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):September 1, 1998
MONACO FINANCE, INC.
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(Exact Name of Registrant as Specified in Charter)
Colorado 0-18819 84-1088131
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State or Other Jurisdiction (Commission File Number) (I.R.S.
of Incorporation or Organization) Employer
Identification No.)
370 Seventeenth Street, Suite 5060
Denver, Colorado 80202
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(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (303) 592-9411
N/A
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(Former Name or Former Address, if Changed Since Last Report)
Total number of pages is 69.
The exhibit index appears at sequential page no. 3.
<PAGE>
ITEM 5. OTHER EVENTS.
On September 1, 1998, the Company entered into a Conversion and Rights
Agreement (the "Agreement") with Pacific USA Holdings Corp. ("Pacific"). See
Exhibit 10.69. In July 1998, Pacific loaned the Company the principal amount
of $5,000,000. Pursuant to the Agreement, $4,463,250 of the principal amount
of the loan was converted, effective July 1, 1998, into 4,698,157 shares (the
"Conversion Shares") of the Company's 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.
As of June 30, 1998, Pacific owned 2,311,152 shares, or approximately 28.7%,
of the outstanding Class A Common Stock and controlled approximately 51.6% of
the combined voting power of the Company's Class A and Class B Common Stock.
Following issuance of the Conversion Shares, Pacific will own 7,009,309
shares, or approximately 49.9% of the then outstanding Class A and Class B
Common Stock and, as a result of proxies granted to Pacific with respect to
the Class B Common Stock, will control approximately 65.3% of the combined
voting power of the Class A and Class B Common Stock.
On June 30, 1998, the Company's Board of Directors elected Joseph A. Cutrona
as Chief Executive Officer of the Company. Mr. Cutrona is an executive vice
president of Pacific. While his salary is paid by Pacific, the Company
reimburses him for his expenses. On or about July 1, 1998, Robert D. Womack
resigned as a member of the Company's Board of Directors and was replaced by
Mr. Cutrona.
On November 1, 1994 the Company sold, in a private placement, unsecured Senior
Subordinated Notes ("Senior Notes") in the gross principal amount of $5.0
million to Rothschild North America, Inc. ("Rothschild") The Senior Notes
accrue interest at a fixed rate per annum of 9.5% through October 1, 1997, and
for each month thereafter, a fluctuating rate per annum equal to the lesser of
(a) 11.5% or (b) 3.5% above LIBOR. Interest was due and payable the first day
of each quarter commencing on January 1, 1995. Principal payments in the
amount of $416,667 were due and payable the first day of January, April, July
and October of each year commencing January 1, 1997.
As reported in the Company's Quarterly Report on Form 10-QSB for the period
ended June 30, 1998, on June 15, 1998, the Company and Rothschild amended the
Note Purchase Agreement (see Exhibit 10.70) to require principal payments of
$450,000 on the last day of each March, June, September and December. In lieu
of the principal payment of $416,667 due on July 1, 1998, the Company made a
payment to Rothschild on June 30, 1998 of $600,000. The unpaid principal
amount of the Senior Notes, plus accrued and unpaid interest, is due October
1, 1999.
On January 9, 1996, the Company entered into a Purchase Agreement for the
sale of an aggregate of $5.0 million in principal amount of 12% Convertible
Senior Subordinated Notes due 2001 (the "12% Notes"). Interest on the 12%
Notes is payable monthly at the rate of 12% per annum and the 12% Notes were
convertible, subject to certain terms contained in the Indenture, into shares
of the Company's Class A Common Stock, par value $.01 per share, at a
conversion price of $4.00 per share, subject to adjustment under certain
circumstances. The 12% Notes were issued pursuant to an Indenture dated
January 9, 1996, between the Company and Norwest Bank Minnesota, N.A., as
trustee. The Company agreed to register, for public sale, the shares of
restricted Common Stock issuable upon conversion of the 12% Notes. The 12%
Notes were sold pursuant to an exemption from the registration requirements
under the Securities Act of 1933, as amended.
Provisions have been made for the issuance of up to an additional $5.0 million
in principal amount of the 12% Notes ("Additional 12% Notes") on or before
September 10, 1998, between the Company and Black Diamond Advisors, Inc.
("Black Diamond"), one of the initial purchasers, with an initial conversion
price of $3.00 per share.
As reported in the Company's Quarterly Report on Form 10-QSB for the period
ended June 30, 1998, on June 12, 1998, the Company and the related note owners
agreed to amend the Indenture (see Exhibit 10.71) to cancel the conversion
feature of the 12% Notes and to require principal payments of $135,000 per
month commencing in June 1998. The maturity date of the 12% Notes was also
amended to the earlier of the maturity date of the Senior Notes or October 1,
1999.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c.) Exhibits.
3.4 Articles of Amendment to the Articles of Incorporation.
3.5 Amended and Restated Bylaws
10.69 Conversion and Rights Agreement dated September 1, 1998, by and
between the Company and Pacific USA Holdings Corp.
10.70 Letter Agreement dated June 25, 1998, by and between the Company and
Rothschild North America, Inc., amending Note Purchase
Agreement.
10.71 Consent and Amendment No. 1 to Indenture and Related Documents by
and among the Company, Black Diamond Advisors, Inc., Heller
Financial, Inc., and others dated September 9, 1998.
<PAGE>
Exhibit 3.4
EXHIBIT A
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ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION
OF
MONACO FINANCE, INC.
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
Articles II through XII of the Articles of Incorporation of the Corporation
are hereby deleted and the following Articles II through XI substituted
therefor. This Amendment shall have no effect whatsoever on the Preferences,
Limitations and Relative Rights of 8% Cumulative Convertible Preferred Stock,
Series 1998-1, previously filed with the Colorado Secretary of State, which
shall remain in full force and effect.
ARTICLE II
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PERIOD OF DURATION
This Corporation shall exist in perpetuity unless dissolved according to
law.
ARTICLE III
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PURPOSES
The purpose for which this Corporation is organized is to transact any
lawful business for which corporations may be incorporated pursuant to the
Colorado Business Corporation Act.
ARTICLE IV
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AUTHORIZED CAPITAL
1. Common Shares. The aggregate number of Common Shares which this
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Corporation shall have authority to issue is thirty-two million two hundred
fifty thousand (32,250,000) shares, $.01 par value, of which 30,000,000 shall
be a series designated "Class A Common Stock," and 2,250,000 shares shall be a
series designated "Class B Common Stock." Each share of Class B Common Stock
may be converted at any time at the option of the original holder thereof into
one (1) share of the Corporation's Class A Common Stock. Each share of Class B
Common Stock shall convert automatically into one (1) share of Class A Common
Stock upon the death of the original holder thereof. Each share of Class B
Common Stock shall also convert automatically into one (1) share of Class A
Common Stock upon the sale or transfer of Class B Common Stock; provided,
however, that the Class B Common Stock shall not automatically convert into
Class A Common Stock as provided herein upon any transfer by the original
holder for estate planning purposes to or for the benefit of the original
holder and/or members of the immediate family of the original holder so long
as, and only so long as, all voting and investment power over the shares of
Class B Common Stock so transferred remain in the original holder. The Class B
Common Stock shall in all other respects be identical to the Class A Common
Stock of the Corporation except that on every matter for which one (1) share
of Class A Common Stock of the Corporation is entitled to one (1) vote, each
share of Class B Common Stock shall be entitled to three (3) votes.
2. Preferred Shares. The aggregate number of Preferred Shares which
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this Corporation shall have authority to issue is ten million (10,000,000)
shares, no par value, which shares shall be designated "Preferred Stock." The
Board of Directors of this Corporation shall have authority to divide the
class of Preferred Shares into series and to fix and determine the relative
rights and preferences of the shares of any such series established to the
full extent permitted by the laws of the State of Colorado in respect of,
among other things: (a) the number of Preferred Shares to constitute such
series and the distinctive designations thereof; (b) the rate and preference
of dividends, if any, the time of payment of dividends, whether dividends are
cumulative and the date from which any dividends shall accrue; (c) whether
Preferred Shares may be redeemed and, if so, the redemption price and the
terms and conditions of redemption; (d) the liquidation preferences payable on
Preferred Shares in the event of involuntary or voluntary liquidation; (e)
sinking fund or other provisions, if any, for redemption or purchase of
Preferred Shares; (f) the terms and conditions by which Preferred Shares may
be converted, if the Preferred Shares of any series are issued with the
privilege of conversion; and (g) voting rights, if any.
3. Dividends. Dividends in cash, property or shares of the
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Corporation may be paid, as and when declared by the Board of Directors, out
of funds of the Corporation and to the extent and in the manner permitted by
law.
4. Distribution in Liquidation. Upon any liquidation, dissolution or
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winding up of the Corporation, and after paying or adequately providing for
the payment of all its obligations, the remainder of the assets of the
Corporation shall be distributed, either in cash or in kind, pro rata to the
holders of the Common Stock.
5. Assessment. The Capital Stock of the Corporation shall not be
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subject to assessment, but shall be issued as fully paid and nonassessable.
ARTICLE V
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VOTING BY SHAREHOLDERS
1. Voting Rights. Each outstanding share of Class A Common Stock is
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entitled to one (1) vote and each fractional share of Class A Common Stock is
entitled to a corresponding fractional vote on each matter submitted to a vote
of shareholders. Each outstanding share of Class B Common Stock is entitled to
three (3) votes and each fractional share of Class B Common Stock is entitled
to a corresponding fractional vote on each matter submitted to a vote of
shareholders.
2. No Preemptive Rights. No holder of any shares of the Corporation,
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whether now or hereafter authorized, shall have any preemptive rights or
preferential right to acquire any unissued shares or securities of the
Corporation, including shares or securities held in the treasury of the
Corporation or securities convertible into shares or carrying stock purchase
warrants or privileges.
3. Quorum. One-third of the votes entitled to be cast on a matter by a
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voting group shall constitute a quorum of that voting group for action on that
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matter at any meeting of shareholders.
4. Voting; No Cumulative Voting
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(a) Except as is otherwise provided by the Colorado Business
Corporation Act with respect to action on amendment to these articles of
incorporation, on a plan of merger or share exchange, on the disposition of
substantially all of the property of the Corporation, on the granting of
consent to the disposition of property by an entity controlled by the
Corporation, and on the dissolution of the Corporation (collectively referred
to as "Major Transactions"), action on a matter other than the election of
directors is approved if a quorum exists and if the votes cast favoring the
action exceed the votes cast opposing the action.
(b) Major Transactions shall be approved by each voting group
entitled to vote separately on the transaction or matter by a majority of all
the votes entitled to be cast on the transaction or matter by that voting
group.
