SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
MONACO FINANCE, INC.
--------------------
(Name of Registrant as Specified in Its Charter)
N/A
---
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PRELIMINARY COPIES
MONACO FINANCE, INC.
370 SEVENTEENTH STREET, SUITE 5060
DENVER, COLORADO 80202
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 2, 1998
Notice is hereby given that a Special Meeting of Shareholders (the
"Special Meeting") of Monaco Finance, Inc., a Colorado corporation (the
"Company"), will be held at 370 Seventeenth Street, Suite 5060, Denver,
Colorado at 10:00 a.m. on November 2, 1998, for the following purposes:
1. To consider and approve a proposal to authorize the Company's
Board of Directors to effect, in its discretion, a reverse split of the
outstanding shares of the Company's Class A Common Stock and Class B Common
Stock on the basis of one share for each five shares then outstanding (the
"Reverse Stock Split").
2. To consider and approve a proposal to amend the Company's Articles
of Incorporation, effective concurrently with effectiveness of the Reverse
Stock Split, with respect to its 8% Cumulative Convertible Preferred Stock -
Series 1998-1 (the "Preferred Stock") to (i) increase the Conversion Ratio of
the Preferred Stock from one share of Class A Common Stock for each two shares
of Preferred Stock converted to one share of Class A Common Stock for each ten
shares of Preferred Stock converted, and (ii) to increase the market value of
the Class A Common Stock triggering automatic conversion of the Preferred
Stock into Class A Common Stock from $6.00 per share to $30.00 per share.
3. To consider and act upon such other matters as may properly come
before the Special Meeting or any adjournment thereof.
Only the holders of record of shares of the Company's Class A Common
Stock, $.01 par value, Class B Common Stock, $.01 par value, and Preferred
Stock, no par value, at the close of business on September 25, 1998, are
entitled to notice of and to vote at the Special Meeting or any adjournment
thereof.
You are cordially invited to attend the Special Meeting in person. All
shareholders, whether or not they plan to attend the Special Meeting, are
requested to complete, date and sign the enclosed proxy and return it promptly
in the envelope provided for that purpose. Shareholders who attend the
Special Meeting may revoke their proxies and vote in person as set forth in
the accompanying Proxy Statement.
By Order of the Board of Directors,
______________________________
Irwin L. Sandler, Secretary
September 30, 1998
<PAGE>
PRELIMINARY COPIES
MONACO FINANCE, INC.
370 SEVENTEENTH STREET, SUITE 5060
DENVER, COLORADO 80202
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 2, 1998
INTRODUCTION
SOLICITATION, EXERCISE AND REVOCABILITY OF PROXY
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Monaco Finance, Inc. (the "Company"), for
use at a Special Meeting of Shareholders of the Company (the "Special
Meeting") to be held on November 2, 1998, at 10:00 a.m., local time, at the
offices of the Company located at 370 Seventeenth Street, Suite 5060, Denver,
Colorado 80202. This Proxy Statement, the accompanying form of proxy and the
Notice of Special Meeting will be first given or mailed to the Company's
shareholders on or about September 30, 1998. All costs incurred in connection
with this proxy solicitation will be borne by the Company.
Because many of the Company's shareholders may be unable to attend the
Special Meeting in person, the Board of Directors solicits proxies by mail to
give each shareholder an opportunity to vote on all matters presented at the
Special Meeting. Shareholders are urged to: (i) read this Proxy Statement
carefully; (ii) specify their choice regarding each matter by marking the
appropriate box on the enclosed form of proxy; and (iii) sign, date and return
the form of proxy in the enclosed envelope.
All shares of the Company's Class A Common Stock, $.01 par value, and
Class B Common Stock, $.01 par value (collectively, the "Common Stock"), and
8% Cumulative Convertible Preferred Stock, Series 1998-1, no par value (the
"Preferred Stock"), represented by properly executed proxies received prior to
the Special Meeting will be voted at the Special Meeting in accordance with
the instructions marked thereon, unless such proxies have previously been
revoked. All shares represented by valid proxies will be voted, unless
instructions to the contrary are marked, in favor of the matters submitted for
approval at the Special Meeting described herein as to which such shares are
entitled to vote and, in the discretion of the proxy holders named therein,
with respect to such other matters as may properly come before the Special
Meeting. Any proxy may be revoked at any time prior to the exercise thereof
by submitting another proxy bearing a later date or by giving written notice
of revocation to the Company at the address indicated above or by voting in
person at the Special Meeting. Any notice of revocation sent to the Company
must include the shareholder's name and must be received prior to the Special
Meeting to be effective.
VOTING
The purpose of the Special Meeting is to consider and approve a proposal
to authorize the Company's Board of Directors to effect, in its discretion, a
reverse split of the outstanding shares of the Company's Class A Common Stock
and Class B Common Stock on the basis of one share for each five shares then
outstanding (the "Reverse Stock Split"); and to consider and approve a related
proposal to amend the Company's Articles of Incorporation, effective
concurrently with effectiveness of the Reverse Stock Split, with respect to
its Preferred Stock to (i) increase the Conversion Ratio of the Preferred
Stock from one share of Class A Common Stock for each two shares of Preferred
Stock converted to one share of Class A Common Stock for each ten shares of
Preferred Stock converted, and (ii) to increase the market value of the Class
A Common Stock triggering automatic conversion of the Preferred Stock into
Class A Common Stock from $6.00 per share to $30.00 per share.
Only persons holding Common Stock or Preferred Stock of record at the
close of business on September 25, 1998 (the "Record Date") will be entitled
to notice of and to vote at the Special Meeting or any adjournment thereof.
Holders of Class A Common Stock and the Class B Common Stock will vote as
separate voting groups on the Reverse Stock Split and together as a single
voting group on the proposed amendment to the Articles of Incorporation and on
all other matters submitted for stockholder approval at the Special Meeting.
