled by arbitration before one arbitrator in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association in Denver, Colorado. Judgment upon the award rendered by the
arbitration may be entered and enforced in the court with jurisdiction over
the appropriate party. All controversies not subject to arbitration or
contesting any arbitration will be litigated in the State of Colorado, Denver
County District Court or a federal court in the State of Colorado (and each of
the parties hereto hereby consent to the exclusive jurisdiction of such courts
and waive any objections thereto). The expenses (including reasonable
attorneys' fees) incurred by the prevailing party in any arbitration or
litigation related to this Agreement shall be borne by the non-prevailing
party in such arbitration or litigation.
(i) Severability. To the extent that any provision of this Agreement
shall be determined to be invalid or unenforceable, the invalid or
unenforceable portion of such provision shall be deleted from this Agreement,
and the validity and enforceability of the remainder of such provision and of
this Agreement shall be unaffected. In furtherance of and not in limitation of
the foregoing, it is expressly agreed that should the duration of or
geographical extent of, or business activities covered by, the noncompetition
agreements contained in Section 11 be determined to be in excess of that which
is valid or enforceable under applicable law, then such provision shall be
construed to cover only that duration, extent, or those activities which may
validly or enforceably be covered. Executive acknowledges the uncertainty of
the law in this respect and expressly stipulates that this Agreement shall be
construed in a manner which renders its provisions valid and enforceable to
the maximum extent (not exceeding its express terms) possible under applicable
law.
(j) Captions. The captions contained in this Agreement are for
convenience of reference only and do not affect the meaning of any terms or
provisions.
(k) Prior Agreement. As of the Effective Date, the Executive
Employment Agreement dated July 9, 1990 between Employer and Executive (the
"Prior Agreement") shall be terminated and shall be of no further force or
effect (except with respect to compensation and benefits earned by Executive
prior to the Effective Date). Notwithstanding any other provision of this
Agreement, in the event that the Purchase Agreement is terminated prior to the
Effective Date, this Agreement shall automatically terminate and the Prior
Agreement shall remain in effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the date first above written.
MONACO FINANCE, INC.
By /s/ Irwin L. Sandler
Name: Irwin L. Sandler
Title:Exec. Vice President
/s/ Morris Ginsburg
Morris Ginsburg
EXHIBIT 10.48
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this "Agreement") is entered into
as of the 29th day of October, 1996 by and between Monaco Finance, Inc., a
Colorado corporation ("Employer"), and Irwin L. Sandler ("Executive").
RECITALS:
WHEREAS, the Employer has entered into a Securities Purchase Agreement,
dated the date hereof (the "Purchase Agreement"), with Pacific USA Holdings
Corp., a Texas corporation ("Pacific USA Holdings Corp."), and Pacific USA
Holdings Corp. has required the execution and delivery of this Agreement as a
condition to the consummation of the transactions contemplated by the Purchase
Agreement.
WHEREAS, the Employer desires to retain the services of Executive, and
Executive desires to be employed by the Employer, on the terms and subject to
the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the respective
undertakings of the Employer and Executive set forth below, and as an
inducement to Pacific USA Holdings Corp. to consummate the transactions
contemplated by the Purchase Agreement, the Employer and Executive agree as
follows:
1. Employment. Effective as of the date of closing of the transactions
contemplated by the Purchase Agreement (the "Effective Date"), the Employer
hereby employs Executive on a full-time basis as a senior executive officer,
and Executive accepts such employment and agrees to perform services for the
Employer, for the period and upon the other terms and conditions set forth in
this Agreement. During the Term (as defined in Section 2), Executive's
day-to-day employment duties and responsibilities shall be substantially
similar to Executive's employment duties and responsibilities prior to the
execution of this Agreement, provided that Executive agrees to perform such
employment duties as the Board of Directors or President of the Employer shall
reasonably assign to him from time to time, consistent with his senior
executive position with Employer. In addition, Employer shall nominate
Executive to serve as a member of Employer's Board of Directors during the
Term (as defined below). Executive agrees that he shall at all times
faithfully, and to the best of his abilities, experience and talents, perform
all the duties that may be required of and from him pursuant to this
Agreement.
2. Term of Employment. Subject to the provisions of termination as
hereinafter provided, the term of this Agreement shall begin as of the
Effective Date and terminate on the third anniversary of the Effective Date
(the "Term").
3. Extent of Service. Unless otherwise approved in writing by
Employer, Executive shall exclusively devote his reasonable best efforts
during the Term to his duties in connection with Employer. Executive agrees
to serve Employer diligently and faithfully to advance its best interests.
Executive shall not, without the express permission of Employer, engage in any
substantial private business activities (whether or not entered into for
profit) outside or separate from his employment with Employer in any field
that would interfere in any material respect with the performance of his
duties hereunder.
4. Compensation. Unless otherwise increased by the Board of Directors
of Employer, Employer shall pay to Executive the following compensation:
(a) Base Salary. As base compensation for all services to be rendered
by the Executive under this Agreement during the Term, the Employer shall pay
to Executive a salary at an annual rate of $240,000 ("Base Salary"), which
Base Salary shall be paid in accordance with the Employer's normal payroll
procedures and policies, and which Base Salary shall be increased to $290,000
in the second year of the Term and to $340,000 in the third year of the Term.
(b) Participation in Benefit Plans. During the Term, Executive shall
be entitled to receive such medical and hospitalization insurance and other
fringe benefits as are being provided to the Employer's other executive-level
employees from time to time to the extent that Executive's age, position or
other factors qualify him for such fringe benefits, which benefits shall in
any case be no less favorable than the benefits currently received by
Executive, including the right to use a 1996 or newer model Jeep Cherokee
Limited (or substantial equivalent) and an annual allowance of $2,500 for the
operation of such automobile. Without limiting the foregoing, during the
Term, Executive shall be eligible to participate in stock option grants on a
level commensurate with other senior executive executives of the Company.
(c) Expenses. The Employer shall pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the presentment of
appropriate vouchers in accordance with the Employer's normal policies for
expense verification.
(d) Life Insurance. To induce Executive to enter into this Agreement,
Employer agrees to provide Executive with life insurance coverage during the
Term and the Noncompetition Period (as defined below) equal to the remaining
unpaid noncompetition payment contemplated by Section 11(c) hereof.
5. Termination. The rights and obligations of the parties under this
Agreement are subject to termination prior to the expiration of the Term as
follows:
(a) Termination for Cause. Employer and Executive agree that no
further salary or other benefits shall be payable to the Executive by the
Employer, and the employment relationship between the parties shall terminate
immediately, upon written notice by the Company to Executive following the
occurrence of any one or more of the following events of termination
(hereinafter referred to as "Cause"):
(i) Executive willfully and materially fails to exercise good faith
efforts to perform his reasonably assigned duties as an executive officer of
the Employer, and such breach is not cured within 15 days after Executive has
received written notice of such breach from Employer.
(ii) Executive is convicted of (A) a felony, (B) gross misdemeanor,
or (C) an offense involving acts of dishonesty or moral turpitude that result
in damage to Employer.
The determination of "Cause" shall be made in good faith by the Board of
Directors of Employer after notice to Executive and after Executive has had an
opportunity to address the Board regarding the events giving rise thereto.
(b) Death or Disability. If Executive should die or be Disabled (as
defined below) during the Term, the parties agree that the employment
relationship between the parties shall terminate automatically. For purposes
of this Agreement, "Disabled" means the inability of Executive (as determined
in good faith by the Board of Directors of the Employer), resulting from
disease, injury or mental condition, to perform the essential functions of his
position, with or without reasonable accommodation by the Employer, required
under the terms of this Agreement for a period in excess of 90 consecutive
days or more than 180 calendar days in any consecutive twelve-month period.