(c) Cumulative voting shall not be allowed in the election of
Directors of the Corporation and every shareholder entitled to vote at such
election shall have the right to vote all of the shareholder's votes for as
many persons as there are directors to be elected, and for whose election the
shareholder has a right to vote. In an election of directors, that number of
candidates equaling the number of directors to be elected, having the highest
number of votes cast in favor of their election, shall be elected to the Board
of Directors.
(d) Any bylaw adding, changing, or deleting a greater quorum or
voting requirement for shareholders shall meet the same quorum requirement and
be adopted by the same vote required to take action under the quorum and
voting requirements then in effect or proposed to be adopted, whichever are
greater.
ARTICLE VI
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RIGHT OF DIRECTORS TO CONTRACT WITH CORPORATION
1. No conflicting interest transaction (as that term is defined in
the Colorado Business Corporation Act) shall be void or voidable or be
enjoined, set aside or give rise to an award of damages or other sanctions in
a proceeding by a shareholder or by or in the right of the Corporation, solely
because the conflicting interest transaction involves a director of the
Corporation or an entity in which a director of the Corporation is a director
or officer or has a financial interest or solely because the director is
present at or participates in a meeting of the Corporation's Board of
Directors or of the committee of the Board of Directors which authorizes,
approves or ratifies the conflicting interest transaction or solely because
the director's vote is counted for such purpose if:
(a) The material facts as to the director's relationship or
interest and as to the conflicting interest transaction are disclosed or are
known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes, approves or ratifies the conflicting
interest transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors are less than
a quorum; or
(b) The material facts as to the director's relationship or
interest and as to the conflicting interest transaction are disclosed or are
known to the shareholders entitled to vote thereon, and the conflicting
interest transaction is specifically authorized, approved or ratified in good
faith by a vote of the shareholders; or
(c) The conflicting interest transaction is fair as to the
Corporation.
2. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
ARTICLE VII
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CORPORATE OPPORTUNITY
The officers, directors and other members of management of this
Corporation shall be subject to the doctrine of "corporate opportunities" only
insofar as it applies to business opportunities in which this Corporation has
expressed an interest as determined from time to time by this Corporation's
Board of Directors as evidenced by resolutions appearing in the Corporation's
minutes. Once such areas of interest are delineated, all such business
opportunities within such areas of interest which come to the attention of the
officers, directors, and other members of management of this Corporation shall
first be made available to the Corporation and, if rejected by a majority of
the disinterested members of the Corporation's Board of Directors, any of such
persons shall be free to engage in such areas of interest on their own. This
doctrine shall not limit the right of any officer, director or other member of
management of this Corporation to continue a business existing prior to the
time that such area of interest is designated by the Corporation. This
provision shall not be construed to release any employee of this Corporation
(other than an officer, director or member of management) from any duties
which he may have to this Corporation.
ARTICLE VIII
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INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
The Corporation shall indemnify, to the fullest extent permitted by
applicable law in effect from time to time, any person, and the estate and
personal representative of any such person, against all liability and expense
(including attorneys' fees) incurred by reason of the fact that he is or was a
director or officer of the Corporation or, while serving as a director or
officer of the Corporation, he is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee, fiduciary, or
agent of, or in any similar managerial or fiduciary position of, another
domestic or foreign corporation or other individual or entity or of an
employee benefit plan. The Corporation shall also indemnify, any person who is
serving or has served the Corporation as director, officer, employee,
fiduciary, or agent, and that person's estate and personal representative, to
the extent and in the manner provided in any bylaw, resolution of the
shareholders or directors, contract, or otherwise, so long as such provision
is legally permissible.
ARTICLE IX
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REGISTERED OFFICE AND REGISTERED AGENT
The address of the registered office of the Corporation is 370
Seventeenth Street, Suite 5060, Denver, Colorado 80202, and the name of the
registered agent at such address is Irwin L. Sandler. Either the registered
office or the registered agent may be changed in the manner permitted by law.
ARTICLE X
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BOARD OF DIRECTORS
The corporate powers shall be exercised by or under the authority of, and
the business and affairs of the Corporation shall be managed under the
direction of, a board of directors. The directors shall be elected at each
annual meeting of the shareholders, provided that vacancies may be filled by
election by the remaining directors, though less than a quorum, or by the
shareholders at a special meeting called for that purpose. Despite the
expiration of his or her term, a director continues to serve until his or her
successor is elected and qualifies.
ARTICLE XI
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LIMITATION ON DIRECTOR LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or to its shareholders for monetary damages for breach of
fiduciary duty as a director; except that this provision shall not eliminate
or limit the liability of a director to the Corporation or to its shareholders
for monetary damages otherwise existing for (i) any breach of the director's
duty of loyalty to the Corporation or to its shareholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) acts specified in Section 7-108-403 of the
Colorado Business Corporation Act; or (iv) any transaction from which the
director directly or indirectly derived any improper personal benefit. If the
Colorado Business Corporation Act is hereafter amended to eliminate or limit
further the liability of a director, then, in addition to the elimination and
limitation of liability provided by the preceding sentence, the liability of
each director shall be eliminated or limited to the fullest extent permitted
by the Colorado Business Corporation Act as so amended. Any repeal or
modification of this Article IX shall not adversely affect any right or
protection of a director of the Corporation under this Article IX. as in
effect immediately prior to such repeal or modification, with respect to any
liability that would have accrued, but for this Article IX, prior to such
repeal or modification.
Dated this 18th day of August, 1998.
MONACO FINANCE, INC.
By: /s/ Morris Ginsburg
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Morris Ginsburg, President
<PAGE>
Exhibit 3.5
AMENDED AND RESTATED
BYLAWS
OF
MONACO FINANCE, INC.
ARTICLE 1
SHAREHOLDERS
1.1 ANNUAL SHAREHOLDERS' MEETING. The annual shareholders' meeting
shall be held on the date and at the time and place fixed from time to time by
the board of directors; provided, however, that the first annual meeting shall
be held on a date that is within six months after the close of the first
fiscal year of the Corporation, and each successive annual meeting shall be
held on a date that is within the earlier of six months after the close of the
last fiscal year or fifteen months after the last annual meeting.
1.2 SPECIAL SHAREHOLDERS' MEETING. A special shareholders' meeting
for any purpose or purposes may be called by the board of directors or the
president. The Corporation shall also hold a special shareholders' meeting in
the event it receives, in the manner specified in Section , one or more
written demands for the meeting, stating the purpose or purposes for which it
is to be held, signed and dated by the holders of shares representing not less
than one-tenth of all of the votes entitled to be cast on any issue at the
meeting. Special meetings shall be held at the principal office of the
Corporation or at such other place as the board of directors or the president
may determine.
1.3 RECORD DATE FOR DETERMINATION OF SHAREHOLDERS.
(a) In order to make a determination of shareholders (1) entitled to
notice of or to vote at any shareholders' meeting or at any adjournment of a
shareholders' meeting, (2) entitled to demand a special shareholders' meeting,
(3) entitled to take any other action, (4) entitled to receive payment of a
share dividend or a distribution, or (5) for any other purpose, the board of
directors may fix a future date as the record date for such determination of
shareholders. The record date may be fixed not more than seventy days before
the date of the proposed action.
(b) Unless otherwise specified when the record date is fixed, the
time of day for determination of shareholders shall be as of the Corporation's
close of business on the record date.
(c) A determination of shareholders entitled to be given notice of or
to vote at a shareholders' meeting is effective for any adjournment of the
meeting unless the board of directors fixes a new record date, which the board
shall do if the meeting is adjourned to a date more than one hundred twenty
days after the date fixed for the original meeting.
(d) If no record date is otherwise fixed, the record date for
determining shareholders entitled to be given notice of and to vote at an
annual or special shareholders' meeting is the day before the first notice is
given to shareholders.
(e) The record date for determining shareholders entitled to take
action without a meeting pursuant to Sections and is the date a writing upon
which the action is taken is first received by the Corporation.
1.4 VOTING LIST.
(a) After a record date is fixed for a shareholders' meeting, the
secretary shall prepare a list of the names of all its shareholders who are
entitled to be given notice of the meeting. The list shall be arranged by
voting groups and within each voting group by class or series of shares, shall
be alphabetical within each class or series, and shall show the address of,
and the number of shares of each such class and series that are held by, each
shareholder.
(b) The shareholders' list shall be available for inspection by any
shareholder, beginning the earlier of ten days before the meeting for which
the list was prepared or two business days after notice of the meeting is
given and continuing through the meeting, and any adjournment thereof, at the
Corporation's principal office or at a place identified in the notice of the
meeting in the city where the meeting will be held.
(c) The secretary shall make the shareholders' list available at the
meeting, and any shareholder or agent or attorney of a shareholder is entitled
to inspect the list at any time during the meeting or any adjournment.
1.5 NOTICE TO SHAREHOLDERS.
(a) The secretary shall give notice to shareholders of the date,
time, and place of each annual and special shareholders' meeting no fewer than
ten nor more than sixty days before the date of the meeting; except that, if
the articles of incorporation are to be amended to increase the number of
authorized shares, at least thirty days' notice shall be given. Except as
otherwise required by the Colorado Business Corporation Act, the secretary
shall be required to give such notice only to shareholders entitled to vote at
the meeting.
(b) Notice of an annual shareholders' meeting need not include a
description of the purpose or purposes for which the meeting is called unless
a purpose of the meeting is to consider an amendment to the articles of
incorporation, a restatement of the articles of incorporation, a plan of
merger or share exchange, disposition of substantially all of the property of
the Corporation, consent by the Corporation to the disposition of property by
another entity, or dissolution of the Corporation.
(c) Notice of a special shareholders' meeting shall include a
description of the purpose or purposes for which the meeting is called.
(d) Notice of a shareholders' meeting shall be in writing and shall
be given
(1) by deposit in the United States mail, properly addressed to the
shareholder's address shown in the Corporation's current record of
shareholders, first class postage prepaid, and, if so given, shall be
effective when mailed;
(2) or by telegraph, teletype, electronically transmitted facsimile,
electronic mail, mail, or private carrier or by personal delivery to the
shareholder, and, if so given, shall be effective when actually received by
the shareholder.
(e) If an annual or special shareholders' meeting is adjourned to a
different date, time or place, notice need not be given of the new date, time
or place if the new date, time or place is announced at the meeting before
adjournment; provided, however, that, if a new record date for the adjourned
meeting is fixed pursuant to Section , notice of the adjourned meeting shall
be given to persons who are shareholders as of the new record date.
(f) If three successive notices are given by the Corporation, whether
with respect to a shareholders' meeting or otherwise, to a shareholder and are
returned as undeliverable, no further notices to such shareholder shall be
necessary until another address for the shareholder is made known to the
Corporation.