Holders of the Preferred Stock will vote as a separate voting group with
respect to the proposed amendment to the Articles of Incorporation. Holders
of Class A Common Stock and the Preferred Stock will be entitled to one vote
for each share held of record as of the Record Date, and holders of Class B
Common Stock will be entitled to three votes for each share held of record as
of the Record Date. As of the Record Date, 12,772,788 shares of Class A
Common Stock were issued and outstanding entitled to cast an aggregate of
12,772,788 votes; 1,273,715 shares of Class B Common Stock were issued and
outstanding entitled to cast an aggregate of 3,821,145 votes; and 2,347,587
shares of Preferred Stock were issued and outstanding entitled to cast an
aggregate of 2,347,587 votes. The presence, in person or by proxy, by the
holders of a majority of the votes entitled to be cast on the matter by any
voting group entitled to vote at the Special Meeting constitutes a quorum for
the transaction of business by that group. If a quorum is present, (i) the
Reverse Stock Split will be approved if the votes cast favoring the action
exceed the votes cast opposing the action by each voting group entitled to
vote thereon, and (ii) the proposed amendment to the Articles of Incorporation
requires approval by a majority of all the votes entitled to be cast by the
holders of the Common Stock as one voting group and the holders of the
Preferred Stock as a separate voting group.
Votes cast by proxy at the Special Meeting will be tabulated by an
automatic system administered by the Company's transfer agent. Votes cast by
proxy or in person at the Special Meeting will be counted by the persons
appointed by the Company to act as election inspectors for the Special
Meeting. Abstentions and broker non-votes are each included in the
determination of the number of shares present at the Special Meeting and are
tabulated separately. Abstentions are counted in tabulations of the votes
cast on proposals presented to shareholders and will have the same effect as
negative votes, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
The relative rights of the holders of shares of Common Stock and
Preferred Stock (collectively referred to as the "Stockholders") will not
change as a result of implementation of the Reverse Stock Split and the
amendment to the Articles of Incorporation. Stockholders of the Company do not
have dissenter's rights of appraisal with respect to either action.
As of the Record Date, Pacific USA Holdings Corp. ("Pacific USA") had
direct and indirect voting power over approximately 54.9% of the outstanding
shares of Class A Common Stock, 100% of the outstanding shares of Class B
Common Stock, approximately 65.3% of the total combined voting power of the
outstanding shares of Common Stock and 100% of the outstanding shares of
Preferred Stock. It is expected that Pacific USA will vote in favor of the
proposals described in this Proxy Statement.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "SEC"). Reports, proxy
statements and other information filed by the Company with the SEC can be
inspected and copied at the public reference facilities maintained by the SEC
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the SEC at Seven World Trade Center, 13th
Floor, New York, New York 10048 and at Citicorp Center, 14th Floor, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can also be
obtained from the Public Reference Section of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. In addition, electronically
filed documents, including reports, proxy statements and other information
filed by the Company, can be obtained from the SEC's Web Site at
http://www.sec.gov. The Company's Class A Common Stock is quoted on the Nasdaq
National Market. Reports, proxy statements and other information concerning
the Company can be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
_____________________
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROXY STATEMENT DOES NOT CONSTITUTE THE
SOLICITATION OF A PROXY BY ANY PERSON IN ANY JURISDICTION OR IN ANY
CIRCUMSTANCES IN WHICH SUCH SOLICITATION WOULD BE UNLAWFUL. THE DELIVERY OF
THIS PROXY STATEMENT SHALL NOT UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
ITEMS 1 AND 2-APPROVAL OF POSSIBLE REVERSE STOCK SPLIT AND
AMENDMENT TO ARTICLES OF INCORPORATION
The Company's Board of Directors has unanimously approved a proposal to
authorize the Board to effect, in the exercise of its business judgment, (i) a
reverse split of the outstanding shares of the Company's Class A Common Stock
and Class B Common Stock on the basis of one share for each five shares then
outstanding (the "Reverse Stock Split"), as determined by the Board at any
time within one year after the date of the Special Meeting (the "Reverse Stock
Split Proposal"); and (ii) an amendment to the Company's Articles of
Incorporation with respect to the conversion of the Preferred Stock. The
amendment to the Articles of Incorporation and the Reverse Stock Split will be
implemented at the same time and one will not be implemented unless the other
concurrently is implemented. The Reverse Stock Split and amendment to the
Articles of Incorporation will not be effected automatically if approved by
the Stockholders, but rather will require Board authorization.
REASONS FOR THE REVERSE STOCK SPLIT
ALTHOUGH THE BOARD OF DIRECTORS IS NOT PROPOSING TO IMPLEMENT THE REVERSE
STOCK SPLIT AT THIS TIME, THE BOARD OF DIRECTORS IS SEEKING STOCKHOLDER
APPROVAL OF THE REVERSE STOCK SPLIT PROPOSAL IN ADVANCE OF A DECISION BY THE
BOARD OF DIRECTORS TO IMPLEMENT THE REVERSE STOCK SPLIT IN ORDER TO PROMPTLY
RESPOND TO DEVELOPMENTS THAT THE BOARD OF DIRECTORS, IN ITS BUSINESS JUDGMENT,
DETERMINES MAKES SUCH REVERSE STOCK SPLIT NECESSARY OR ADVISABLE.
The Company is engaged in the business of providing alternative financing
to purchasers of automobiles who do not qualify for traditional sources of
financing due to low income levels and/or adverse credit history. No single
financial institution has a significant market share of this "sub-prime"
credit market. Since 1994, competition in the sub-prime credit market has
increased markedly which has resulted in a substantial reduction in the number
of available loans which meet the Company's credit standards. However, during
this period of time the Company has maintained its credit standards and also
committed substantial resources to develop internal systems, including an
automated proprietary credit scoring system. While the Company's new and
enhanced systems enable it to support a larger loan portfolio, it has been
unable to obtain a sufficient number of loans meeting its credit standards to
allow profitable operations. As a result, the Company has incurred substantial
operating losses. Notwithstanding, the Company has been able to obtain debt
and equity financing.
Within the past few years, many companies in the industry have incurred
significant losses due to poor credit evaluation practices which led to
business failures and other financial problems. As a result, stock prices
decreased substantially and stock brokers and market analysts soured on the
industry. Accordingly, there has been little market support for the stock of
public companies in the sub-prime industry.