If the Executive cannot perform his duties because he is Disabled, the
Executive shall receive from Employer disability payments equal to the Base
Salary (including all annual increases) during the remainder of the original
Term. If the Executive dies during the Term, Employer shall pay to
Executive's estate a death benefit equal to the remaining Base Salary
(including all annual increases) that would have been paid to Executive during
the remainder of the original Term.
(c) Voluntary Termination. Executive shall have the right to
voluntarily terminate his employment relationship with Employer without Good
Reason (as defined in Section 4(d) below) at any time upon ninety (90) days
written notice to Employer. Upon a termination by Executive without Good
Reason, Executive shall continue to render his services and shall be paid his
Base Salary, and be entitled to any other employment benefit(s) received by
Executive in the ordinary course pursuant to the Employer's standard employee
benefit plans, up to the date of termination pursuant to the terms of this
Agreement. On and after such date, no salary or other benefits shall be
payable to the Executive by the Employer and the employment relationship
between the parties shall cease.
(d) Termination by Employer without Cause; Termination by Executive for
Good Reason.
(i) Employer shall have the right to terminate the employment
relationship between Employer and Executive without Cause upon ninety (90)
days written notice to Executive.
(ii) Executive shall have the right to terminate the employment
relationship between Employer and Executive upon ninety (90) days written
notice to Employer due to (A) a substantial diminution in the nature or scope
of his duties from those contemplated by Section 1, (B) a reduction in
Executive's Base Salary or benefits without Executive's consent, (C) a
material breach by Employer of any provision of this Agreement which has not
been cured within 10 days after Employer has received written notice of such
breach from Executive, or (D) a requirement by Employer without Executive's
consent that Executive perform his services outside the Denver, Colorado
metropolitan area for more than twenty-five days in any 12-month period (each
such event referred to as "Good Reason").
(iii) Upon any termination of the employment relationship between
Employer and Executive (A) by Employer without Cause, or (B) by Executive for
Good Reason, (I) Employer shall continue to pay to Executive, as a severance
allowance, Executive's Base Salary (including all annual increases) until the
end of the original Term, and (II) Executive shall continue to receive his
existing employee benefits during the remainder of the original Term at
Employer's expense, if Employer's benefit plans permit Executive's continued
enrollment subsequent to termination of Executive's employment with Employer
or, in the event such plans do not permit Executive's continued enrollment,
Employer shall provide equivalent benefits to Executive. Any severance
allowance payable under this provision shall be paid on a monthly basis with
appropriate withholdings.
6. Vacation. The Executive shall be entitled to four weeks of paid
vacation during the first year of the Term, increasing to five weeks during
the second year of the Term and six weeks during the third year of the Term.
7. Assistance in Litigation. During the Term and at any time
thereafter, the Executive shall, upon reasonable notice, furnish such
information and proper assistance to the Employer as it may reasonably require
in connection with any litigation in which it is, or may become, a party.
8. Confidential Information. Except as permitted or directed by
Employer's Board of Directors, during the Term or at any time thereafter,
Executive shall not divulge, furnish, make accessible to anyone, lay claim to,
attempt to lay claim to or use, or attempt to use, in any way (other than in
the ordinary course of the business of the Employer) any confidential or
secret knowledge or information of the Employer which Executive has acquired
or become acquainted with or will acquire or become acquainted with during the
period of his employment by the Employer, whether developed by himself or by
others, concerning any trade secrets, confidential or secret designs,
processes, formulae, plans, devices or material (whether or not patented or
patentable) directly or indirectly useful in any aspect of the business of the
Employer, any customer or supplier lists of the Employer, any confidential or
secret development or research work of the Employer, or any other confidential
information or secret aspects of the business of the Employer (collectively,
"Confidential Information"). Executive acknowledges that the Confidential
Information constitutes a unique and valuable asset of the Employer and
represents a substantial investment of time and expense by the Employer, and
that any disclosure or other use of the Confidential Information other than
for the sole benefit of the Employer would be wrongful and would cause
irreparable harm to the Employer. The foregoing obligations of
confidentiality shall not apply to any knowledge or information in the public
domain, other than as a direct or indirect result of the breach of this
Agreement by Executive.
9. Ventures. If, during the term of this Agreement, Executive is
engaged in or associated with the planning or implementing of any project,
program or venture involving the Employer and a third party or parties, all
rights in such project, program or venture shall belong to the Employer.
Except as formally approved by the Employer's Board of Directors, Executive
shall not be entitled to any interest in such project, program or venture or
to any commission, finder's fee or other compensation in connection therewith
other than the salary to be paid to Executive as provided in this Agreement.
10. Intellectual Property.
(a) Disclosure and Assignment. Executive shall promptly disclose in
writing to the Employer complete information concerning each and every
invention, discovery, improvement, device, design, apparatus, practice,
process, method or product, whether patentable or not, made, developed,
perfected, devised, conceived or first reduced to practice by Executive,
either solely or in collaboration with others, during the term of this
Agreement, or within six months thereafter, whether or not during regular
working hours, relating either directly or indirectly to the business,
products, practices or techniques of the Employer (hereinafter referred to as
"Developments"). Executive hereby acknowledges that any and all of such
Developments, and any Developments made, developed, perfected, devised,
conceived or first reduced to practice by Executive, either solely or in
collaboration with others during his employment with the Company prior to the
Term, are the property of the Employer and, in consideration of this Agreement
and for no compensation other than that provided by this Agreement, hereby
assigns and agrees to assign to the Employer any and all of Executive's right,
title and interest in and to any and all of such Developments.
(b) Future Developments. As to any future Developments made by
Executive which relate to the business, products or practices of the Employer
and which are first conceived or reduced to practice during the term of this
Agreement, or within six months thereafter, but which are claimed for any
reason to belong to an entity or person other than the Employer, Executive
shall promptly disclose the same in writing to the Employer and shall not
disclose the same to others if the Employer, within 20 days thereafter, shall
claim ownership of such Developments under the terms of this Agreement. If
the Employer makes such claim, Executive agrees that, insofar as the rights
(if any) of Executive are involved, it shall be settled by arbitration in
accordance with the rules then obtaining of the American Arbitration
Association. The locale of the arbitration shall be Denver, Colorado (or
other locale convenient to the Employer's principal executive offices). If
the Employer makes no such claim, Executive hereby acknowledges that the
Employer has made no promise to receive and hold in confidence any such
information disclosed by Executive.
(c) Assistance of Executive. Upon request and without further
compensation therefor, but at no expense to Executive, and whether during the
term of this Agreement or thereafter, Executive shall do all lawful acts,
including, but not limited to, the execution of papers and lawful oaths and
the giving of testimony, that in the opinion of the Employer, its successors
and assigns, may be necessary or desirable in obtaining, sustaining,
reissuing, extending and enforcing United States and foreign Letters Patent,
including, but not limited to, design patents, on any and all of such
Developments, and for perfecting, affirming and recording the Employer's
complete ownership and title thereto, and to cooperate otherwise in all
proceedings and matters relating thereto.
(d) Records. Executive shall keep complete, accurate and authentic
accounts, notes, data and records of all Developments in the manner and form
requested by the Employer. Such accounts, notes, data and records shall be
the property of the Employer, and, upon its request, Executive shall promptly
surrender same to it or, if not previously surrendered upon its request or
otherwise, Executive shall surrender the same, and all copies thereof, to the
Employer upon the conclusion of his employment.