1.6 QUORUM. Shares entitled to vote as a separate voting group may
take action on a matter at a meeting only if a quorum of those shares exists
with respect to that matter. A majority of the votes entitled to be cast on
the matter by the voting group shall constitute a quorum of that voting group
for action on the matter. If a quorum does not exist with respect to any
voting group, the president or any shareholder or proxy that is present at the
meeting, whether or not a member of that voting group, may adjourn the meeting
to a different date, time or place, and (subject to the next sentence) notice
need not be given of the new date, time or place if the new date, time or
place is announced at the meeting before adjournment. If a new record date
for the adjourned meeting is or must be fixed pursuant to Section , notice of
the adjourned meeting shall be given pursuant to Section to persons who are
shareholders as of the new record date. At any adjourned meeting at which a
quorum exists, any matter may be acted upon that could have been acted upon at
the meeting originally called; provided, however, that, if new notice is given
of the adjourned meeting, then such notice shall state the purpose or purposes
of the adjourned meeting sufficiently to permit action on such matters. Once a
share is represented for any purpose at a meeting, including the purpose of
determining that a quorum exists, it is deemed present for quorum purposes for
the remainder of the meeting and for any adjournment of that meeting unless a
new record date is or shall be set for that adjourned meeting.
1.7 VOTING ENTITLEMENT OF SHARES. Except as stated in the articles of
incorporation, each outstanding share, regardless of class, is entitled to one
vote, and each fractional share is entitled to a corresponding fractional
vote, on each matter voted on at a shareholders' meeting. In an election of
directors, that number of candidates equaling the number of directors to be
elected, having the highest number of votes cast in favor of their election,
are elected to the board of directors. On all other matters, voting shall be
as provided in the Articles of Incorporation or by law.
1.8 PROXIES; ACCEPTANCE OF VOTES AND CONSENTS.
(a) A shareholder may vote either in person or by proxy.
(b) An appointment of a proxy is not effective against the
Corporation until the appointment is received by the Corporation. An
appointment is valid for eleven months unless a different period is expressly
provided in the appointment form.
(c) The Corporation may accept or reject any appointment of a proxy,
revocation of appointment of a proxy, vote, consent, waiver or other writing
purportedly signed by or for a shareholder, if such acceptance or rejection is
in accordance with the provisions of Sections 7-107-203 and 7-107-205 of the
Colorado Business Corporation Act.
1.9 WAIVER OF NOTICE.
(a) A shareholder may waive any notice required by the Colorado
Business Corporation Act, by the articles of incorporation or these bylaws,
whether before or after the date or time stated in the notice as the date or
time when any action will occur or has occurred. The waiver shall be in
writing, be signed by the shareholder entitled to the notice, and be delivered
to the Corporation for inclusion in the minutes or filing with the corporate
records, but such delivery and filing shall not be conditions of the
effectiveness of the waiver.
(b) A shareholder's attendance at a meeting waives objection to lack
of notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the meeting or transacting
business at the meeting because of lack of notice or defective notice, and
waives objection to consideration of a particular matter at the meeting that
is not within the purpose or purposes described in the meeting notice, unless
the shareholder objects to considering the matter when it is presented.
1.10 ACTION BY SHAREHOLDERS WITHOUT A MEETING. Any action required or
permitted to be taken at a shareholders' meeting may be taken without a
meeting if all of the shareholders entitled to vote thereon consent to such
action in writing. Action taken pursuant to this section shall be effective
when the Corporation has received writings that describe and consent to the
action, signed by all of the shareholders entitled to vote thereon. Action
taken pursuant to this section shall be effective as of the date the last
writing necessary to effect the action is received by the Corporation, unless
all of the writings necessary to effect the action specify another date, which
may be before or after the date the writings are received by the Corporation.
Such action shall have the same effect as action taken at a meeting of
shareholders and may be described as such in any document. Any shareholder who
has signed a writing describing and consenting to action taken pursuant to
this section may revoke such consent by a writing signed by the shareholder
describing the action and stating that the shareholder's prior consent thereto
is revoked, if such writing is received by the Corporation before the
effectiveness of the action.
1.11 MEETINGS BY TELECOMMUNICATIONS. Any or all of the shareholders may
participate in an annual or special shareholders' meeting by, or the meeting
may be conducted through the use of, any means of communication by which all
persons participating in the meeting may hear each other during the meeting. A
shareholder participating in a meeting by this means is deemed to be present
in person at the meeting.
ARTICLE 2
DIRECTORS
2.1 AUTHORITY OF THE BOARD OF DIRECTORS. The corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
Corporation shall be managed under the direction of, a board of directors.
2.2 NUMBER. The number of directors shall be fixed by resolution of
the board of directors from time to time and may be increased or decreased by
resolution adopted by the board of directors from time to time, but no
decrease in the number of directors shall have the effect of shortening the
term of any incumbent director.
2.3 QUALIFICATION. Directors shall be natural persons at least
eighteen years old but need not be residents of the State of Colorado or
shareholders of the Corporation.
2.4 ELECTION. The board of directors shall be elected at the annual
meeting of the shareholders or at a special meeting called for that purpose.
2.5 TERM. Each director shall be elected to hold office until the
next annual meeting of shareholders and until the director's successor is
elected and qualified.
2.6 RESIGNATION. A director may resign at any time by giving written
notice of his or her resignation to any other director or (if the director is
not also the secretary) to the secretary. The resignation shall be effective
when it is received by the other director or secretary, as the case may be,
unless the notice of resignation specifies a later effective date. Acceptance
of such resignation shall not be necessary to make it effective unless the
notice so provides.
2.7 REMOVAL. Any director may be removed by the shareholders of the
voting group that elected the director, with or without cause, at a meeting
called for that purpose. The notice of the meeting shall state that the
purpose, or one of the purposes, of the meeting is removal of the director. A
director may be removed only if the number of votes cast in favor of removal
exceeds the number of votes cast against removal.
2.8 VACANCIES.
(a) If a vacancy occurs on the board of directors, including a
vacancy resulting from an increase in the number of directors:
(1) The shareholders may fill the vacancy at the next annual meeting
or at a special meeting called for that purpose; or
(2) The board of directors may fill the vacancy; or
(3) If the directors remaining in office constitute fewer than a
quorum of the board, they may fill the vacancy by the affirmative vote of a
majority of all the directors remaining in office.
(b) Notwithstanding Section and unless otherwise provided in the
Articles of Incorporation, if the vacant office was held by a director elected
by a voting group of shareholders, then, if one or more of the remaining
directors were elected by the same voting group, only such directors are
entitled to vote to fill the vacancy if it is filled by directors, and they
may do so by the affirmative vote of a majority of such directors remaining in
office; and only the holders of shares of that voting group are entitled to
vote to fill the vacancy if it is filled by the shareholders.
(c) A vacancy that will occur at a specific later date, by reason of
a resignation that will become effective at a later date under Section or
otherwise, may be filled before the vacancy occurs, but the new director may
not take office until the vacancy occurs.
2.9 MEETINGS. The board of directors may hold regular or special
meetings in or out of Colorado. A regular meeting shall be held in the
principal office of the Corporation on the first Monday, which is not a
Federal holiday, after the first day of each calendar quarter, commencing at
10:00 Mountain Time, without notice of the date, time, place or purpose of the
meeting. The board of directors may, by resolution, establish other dates,
times and places for additional regular meetings, which may thereafter be held
without further notice. Special meetings may be called by the president or by
any two directors and shall be held at the principal office of the Corporation
unless another place is consented to by every director. At any time when the
board consists of a single director, that director may act at any time, date
or place without notice.
2.10 NOTICE OF SPECIAL MEETING. Notice of a special meeting shall be given
to every director at least twenty four hours before the time of the meeting,
stating the date, time, and place of the meeting. The notice need not describe
the purpose of the meeting. Notice may be given orally to the director,
personally or by telephone or other wire or wireless communication. Notice may
also be given in writing by telegraph, teletype, electronically transmitted
facsimile, electronic mail, mail, or private carrier. Notice shall be
effective at the earliest of the time it is received; five days after it is
deposited in the United States mail, properly addressed to the last address
for the director shown on the records of the Corporation, first class postage
prepaid; or the date shown on the return receipt if mailed by registered or
certified mail, return receipt requested, postage prepaid, in the United
States mail and if the return receipt is signed by the director to which the
notice is addressed.
2.11 QUORUM. Except as provided in Section , a majority of the number of
directors fixed in accordance with these bylaws shall constitute a quorum for
the transaction of business at all meetings of the board of directors. The act
of a majority of the directors present at any meeting at which a quorum is
present shall be the act of the board of directors, except as otherwise
specifically required by law.
2.12 WAIVER OF NOTICE.
(a) A director may waive any notice of a meeting before or after the
time and date of the meeting stated in the notice. Except as provided by
Section , the waiver shall be in writing and shall be signed by the director.
Such waiver shall be delivered to the secretary for filing with the corporate
records, but such delivery and filing shall not be conditions of the
effectiveness of the waiver.
(b) A director's attendance at or participation in a meeting waives
any required notice to him or her of the meeting unless, at the beginning of
the meeting or promptly upon his or her later arrival, the director objects to
holding the meeting or transacting business at the meeting because of lack of
notice or defective notice and does not thereafter vote for or assent to
action taken at the meeting.
2.13 ATTENDANCE BY TELEPHONE. One or more directors may participate in a
regular or special meeting by, or conduct the meeting through the use of, any
means of communication by which all directors participating may hear each
other during the meeting. A director participating in a meeting by this means
is deemed to be present in person at the meeting.
2.14 DEEMED ASSENT TO ACTION. A director who is present at a meeting of
the board of directors when corporate action is taken shall be deemed to have
assented to all action taken at the meeting unless:
(1) The director objects at the beginning of the meeting, or promptly
upon his or her arrival, to holding the meeting or transacting business
at the meeting and does not thereafter vote for or assent to any action taken
at the meeting;
(2) The director contemporaneously requests that his or her dissent
or abstention as to any specific action taken be entered in the minutes of the
meeting; or
(3) The director causes written notice of his or her dissent or
abstention as to any specific action to be received by the presiding officer
of the meeting before adjournment of the meeting or by the secretary (or, if
the director is the secretary, by another director) promptly after adjournment
of the meeting.
The right of dissent or abstention pursuant to this Section as to a
specific action is not available to a director who votes in favor of the
action taken.
2.15 ACTION BY DIRECTORS WITHOUT A MEETING. Any action required or
permitted by law to be taken at a board of directors' meeting may be taken
without a meeting if all members of the board consent to such action in
writing. Action shall be deemed to have been so taken by the board at the time
the last director signs a writing describing the action taken, unless, before
such time, any director has revoked his or her consent by a writing signed by
the director and received by the secretary or any other person authorized by
the bylaws or the board of directors to receive such a revocation. Such action
shall be effective at the time and date it is so taken unless the directors
establish a different effective time or date. Such action has the same effect
as action taken at a meeting of directors and may be described as such in any
document.