Notwithstanding, the sub-prime credit industry continues to grow. The
remaining competitors in this industry, including the Company, are relatively
strong. In 1997 and early 1998, the Company acquired, in portfolio purchases,
over $100 million in principal amount of sub-prime loans which allows the
Company to more fully utilize the various systems it has developed. Management
believes the Company is well positioned to significantly expand its market
share, without compromising its credit standards, through portfolio purchases
of loans and expansion of its network of dealers from which it acquires loans.
The Company's Class A Common Stock presently is traded on the Nasdaq
National Market. Commencing February 23, 1998, the requirements for continued
trading of securities on the Nasdaq National Market and on the Nasdaq Small
Cap Market were changed to include requirements that (i) the minimum bid price
for common stock must be $1.00 or more per share, and (ii) the market value of
the public float must be $5 million or more for a National Market security and
$1 million or more for a Small Cap Market security. "Public float" is defined
as outstanding shares other than those held by officers, directors and
beneficial owners of more than ten percent of the total shares outstanding. If
a deficiency exists for a period of 30 consecutive business days, Nasdaq is
required to promptly notify the issuer, which will have a period of 90
calendar days from such notification to achieve compliance. Compliance can be
achieved by meeting the applicable standard for a minimum of ten consecutive
business days during the 90-day compliance period. From February 23, 1998, to
the date of this Proxy Statement, the bid price of the Class A Common Stock
has been less than $1.00 per share and the market value of the public float
has been less than $5 million, but greater than $1 million. As of the Record
Date, approximately 5,741,109 shares of Class A Common Stock comprise the
Company's public float. After the Reverse Stock Split, to meet the National
Market requirement of $5 million in public float, the market price would have
to be approximately $4.36 per share and to meet the Small Cap Market
requirement of $1 million in public float, the market price would have to be
approximately $.88 per share.
By letter dated February 27, 1998, Nasdaq advised the Company that it was
not in compliance with the new market value of public float and minimum bid
price requirements and that the Company had until May 28, 1998, to achieve
compliance. Since the Company did not meet the requirements, by letter dated
May 29, 1998, Nasdaq advised the Company that the Class A Common Stock would
be delisted unless the Company requested a hearing. The request, which was
made, had the effect of staying the delisting. By letter dated August 11,
1998, the Nasdaq Listing Qualifications Panel (the "Panel") denied the
Company's request for continued listing. The Company requested a hearing
before a new Panel, which will stay the Panel's delisting determination
pending the final determination of the new Panel.
If required by Nasdaq, the Company will effect the Reverse Stock Split.
However, that is the least desirable means of achieving compliance. While the
Reverse Stock Split may satisfy the requirement of a minimum bid price of
$1.00 per share, (i) it would reduce the number of shares in the public float
which may adversely affect liquidity of the Class A Common Stock, and (ii) it
would not satisfy the National Market requirement that the public float have a
market value of not less than $5 million. Management believes, however, that
implementation of the Reverse Stock Split would result in the Class A Common
Stock being eligible for trading on the Nasdaq Small Cap Market and that
trading on that market would not, in and of itself, have a materially adverse
effect upon the liquidity of the Class A Common Stock. In the event the $1.00
minimum bid price requirement cannot be achieved, the Class A Common Stock
probably would trade in the so-called "pink sheets" or on Nasdaq's OTC
Bulletin Board. The most likely result would be that the liquidity of the
Class A Common Stock would be further impaired.
If the market price of the Class A Common Stock increases to $1.00 or
more per share or if the Company is able to maintain listing of the Class A
Common Stock on the Nasdaq National Market or Small Cap Market without the
necessity of the Reverse Stock Split, it is possible that the Board of
Directors will not effect the split. On the one hand, a significantly higher
stock price may stimulate greater interest in the Class A Common Stock by the
financial community and the investing public, which may result in greater
trading volume and liquidity. On the other hand, it is possible that any
increase in the market price of the Class A Common Stock resulting from the
Reverse Stock Split may be proportionately less than the decrease in the
number of shares outstanding and that the liquidity of the Class A Common
Stock after the Reverse Stock Split may be adversely affected due to the
reduced number of shares of that class outstanding. Also, implementation of
the Reverse Stock Split will result in additional Class A Common Stockholders
owning "odd lots" (fewer than 100 shares) as to which brokerage commissions on
resale could be higher than the commissions on 100-share lots.
The Reverse Stock Split Proposal and related amendment to the Articles of
Incorporation, if approved by Stockholders, will allow the Board of Directors
to promptly implement a Reverse Stock Split without the delay and expense of
calling a special meeting of Stockholders of the Company. The Board of
Directors believes this flexibility is important and in the best interest of
the Stockholders.
EFFECTS OF THE REVERSE STOCK SPLIT
The Reverse Stock Split will be implemented only in the event the Board
of Directors, in its business judgment exercised at any time within one year
after the date of the Special Meeting, determines that the Reverse Stock Split
is necessary or desirable. The Reverse Stock Split will become effective ten
calendar days (or such longer or shorter period as determined by the Board of
Directors) after the announcement of such stock split by the latest of
publication of a press release, filing of a Form 8-K with the Securities and
Exchange Commission and notification to The Nasdaq Stock Market, and filing of
the amendment to the Articles of Incorporation with the office of the Colorado
Secretary of State (the "Effective Date"). If the Reverse Stock Split Proposal
is adopted and the proposed amendment to the Company's Articles of
Incorporation is approved by the Stockholders at the Special Meeting, no
further authorization or approval by the Stockholders will be required in
order for the Board of Directors to implement the Reverse Stock Split.
On the Effective Date, each five shares (the "Stock Split Ratio") of
Class A and Class B Common Stock then issued and outstanding ("Pre-Split
Common Stock") will be automatically exchanged for one share of the same class
of Common Stock ("Post-Split Common Stock"). From and after the Effective
Date, certificates representing shares of Pre-Split Common Stock will be
deemed to represent the number of shares of Post-Split Common Stock, rounded
up to the nearest whole share, into which the shares of Pre-Split Common Stock
were converted.