11. Noncompetition.
(a) Agreement not to Compete. Executive understands and agrees that,
in addition to Executive's exposure to Employer's Confidential Information,
Executive may, in his capacity as an Executive, at times meet with companies
or persons who do business with Employer, and that as a consequence of using
or associating himself with Employer's name, goodwill, and professional
reputation, Executive's employment shall place him in a position where
Executive can develop personal and professional relationships of value to
Employer. Executive understands and agrees that this goodwill and reputation,
as well as Executive's knowledge of Confidential Information, could be used
unfairly in competition against Employer. Accordingly, in consideration for
the noncompetition payment set forth in Section 11(c) below, and as an
inducement to Pacific USA Holdings Corp. to consummate the transactions
contemplated by the Purchase Agreement, Executive agrees that, during the
Noncompetition Period (as defined in Section 11(b) below), Executive shall
not:
(i) Directly or indirectly, individually or collectively in
conjunction with others, engage in activities that compete with Employer's
business as it is described in Employer's periodic reports filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934 or as otherwise conducted at the expiration or earlier termination of
Executive's employment (the "Business"). Without limiting the generality of
the foregoing, Executive specifically agrees not to solicit, serve, contract
with or otherwise engage any existing or prospective customer, client, or
account who then has a relationship with Employer for current or prospective
business related in any manner to the Business. Executive and Employer agree
that this provision is reasonably enforced with reference to whatever
geographic area Employer is then doing or planning to do business, it being
agreed and understood between the parties that Employer conducts a nation-wide
business and any such restriction might reasonably include the entire United
States.
(ii) Cause or attempt to cause any existing or prospective customer,
client or account who then has a relationship with Employer for current or
prospective business to divert, terminate, limit or in any manner modify, or
fail to enter into any actual or potential business relationship with
Employer. Executive and Employer agree that this provision is reasonably
enforced with reference to any geographic area applicable to such
relationships with Employer.
(iii) Directly or indirectly solicit for employment, employ or
conspire or act in concert with others to solicit for employment or employ any
of Employer's employees or otherwise interfere with Employer's relationships
with any of its Executives. The term "employ" for purposes of this paragraph
means to enter into an arrangement for services as a full-time or part-time
Executive, independent contractor, agent or otherwise. Executive and Employer
agree that this provision is reasonably enforced as to any geographic area.
Executive further agrees that, during the Noncompetition Period, to
inform any new employer or other person or entity with whom Executive enters
into a business relationship, before accepting employment or entering into a
business relationship, the existence of this Agreement and give such employer,
person other entity a copy of this Section 11.
(b) Noncompetition Period. As used in this Section 11, "Noncompetition
Period" means the period of two years following the expiration of Executive's
employment for any reason other than the death of Executive.
(c) Noncompetition Payment. Employer agrees to pay Executive the sum
of $200,000 in consideration of Executive entering into the noncompetition
covenants set forth in this Section 11(a). Such amount shall be payable in
two equal installments in arrears (without interest), with the first such
installment due on the first anniversary of the date of commencement of the
Noncompetition Period and the second installment due on the second anniversary
thereof. Upon execution of this Agreement, the payments specified in this
subsection 2(c) shall be deemed earned and payable according to the terms
hereof in all events.
12. General Provisions.
(a) Notices. All notices, requests and other communications from any
of the parties hereto to another shall be in writing and shall be personally
served or sent by registered or certified mail, return receipt requested, and
shall be deemed to have been given on the day when deposited in the United
States mail addressed to the other party as follows, provided that either
party may from time-to-time change the address to which notices to it are to
be sent by giving written notice to the other in accordance herewith. Notices
to Employer shall be given to Employer at its corporate headquarters which as
of the date of this Agreement is: Monaco Finance, Inc., 370 17th Street,
Suite 5060, Denver, Colorado 80202. Notices to Executive shall be addressed
to Executive at Executive's residence address as the same appears on
Employer's records.
(b) Entirety of Agreement. This Agreement constitutes the final
expression of the parties' agreement, and it is a complete and exclusive
statement of the terms of that agreement. There are no agreements or
understandings between Employer and Executive with respect to the subject
matter hereof except as expressly herein stated. This Agreement supersedes
and replaces any prior employment agreement between the parties whether oral
or written relating generally to the same subject matter, any of which are
hereby terminated.
(c) Withholding Taxes; Offset. The Employer may withhold from any
compensation or other benefits payable under this Agreement all federal,
state, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling. The Employer may also offset any sums that
are owed by Executive to Employer against any of the amounts payable by
Employer to Executive under this Agreement.
(d) Amendments. This Agreement may be modified or rescinded only by an
instrument in writing signed by Employer and Executive. No amendment,
alteration or modification of the express terms of this Agreement shall be
binding unless set forth in an instrument in writing signed by the Employer
and Executive.
(e) Waiver. Waiver by either Employer or Executive of a breach of any
provision, term or condition hereof shall not be deemed or construed as a
further or continuing waiver thereof or a waiver of any breach of any other
provision, term or condition of this Agreement.
(f) Assignment. In the event of a merger, sale, transfer,
consolidation, or reorganization involving Employer, this Agreement shall
continue in full force and effect. The rights and obligations of Employer
hereunder may be transferred or assigned to any successor, representative or
assign of Employer. Employer's obligations under this Agreement shall not be
affected or diminished by any such transfer or assignment or by any change in
the equity ownership of employer. No assignment of this Agreement shall be
made by Executive, and any purported assignment by Executive shall be null and
void. All obligations of Employer and Executive arising out of this Agreement
shall be binding upon their heirs, spouses, legal representatives, successors
and permitted assigns.
(g) Injunctive Relief. Executive agrees that it would be difficult to
compensate the Employer fully for damages for any violation of the provisions
of this Agreement, including, without limitation the provisions of Sections 9,
10 and 11. Accordingly, Executive specifically agrees that the Employer shall
be entitled to temporary and permanent injunctive relief to enforce the
provisions of this Agreement and that such relief may be granted without the
necessity of proving actual damages. This provision with respect to
injunctive relief shall not, however, diminish the right of the Employer to
claim and recover damages in addition to injunctive relief.
(h) Agreement to Arbitrate; Expenses. Except with respect to the
provisions of Sections 8, 9, 10 and 11 of this Agreement, any controversy or
claim arising out of or relating to this Agreement or the formation, breach or
interpretation hereof, will be settled by arbitration before one arbitrator in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association in Denver, Colorado. Judgment upon the award rendered by the
arbitration may be entered and enforced in the court with jurisdiction over
the appropriate party. All controversies not subject to arbitration or
contesting any arbitration will be litigated in the State of Colorado, Denver
County District Court or a federal court in the State of Colorado (and each of
the parties hereto hereby consent to the exclusive jurisdiction of such courts
and waive any objections thereto). The expenses (including reasonable
attorneys' fees) incurred by the prevailing party in any arbitration or
litigation related to this Agreement shall be borne by the non-prevailing
party in such arbitration or litigation.
(i) Severability. To the extent that any provision of this Agreement
shall be determined to be invalid or unenforceable, the invalid or
unenforceable portion of such provision shall be deleted from this Agreement,
and the validity and enforceability of the remainder of such provision and of
this Agreement shall be unaffected. In furtherance of and not in limitation of
the foregoing, it is expressly agreed that should the duration of or
geographical extent of, or business activities covered by, the noncompetition
agreements contained in Section 11 be determined to be in excess of that which
is valid or enforceable under applicable law, then such provision shall be
construed to cover only that duration, extent, or those activities which may
validly or enforceably be covered. Executive acknowledges the uncertainty of
the law in this respect and expressly stipulates that this Agreement shall be
construed in a manner which renders its provisions valid and enforceable to
the maximum extent (not exceeding its express terms) possible under applicable
law.
(j) Captions. The captions contained in this Agreement are for
convenience of reference only and do not affect the meaning of any terms or
provisions.