ARTICLE 3
COMMITTEES OF THE BOARD OF DIRECTORS
3.1 COMMITTEES OF THE BOARD OF DIRECTORS.
(a) Subject to the provisions of Section 7-109-106 of the Colorado
Business Corporation Act, the board of directors may create one or more
committees and appoint one or more members of the board of directors to serve
on them. The creation of a committee and appointment of members to it shall
require the approval of a majority of all the directors in office when the
action is taken, whether or not those directors constitute a quorum of the
board.
(b) The provisions of these bylaws governing meetings, action without
meeting, notice, waiver of notice, and quorum and voting requirements of the
board of directors apply to committees and their members as well.
(c) To the extent specified by resolution adopted from time to time
by a majority of all the directors in office when the resolution is adopted,
whether or not those directors constitute a quorum of the board, each
committee shall exercise the authority of the board of directors with respect
to the corporate powers and the management of the business and affairs of the
Corporation; except that a committee shall not:
(1) Authorize distributions;
(2) Approve or propose to shareholders action that the Colorado
Business Corporation Act requires to be approved by shareholders;
(3) Fill vacancies on the board of directors or on any of its
committees;
(4) Amend the articles of incorporation pursuant to Section 7-110-102
of the Colorado Business Corporation Act;
(5) Adopt, amend, or repeal bylaws;
(6) Approve a plan of merger not requiring shareholder approval;
(7) Authorize or approve reacquisition of shares, except according to
a formula or method prescribed by the board of directors; or
(8) Authorize or approve the issuance or sale of shares, or a
contract for the sale of shares, or determine the designation and relative
rights, preferences, and limitations of a class or series of shares; except
that the board of directors may authorize a committee or an officer to do so
within limits specifically prescribed by the board of directors.
(d) the creation of, delegation of authority to, or action by, a
committee does not alone constitute compliance by a director with applicable
standards of conduct.
ARTICLE 4
OFFICERS
4.1 GENERAL. The Corporation shall have as officers a president, a
secretary, and a treasurer, who shall be appointed by the board of directors.
The board of directors may appoint as additional officers a chairman and other
officers of the board. The board of directors, the president, and such other
subordinate officers as the board of directors may authorize from time to
time, acting singly, may appoint as additional officers one or more vice
presidents, assistant secretaries, assistant treasurers, and such other
subordinate officers as the board of directors, the president, or such other
appointing officers deem necessary or appropriate. The officers of the
Corporation shall hold their offices for such terms and shall exercise such
authority and perform such duties as shall be determined from time to time by
these Bylaws, the board of directors, or (with respect to officers whom are
appointed by the president or other appointing officers) the persons
appointing them; provided, however, that the board of directors may change the
term of offices and the authority of any officer appointed by the president or
other appointing officers. Any two or more offices may be held by the same
person. The officers of the Corporation shall be natural persons at least
eighteen years old.
4.2 TERM. Each officer shall hold office from the time of appointment
until the time of removal or resignation pursuant to Section or until the
officer's death.
4.3 REMOVAL AND RESIGNATION. Any officer appointed by the board of
directors may be removed at any time by the board of directors. Any officer
appointed by the president or other appointing officer may be removed at any
time by the board of directors or by the person appointing the officer. Any
officer may resign at any time by giving written notice of resignation to any
director (or to any director other than the resigning officer if the officer
is also a director), to the president, to the secretary, or to the officer who
appointed the officer. Acceptance of such resignation shall not be necessary
to make it effective, unless the notice so provides.
4.4 PRESIDENT. The president shall preside at all meetings of
shareholders, and the president shall also preside at all meetings of the
board of directors unless the board of directors has appointed a chairman,
vice chairman, or other officer of the board and has authorized such person to
preside at meetings of the board of directors instead of the president.
Subject to the direction and control of the board of directors, the president
shall be the chief executive officer of the Corporation and as such shall have
general and active management of the business of the Corporation and shall see
that all orders and resolutions of the board of directors are carried into
effect. The president may negotiate, enter into and execute contracts, deeds
and other instruments on behalf of the Corporation as are necessary and
appropriate to the conduct of the business and affairs of the Corporation or
as are approved by the board of directors. The president shall have such
additional authority and duties as are appropriate and customary for the
office of president and chief executive officer, except as the same may be
expanded or limited by the board of directors from time to time.
4.5 VICE PRESIDENT. The vice president, if any, or, if there are more
than one, the vice presidents in the order determined by the board of
directors or the president (or, if no such determination is made, in the order
of their appointment), shall be the officer or officers next in seniority
after the president. Each vice president shall have such authority and duties
as are prescribed by the board of directors or president. Upon the death,
absence or disability of the president, the vice president, if any, or, if
there are more than one, the vice presidents in the order determined by the
board of directors or the president, shall have the authority and duties of
the president.
4.6 SECRETARY. The secretary shall be responsible for the preparation
and maintenance of minutes of the meetings of the board of directors and of
the shareholders and of the other records and information required to be kept
by the Corporation under Section 7-116-101 of the Colorado Business
Corporation Act and for authenticating records of the corporation. The
secretary shall also give, or cause to be given, notice of all meetings of the
shareholders and special meetings of the board of directors, keep the minutes
of such meetings, have charge of the corporate seal and have authority to
affix the corporate seal to any instrument requiring it (and, when so affixed,
it may be attested by the secretary's signature), be responsible for the
maintenance of all other corporate records and files and for the preparation
and filing of reports to governmental agencies (other than tax returns), and
have such other authority and duties as are appropriate and customary for the
office of secretary, except as the same may be expanded or limited by the
board of directors from time to time.
4.7 ASSISTANT SECRETARY. The assistant secretary, if any, or, if
there are more than one, the assistant secretaries in the order determined by
the board of directors or the secretary (or, if no such determination is made,
in the order of their appointment) shall, under the supervision of the
secretary, perform such duties and have such authority as may be prescribed
from time to time by the board of directors or the secretary. Upon the death,
absence or disability of the secretary, the assistant secretary, if any, or,
if there are more than one, the assistant secretaries in the order designated
by the board of directors or the secretary (or, if no such determination is
made, in the order of their appointment), shall have the authority and duties
of the secretary.
4.8 TREASURER. The treasurer shall have control of the funds and the
care and custody of all stocks, bonds and other securities owned by the
Corporation, and shall be responsible for the preparation and filing of tax
returns. The treasurer shall receive all moneys paid to the Corporation and,
subject to any limits imposed by the board of directors, shall have authority
to give receipts and vouchers, to sign and endorse checks and warrants in the
Corporation's name and on the Corporation's behalf, and give full discharge
for the same. The treasurer shall also have charge of disbursement of funds of
the Corporation, shall keep full and accurate records of the receipts and
disbursements, and shall deposit all moneys and other valuable effects in the
name and to the credit of the Corporation in such depositories as shall be
designated by the board of directors. The treasurer shall have such additional
authority and duties as are appropriate and customary for the office of
treasurer, except as the same may be expanded or limited by the board of
directors from time to time.
4.9 ASSISTANT TREASURER. The assistant treasurer, if any, or, if
there are more than one, the assistant treasurers in the order determined by
the board of directors or the treasurer (or, if no such determination is made,
in the order of their appointment) shall, under the supervision of the
treasurer, have such authority and duties as may be prescribed from time to
time by the board of directors or the treasurer. Upon the death, absence or
disability of the treasurer, the assistant treasurer, if any, or if there are
more than one, the assistant treasurers in the order determined by the board
of directors or the treasurer (or, if no such determination is made, in the
order of their appointment), shall have the authority and duties of the
treasurer.
4.10 COMPENSATION. Officers shall receive such compensation for their
services as may be authorized or ratified by the board of directors. Election
or appointment of an officer shall not of itself create a contractual right to
compensation for services performed as such officer.
ARTICLE 5
INDEMNIFICATION
5.1 DEFINITIONS. As used in this article:
(a) "Corporation" includes any domestic or foreign entity that is a
predecessor of the Corporation by reason of a merger or other transaction in
which the predecessor's existence ceased upon consummation of the transaction.
(b) "Director" means an individual who is or was a director of the
Corporation or an individual who, while a director of the Corporation, is or
was serving at the Corporation's request as a director, officer, partner,
trustee, employee, fiduciary or agent of another domestic or foreign
corporation or other person or of an employee benefit plan. A director is
considered to be serving an employee benefit plan at the Corporation's request
if his or her duties to the Corporation also impose duties on, or otherwise
involve services by, the director to the plan or to participants in or
beneficiaries of the plan. "Director" includes, unless the context requires
otherwise, the estate or personal representative of a director.
(c) "Expenses" includes counsel fees.
(d) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine, including an excise
tax assessed with respect to an employee benefit plan, or reasonable expenses.
(e) "Official capacity" means, when used with respect to a director,
the office of director in the Corporation and, when used with respect to a
person other than a director, the office in the Corporation held by the
officer or the employment, fiduciary or agency relationship undertaken by the
employee, fiduciary, or agent on behalf of the Corporation. "Official
capacity" does not include service for any other domestic or foreign
corporation or other person or employee benefit plan.
(f) "Party" includes a person who was, is or is threatened to be made
a named defendant or respondent in a proceeding.
(g) "Proceeding" means any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
and whether formal or informal.
5.2 AUTHORITY TO INDEMNIFY DIRECTORS.
(a) Except as provided in Section , the Corporation shall
indemnify a person made a party to a proceeding because the person is or was a
director against liability incurred in the proceeding if:
(1) The person conducted himself or herself in good faith; and
(2) The person reasonably believed:
(A) In the case of conduct in an official capacity with the
Corporation, that his or her conduct was in the Corporation's best interests;
and
(B) In all other cases, that his or her conduct was at least not
opposed to the Corporation's best interests; and
(3) In the case of any criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for
a purpose the director reasonably believed to be in the interests of the
participants in or beneficiaries of the plan is conduct that satisfies the
requirement of Section . A director's conduct with respect to an employee
benefit plan for a purpose that the director did not reasonably believe to be
in the interests of the participants in or beneficiaries of the plan shall be
deemed not to satisfy the requirements of Section .
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this Section .
(d) The Corporation may not indemnify a director under this Section .
(1) In connection with a proceeding by or in the right of the
Corporation in which the director was adjudged liable to the Corporation; or
(2) In connection with any other proceeding charging that the
director derived an improper personal benefit, whether or not involving action
in an official capacity, in which proceeding the director was adjudged
liable on the basis that he or she derived an improper personal benefit.