The following table summarizes the effect of the Reverse Stock Split on
the outstanding securities of the Company:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NUMBER OF OUTSTANDING SHARES OUTSTANDING SHARES
CLASS OF SECURITY. . AUTHORIZED SHARES BEFORE SPLIT AFTER SPLIT
- -------------------- ----------------- ------------------ ------------------
Class A Common Stock 30,000,000 12,772,788 2,554,558
Class B Common Stock 2,250,000 1,273,715 254,743
<FN>
</TABLE>
The number of authorized shares and par value of the Common Stock and
Preferred Stock will not change. The number of shares of Class A Common Stock
issuable upon exercise or conversion of outstanding stock options, stock
purchase warrants, convertible securities (including the Preferred Stock) and
other rights to purchase shares of Class A Common Stock will be reduced by the
Stock Split Ratio, and the exercise or conversion price will be increased by
the Stock Split Ratio. The effect is that the aggregate consideration payable
upon exercise or conversion of all such securities will remain the same before
and after the Reverse Stock Split and that, upon full exercise or conversion
of such securities, the holder will be entitled to purchase the same relative
amount of Class A Common Stock before and after the Reverse Stock Split. In
addition, the number of shares of Class A Common Stock authorized to be issued
under the Company's 1992 Stock Option Plan will be reduced by the Stock Split
Ratio.
Except for changes resulting from the Reverse Stock Split as described
herein, the relative rights and privileges of holders of shares of Common
Stock and Preferred Stock will remain unchanged, and implementation of the
Reverse Stock Split will not result in any change of the relative equity
interest in the Company or the voting power or the rights and privileges of
the holders of Common Stock or Preferred Stock.
If the Reverse Stock Split is implemented, then the decrease in the
number of shares of Class A Common Stock outstanding and reserved for issuance
pursuant to the exercise of outstanding options, warrants and convertible
securities will result in an increase in the number of shares of Class A
Common Stock available for issuance by the Board of Directors. The Board of
Directors will determine whether, when and on what terms the issuance of
shares of Class A Common Stock may be warranted. Like the presently authorized
but unissued shares of Class A Common Stock, the additional shares of Class A
Common Stock which will become available for issuance upon the implementation
of the Reverse Stock Split will be available for issuance without further
action by the Company's Stockholders, unless such action is required by
applicable law or the rules of the Nasdaq Stock Market or any other stock
exchange or stock market on which the Class A Common Stock may be listed in
the future. Holders of Class A Common Stock and Preferred Stock have no
preemptive rights to subscribe to or for any additional shares of the
Company's capital stock. Except in certain cases such as stock dividends, the
issuance of additional shares of Class A Common Stock would have the effect of
diluting the voting power of existing Class A and Class B Common Stockholders.
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION
As of the Record Date, 2,347,587 shares of Preferred Stock were issued
and outstanding, all of which are beneficially owned by Pacific USA. The
Preferred Stock is convertible into shares of Class A Common Stock at the rate
of one share of Class A Common Stock for each two shares of Preferred Stock so
converted (the "Conversion Ratio"). Also, in the event the Current Market
Value (as defined in the Articles of Incorporation) of the Class A Common
Stock shall equal or exceed $6.00 per share on each trading day during any
period of 60 consecutive calendar days, commencing on the date of original
issuance of the Preferred Stock, all of the shares of Preferred Stock shall be
automatically converted into shares of Class A Common Stock at the Conversion
Ratio.
The text of the proposed amendment to the Company's Articles of
Incorporation is attached hereto as Annex B. The amendment, if approved by
Stockholders, will (i) increase the Conversion Ratio of the Preferred Stock
from one share of Class A Common Stock for each two shares of Preferred Stock
converted to one share of Class A Common Stock for each ten shares of
Preferred Stock converted, and (ii) increase the market value of the Class A
Common Stock triggering automatic conversion of the Preferred Stock into Class
A Common Stock from $6.00 per share to $30.00 per share. These changes are
necessary to adjust for the effects of the Reverse Stock Split.
The proposed amendment to the Articles of Incorporation will not become
effective upon Stockholder approval. Rather, the proposed amendment will
become effective only at such time as the Board of Directors determines to
proceed with the Reverse Stock Split and then upon the Effective Date of such
Reverse Stock Split.
The proposed amendment to the Articles of Incorporation will not change
the rights of the holders of the Preferred Stock in relation to those of the
holders of the Class A and Class B Common Stock. The proposed amendment to the
Articles of Incorporation requires approval by a majority of all votes
entitled to be cast thereon by the holders of the Common Stock as a single
voting group and by a majority of all votes entitled to be cast thereon by the
holders of the Preferred Stock also as a single voting group.
EXCHANGE OF CERTIFICATES
If the Reverse Stock Split is approved by the Common Stockholders and
implemented by the Board of Directors, then as soon as practicable after the
Effective Date Stockholders will be given the option, but will not be
required, to exchange their certificates representing shares of Pre-Split
Common Stock ("Pre-Split Certificates") for certificates representing the
number of whole shares of Post-Split Class A Common Stock ("Post-Split
Certificates") into which the shares of Pre-Split Common Stock have been
converted as a result of the Reverse Stock Split. After the Effective Date,
each Common Stockholder will receive a letter of transmittal from the
Company's transfer agent, American Stock Transfer & Trust Company, New York,
New York (the "Exchange Agent"), which will act as the Exchange Agent in the
exchange of stock certificates, containing the necessary materials and
instructions. In order to receive Post-Split Certificates, stockholders must
surrender their Pre-Split Certificates pursuant to the Exchange Agent's
instructions, together with properly executed and completed letters of
transmittal and such evidence of ownership of such shares as the Company or
the Exchange Agent may require, plus the applicable exchange fees. Pre-Split
Certificates not presented for surrender after the Effective Date will be
exchanged for Post-Split Certificates the first time they are presented for
transfer. From and after the Effective Date, each Pre-Split Certificate will,
until surrendered in exchange as described above, be deemed for all corporate
purposes after the Effective Date to evidence ownership of the whole number of
shares of Post-Split Class A Common Stock into which the shares evidenced by
such Pre-Split Certificate have been converted pursuant to the Reverse Stock
Split.