(k) Prior Agreement. As of the Effective Date, the Executive
Employment Agreement dated July 9, 1990 between Employer and Executive (the
"Prior Agreement") shall be terminated and shall be of no further force or
effect (except with respect to compensation and benefits earned by Executive
prior to the Effective Date). Notwithstanding any other provision of this
Agreement, in the event that the Purchase Agreement is terminated prior to the
Effective Date, this Agreement shall automatically terminate and the Prior
Agreement shall remain in effect.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the date first above written.
<PAGE>
MONACO FINANCE, INC.
By /s/ Morris Ginsburg
Name: Morris Ginsburg
Title: President
/s/ Irwin L. Sandler
Irwin L. Sandler
EXHIBIT 10.49
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made this 29th day of October, 1996,
between MONACO FINANCE, INC., a Colorado corporation ("Borrower"), and PACIFIC
USA HOLDINGS CORP., a Texas corporation ("Lender").
RECITAL
Borrower has requested that Lender make a loan to or for the benefit of
Borrower in the amount of Three Million Dollars ($3,000,000.00), and Lender is
willing to do so on the following terms and conditions.
NOW, THEREFORE, in consideration of the foregoing and of the terms and
conditions contained in this Agreement, Borrower and Lender agree as follows:
1 LOAN.
1.1 Loan. Subject to all of the terms and conditions contained in this
Agreement, Lender agrees to advance to Borrower, on or before November 1,
1996, the principal sum of Three Million and No/100ths Dollars ($3,000,000.00)
("Loan"). The Loan shall be evidenced by and repayable in accordance with the
terms of Borrower's promissory note ("Note"), the form of which is attached as
Exhibit A. The Loan will initially be non-recourse as against Borrower,
provided that, with the consent of LaSalle National Bank, Borrower will be
liable on a full recourse basis for all amounts of mandatory prepayments
described in the Pledge Agreement (hereinafter defined) to the extent that
Borrower has control over the amounts which are the source of such
prepayments. In the event that a trustee or a custodian has control over the
amounts which are the source of the prepayments, Borrower shall direct such
trustee or custodian to apply the amounts to such prepayments.
2 CONDITIONS TO THE LOAN.
2.1 Documents. The making of the Loan is conditioned upon the execution
and/or delivery to Lender of the following agreements, instruments and
documents by the parties thereto: (a) this Agreement; (b) the Note; (c) the
Pledge and Security Agreement in the form attached as Exhibit B ("Pledge
Agreement"); (d) the Notice of No Oral Agreement; (e) original stock
certificates representing one hundred percent (100%) of the issued and
outstanding shares of stock of MF Receivables Corp. I, a Delaware corporation
("MF"); (f) stock powers executed in blank relating to one hundred percent
(100%) of the issued and outstanding shares of stock of MF; and (g) an
agreement among Monaco, the Lender, Norwest Bank Minnesota, National
Association (the "Trustee") setting forth the mechanism by which Monaco and
the Lender will jointly instruct the Trustee to make certain cash
distributions to the Lender (the "Norwest Agreement"), and which Norwest
Agreement shall evidence that MF has executed and delivered the items
contemplated thereby to be executed and delivered by MF.
2.2 Representations and Warranties. All representations and warranties
contained in this Agreement and in the Pledge Agreement shall be true in all
material respects on and as of the date of the making of the Loan as if such
representations and warranties had been made on and as of such date, and no
"Default" (as defined in the Pledge Agreement) shall have occurred and be
continuing.
2.3 Opinion of Counsel. The making of the Loan is conditioned upon the
receipt by Lender of legal opinions of Brownstein Hyatt Farber & Strickland,
P.C. or other counsel reasonably acceptable to Lender as to the capitalization
of MF and as to the enforceability of this Agreement, Note, the Notice of No
Oral Agreement, the Pledge Agreement and the Norwest Agreement (collectively
the "Loan Documents"), the good standing and authority of Borrower and MF to
enter into the Loan Documents to which each is a party and the absence of any
conflict between the Loan Documents and Monaco's charter, bylaws, governing
law and material agreements to which Monaco or MF is a party, including
without limitation, the Loan and Security Agreement, dated as of January 16,
1996 by and between Monaco and LaSalle National Bank and the governing
instruments and agreements relating to the issuance of the receivables-backed
notes of MF. The opinion as to the enforceability of the Norwest Agreement
shall state that the Norwest Agreement is enforceable without the consent of
the "Noteholders" (as such term is defined in that certain Amended and
Restated Indenture among Borrower, MF, and Norwest Bank Minnesota, National
Association). Said legal opinions shall be in form and substance reasonably
satisfactory to Lender.
2.4 Acknowledgment of LaSalle National Bank. The making of the Loan is
conditioned upon the receipt by Lender of the written acknowledgment of
LaSalle National Bank to the effect that the Loan and the granting in favor of
the Lender of the liens and security interests in the "Collateral" (as defined
in the Pledge Agreement) and the proceeds thereof, is a "Permitted
Securitization Transaction" (as such term is defined in that certain Loan and
Security Agreement dated as of January 16, 1996 between Borrower and LaSalle
National Bank). Said acknowledgment shall be in form and substance reasonably
satisfactory to the Lender.
3 SECURITY.
3.1 Security. The Loan shall be secured by the "Collateral" (as
defined in the Pledge Agreement.
4 REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants that as of the date of the execution of
this Agreement:
4.1 Existence. Borrower is a corporation duly organized and in good
standing under the laws of the State of Colorado and is duly qualified to do
business and is in good standing in all states where such qualification is
necessary, except for those jurisdictions in which the failure so to qualify
would not, in the aggregate, have a material adverse effect on Borrower's
financial condition, results of operations or business.
4.2 Authority. The execution and delivery by Borrower of this
Agreement, the Note, the Pledge Agreement and the Notice of No Oral Agreement:
(a) are within Borrower's corporate powers; (b) are duly authorized by
Borrower's board of directors and, if necessary, Borrower's stockholders; (c)
are not in contravention of the terms of Borrower's articles or certificate of
incorporation or bylaws; (d) are not in contravention of any law or laws, or
of the terms of any material indenture, agreement or undertaking to which
Borrower is a party or by which Borrower or any of Borrower's property is
bound, including without limitation, the Loan and Security Agreement, dated as
of January 16, 1996 by and between Borrower and LaSalle National Bank and the
governing instruments and agreements relating to the issuance of the
receivables-backed notes of MF Receivables Corp. I.; (e) do not require any
governmental consent, registration or approval; (f) do not contravene any
contractual or governmental restriction binding upon Borrower; and (g) will
not, except as contemplated or permitted by this Agreement, result in the
imposition of any lien, charge, security interest or encumbrance upon any
property of Borrower under any existing indenture, mortgage, deed of trust,
loan or credit agreement or other material agreement or instrument to which
Borrower is a party or by which Borrower or any of Borrower's property may be
bound or affected.
4.3 Binding Effect. This Agreement, the Note, the Pledge Agreement and
Notice of No Oral Agreement set forth the legal, valid and binding obligations
of Borrower and are enforceable against Borrower in accordance with their
respective terms. This Agreement and the transactions contemplated hereby
constitute a "Permitted Securitization Transaction" within the meaning of the
Loan and Security Agreement dated as of January 16, 1996 between Borrower and
LaSalle National Bank.
5 COVENANT.
5.1 Consent of LaSalle National Bank. Borrower shall use its
reasonable best efforts to obtain the consent of LaSalle National Bank to
making the Note and the Pledge Agreement fully recourse as against Borrower.
In the event such consent is obtained, Borrower and Lender shall delete the
penultimate paragraph of the Note and Section 24 of the Pledge Agreement,
which deletions shall be evidenced in a manner reasonably satisfactory to
Lender.