(e) Indemnification permitted under this Section in connection with
a proceeding by or in the right of the Corporation is limited to reasonable
expenses incurred in connection with the proceeding.
5.3 MANDATORY INDEMNIFICATION OF DIRECTORS. The Corporation shall
indemnify a person who was wholly successful, on the merits or otherwise, in
the defense of any proceeding to which the person was a party because the
person is or was a director, against reasonable expenses incurred by him or
her in connection with the proceeding.
5.4 ADVANCE OF EXPENSES TO DIRECTORS.
(a) The Corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of final
disposition of the proceeding if:
(1) The director furnishes to the Corporation a written affirmation
of the director's good faith belief that he or she has met the standard of
conduct described in Section .
(2) The director furnishes to the Corporation a written undertaking,
executed personally or on the director's behalf, to repay the advance if it is
ultimately determined that he or she did not meet the standard of
conduct; and
(3) A determination is made that the facts then known to those making
the determination would not preclude indemnification under this article.
(b) The undertaking required by Section shall be an unlimited
general obligation of the director but need not be secured and may be accepted
without reference to financial ability to make repayment.
(c) Determinations and authorizations of payments under this Section
shall be made in the manner specified in Section .
5.5 COURT-ORDERED INDEMNIFICATION OF DIRECTORS. A director who is or
was a party to a proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent jurisdiction. On
receipt of an application, the court, after giving any notice the court
considers necessary, may order indemnification in the following manner:
(1) If it determines that the director is entitled to mandatory
indemnification under Section , the court shall order indemnification, in
which case the court shall also order the Corporation to pay the directors
reasonable expenses incurred to obtain court-ordered indemnification.
(2) If it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances, whether
or not the director met the standard of conduct set forth in Section or
was adjudged liable in the circumstances described in Section , the court may
order such indemnification as the court deems proper; except that the
indemnification with respect to any proceeding in which liability shall have
been adjudged in the circumstances described in Section is limited to
reasonable expenses incurred in connection with the proceeding and reasonable
expenses incurred to obtain court-ordered indemnification.
5.6 DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION OF DIRECTORS.
(a) The Corporation may not indemnify a director under Section
unless authorized in the specific case after a determination has been made
that indemnification of the director is permissible in the circumstances
because the director has met the standard of conduct set forth in Section .
The Corporation shall not advance expenses to a director under Section unless
authorized in the specific case after the written affirmation and undertaking
required by Section and are received and the determination required by
Section has been made.
(b) The determinations required by Section shall be made:
(1) By the board of directors by a majority vote of those present at
a meeting at which a quorum is present, and only those directors not parties
to the proceeding shall be counted in satisfying the quorum; or
(2) If a quorum cannot be obtained, by a majority vote of a committee
of the board of directors designated by the board of directors, which
committee shall consist of two or more directors not parties to the
proceeding; except that directors who are parties to the proceeding may
participate in the designation of directors for the committee.
(c) If a quorum cannot be obtained as contemplated in Section , and a
committee cannot be established under Section if a quorum is obtained or a
committee is designated, if a majority of the directors constituting such
quorum or such committee so directs, the determination required to be made by
Section shall be made:
(1) By independent legal counsel selected by a vote of the board of
directors or the committee in the manner specified in Section or , or, if a
quorum of the full board cannot be obtained and a committee cannot be
established, by independent legal counsel selected by a majority vote of the
full board of directors; or
(2) By the shareholders.
(d) Authorization of indemnification and advance of expenses shall be
made in the same manner as the determination that indemnification or advance
of expenses is permissible; except that, if the determination that
indemnification or advance of expenses is permissible is made by independent
legal counsel, authorization of indemnification and advance of expenses shall
be made by the body that selected such counsel.
5.7 INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES AND AGENTS.
(a) An officer is entitled to mandatory indemnification under Section
and is entitled to apply for court-ordered indemnification under Section , in
each case to the same extent as a director;
(b) The Corporation may indemnify and advance expenses to an officer,
employee, fiduciary or agent of the Corporation to the same extent as to a
director; and
(c) The Corporation may also indemnify and advance expenses to an
officer, employee, fiduciary or agent who is not a director to a greater
extent than is provided in these bylaws, if not inconsistent with public
policy, and if provided for by general or specific action of its board of
directors or shareholders or by contract.
5.8 INSURANCE. The Corporation may purchase and maintain insurance on
behalf of a person who is or was a director, officer, employee, fiduciary or
agent of the Corporation, or who, while a director, officer, employee,
fiduciary or agent of the Corporation, is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee, fiduciary or
agent of another domestic or foreign corporation or other person or of an
employee benefit plan, against liability asserted against or incurred by the
person in that capacity or arising from his or her status as a director,
officer, employee, fiduciary or agent, whether or not the Corporation would
have power to indemnify the person against the same liability under Section ,
or . Any such insurance may be procured from any insurance company designated
by the board of directors, whether such insurance company is formed under the
laws of this state or any other jurisdiction of the United States or
elsewhere, including any insurance company in which the Corporation has an
equity or any other interest through stock ownership or otherwise.
5.9 NOTICE TO SHAREHOLDERS OF INDEMNIFICATION OF DIRECTOR. If the
Corporation indemnifies or advances expenses to a director under this article
in connection with a proceeding by or in the right of the Corporation, the
Corporation shall give written notice of the indemnification or advance to the
shareholders with or before the notice of the next shareholders' meeting. If
the next shareholder action is taken without a meeting at the instigation of
the board of directors, such notice shall be given to the shareholders at or
before the time the first shareholder signs a writing consenting to such
action.
ARTICLE 6
SHARES
6.1 CERTIFICATES. Certificates representing shares of the capital
stock of the Corporation shall be in such form as is approved by the board of
directors and shall be signed by the chairman or vice chairman of the board of
directors (if any), or the president or any vice president, and by the
secretary or an assistant secretary or the treasurer or an assistant
treasurer. All certificates shall be consecutively numbered, and the names of
the owners, the number of shares and the date of issue shall be entered on the
books of the Corporation. Each certificate representing shares shall state
upon its face
(a) That the Corporation is organized under the laws of the State of
Colorado;
(b) The name of the person to whom issued;
(c) The number and class of the shares and the designation of the
series, if any, that the certificate represents;
(d) The par value, if any, of each share represented by the
certificate;
(e) A conspicuous statement, on the front or the back, that the
Corporation will furnish to the shareholder, on request in writing and without
charge, information concerning the designations, preferences, limitations and
relative rights applicable to each class, the variations in preferences,
limitations and rights determined for each series, and the authority of the
board of directors to determine variations for future classes or series; and
(f) Any restrictions imposed by the Corporation upon the transfer of
the shares represented by the certificate.
6.2 FACSIMILE SIGNATURES. Where a certificate is signed
(a) By a transfer agent other than the Corporation or its employee,
or
(b) By a registrar other than the Corporation or its employee,
any or all of the officers' signatures on the certificate required by Section
may be facsimile. If any officer, transfer agent or registrar who has signed,
or whose facsimile signature or signatures have been placed upon, any
certificate shall cease to be such officer, transfer agent, or registrar,
whether because of death, resignation, or otherwise, before the certificate is
issued by the Corporation, it may nevertheless be issued by the Corporation
with the same effect as if he or she were such officer, transfer agent or
registrar at the date of issue.
6.3 TRANSFERS OF SHARES. Transfers of shares shall be made on the
books of the Corporation only upon presentation of the certificate or
certificates representing such shares properly endorsed by the person or
persons appearing upon the face of such certificate to be the owner, or
accompanied by a proper transfer or assignment separate from the certificate,
except as may otherwise be expressly provided by the statutes of the State of
Colorado or by order of a court of competent jurisdiction. The officers or
transfer agents of the Corporation may, in their discretion, require a
signature guaranty before making any transfer. The Corporation shall be
entitled to treat the person in whose name any shares are registered on its
books as the owner of those shares for all purposes and shall not be bound to
recognize any equitable or other claim or interest in the shares on the part
of any other person, whether or not the Corporation shall have notice of such
claim or interest.
6.4 SHARES HELD FOR ACCOUNT OF ANOTHER. The board of directors may
adopt by resolution a procedure whereby a shareholder of the Corporation may
certify in writing to the Corporation that all or a portion of the shares
registered in the name of such shareholder are held for the account of a
specified person or persons. The resolution shall set forth
(a) The classification of shareholders who may certify;
(b) The purpose or purposes for which the certification may be made;
(c) The form of certification and information to be contained herein;
(d) If the certification is with respect to a record date or closing
of the stock transfer books, the time after the record date or the closing of
the stock transfer books within which the certification must be received by
the Corporation; and
(e) Such other provisions with respect to the procedure as are deemed
necessary or desirable. Upon receipt by the Corporation of a certification
complying with the procedure, the persons specified in the certification shall
be deemed, for the purpose or purposes set forth in the certification, to be
the holders of record of the number of shares specified in place of the
shareholder making the certification.
ARTICLE 7
MISCELLANEOUS
7.1 CORPORATE SEAL. The board of directors may adopt a seal, circular
in form and bearing the name of the Corporation and the words "SEAL" and
"COLORADO," which, when adopted, shall constitute the seal of the Corporation.
The seal may be used by causing it or a facsimile of it to be impressed,
affixed, manually reproduced or rubber stamped with indelible ink.
7.2 FISCAL YEAR. The board of directors may, by resolution, adopt a
fiscal year for the Corporation.
7.3 RECEIPT OF NOTICES BY THE CORPORATION. Notices, shareholder
writings consenting to action, and other documents or writings shall be deemed
to have been received by the Corporation when they are received
(a) At the registered office of the Corporation in the State of Colorado;
(b) At the principal office of the Corporation (as that office is
designated in the most recent document filed by the Corporation with the
Secretary of State for the State of Colorado designating a principal office)
addressed to the attention of the secretary of the Corporation;
(c) By the secretary of the corporation wherever the secretary may be
found; or
(d) By any other person authorized from time to time by the board of
directors, the president, or the secretary to receive such writings, wherever
such person is found.
<PAGE>
7.4 AMENDMENT OF BYLAWS. These Bylaws may at any time and from time
to time be amended, supplemented or repealed by the board of directors.
The undersigned directors have adopted the foregoing bylaws as the
Amended and Restated Bylaws of Monaco Finance, Inc., effective August 13,
1998.
/s/ Morris Ginsburg /s/ Irwin L. Sandler
---------------- ------------------
Morris Ginsburg Irwin L. Sandler
/s/ Bill C. Bradley /s/ John Sloan
----------------- ------------------
Bill C. Bradley John Sloan
/s/ Bobby Hashaway /s/ Joseph A. Cutrona
---------------- ------------------
Bobby Hashaway Joseph A. Cutrona
/s/ Bill Clark /s/ Leonard M. Snyder
---------------- ------------------
Bill Clark Leonard M. Snyder
<PAGE>
Exhibit 10.69
CONVERSION AND RIGHTS AGREEMENT
THIS CONVERSION AND RIGHTS AGREEMENT (the "Agreement") dated as of July
1, 1998, is made by and between Monaco Finance, Inc., a Colorado corporation
(the "Company") and Pacific USA Holdings Corp., a Texas corporation
("Pacific").