DO NOT SEND ANY STOCK CERTIFICATE TO THE COMPANY OR TO THE EXCHANGE AGENT AT
THIS TIME. NOTIFICATION OF THE DETAILED PROCEDURES FOR EFFECTING THE EXCHANGE
IF THE REVERSE STOCK SPLIT IS APPROVED AND IMPLEMENTED WILL BE PROVIDED AT A
LATER DATE.
ROUNDING UP OF FRACTIONAL SHARES
If the Reverse Stock Split is implemented, no fractional shares of
Post-Split Class A Common Stock will be issued. Rather, all fractional shares
will be rounded up to the nearest whole share. Management believes that the
Company presently has approximately 4,400 shareholders. Accordingly, fewer
than 4,400 additional shares of Class A Common Stock would be issued as a
result of the rounding up of fractional shares. This would amount to
approximately .03% of the 12,772,788 shares of Class A Common Stock
outstanding as of the Record Date.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the anticipated federal income tax
consequences of the Reverse Stock Split to Common Stockholders of the Company,
if the Reverse Stock Split is implemented. This summary is based upon the
Internal Revenue Code, the applicable treasury regulations promulgated
thereunder, judicial authority and administrative rulings and practice, all as
in effect on the date hereof. Legislative, judicial or administrative rules
and interpretations are subject to change, potentially on a retroactive basis,
at any time and therefore could alter or modify the statements and conclusions
set forth below. For the purpose of this discussion, it is assumed that the
shares of Common Stock are held as capital assets by stockholders who are
United States persons (i.e., citizens or residents of the United States or
domestic corporations). This summary does not purport to be complete and does
not address all aspects of federal income taxation that may be relevant to a
particular stockholder in light of such stockholder's personal investment
circumstances, stockholders holding Common Stock as security for borrowings or
those stockholders subject to special treatment under the federal income tax
laws (for example, life insurance companies, tax-exempt organizations, foreign
corporations and nonresident alien individuals). The summary also does not
discuss any consequence of the Reverse Stock Split under any state, local,
foreign, gift or estate tax laws.
No ruling from the Internal Revenue Service or opinion of counsel will be
obtained regarding the federal income tax consequences to the Common
Stockholders of the Company as a result of the Reverse Stock Split.
ACCORDINGLY, EACH STOCKHOLDER IS ENCOURAGED TO CONSULT HIS TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE PROPOSED REVERSE STOCK SPLIT TO
SUCH STOCKHOLDER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND
FOREIGN INCOME TAX LAWS.
The Company believes that the Reverse Stock Split, if implemented, would
be a tax-free recapitalization to the Company and its Common Stockholders. If
the Reverse Stock Split qualifies as a recapitalization described in Section
368(A)(1)(E) of the Code, (i) no gain or loss will be recognized by the
Company in connection with the Reverse Stock Split; and (ii) no gain or loss
will be recognized by holders of Common Stock who exchange their shares of
Pre-Split Common Stock for shares of Post-Split Common Stock, except that
holders of Common Stock whose fractional shares resulting from the Reverse
Stock Split are rounded up to the nearest whole share will recognize gain for
federal income tax purposes equal to the value of the additional fractional
share. The Company expects that rounding up of fractional shares will result
in an increase of less than .03% in the total number of shares of Class A and
Class B Common Stock outstanding after any Reverse Stock Split.
TEXT OF RESOLUTIONS
The text of the resolutions adopting the Reverse Stock Split Proposal and
the amendment to the Articles of Incorporation to be submitted to shareholders
at the Special Meeting are attached hereto as Annex A. Stockholders are urged
to read the resolutions in their entirety.
VOTE REQUIRED
If quorums of the Class A Common Stock, the Class B Common Stock and the
Preferred Stock are present at the Special Meeting, (i) the Reverse Stock
Split will be approved if the votes cast favoring the action exceed the votes
cast opposing the action by the holders of the Class A and Class B Common
Stock as separate voting groups, and (ii) the proposed amendment to the
Articles of Incorporation requires approval by a majority of all votes
entitled to be cast thereon by the holders of the Common Stock as a single
voting group and by the holders of the Preferred Stock as a separate voting
group. Properly signed proxies returned to the Company at or prior to the
Special Meeting will be voted in favor of the Reverse Stock Split Proposal and
the amendment to the Articles of Incorporation, as applicable, unless contrary
instructions are specified.
NO DISSENTERS' RIGHTS OF APPRAISAL
Under Colorado law, Stockholders are not entitled to dissenters' rights
of appraisal with respect to the Reverse Stock Split Proposal or the proposed
amendment to the Articles of Incorporation.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE ADOPTION AND APPROVAL OF THE REVERSE STOCK SPLIT PROPOSAL AND THE
RELATED PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information as of September 15, 1998, with
respect to the beneficial ownership of shares of Class A Common Stock and
Class B Common Stock of the Company by (a) each person known by the Company to
be the beneficial owner of more than five percent of the outstanding shares of
Class A and Class B Common Stock; (b) each executive officer and director; and
(c) all executive officers and directors as a group. Except as noted below,
each person has sole voting and investment power over the shares indicated:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF % OF COMMON STOCK
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OWNERSHIP(2) % OF VOTING POWER
- ----------------- -------------------------- ------------------ -------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B COMBINED(3)
-------------- ------------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph A. Cutrona . . . . . . . - - - - - - -
370 17th Street
Denver, CO 80202
Morris Ginsburg . . . . . . . . 863,950(4) 580,000(5) 6.3% 45.5% * - *(6)
370 17th Street
Denver, CO 80202
Irwin L. Sandler. . . . . . . . 533,320(7) 250,000(5) 4.0% 19.6% * - *(6)
370 17th Street
Denver, CO 80202
Bill C. Bradley . . . . . . . . 10,021,817(8) 1,273,715(8) 63.5% 100.0% 54.9% 100.0% 65.3%
5999 Summerside Dr., #112
Dallas, TX 75252
John R. Sloan . . . . . . . . . - - - - - - -
5999 Summerside Dr., #112
Dallas, TX 75252
Bobby L. Hashaway . . . . . . . 1,984,945(9) - 14.2% - 6.4% - 4.9%
18524 Bay Pines Lane
Dallas, TX 75287
William P. Clark, Jr. . . . . . 1,994,945(10) - 14.3% - 6.4% - 4.9%
P.O. Box 208
Lockhart, TX 78644
Leonard M. Snyder . . . . . . . 10,000 - * - * - *
6260 N. Desert Moon Loop
Tucson, AZ 85750
Vann R. Martin. . . . . . . . . 10,000 - * - * - *
370 17th Street
Denver, CO 80202
Mark Gengozian. . . . . . . . . 55,000(11) - * - * - *
370 17th Street
Denver, CO 80202
Michael Feinstein . . . . . . . 26,667(12) - * - * - *
370 17th Street
Denver, CO 80202
Pacific USA Holdings Corp. . . 10,021,817(13) 1,273,715(13) 63.5% 100.0% 54.9% 100.0% 65.3%
Pacific Electric Wire &
Cable Co., Ltd.