5.2 No Issuance of Other Securities. Borrower shall not authorize or
issue, and shall prevent MF from authorizing and issuing, any capital stock
other than the capital stock which is collateral for the Note pursuant to the
terms of the Pledge Agreement or any option, warrant or other right to acquire
such capital stock or any debt or equity instrument convertible into such
capital stock.
6 DEFAULT AND RIGHTS AND REMEDIES.
6.1 Default and Rights and Remedies. Upon the occurrence of a Default,
Lender shall have the rights and remedies set forth in the Note and the Pledge
Agreement, and the rights and remedies available to Lender under applicable
law.
7 MISCELLANEOUS.
7.1 Reliance by Lender. All covenants, agreements, representations and
warranties made by Borrower shall, notwithstanding any investigation by
Lender, be deemed to be material to and to have been relied upon by Lender.
7.2 Parties. Whenever in this Agreement there is reference made to any
of the parties, such reference shall be deemed to include, wherever
applicable, a reference to the respective successors and assigns of Borrower
and Lender.
7.3 Applicable Law; Severability. This Agreement shall be construed in
all respects in accordance with, and governed by, the laws and decisions of
the State of Texas. Borrower hereby consents to jurisdiction and venue in any
controversy involving this Agreement in federal courts sitting in Dallas
County, Texas. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Agreement.
7.4 Maximum Interest.
(a) It is expressly stipulated and agreed to be the intent of Borrower
and Lender at all times to comply with the applicable law governing the
maximum rate of interest payable on or in connection with all indebtedness and
transactions hereunder (or applicable United States federal law to the extent
that it permits Lender to contract for, charge, take, reserve or receive a
greater amount of interest). If the applicable law is ever judicially
interpreted so as to render usurious any amount of money or other
consideration called for hereunder, or contracted for, charged, taken,
reserved or received with respect to any loan or advance hereunder, or if
acceleration of the maturity of the Loan or the indebtedness hereunder or if
any prepayment by Borrower results in Borrower's having paid any interest in
excess of that permitted by law, then it is Borrower's and Lender's express
intent that all excess amounts theretofore collected by Lender be credited on
the principal balance of the Loan (or if the Loan has been or would thereby be
paid in full, refunded to Borrower), and the provisions of this Agreement
immediately be deemed reformed and the amounts thereafter collectible
hereunder reduced, without the necessity of the execution of any new document,
so as to comply with the applicable law, but so as to permit the recovery of
the fullest amount otherwise called for hereunder. The right to accelerate
maturity of the Loan does not include the right to accelerate any interest
which has not otherwise accrued on the date of such acceleration, and Lender
does not intend to collect any unearned interest in the event of acceleration.
(b) All sums paid or agreed to be paid to Lender for the use,
forbearance or detention of the indebtedness evidenced by this Agreement
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such indebtedness until
payment in full so that the rate or amount of interest on account of such
indebtedness does not exceed the applicable usury ceiling. To the extent that
Texas law determines the highest lawful rate for the use, forbearance or
detention of said indebtedness, such highest lawful rate shall be determined
by utilizing the indicated (weekly) rate ceiling from time to time in effect
pursuant to Tex. Rev. Civ. Stat. art. 5069-1.04, as amended.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
MONACO FINANCE, INC.,
a Colorado corporation
By /s/ Irwin L. Sandler
Name: Irwin L. Sandler
Title:Executive Vice President
Date: October 29, 1996
PACIFIC USA HOLDINGS CORP.,
a Texas corporation
By /s/ Bill C. Bradley
Name: Bill C. Bradley
Title:President and Chief Executive Officer
Date: October 29, 1996
<PAGE>
Exhibit A to
Loan Agreement
INSTALLMENT NOTE
$3,000,000.00 NOVEMBER 1, 1996
DALLAS, TEXAS
FOR VALUE RECEIVED, the undersigned, MONACO FINANCE, INC., a Colorado
corporation ("BORROWER") promises to pay to PACIFIC USA HOLDINGS CORP., a
Texas corporation ("LENDER"), at 5999 Summerside Drive, Suite 112, Dallas,
Texas 75252, or at any other place designated at any time by the holder
hereof, in lawful money of the United States of America, the principal amount
of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) in installments as
described herein. Borrower further promises to pay interest (computed on the
basis of a year consisting of twelve equal months) on the principal balance of
this Non-Negotiable Installment Note (THIS "NOTE") outstanding from time to
time at the rate of 9.0% per annum.
The principal of this Note shall be paid in twelve equal consecutive
monthly installments each in the amount of One Hundred Thousand and No/100ths
Dollars ($100,000.00) payable on the 1st day of each month beginning on the
1st day of November, 1997, and continuing on the same day of each month
thereafter through and including the 1st day of September, 1998. The
remaining outstanding principal of this Note and accrued and unpaid interest
hereon shall be due and payable in full on October 1st, 1998.
Interest on this Note shall be payable monthly in arrears on the 1st day
of each month beginning with the 1st day of November, 1996.
This Note may be prepaid in whole or in part at any time without premium
or penalty. This Note is also subject to certain mandatory prepayment
requirements and other terms, conditions and restrictions, which are set forth
in that certain Pledge and Security Agreement of even date with this Note
between Borrower and LENDER (THE "PLEDGE AGREEMENT"). All prepayments,
whether permissive or mandatory, shall be applied to reduce future
installments due under this Note in the inverse order of their maturity.
The maturity of this Note is subject to acceleration upon the terms
provided in said Pledge Agreement.
If any installment under this Note is not paid within ten (10) days
after the same becomes due and payable, the same shall bear interest at a rate
which is three percent (3.0%) per annum in excess of the otherwise applicable
rate of interest.
In the event of default hereunder, the undersigned agrees to pay all
costs and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, notice of acceleration, notice of intent to
accelerate, presentment, notice of nonpayment, protest, notice of protest and
notice of dishonor.
This Note is fully transferable by Lender, without the consent of or
notice to, Borrower. Notwithstanding the foregoing, any transfer of this Note
is subject to Section 25 of the Pledge Agreement.
It is expressly stipulated and agreed to be the intent of Borrower and
Lender at all times to comply with the applicable law governing the maximum
rate of interest payable on or in connection with all indebtedness and
transactions hereunder (or applicable United States federal law to the extent
that it permits Lender to contract for, charge, take, reserve or receive a
greater amount of interest). If the applicable law is ever judicially
interpreted so as to render usurious any amount of money or other
consideration called for hereunder, or contracted for, charged, taken,
reserved or received with respect to any loan or advance hereunder, or if
acceleration of the maturity of this Note or the indebtedness hereunder or if
any prepayment by Borrower results in Borrower's having paid any interest in
excess of that permitted by law, then it is Borrower's and Lender's express
intent that all excess amounts theretofore collected by Lender be credited on
the principal balance of this Note (or if this Note has been or would thereby
be paid in full, refunded to Borrower), and the provisions of this Note
immediately be deemed reformed and the amounts thereafter collectible
hereunder reduced, without the necessity of the execution of any new document,
so as to comply with the applicable law, but so as to permit the recovery of
the fullest amount otherwise called for hereunder. The right to accelerate
maturity of this Note does not include the right to accelerate any interest
which has not otherwise accrued on the date of such acceleration, and Lender
does not intend to collect any unearned interest in the event of acceleration.
All sums paid or agreed to be paid to Lender for the use, forbearance or
detention of the indebtedness evidenced by this Note shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that
the rate or amount of interest on account of such indebtedness does not exceed
the applicable usury ceiling. To the extent that Texas law determines the
highest lawful rate for the use, forbearance or detention of said
indebtedness, such highest lawful rate shall be determined by utilizing the
indicated (weekly) rate ceiling from time to time in effect pursuant to Tex.
Rev. Civ. Stat. art. 5069-1.04, as amended.