RECITALS
WHEREAS, the Company and Pacific entered into a loan arrangement,
pursuant to which Pacific made a loan to the Company (the "Loan") evidenced by
that certain promissory note dated June 30, 1998 (the "Note") in the principal
amount of Five Million and No/100 Dollars ($5,000,000.00); and
WHEREAS, the outstanding principal amount of the Loan as of the Effective
Date (as defined below) is Five Million and No/100 Dollars ($5,000,000,00)
(the "Outstanding Principal Amount"); and
WHEREAS, the Company and Pacific entered into a Pledge and Security
Agreement dated as of June 30, 1998 whereby the Company pledged the Collateral
(as defined therein) to secure the obligations of the Company under the Loan
Agreement; and
WHEREAS, the Company and Pacific desire to (i) convert $4,463,250.00 of
the Outstanding Principal Amount of the Note into shares of Class A Common
Stock of the Company and (ii) accomplish certain related purposes, all as set
forth herein.
AGREEMENT
NOW, THEREFORE, in exchange for good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties do
hereby covenant and agree as follows:
Section 1. Definitions
-----------
The following terms when used in this Agreement shall have the following
meanings:
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities and Exchange Act of 1934, and the
rules and regulations promulgated thereunder, as amended.
"Registrable Securities" means (i) the Conversion Shares and (ii) 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 Conversion
Shares.
"Securities Act" means the Securities Act of 1933, and the rules and
regulations promulgated thereunder, as amended.
Section 2. Conversion
----------
(a) The parties hereby agree that as of the Effective Date,
$4,463,250.00 of the Outstanding Principal Amount of the Loan shall be
converted into Class A Common Stock of the Company, par value $.01 per share
("Common Stock"). The number of shares of Common Stock to be delivered to
Pacific by the Company upon such conversion ("Conversion Shares") shall be
determined by dividing the $4,463,250.00 by $0.95.
(b) The Company hereby agrees to deliver, on the Effective Date, the
Conversion Shares to Pacific per its instructions. At Pacific's request, the
Company shall register the Conversion Shares in the name of a wholly owned
subsidiary. In such event, the term "Pacific" shall include such wholly owned
subsidiary.
Section 3. Request for Registration
--------------------------
(a) Pacific (so long as it or any of its affiliates own at least 25%
of the Registrable Securities) may request in a written notice that the
Company file a registration statement under the Securities Act covering the
registration of all or part of the Registrable Securities. Following receipt
of any notice under this Section 3(a) the Company shall use its best efforts
to cause to be registered under the Securities Act all Registrable Securities
that Pacific has requested be registered in accordance with the manner of
disposition specified in such notice by Pacific.
(b) If Pacific intends to have the Registrable Securities distributed
by means of an underwritten offering, then Pacific shall enter into an
underwriting agreement in customary form with the underwriter or underwriters.
An underwriter or underwriters shall be selected by Pacific and shall be
approved by the Company, which approval shall not be unreasonably withheld;
provided (i) that all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of Pacific, (ii) that
any or all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement shall be conditions precedent to the
obligations of Pacific, and (iii) that Pacific shall not be required to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties to or agreements regarding
Pacific, the Registrable Securities and Pacific's intended method of
distribution and any other representations required by law or reasonably
required by the underwriter.
(c) The Company shall not be obligated to effect more than two
registrations pursuant to this Section 3; provided that a registration
requested pursuant to this Section 3 shall not be deemed to have been effected
for purposes of this Section 3 unless (i) it has been declared effective by
the Commission, (ii) it has remained effective for the period set forth in
Section 6(a), (iii) the offering of Registrable Securities pursuant to such
registration is not subject to any stop order, injunction or other order of
requirement of the Commission (other than any such stop order, injunction, or
other requirement of the Commission prompted by any act or omission of
Pacific).
(d) If the Board of Directors of the Company, in its good faith
judgment, determines that any registration of Registrable Securities should
not be made or continued due to a valid need not to disclose confidential
information or because it would materially interfere with any material
financing, acquisition, corporate reorganization or merger or other material
transaction involving the Company (collectively, a "Valid Business Reason"),
the Company may postpone filing a registration statement relating to a request
for registration under this Section 3 until such Valid Business Reason no
longer exists, but in no event for more than three months from the date of the
notice referred to below, and, in case any such registration statement has
been filed the Company may cause such registration statement to be withdrawn
and its effectiveness terminated or may postpone amending or supplementing
such registration statement; and the Company shall give written notice (a
"Delay Notice") of its determination to postpone or withdraw a registration
statement and of the fact that the Valid Business Reason for such postponement
or withdrawal no longer exists, in each case, promptly after the occurrence
thereof. Upon the request of Pacific, the Company will disclose to Pacific
the nature of such Valid Business Reason in reasonable detail; provided that
Pacific executes a confidentiality agreement reasonably satisfactory to the
Company; provided further that any such confidentiality agreement shall
terminate upon the earlier of the public disclosure of such Valid Business
Reason or three months from the date of such Delay Notice. Notwithstanding
the foregoing provisions of this subparagraph (d), no registration statement
filed and subsequently withdrawn by reason of any existing or anticipated
Valid Business Reason as hereinabove provided shall count as one of the two
registration statements referred to in the limitation in Section 3(c) and the
Company shall be entitled to serve only one Delay Notice (i) within any period
of 180 consecutive days, or (ii) with respect to any three consecutive
registrations requested pursuant to this Section 3 or Section 5.
(e) In the event that Pacific 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) Pacific 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) Pacific 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 Pacific shall not be deemed to have exercised its right to
require the Company to register Registrable Securities pursuant to this
Section 3.
(f) Without the written consent of Pacific, neither the Company nor
any other holder of securities of the Company may include securities in a
registration pursuant to this Section 3 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.
<PAGE>
Section 4. 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 Pacific. Upon the written request of Pacific 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 Pacific has so requested registration, to be included in such
registration statement, all to the extent requisite to permit the sale or
other disposition by Pacific of the Registrable Securities 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 4 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 written opinion of the
managing underwriter, the total amount of securities to be so registered,
including the Registrable Securities, will exceed the maximum amount of the
Company's securities that can be marketed (a) at a price reasonably related to
the then current market value of such securities, or (b) without otherwise
materially and adversely affecting the entire offering, then the Company shall
include in such registration (i) first, all the securities the Company
proposes to sell for its own account or is required to register on behalf of
any third party exercising rights similar to those granted in Section 3(a) and
without having the adverse effect referred to above, and (ii) second, to the
extent that the number of securities which the Company proposes to sell for
its own account pursuant to this Section 4 or is required to registered on
behalf of any third party exercising rights similar to those granted in
Section 3(a) is less than the number of equity securities which the Company
has been advised can be sold in such offering without having the adverse
effect referred to above, all Registrable Securities requested to be included
in such registration by Pacific pursuant to this Section 4; provided that if
the number of Registrable Securities requested to be included in such
registration by Pacific pursuant to this Section 4, together with the number
of securities to be included in such registration pursuant to clause (i) of
this Section 4, exceeds the number which the Company has been advised can be
sold in such offering without having the adverse effect referred to above, the
number of such Registrable Securities requested to be included in such
registration by Pacific shall be limited to such extent.
Section 5. Registration on Form S-3. If at any time (a) Pacific requests
------------------------
in writing that the Company file a registration statement on Form S-3 or any
successor thereto for a public offering of all or any portion of the
Registrable Securities held by Pacific, the reasonably anticipated aggregate
price to the public of which would exceed $1,000,000, and (b) the Company is a
registrant entitled to use Form S-3 or any successor thereto, then the Company
shall use its best efforts to register as soon as practicable under the
Securities Act on Form S-3 or any successor thereto, for public sale in
accordance with the method of disposition specified in such request, the
Registrable Securities specified in such request. Whenever the Company is
required by this Section 5 to use its best efforts to effect the registration
of Registrable Securities, each of the limitations, procedures and
requirements of Section 3(b) and (d) shall apply to such registration;
provided, however, that there shall be no limitation on the number of
registrations on From S-3 that may be requested and obtained under this
Section 5. The Company will use its best efforts to qualify and maintain its
qualification as a registrant entitled to use Form S-3 or any successor
thereto.