Consumer Finance Holdings, Inc.
5999 Summerside Drive, #106
Dallas, TX 75252
Bud Karsh . . . . . . . . . . . - 443,715(5) -(5) 34.9%(6) - - -(5)
10000 E. Yale #60
Denver, CO 80231
All executive officers. . . . . 10,700,754 1,273,715 65.1% 100.0% 55.1% 100.0% 65.5%
and directors as a group
(11 persons)
<FN>
* Represents less than one percent.
(1) Shares are considered beneficially owned, for purposes of this table, only if held by the person indicated, or
if such person, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise
has or shares the power to vote, to direct the voting of and/or to dispose of or to direct the disposition of, such
security, or if the person has the right to acquire beneficial ownership within 60 days, unless otherwise indicated.
All shares are owned of record unless otherwise indicated.
(2) Includes all shares of Class A Common Stock and Class B Common Stock outstanding and assumes exercise of all
outstanding options and warrants and conversion of all outstanding debentures beneficially owned by the indicated
person.
(3) Includes all shares of Class A Common Stock and Class B Common Stock outstanding. Each share of Class A Common
Stock has one vote per share while each share of Class B Common Stock has three votes per share. The Class B Common
Stock may be converted into Class A Common Stock on a share for share basis at the option of the holder thereof, and
shall automatically be converted in the event of its sale or transfer (whether by sale, assignment, gift, bequest,
appointment or otherwise) or upon death of the holder. Excluded, however, from the automatic conversion are transfers
of the Class B Common Stock for estate planning purposes to or for the benefit of the original holder or members of
his immediate family, provided that the original holder retains both voting and investment power over the stock so
transferred.
(4) Includes options to purchase 50,000 shares of Class A Common Stock at $2.125 per share, exercisable at any
time until January 3, 2002; options to purchase 125,000 shares of Class A Common Stock at $3.00 per share, exercisable
at any time prior to June 30, 2002; options to purchase 50,000 shares of Class A Common Stock at $1.875 per share
exercisable at any time prior to July 29, 2006; options to purchase 56,250 shares of Class A Common Stock at $0.531
per share exercisable at any time prior to August 25, 2007; and 580,000 shares of Class A Common Stock issuable upon
conversion of the same number of shares of Class B Common Stock. Excludes 7,500 shares of Class A Common Stock owned
by the spouse of Mr. Ginsburg as to which he disclaims beneficial ownership.
(5) Messrs. Ginsburg, Sandler (through a family partnership of which he is sole general partner) and Karsh own
580,000, 250,000 and 443,715 shares, respectively, of Class B Common Stock. Messrs. Ginsburg and Sandler have granted
an option to CFH to purchase all of their shares of Class B Common Stock exercisable until December 4, 2000.
(6) Messrs. Ginsburg, Sandler and Karsh entered into an Agreement Among Certain Shareholders of Monaco Finance,
Inc., dated April 9, 1992, in which Mr. Karsh appointed Messrs. Ginsburg and Sandler as his proxy and attorney-in-fact
to each vote 50% of his Class B Common Stock. On December 4, 1997, Messrs. Ginsburg and Sandler transferred their
voting rights with respect to these shares to Pacific USA, which, since it has sole voting power over those shares,
may be deemed to be the beneficial owner thereof. Mr. Karsh also may be deemed to be the beneficial owner of these
shares since he retains sole dispositive power with respect thereto.
(7) Includes options to purchase 50,000 shares of Class A Common Stock at $2.125 per share, exercisable at any
time until January 3, 2002; options to purchase 125,000 shares of Class A Common Stock at $3.00 per share, exercisable
at any time prior to June 30, 2002; options to purchase 50,000 shares of Class A Common Stock at $1.875 per share,
exercisable at any time prior to July 29, 2006; options to purchase 56,250 shares of Class A Common Stock at $0.531
per share exercisable at any time prior to August 25, 2007; and 250,000 shares of Class A Common Stock issuable upon
conversion of the same number of shares of Class B Common Stock. Of the remaining shares listed for Irwin L. Sandler,
2,070 shares were purchased by Mr. Sandler through the custodial account of his Keogh Plan. Mr. Sandler may be deemed
the beneficial owner of these shares.
(8) Mr. Bradley, as a director of Pacific USA, may be deemed to share voting and/or investment power with respect
to the following shares: 6,198,157 shares of Class A Common Stock owned of record by CFH; 811,152 shares of Class A
Common Stock owned of record by First CF Corp.; 1,173,793 shares of Class A Common Stock issuable upon full conversion
of the Preferred Stock owned by First CF Corp.; and 565,000 shares of Class A Common Stock issuable upon full exercise
of a promissory note due December 31, 1998, in the principal amount of $536,750 held by Pacific USA. In addition, Mr.
Bradley may be deemed to be the beneficial owner of 1,273,715 shares of Class B Common Stock as to which CFH has sole
voting power. CFH also owns an option to purchase the 830,000 shares of Class B Common Stock owned by Messrs. Ginsburg
and Sandler exercisable until December 4, 2000.