Notwithstanding any other provision of this Note, the holder of this
Note shall have no recourse against Borrower for the indebtedness evidenced by
this Note, except as expressly provided in the Pledge Agreement.
<PAGE>
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF TEXAS.
MONACO FINANCE, INC.,
A COLORADO CORPORATION
BY
NAME:
TITLE:
<PAGE>
Exhibit B to
Loan Agreement
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement (THIS "AGREEMENT") is made as of
October 29, 1996 by MONACO FINANCE, INC., a Colorado corporation ("MONACO" OR
"PLEDGOR"), located at 370 Seventeenth Street, Suite 5060, Denver, Colorado
80202, in favor of PACIFIC USA HOLDINGS CORP., a Texas corporation ("LENDER"),
located at 17103 Preston Road, Suite 100, Dallas, Texas 75252.
RECITALS:
A. Lender has agreed, subject to certain conditions of this Agreement, to loan
to Monaco the sum of Three Million Dollars ($3,000,000) (THE "LOAN"), which
loan shall be evidenced by a Loan Agreement ("LOAN AGREEMENT") and an
Installment Note, both of even date with this Agreement ("NOTE").
B. A condition precedent to Lender's willingness to loan said amount to
Monaco is that Pledgor execute and deliver this Agreement in favor of Lender.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained in this Agreement, Pledgor and Lender agree as follows:
1. PLEDGE OF MF STOCK. To secure the repayment of the Note and all of
Monaco's other liabilities and obligations described in the Loan Agreement
and/or this Agreement (THE "SECURED OBLIGATIONS"), Monaco hereby assigns to
Lender for collateral security purposes, and deposits, pledges and grants to
Lender a security interest in, the following property ("COLLATERAL"):
One hundred percent (100%) of the authorized, issued and outstanding shares of
stock of MF Receivables Corp. I ("MF"), consisting of 1,000 shares of common
stock $.01 par value per share;
and all dividends and distributions on or other rights in connection with such
Collateral, and all proceeds of all of the foregoing. Lender and Pledgor
shall, pursuant to the "Norwest Agreement" (as such term is defined in the
Loan Agreement) jointly instruct Norwest Bank Minnesota, N.A. that all such
dividends and distributions shall be paid directly to Lender as secured party.
So long as no Default (as defined below) is continuing, however, all such sums
in excess of amounts then due and owing to Lender with respect to the Loan,
shall be remitted to Pledgor. Said Collateral and any substitutions thereof or
additions thereto, together with any interest, stock rights, rights to
subscribe, rights to convert, dividends, stock dividends, dividends paid by
stock liquidating dividends, new securities and other property to which Monaco
may become entitled by reason of ownership of the Collateral during the
existence of this Agreement, is to be subject to the interests of and held by
Lender.
2. GRANT OF PROXY. Pledgor hereby grants to Lender a proxy to vote all
shares of MF stock (i) at any time with respect to any dividend or
distribution on such stock permitted by the terms of MF's outstanding
indebtedness, or (ii) during the continuation of a Default, as to any other
matter. Such proxy shall irrevocable so long as the Loan is outstanding and
shall be deemed to be coupled with an interest.
3. TITLE TO COLLATERAL AND TITLE TO MF ASSETS. Pledgor has title to and
will at all times keep the Collateral free of all security interests, liens
and encumbrances, except the security interest created hereby and any
restrictive legend appearing on any instrument constituting Collateral, and
has full power and authority to execute this Agreement, to perform Pledgor's
obligations hereunder and to subject the Collateral to the security interest
created hereby. No financing statement covering all or any part of the
Collateral is on file in any public office except for a blanket financing
statement in favor of LaSalle National Bank. All costs of keeping the
Collateral free of any liens, encumbrances and security interests prohibited
by this Agreement and of removing the same, if they should arise, shall be
borne and paid by Pledgor. There is no encumbrance or security interest with
respect to all or any part of the Collateral which either (a) is superior to
Lender's security interest hereunder, or (b) has not been disclosed to Lender
by Pledgor. Pledgor also represents and warrants that MF has title to and will
at all times keep all of its assets free of all security interests, liens and
encumbrances, except the security interests, liens and encumbrances identified
on Exhibit B. Pledgor further represents and warrants that no financing
statement covering all or any part of the assets of MF is on file in any
public office except such financing statements as reflect the security
interests, liens and encumbrances disclosed on Exhibit B.
4. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS. Pledgor
represents and warrants to Lender that as of the date of this Agreement: (a)
the 1,000 shares of common stock of MF, $.01 par value per share, pledged
pursuant to this Agreement comprise 100% of the authorized, issued and
outstanding stock of MF; (b) there are no other options, warrants or other
rights to acquire any stock of MF, nor are there any debt or equity securities
which are convertible into stock of MF; (c) MF is a special purpose entity
which is "bankruptcy remote" as that term is generally used in the context of
issuing asset backed securities; (d) all of the assets of MF consist of cash,
retail installment contracts and repossessed vehicles and certain accounts and
surety bonds for the benefit of the holders of MF's asset-backed notes; and
(e) all of the liabilities of MF are evidenced by promissory notes, all of
which are listed on Exhibit A. Pledgor covenants with Lender that the
representations and warranties set forth in clauses (a), (b), (c) and (d)
above shall remain true and correct at all times hereafter as long as any
Secured Obligations shall exist.
5. REPORTING OF ASSETS AND LIABILITIES OF MF, AUDITS BY LENDER AND
NOTICES OF CERTAIN SALES. Pledgor shall provide Lender monthly financial
statements for Monaco and MF and Monthly Servicer Reports no later than
fifteen (15) days after end of the month which is the subject of the financial
statements and the Monthly Servicer Reports, and with written updates as to
the assets and liabilities of MF. The documents required to be provided under
this Section 5 shall be accompanied by a certification as to the existence
of any circumstance giving rise to a mandatory prepayment under Section 19, 20
or 21. Lender shall also have the right, from time to time, to conduct audits
of the retail installment contracts of MF, which audit may include verbal or
written confirmation requests directed to the obligors of such contracts.
Pledgor shall also provide Lender with prior written notice of any sale by MF,
whether in a single transaction or a series of related transactions, of more
than ten percent (10.0%) of its retail installment contracts (determined on
the basis of the outstanding balances of such contracts) or the entry by MF
into any other transaction in which MF sells all of the beneficial ownership
of more than ten percent (10.0%) of MF's retail installment contracts
(determined on the basis of the outstanding balances of such contracts).
6. ENDORSEMENT. Pledgor will duly endorse, in blank, each and every
instrument constituting Collateral by signing on said instrument or by signing
a separate assignment or other documents of transfer, if required by Lender,
and will at any time or times hereafter perform such other acts or execute
such documents as Lender may reasonably request to establish, maintain,
perfect and enforce Lender's security interest in the Collateral and rights
under this Agreement, including the preparation, execution and filing of
financing and continuation statements under the Uniform Commercial Code.
7. TAXES. Pledgor will pay, when due, all taxes and other governmental
charges levied or assessed upon or against any Collateral. Upon the occurrence
of a Default (hereinafter defined) hereunder, Lender at its option may pay and
discharge any taxes, governmental charges, liens, encumbrances or security
interests in the Collateral The sums so advanced or paid by Lender shall be
payable by Pledgor on demand, and shall become part of the Secured
Obligations. If such sums are not paid within ten (10) days after demand, such
sums shall bear interest at the rate described in the Note as applicable to
installment payments not made within ten (10) days after the same become due
and payable.
8. INFORMATION. At any time, upon request by Lender, Pledgor will
deliver to Lender all notices, financial statements, reports or other
communications received by Pledgor as an owner or holder of the Collateral.