Section 6. Obligations of the Company. Whenever required under Section 3
--------------------------
or Section 5 to use its best efforts to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become and remain effective for the period of
the distribution contemplated thereby determined as provided hereafter;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement, and furnish to Pacific copies of any
such amendments and supplements prior to their being used or filed with the
Commission;
(c) furnish to Pacific such numbers of copies of the registration
statements and the prospectus included therein (including each preliminary
prospectus and any amendments or supplements thereto in conformity with the
requirements of the Securities Act) and such other documents and information
as Pacific may reasonably request and make available for inspection by the
parties referred to in Section 6(d) below such financial and other information
and books and records of the Company, and cause the officers, directors,
employees, counsel and independent certified public accountants of the Company
to respond to such inquiries, as shall be reasonably necessary, in the
judgment of the respective counsel referred to in such Section, to conduct a
reasonable investigation within the meaning of Section 11 of the Securities
Act;
(d) provide (i) Pacific, (ii) the underwriters (which term, for
purposes of this Agreement, shall include a person deemed to be an underwriter
within the meaning of Section 2(11) of the Securities Act), if any, thereof,
(iii) the sales or placement agent, if any, therefor, (iv) counsel for such
underwriters or agent, and (v) not more than one counsel for Pacific the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment or supplement thereto;
(e) use its best efforts to register or qualify the Registrable Securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions within the United States and Puerto Rico as shall
be reasonably appropriate for the distribution of the Registrable Securities
covered by the registration statement; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business in or to file a general consent to service of process
in any jurisdiction wherein it would not but for the requirements of this
paragraph (e) be obligated to do so; and provided further, that the Company
shall not be required to qualify such Registrable Securities in any
jurisdiction in which the securities regulatory authority requires that
Pacific submit its Registrable Securities to the terms, provisions and
restrictions of any escrow, lockup or similar agreement(s) for consent to sell
Registrable Securities in such jurisdiction unless Pacific agrees to do so;
(f) promptly notify Pacific, the sales or placement agent, if any,
and the managing underwriter or underwriters, if any, and confirm such advice
in writing (i) when such registration statement or the prospectus included
therein or any prospectus amendment or supplement or post-effective amendment
has been filed, and, with respect to such registration statement or any
post-effective amendment, when the same has become effective, (ii) of any
comments by the Commission or by any Blue Sky securities commissioner or
regulator of any state with respect thereto or any request by the Commission
for amendments or supplements to such registration statement or prospectus or
for additional information, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the registration statement or the
initiation or threatening of any proceedings for the purpose, (iv) if at any
time the representations and warranties of the Company contained in any
underwriting agreement or other customary agreement cease to be true and
correct in all material respects, or (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for the sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(g) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment thereto at the earliest practicable date;
(h) promptly notify Pacific at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make, in light of the circumstances under which they were made, the
statements therein not misleading, and at the request of Pacific promptly
prepare and furnish to Pacific a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make, in light of
the circumstances under which they were made, the statements therein not
misleading;
(i) furnish, at the request of Pacific, if the method of distribution
is by means of an underwriting on the date that the Registrable Securities are
delivered to the underwriters for sale pursuant to such registration or if
such Registrable Securities are not being sold through underwriters, on the
date that the registration statement with respect to such Registrable
Securities becomes effective, (1) a signed opinion, dated such date, of the
independent legal counsel representing the Company for the purpose of such
registration, addressed to the underwriters, if any, and if such Registrable
Securities are not being sold through underwriters, then to Pacific as to such
matters as such underwriters or Pacific, as the case may be, may reasonably
request and as would be customary in such a transaction; and (2) letters dated
such date and the date the offering is priced from the independent certified
public accountants of the Company, addressed to the underwriters, if any, and
if such Registrable Securities are not being sold through underwriters, then
to Pacific, and if such accountants refuse to deliver such letters to Pacific,
then to the Company (i) stating 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 the prospectus, or any
amendment or supplement thereto, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and (ii)
covering such other financial matters (including information as to the period
ending not more than five (5) business days prior to the date of such letters)
with respect to the registration in respect of which such letter is being
given as such underwriters or Pacific, as the case may be, may reasonably
request and as would be customary in such a transaction;
(j) enter into customary agreements (including if the method of
distribution is by means of an underwriting, an underwriting agreement in
customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Securities
to be so included in the registration statement;
(k) use its best efforts to obtain the consent or approval of each
governmental agency or authority, whether federal, state or local, which may
be required to effect registration or the offering or sale in connection
therewith or to enable Pacific to offer, or to consummate the disposition of,
their Registrable Securities;
(l) use its best efforts to list the Registrable Securities covered
by such registration statement with any securities exchange on which the
Common Stock of the Company is then listed.
For purposes of Sections 6(a) and 6(b), and with respect to (i) registration
required pursuant to Section 3, (A) the period of distribution of Registrable
Securities in a firm commitment underwritten public offering shall be deemed
to extend until each underwriter has completed the distribution of all
securities purchased by it and (B) the period of distribution of Registrable
Securities in any other registration shall be deemed to extend until the
earlier of the sale of all Registrable Securities covered thereby and six (6)
months after the effective date thereof, and (ii) registrations required
pursuant to Section 5, the period of distribution of Registrable Securities in
any registration (firm commitment underwritten or otherwise) shall be deemed
to extend until the earlier of the sale of all Registrable Securities covered
thereby and three (3) months after the effective date thereof.
Pacific agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in clause (h) of this Section 6,
Pacific will forthwith discontinue disposition of the Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until Pacific's receipt of the copies of the supplemented or amended
prospectus contemplated by clause (h) of this Section 6, and, if so directed
by the Company, Pacific will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in Pacific's possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice; provided, however, that any period of time during
which Pacific must discontinue disposition of the Registrable Securities shall
not be included in the determination of a period of distribution for purposes
of Sections 6(a) and 6(b).
Section 7. Furnish Information. It shall be a condition precedent to the
--------------------
obligations of the Company to take any action pursuant to this Agreement, that
Pacific shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as the Company shall reasonably request and as shall be
required in connection with the action to be taken by the Company.
Section 8. Expenses of Registration. All expenses incurred in connection
------------------------
with the first registration effected pursuant to Section 3, and each
registration pursuant to Section 4 and Section 5 of this Agreement, excluding
underwriter's discounts and commissions, but including without limitation all
registration, filing and qualification fees, word processing, duplicating,
printers' and accounting fees (including the expense of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance), fees of the National Association of Securities Dealers, Inc. (the
"NASD") or listing fees, messenger and deliver expenses, all fees and expenses
of complying with state securities or blue sky laws, and fees and
disbursements of counsel for the Company and Pacific, shall be paid by the
Company; provided, however, that if a registration request pursuant to Section
3 of this Agreement is subsequently withdrawn at the request of Pacific,
Pacific shall bear such expenses; and provided further, that if a registration
request pursuant to Section 5 of this Agreement is subsequently withdrawn at
the request of Pacific, the Company shall not be required to pay any expenses
of such registration proceeding, and Pacific shall bear such expenses.
Pacific shall bear and pay the underwriting commissions and discounts
applicable to securities offered for their account in connection with any
registration, filings, and qualifications made pursuant to this Agreement. In
addition, Pacific shall pay all expenses incurred in connection with the
second registration effected pursuant to Section 3.
Section 9. Underwriting Requirements. In connection with any
--------------------------
underwritten offering, the Company shall not be required under Section 4 to
include Registrable Securities in such underwritten offering, unless Pacific
accepts the terms of the underwriting of such offering that have been
reasonably agreed upon between the Company and the underwriters selected by
the Company.
Section 10. Rule 144 and Rule 144A Information. With a view to making
----------------------------------
available the benefits of certain rules and regulations of the Commission
which may at any time permit the sale of the Registrable Securities to the
public without registration, at all times, the Company agrees to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities
Act and the Exchange Act; and
(iii) furnish to Pacific forthwith upon request a written statement by
the Company as to its compliance with the reporting requirements of such Rule
144 and of the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company as Pacific may reasonably request in availing itself
of any rule or regulation of the Commission allowing Pacific to sell any
Registrable Security without registration.
Notwithstanding anything contained in this Section 10, the Company may cease
to file reports with the Commission under Section 12 of the Exchange Act if it
then is permitted to do so pursuant to the Exchange Act and the rules and
regulations thereunder.
Section 11. Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless Pacific, its
directors and officers, each person who participates in the offering of such
Registrable Securities, including underwriters (as defined in the Securities
Act), and each person, if any, who controls Pacific or participating person
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
proceedings in respect thereof) arise out of or are based on any untrue or
alleged untrue statement of a material fact contained in such registration
statement, preliminary prospectus, final prospectus or amendments or
supplements thereto or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that the indemnity agreement contained in this Section 11(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld); provided, further, that
the Company shall not be liable to Pacific, its directors and officers,
participating person or controlling person in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendments or supplements thereto,
in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by Pacific, its
directors and officers, participating person or controlling person; and
provided, further, that the Company will not be liable to Pacific, its
directors and officers, participating person or controlling person in any such
case for any such loss, claim, damage, liability or action to the extent that
it arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any registration statement
or preliminary prospectus that is corrected in the final registration
statement and prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage, liability or action purchased
Registrable Securities but was not sent or given a copy of the final
prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Registrable Securities to such person in any
case where such delivery of the final registration statement and prospectus
(as amended or supplemented) is required by the Securities Act and such final
prospectus (as amended or supplemented) was previously delivered in a timely
manner to Pacific by the Company. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of Pacific,
its directors and officers, participating person or controlling person, and
shall survive the transfer of such securities by Pacific.
(b) Pacific shall indemnify and hold harmless the Company, each of
its directors and officers, each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, and each agent and any underwriter for the Company (within
the meaning of the Securities Act) to the same extent as the foregoing
indemnity from the Company to Pacific but only with reference to written
information relating to Pacific furnished to the Company expressly for use in
connection with such registration; provided, however, that the indemnity
agreement contained in this Section 11(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Pacific (which consent shall not
be unreasonably withheld); and provided further, that the liability of Pacific
hereunder shall be limited to the proportion of any such loss, claim, damage,
liability or expense that is equal to the proportion that the gross proceeds
from the sale of the shares sold by Pacific under such registration statement
bears to the total gross proceeds from the sale of all securities sold
thereunder, but not in any event to exceed the gross proceeds actually
received by Pacific from the sale of Registrable Securities by such
registration statement.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, or (ii) the name parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to the actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all such indemnified parties and that all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by
Pacific, in the case of parties indemnified pursuant to the second preceding
paragraph, and by the Company in the case of the parties indemnified pursuant
to the first preceding paragraph. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reasons of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party, unless
such settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in the first or second
paragraph of this Section 11 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of material or
omission or alleged omission to state a material fact, has been made by, or
relates to information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by
a party as a result of the losses, claims, damages or liabilities referred to
above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 11(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 11, Pacific shall
not be required to contribute any amount in excess of the amount of gross
proceeds received by Pacific from the sale of Registrable Securities covered
by such registration statement. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 11
are not exclusive and shall not limit any right or remedies that may otherwise
be available to any indemnified party at law or in equity.
<PAGE>
Section 12. Transfer of Registration Rights.
----------------------------------
The registration rights of Pacific under this Agreement may be
transferred to (a) any transferee of such Registrable Securities who acquires
all Registrable Securities of Pacific or (b) any affiliate of Pacific.
Section 13. Intentionally Deleted.
-----------------------
Section 14. Intentionally Deleted.
-----------------------
Section 15. Representations and Warranties of the Company
--------------------------------------------------
(a) Organization and Good Standing. The Company is a corporation
------------------------------
duly organized, validly existing and in good standing under the law of the
State of Colorado and each other State where the nature of its business
requires it to qualify, except to the extent that the failure to so qualify
would not in the aggregate materially adversely affect the ability of the
Company to perform its obligations hereunder.
(b) Authorization. The Company has the power, authority and legal
-------------
right to execute, deliver and perform under the terms of this Agreement and
the execution, delivery and performance of this Agreement has been duly
authorized by the Company by all necessary corporate and shareholder action.
(c) Binding Obligation. This Agreement, assuming due authorization,
------------------
execution and delivery by Pacific, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws (whether
statutory, regulatory or decisional) now or hereafter in effect relating to
creditors' rights generally and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether a proceeding at law or in equity.
(d) No Violation. The consummation of the transactions contemplated
------------
by the fulfillment of the terms of this Agreement will not conflict with,
result in any breach of any of the terms and provisions of or constitute (with
or without notice, lapse of time or both) a default under the organizational
documents or bylaws of the Company, or any indenture, agreement, mortgage,
deed of trust or other instrument to which the Company is a party or by which
it is bound, or in the creation or imposition of any lien upon any of its
properties pursuant to the terms of such indenture, agreement, mortgage, deed
of trust or other such instrument, or violate any law, or any order, rule or
regulation applicable to the Company of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Company or any of its properties.