(9) As a director of First CF Corp., Mr. Hashaway may be deemed to share voting and/or investment power over
811,152 shares of Class A Common Stock and 1,173,793 shares of Class A Common Stock issuable upon full conversion of
the Preferred Stock owned by that company.
(10) As a director of Pacific Southwest Bank, Mr. Clark may be deemed to share voting and/or investment power over
811,152 shares of Class A Common Stock and 1,173,793 shares of Class A Common Stock issuable upon full conversion of
the Preferred Stock owned by First CF Corp., a wholly-owned subsidiary of that bank.
(11) Includes options to purchase 15,000 shares of Class A Common Stock at $1.875 per share any time prior to July
29, 2006; and options to purchase 39,900 shares of Class A Common Stock at $0.531 per share exercisable at any time
prior to August 25, 2007.
(12) Includes options to purchase 10,000 shares of Class A Common Stock at $1.875 per share exercisable for three
months following his termination date; and options to purchase 16,667 shares of Class A Common Stock at $0.531 per
share exercisable for three months following his termination date. Mr. Feinstein is no longer employed by the Company
effective April 1998.
(13) Except as stated below, the information contained in the table, in this footnote and elsewhere herein is
derived from a Schedule 13D dated March 16, 1998, filed by Pacific USA, Pacific Electric Wire & Cable Co., Ltd.
("Pacific Electric") and CFH with the Securities and Exchange Commission. Pacific USA is a wholly-owned subsidiary of
Pacific Electric. CFH and First CF Corp. are direct and indirect wholly-owned subsidi-aries of Pacific USA.
Accordingly, Pacific Electric and Pacific USA may be deemed to be the beneficial owners of all of the shares referred
to in Note (8) above. On September 1, 1998, effective as of July 1, 1998, Pacific USA converted $4,463,250 in
principal amount of a $5,000,000 loan into 4,698,157 shares of Class A Common Stock at a conversion price of $.95 per
share. The conversion price is the book value per share of the Company's issued and outstanding Common Stock as of
June 30, 1998. The closing price of the Class A Common Stock on the Nasdaq Stock Market was $.50 per share on June 30,
1998, and $.38 per share on September 1, 1998.
</TABLE>
PROXY SOLICITATION
In addition to soliciting proxies by mail, directors, executive officers
and employees of the Company, without receiving additional compensation, may
solicit proxies by telephone, by telegram or in person. Arrangements will
also be made with brokerage firms and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of
shares of Class A Common Stock and the Company will reimburse such brokerage
firms and other custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred by them in connection with forwarding such
materials.
OTHER BUSINESS
The Board of Directors does not know of any business to be presented for
consideration at the Special Meeting other than that stated in the attached
Notice of Special Meeting. In the event that other business properly comes
before the Special Meeting, the proxy holders identified in the form of proxy
are authorized to vote or act in accordance with their judgment with respect
to any such matter.
PROPOSALS BY STOCKHOLDERS
Proposals by stockholders of the Company intended to be presented at the
next annual meeting of stockholders of the Company must be received at the
Company's executive offices no later than January 15, 1998, to be included in
the Company's proxy statement and form of proxy relating to that meeting.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Company whether other persons are the beneficial owners
of the Common Stock for which proxies are being solicited from you, and, if
so, the number of copies of the Proxy Statement and other soliciting materials
you wish to receive in order to supply copies to the beneficial owners of the
Common Stock.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
SHARE-HOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF
PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE,
WHETHER OR NOT THEY EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON. BY
RETURNING YOUR PROXY PROMPTLY YOU CAN HELP THE COMPANY AVOID THE EXPENSE OF
FOLLOW-UP MAILINGS TO ENSURE A QUORUM SO THAT THE SPECIAL MEETING CAN BE HELD.
SHAREHOLDERS WHO ATTEND THE SPECIAL MEETING MAY REVOKE A PRIOR PROXY AS SET
FORTH IN THIS PROXY STATEMENT.
By Order of the Board of Directors,
Irwin L. Sandler, Secretary
Denver, Colorado
September 30, 1998
<PAGE>
ANNEX A
APPROVAL OF REVERSE STOCK SPLIT
RESOLVED, that the Board of Directors of the Company is authorized, in
the exercise of its business judgment, to cause the issued and outstanding
shares of the Company's Class A Common Stock and Class B Common Stock to be
reclassi-fied and changed without any further act into fully paid and
nonassessable shares of the same class on the basis of one share for each five
shares (the "Reverse Split Ratio") issued and outstanding to be effective ten
calendar days (or such longer or shorter period as determined by the Board of
Directors) after the announcement of such stock split by the latest of
publication of a press release, filing of a Form 8-K with the Securities and
Exchange Commission and notification to The Nasdaq Stock Market, and filing of
the amendment to the Articles of Incorporation referenced herein with the
office of the Colorado Secretary of State (the "Effective Date"); and further
RESOLVED, that no fractional shares shall be issued and that all
fractional shares resulting from the reverse stock split shall be rounded up
to the nearest whole share; and further
RESOLVED, that on the Effective Date the number of shares issuable upon
exercise or conversion of all outstanding stock options, stock purchase
warrants and other securities convertible into or exercisable for shares of
the Company's common stock shall be reduced by the Reverse Split Ratio and the
exercise or conversion prices shall be increased by the Reverse Split Ratio;
and further
RESOLVED, that the number of shares of Class A Common Stock covered by
and reserved for issuance under the Company's 1992 Stock Option Plan shall be
reduced by the Reverse Split Ratio; and further
RESOLVED, that the Reverse Stock Split shall not have any effect upon the
par value of the Company's common stock or upon the number of shares of the
Company's common stock authorized in its articles of incorporation; and
further
RESOLVED, the stated capital of the Company shall not be reduced as a
result of the Reverse Stock Split and, accordingly, upon effectiveness of the
reverse stock split, there shall be transferred from the surplus of the
Company to stated capital that amount as is required so that the stated
capital of the Company upon effectiveness of the Reverse Stock Split is the
same as the stated capital of the Company immediately prior to effectiveness
of the Reverse Stock Split; and further
RESOLVED, that the officers of the Company are hereby authorized and
directed to execute and deliver such documents and to take such other and
further action as they shall deem necessary or desirable in connection with
any Reverse Stock Split.
APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION
RESOLVED, that the Company is authorized to amend its Articles of
Incorporation, effective concurrently with effectiveness of the Reverse Stock
Split, with respect to its 8% Cumulative Convertible Preferred Stock, Series
1998-1 (the "Preferred Stock") to (i) increase the Conversion Ratio of the
Preferred Stock from one share of Class A Common Stock for each two shares of
Preferred Stock converted to one share of Class A Common Stock for each ten
shares of Preferred Stock converted, and (ii) to increase the market value of
the Class A Common Stock triggering automatic conversion of the Preferred
Stock into Class A Common Stock from $6.00 per share to $30.00 per share; and
further
RESOLVED, that the officers of the Company are authorized and directed, on
behalf of the Company, to execute and deliver Articles of Amendment to its
Articles of Incorporation and to cause such Articles of Amendment to be filed
with the Colorado Secretary of State to be effective on the Effective Date of
the Reverse Stock Split; and further
RESOLVED, that the officers of the Company are authorized and directed,
on behalf of the Company, to take such other and further actions and to
execute and deliver such documents as they shall deem necessary or desirable
in the best interests of the Company and its stockholders in connection with
the amendments to the Company's Articles of Incorporation and the transactions
contemplated thereby.
<PAGE>
ANNEX B
Form of Articles of Amendment to Articles of Incorporation
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is MONACO FINANCE, INC.
----------------------
SECOND: The following amendment to the Articles of Incorporation was adopted
on November 2, 1998, as prescribed by the Colorado Business Corporation Act,
---------------
in the manner marked with an X below:
___ No shares have been issued or Directors Elected - Action by
Incorporators
___ No shares have been issued but Directors Elected - Action by
Directors
___ Such amendment was adopted by the board of directors where shares have
been issued and shareholder action was not required.
_X_ Such amendment was adopted by a vote of the shareholders. The number of
shares voted for the amendment was sufficient for approval.
The Articles of Incorporation shall be amended by striking the existing
Section 4.1 of the Preferences, Limitations And Relative Rights of 8%
Cumulative Convertible Preferred Stock, Series 1998-1 and inserting in lieu
thereof the following new section:
4.1 VOLUNTARY CONVERSION. The Preferred Stock may be converted in
whole or in part at any time and from time to time into shares of Class A
Common Stock ("Voluntary Conversion") at the rate of one share of Class A
Common Stock for each ten shares of Preferred Stock so converted (the
"Conversion Ratio").
The Articles of Incorporation shall be amended by striking the existing
Section 4.2 of the Preferences, Limitations And Relative Rights of 8%
Cumulative Convertible Preferred Stock, Series 1998-1 and inserting in lieu
thereof the following new section:
4.2 AUTOMATIC CONVERSION. In the event the Current Market Value (as
defined in Section 4.6(a) herein) of the Class A Common Stock shall equal or
exceed $30.00 per share on each trading day during any period of 60
consecutive calendar days commencing on the date of original issuance of the
Preferred Stock, all of the Preferred Shares shall be automatically converted
("Automatic Conversion") into shares of Class A Common Stock at the Conversion
Ratio. All holders of Preferred Stock shall deliver or cause to be transferred
to the Corporation all of their Preferred Stock promptly upon Automatic
Conversion.
THIRD: If changing corporate name, the new name of the corporation is
FOURTH: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for in
the amendment shall be effected, is as follows: None
If these amendments are to have a delayed effective date, please list that
date:
(Not to exceed ninety (90) days from the date of filing)
MONACO FINANCE, INC.
Signature___________________________
Morris Ginsburg, President
<PAGE>
PROXY APPENDIX A
-----------
MONACO FINANCE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
MONACO FINANCE, INC.
The undersigned hereby appoints Morris Ginsburg and Irwin L. Sandler, and
each of them, as proxies for the undersigned, each with full power of
appointment and substitution, and hereby authorizes them to represent and to
vote, as designated below, all shares of the $0.01 par value Class A Common
Stock of Monaco Finance, Inc. (the "Company") which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the Company to be
held on November 2, 1998 (the "Meeting"), or at any postponements,
continuations or adjournments thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned. If no direction is made, this proxy will be voted
(i) FOR the proposal to authorize the Company's Board of Directors to effect a
reverse split of the outstanding shares of the Company's Class A Common Stock
and Class B Common Stock on the basis of one share for each five shares then
outstanding; (ii) FOR the proposal to amend the Company's Articles of
Incorporation with respect to its 8% Cumulative Convertible Preferred Stock,
Series 1998-1; and (iii) on such other matters as may properly come before the
Meeting.
1. Proposal to authorize the Company's Board of Directors to effect,
in its discretion, a reverse split of the outstanding shares of the Company's
Class A Common Stock and Class B Common Stock on the basis of one share for
each five shares then outstanding (the "Reverse Stock Split").
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Proposal to amend the Company's Articles of Incorporation,
effective concurrently with effectiveness of the Reverse Stock Split, with
respect to its 8% Cumulative Convertible Preferred Stock , Series 1998-1 (the
"Preferred Stock") to (i) increase the Conversion Ratio of the Preferred Stock
from one share of Class A Common Stock for each two shares of Preferred Stock
converted to one share of Class A Common Stock for each ten shares of
Preferred Stock converted, and (ii) to increase the market value of the Class
A Common Stock triggering automatic conversion of the Preferred Stock into
Class A Common Stock from $6.00 per share to $30.00 per share.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting or at any
postponements, continuations or adjournments thereof.
Please sign exactly as your name appears hereon. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign partnership name by authorized person. When signing
as trustee, please give full title as such.
Dated,___________1998
Authorized Signature:_______________________
Title:_______________________
Please mark boxes /X/ in ink. Sign, date and return this Proxy Card promptly
using the enclosed envelope.