9. DISTRIBUTIONS. Pledgor will, upon receipt, deliver to Lender as
additional Collateral hereunder, all securities distributed on account of the
Collateral, such as stock dividends and securities resulting from stock
splits, reorganizations and recapitalizations.
10. DUTY OF CARE. Lender's duty of care with respect to Collateral in
its possession shall be deemed fulfilled if Lender exercises reasonable care
in physically safekeeping such Collateral or, in the case of Collateral in the
custody or possession of a bailee or other third party, if Lender has
exercised reasonable care in the selection of the bailee or other third party,
and Lender need not otherwise preserve, protect, insure or care for any
Collateral. Lender shall not be obligated to preserve any rights Pledgor may
have against prior parties or to realize on the Collateral at all or in any
particular manner or order. Lender shall have no liability or responsibility
to Pledgor for any action taken or omitted with respect to the Collateral on
the direction of Pledgor.
11. SETTLEMENTS. Lender, in the name of Pledgor or otherwise, upon the
occurrence and during the continuation of a Default, shall have the authority
but shall not be obligated to demand, collect, receive and receipt for,
compromise, compound, settle, prosecute and discontinue any suits or
proceedings in respect of any or all of the Collateral; take any action which
Lender may deem necessary or desirable in order to realize on the Collateral,
including without limitation, the power to perform any contract, to endorse in
the name of Pledgor any checks, drafts, notes or other documents which are
Collateral or are received in payment or on account of the Collateral, to
transfer any of the Collateral into its name or that of its nominee, and to
notify the obligor on or issuer of any Collateral of any amounts due or
distributable thereon; and to apply any proceeds of any Collateral against any
item or items of the Secured Obligations as Lender, in its sole discretion,
may determine, whether the same shall then be due or not due. However, Pledgor
and not Lender shall have full responsibility for complying with call dates,
conversion dates or any other deadlines for action by the owner of the
Collateral.
12. RECORDKEEPING. Pledgor will keep accurate books, records and
account with respect to the general business of Pledgor, and will make the
same available to Lender at its request for examination and inspection, and
will make and render to Lender such reports, accountings and statements as
Lender from time to time may request with respect to the Collateral, and will
permit any authorized representative of Lender to examine and inspect, during
normal business hours, any and all premises where the Collateral is or may be
kept or located.
13. DEFAULT. The occurrence of any of the following events shall
constitute a "Default" under this Agreement: (a) failure of Pledgor to pay
when due any amount payable under any of the Secured Obligations within five
(5) days after the same becomes due and payable; (b) failure of Pledgor to
perform its obligations under Section 5 of this Agreement or its obligations
under the Norwest Agreement, which failure is not cured within ten (10) days
after notice by Lender to Pledgor; (c) failure of Pledgor to perform in any
material respect any agreement of Pledgor contained herein or in any other
agreement between Pledgor and Lender (other than as set forth in the preceding
clauses (a) and (b)) which failure is not cured within twenty (20) days after
notice by Lender to Pledgor; (d) any statement, representation or warranty of
Pledgor made herein or at any time furnished to Lender in connection with this
Agreement is untrue in any material respect as of the date made and not cured
within twenty (20) days after notice by Lender to Pledgor; (e) entry of any
judgment against Pledgor or MF in an amount of $500,000, which judgment is not
discharged or stayed within thirty (30) days; (f) Pledgor or MF becomes
insolvent or is generally not paying its debts as such debts become due; (g)
appointment of or assignment to a custodian, as the term is defined in the
United States Bankruptcy Code, for any property of Pledgor or MF which, if
involuntary, is not dismissed within sixty (60) days, or loss, substantial
damage to, destruction, theft, levy, seizure or attachment of any portion of
the Collateral or any of the assets of MF; (h) commencement of any proceeding
or filing of a petition by or against Pledgor or MF under the provisions of
the United States Bankruptcy Code, for liquidation, reorganization or
adjustment of debts, under any insolvency law or other statute or law
providing for the modification or adjustment of the rights of creditors,
which, if involuntary, is not dismissed within sixty (60) days; or (i)
dissolution, consolidation, merger of Pledgor or MF, transfer of a substantial
part of the property of Pledgor, transfer of substantially all of the assets
of MF, or a cessation of the business of Pledgor or MF.
14. REMEDIES UPON DEFAULT. Whenever a Default shall exist, Lender may,
at its option and without demand or notice, declare all or any part of the
Secured Obligations immediately due and payable, and Lender may exercise, in
addition to the rights and remedies granted hereby, all rights and remedies of
a secured party under the Uniform Commercial Code or any other applicable law,
including the right to exercise all voting and other rights as a holder of the
Collateral and the right to offer and sell the Collateral privately to
purchasers who will agree to take the Collateral for investment and not with a
view to distribution and who will agree to the imposition of restrictive
legends on the certificates representing the Collateral and agree to be bound
by Section 25, and the right to arrange for a sale which would otherwise
qualify as exempt from registration under the Securities Act of 1933, and the
right to sell without notice if the Collateral is of a type customarily sold
on a recognized market. Once Lender has declared the Secured Obligations due
and payable, Lender may proceed with its collection remedies regardless of any
partial payment or other action taken by Pledgor or of any subsequent change
in the value of the Collateral. Any notice required to be given by Lender of a
sale, lease or other disposition or other intended action by Lender with
respect to any of the Collateral, which notice is deposited in the United
States mail, postage prepaid and duly addressed to Pledgor at the address
specified above, at least five (5) business days prior to such proposed
action, shall constitute fair and commercially reasonable notice to Pledgor of
any such action.
15. COSTS AND ATTORNEYS' FEES. Pledgor agrees, in the event of Default,
to pay all costs of Lender, including without limitation, reasonable
attorneys' fees, in the collection of any of the Secured Obligations and the
enforcement of any of Lender's rights. If any notification of intended
disposition of any of the Collateral is required by law, Lender shall give not
less than five (5) business days' notice to Pledgor at the address set forth
above.
16. WAIVER. No delay or failure by Lender in the exercise of any right
or remedy shall constitute a waiver thereof, and no single or partial exercise
by Lender of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of Pledgor and Lender and their respective heirs,
representatives, successors and assigns and shall take effect when signed by
Pledgor and delivered to Lender, and Pledgor waives notice of Lender's
acceptance hereof. This Agreement shall be governed by the laws of the State
of Texas, and unless the context otherwise requires, all terms used herein
which are defined in Articles 1 and 9 of the Uniform Commercial Code, as in
effect in such state, shall have the meanings therein stated. If any provision
or application of this Agreement is held unlawful or unenforceable in any
respect, such illegality or unenforceability shall not affect other provisions
or applications which can be given effect, and this Agreement shall be
construed as if the unlawful or unenforceable provision or application had
never been contained herein or prescribed hereby. All representations and
warranties contained in this Agreement shall survive the execution, delivery
and performance of this Agreement and the creation and payment of the Secured
Obligations.
18. FINAL AGREEMENT. This Agreement supersedes, replaces and terminates
all prior conversations, discussions, negotiations, understandings and oral
offers and agreements relating to any of the matters contemplated herein. This
Agreement cannot be amended except in a writing signed by the party against
whom that amendment is to be enforced.
19. MANDATORY PREPAYMENTS RELATED TO STOCK PURCHASES. Monaco agrees to
make prepayments with respect to the Note if at any time or times in the
future Lender or any affiliate of Lender purchases shares of any class of
Monaco's stock from Monaco. In such event, one hundred percent (100%) of the
net proceeds of sale received by Monaco shall be used to make a prepayment
with respect to the Note. The prepayments required by this section shall be
made in the form of a credit against the purchase price for such securities.
20. MANDATORY PARTIAL PREPAYMENTS RELATED TO ASSET LIQUIDATIONS.
Monaco also agrees to cause MF to declare dividends on the MF stock in an
amount sufficient to enable Monaco to make prepayments with respect to the
Note if at any time or times in the future MF sells in a single transaction or
a series of related transactions, more than ten percent (10.0%) of its retail
installment contracts (determined on the basis of the outstanding balances of
such contracts) or enters into any other transaction in which MF sells all of
the beneficial ownership of more than ten percent (10.0%) of MF's retail
installment contracts (determined on the basis of the outstanding balances of
such contracts). In such event the amount of the prepayment shall be equal to
the product of: (a) a fraction, the numerator of which shall be equal to the
difference between the outstanding balance of the retail installment contracts
owned by MF on the date the Loan is made, and the outstanding principal
balance of all retail installment contracts owned by MF after such sale, and
the denominator of which is equal to the outstanding balance of the retail
installment contracts owned by MF on the date the Loan is made, and (b) the
then outstanding principal balance of the Loan. The prepayments required by
this section shall be made within ten (10) days after the earlier of the date
Monaco first determines that such prepayment is due, or the date Lender makes
any demand for such prepayment.
21. MANDATORY PARTIAL PREPAYMENTS RELATED TO FAILURE TO MAINTAIN
REQUIRED RATIO. Monaco also agrees to cause MF to declare dividends on the
MF stock in an amount sufficient to enable Monaco to make prepayments with
respect to the Note if at any time or times in the future the outstanding
balance of all retail installment contracts then owned by MF, less the
outstanding principal balance of all debt issued by MF, is less than 3.5 times
the then outstanding principal balance of the Loan. In such event the amount
of the prepayment shall be such amount as is necessary to ensure that the
outstanding balance of all retail installment contracts then owned by MF, less
the outstanding principal balance of all debt issued by MF, is at least equal
to 3.5 times the outstanding principal balance of the Loan.
22. MANDATORY PREPAYMENT RELATED TO NON-COMPLIANCE WITH SECURITIES
PURCHASE AGREEMENT. Monaco also agrees to prepay the Note in full if Lender
elects to terminate that certain Securities Purchase Agreement pursuant to
Section 9(a)(vi) thereof, or if Monaco defaults on its obligation to pay
liquidated damages, pursuant to Section 9(b) thereof within thirty (30) days
after written demand therefor. The prepayment required by this section shall
be made within ten (10) days after the earlier of the date Monaco first
determines that such prepayment is due, or the date Lender makes any demand
for such prepayment. Also, in the event that the Securities Purchase Agreement
between the parties is not consummated and Monaco consummates a change of
control or similar transaction with any third party, the proceeds of such
transaction with a third party shall be promptly applied to the prepayment of
the Loan, and no such transaction shall be agreed to or consummated unless the
governing documents make express provision for the prepayment in full of the
Loan.
23. NEGATIVE COVENANT WITH RESPECT TO MF. MF shall not finance its
retail installment contracts, chattel paper of other evidences of
indebtedness, at a blended advance rate which is more than eighty percent
(80%) of the then outstanding balance of such retail installment contracts,
chattel paper or other evidences of indebtedness.
24. NON-RECOURSE PROVISIONS. The Note is a non-recourse obligation of
Monaco. Pledgor shall not be personally liable for the Secured Obligations,
and Lender agrees to look solely to the Collateral and to any other collateral
at any time pledged to secure the Note, provided, however, that with the
consent of LaSalle National Bank, Monaco shall nonetheless be liable on a full
recourse basis for the Secured Obligations to the extent of the amount of any
prepayment required pursuant to Sections 19, 20, 21 or 22 above, to the
extent that Monaco has control over the amounts which are the source of such
prepayments. In the event that a trustee or a custodian has control over the
amounts which are the source of the prepayments, Monaco shall direct such
trustee or custodian to apply the amounts to such prepayments.
25. RESTRICTIONS ON CERTAIN ACTIONS. Lender agrees that it shall take
no action that would cause MF to breach any of its covenants under any
documents entered into in connection with MF's outstanding debt or any debt to
be issued by MF in the future and that, so long as the Indenture pursuant to
such debt is issued is in effect, the Lender will not file any involuntary
petition or otherwise institute any bankruptcy, reorganization, insolvency or
liquidation proceeding or other proceeding under any federal or state
bankruptcy or similar law against MF. The Lender and any successors or
assignees of the Lender agree to obtain an agreement as to the foregoing from
any further successor or assignee as a condition to any assignment of the
Loan.
<PAGE>
IN WITNESS WHEREOF, Pledgor has executed this Agreement as of the date first
written above.
MONACO FINANCE, INC.,
a Colorado corporation
By /s/ Morris Ginsburg
Name:Morris Ginsburg
Title:President
<PAGE>
Exhibit A to
Pledge and Security Agreement
List of Liabilities of MF
<TABLE>
<CAPTION>
<S> <C> <C>
Underlying
Receivable
Note Series Note Balance Balance
- ------------------- ------------- -----------
Series 1994-A Notes $ 6,072,545 $ 6,296,868
Series 1995-A Notes $ 39,220,419 $51,363,299
Series 1995-B Notes $ 16,886,806 $19,100,595
<FN>
</TABLE>
<PAGE>
Exhibit B to
Pledge and Security Agreement
Security Interests, Liens and Encumbrances on Assets of MF
Floating lien on all assets of MF in favor of Norwest Bank of Minnesota,
N.A., as Trustee under the Indenture governing MF's receivables-backed notes.
EXHIBIT 10.50
FROM: MONACO FINANCE, INC.
370 17th Street, Suite 5060
Denver, CO 80202
Contact: Irwin L. Sandler, Executive Vice President
Tel. (303) 592-9411
________________________________________________________________________
FOR IMMEDIATE RELEASE
MONACO FINANCE ANNOUNCES SALE OF SECURITIES TO PACIFIC USA HOLDINGS CORP.
FULFILLING STRATEGIC ALLIANCE PLAN
DENVER, CO - October 30, 1996 -- Monaco Finance (NASDAQ NM:MONFA)
announced today that it entered into a Securities Purchase Agreement with
Pacific USA Holdings Corp. ("Pacific"), providing for the purchase of
3,800,000 shares of Monaco's Class A Common Stock ("Monaco Shares") for a
cash purchase price of $3.25 per share, or a total consideration of
$12,350,000. In addition, Pacific will receive a Warrant to Purchase up to
6,000,000 additional shares at exercise prices ranging from $4.50 to $7.00 per
share, as well as an option to purchase up to 830,000 outstanding shares of
Monaco's Class B Common Stock at $4.00 per share from two stockholders.
According to Morris Ginsburg, Chairman of Monaco Finance "the Pacific
transaction provides Monaco with a significant capital infusion at above
current market and book value levels, as well as providing additional
financing expertise to our Board. It is the type of strategic alliance which
we believe is desirable to maximize today's opportunities in the secondary
finance industry."
Consummation of the transaction contemplated by the Securities Purchase
Agreement is subject to various conditions, including approval by the
stockholders of Monaco Finance at a special meeting expected to be held in
December, the expiration of waiting periods under the Hart-Scott-Rodino
Anti-Trust Improvements Act and other conditions customary in transactions of
this type.
Monaco Finance, which is based in Denver and operates in 22 states, is
one of the nations most experienced secondary finance companies specializing
in acquiring, from automobile dealerships, retail installment contracts of
non-prime buyers of new and late model automobiles. Monaco has developed
sophisticated credit evaluation systems and state-of-the-art loan monitoring
programs to provide a solid platform for future growth.
Pacific is a diversified holding company engaged in the financial
services, real estate, technology professional services, and investment
banking businesses. Pacific is responsible for the U.S. business operations
of its parent company, Pacific Electric Wire & Cable Co., Ltd., an
international company with headquarters in Taiwan.