(e) Approvals. All approvals, authorizations, consents, orders or other
---------
actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Effective
Date.
(f) Conversion Shares. All of the Conversion Shares have been duly
-----------------
authorized, and upon delivery thereof to Pacific in accordance with Section 2
hereof, shall be validly issued, fully paid and non-assessable, free and clear
of all pledges, liens, encumbrances and restrictions (other than as set forth
in this Agreement).
(g) Capital Stock. At the Effective Date, the authorized capital
-------------
stock of the Company consists of 30,000,000 shares of Class A Common Stock, of
which 8,074,631 shares are issued and outstanding, 2,250,000 shares of Class B
Common Stock, of which 1,273,715 shares are issued and outstanding, and
10,000,000 shares of preferred stock, no par value, of which 2,356,236 shares
are issued and outstanding.
(h) Securities Laws. Under the circumstances contemplated by this
----------------
Agreement and assuming the accuracy of the representations of Pacific in
Section 16 of this Agreement, the offer, issuance, sale and delivery of the
Conversion Shares will not, under current laws and regulations, require
compliance with the prospectus delivery or registration requirements of the
Securities Act.
(i) SEC Filings. The Company has made all filings that it is
------------
required to make with the Commission under the Securities Act and the Exchange
Act (the "Company SEC Reports"). As of their respective dates, the Company
SEC Reports did 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.
Section 16. Representations and Warranties of Pacific.
---------------------------------------------
(a) Organization and Good Standing. Pacific is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State
of Texas and each other State where the nature of its business requires it to
qualify, except to the extent that the failure to so qualify would not in the
aggregate materially adversely affect the ability of Pacific to perform its
obligations hereunder.
(b) Authorization. Pacific has the power, authority and legal right
-------------
to execute, deliver and perform under the terms of this Agreement and the
execution, delivery and performance of this Agreement has been duly
authorized by Pacific by all necessary corporate action.
(c) Binding Obligation. This Agreement, assuming due authorization,
------------------
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Pacific, enforceable against Pacific in accordance with its
terms except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws (whether
statutory, regulatory or decisional) now or hereafter in effect relating to
creditors' rights generally and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether a proceeding at law or in equity.
(d) No Violation. The consummation of the transactions contemplated
------------
by the fulfillment of the terms of this Agreement will not conflict with,
result in any breach of any of the terms and provisions of or constitute (with
or without notice, lapse of time or both) a default under the organizational
documents or bylaws of Pacific, or any indenture, agreement, mortgage, deed of
trust or other instrument to which Pacific is a party or by which it is bound,
or in the creation or imposition of any lien upon any of its properties
pursuant to the terms of such indenture, agreement, mortgage, deed of trust
or other such instrument, or violate any law, or any order, rule or regulation
applicable to Pacific of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over Pacific or any of its properties.
(e) Approvals. All approvals, authorizations, consents, orders or
---------
other actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Effective
Date.
(f) Sole Owner. Pacific is the sole owner of the Note and has not
----------
sold, assigned or otherwise conveyed any interest in the Note to any Person or
entity.
(g) Private Placement. Except as contemplated by this Agreement,
-----------------
Pacific will acquire the Conversion Shares for investment, and not for the
interest of any other person, not for resale to any other person and not with
a view to or in connection with any sale or distribution.
Section 17. Opinion of the Company's Counsel. On or before the Effective
--------------------------------
Date, the Company shall have delivered to Pacific an opinion, satisfactory to
Pacific, of outside counsel to the Company, dated the Effective Date,
substantially to the effect that:
(a) 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 Conversion Shares and to carry out the provisions of this Agreement.
(b) The 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 (i) 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
and (ii) limitations as rights of indemnification or contribution may be
limited by principles of public policy.
(c) The Conversion Shares have been duly authorized, validly issued
and delivered by the Company. The Conversion 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 Conversion
Shares are in valid and sufficient form.
(d) 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 in connection with the execution and delivery of this Agreement, the
offer, issuance and sale of the Conversion Shares and the consummation of the
transactions contemplated by this Agreement, have been duly and validly taken.
(e) Assuming the accuracy of the representations made by Pacific in
Section 16 of this Agreement, the Company has obtained the approval or consent
of all governmental agencies or bodies required 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 Conversion 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 Pacific in Section 16 of this Agreement, the
execution, delivery and performance of this Agreement, the offer, issuance and
sale of the Conversion 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.
(f) Assuming the accuracy of the representations made by Pacific in
Section 16 of this Agreement, the offer, sale, issuance and delivery of the
Conversion Shares to Pacific 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.
Section 18. Effective Date.
----------------
This Agreement shall become effective as of the date first above written
(the "EffectiveDate") provided each of the parties hereto shall have executed
this Agreement or a counterpart hereof on or before September 1, 1998.
Section 19. 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,
(a) if to Pacific:
Pacific USA Holdings Corp.
5999 Summerside Drive, Suite 112
Dallas, Texas 75252
Attn: Bill C. Bradley, Chief Executive Officer
Facsimile No. (972) 248-5023
With a Copy to:
Pacific USA Holdings Corp.
3200 Southwest Freeway, Suite 1220
Houston, Texas 77027
Attn: Cathryn L. Porter, Chief General Counsel
Facsimile No. (713) 871-0155
(b) if to Company:
Monaco Finance, Inc.
370 Seventeenth Street, Suite 5060
Denver, Colorado 80202
Attn: Irwin L. Sandler, Executive Vice President
Facsimile No. (303) 405-6496
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. Any party may change its address for
notice by notifying the other party pursuant to the above notice provisions.
Section 20. Miscellaneous.
-------------
(a) Counterparts. This Agreement may be executed in two or more
------------
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered will be deemed to be an original but
all of which together will constitute one and the same instrument.
(b) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Colorado, without regard to the
application of choice of law principles, except to the extent that such laws
are superseded by federal law.
(c) Binding Agreement. This Agreement shall be binding upon and
-----------------
inure to the benefit of the parties hereto and their respective successors and
assigns.
(d) Amendments; No Waivers. Any provision of this Agreement may be
----------------------
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Pacific and the Company, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
(e) Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the transactions be consummated as originally contemplated to the fullest
extent possible.
(f) Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
<PAGE>
IN WITNESS WHEREOF, this CONVERSION AND RIGHTS AGREEMENT has been signed and
delivered by the parties as of the date first above written.
MONACO FINANCE, INC.,
a Colorado corporation
By: /s/ Morris Ginsburg
----------------
Name: Morris Ginsburg
Title: Chairman of the Board of Directors:
PACIFIC USA HOLDINGS CORP.,
a Texas corporation
By: /s/ John Sloan
-----------
Name: John Sloan
Title: Chief Operating Officer
<PAGE>
Exhibit 10.70
June 25, 1998
Via Facsimile 212-403-3734
Rothschild North America, Inc.
1251 Avenue of the Americas
New York, New York 10020
Attention: Mr. Rick Fingeret
Ladies and Gentlemen:
Reference is made to the Amended and Restated Note Purchase
Agreement, dated as of January 9, 1996 (as amended or modified from time to
time, the "Note Purchase Agreement"), between Rothschild North America, Inc.
("Rothschild") and Monaco Finance, Inc. (the "Company"). Each capitalized
term used but not otherwise defined herein has the meaning given to it in the
Note Purchase Agreement.
Notwithstanding anything to the contrary contained in the Note
Purchase Agreement or the Notes:
1. In lieu of the principal payment of $416,667 due on July 1,
1998, the Company shall make a principal payment to Rothschild on or before
June 30, 1998 in an amount equal to $600,000.
2. On the last business day of each September, December, March
and June following July 1, 1998, the Company shall pay and apply pro rata to,
and there shall become due and payable on, the principal Indebtedness
evidenced by the Notes the aggregate amount of $450,000.
3. Rothschild waives any Default or any Event of Default or right to
require
prepayment of the Notes which may have been available to Rothschild as a
result of the Company's Stockholder's Equity as stated in its December 31,
1997 audited financial statements. Other than the foregoing waiver,
Rothschild retains all of its rights and remedies as the sole holder of the
Notes.
4. The Notes will be paid in full prior to the maturity of the
Black Diamond/Heller Notes.
<PAGE>
If the above is acceptable to you, kindly execute a copy of this
letter in the space provided below and return a copy of the same to me.
Very truly yours,
MONACO FINANCE, INC.
By: /s/ Irwin L. Sandler
-------------------------
Its: Executive Vice President
--------------------------
ROTHSCHILD NORTH AMERICA, INC.
By: /s/ Rick Fingeret
-------------------
Its: President and Chief Executive Officer
-----------------------------------------
<PAGE>
Exhibit 10.71
CONSENT AND AMENDMENT NO. 1
TO
INDENTURE AND RELATED DOCUMENTS
-------------------------------
This Consent and Amendment No. 1 to Indenture and Related Documents (this
"Amendment") is entered into as of September 9, 1998 between Norwest Bank
Minnesota, N.A., as trustee ("Trustee"), and Monaco Finance, Inc., a Colorado
corporation ("Company"), and is consented and agreed to by each of the Holders
of the Notes issued pursuant to the Indenture dated as of January 9, 1996 (as
heretofore, now or hereafter amended, supplemented, restated or otherwise
modified, the "Indenture") between Company and Trustee.
RECITALS
--------
WHEREAS, Black Diamond Advisors, Inc. ("Black Diamond") and Heller
Financial, Inc. ("Heller"), who constitute the Holders of a majority of the
aggregate principal amount of the Notes, have informed Company that such
Holders believe that a Change of Control occurred as a result of the issuance
of Convertible Preferred Stock and Class A Common Stock to affiliates of
Pacific USA Holdings Corp. ("Pacific USA") and the execution of an option
agreement and buy/sell agreement with Pacific USA and its affiliates as more
fully described in the Proxy Statement of Company dated February 3, 1998 (the
"Alleged Change of Control");
WHEREAS, pursuant to Section 3.01(c) of the Indenture, the occurrence of a
Change of Control would enable the Holders of a majority in aggregate
principal amount of the Notes (i.e., Black Diamond and Heller) to declare the
entire principal and all interest accrued on all Notes immediately due and
payable;
WHEREAS, the Holders of all of the Notes have agreed to waive any mandatory
prepayment rights they believe they have under Section 3.01(c) of the
Indenture in connection with the Alleged Change of Control, subject to the
terms and conditions set forth herein, including, without limitation, the
shortening of the maturity date of the Notes to the earlier of (a) October 1,
1999 or (b) the date the Rothschild Debt is paid in full, and the addition of
required principal payments on the Notes of $135,000 per month;
WHEREAS, the Trustee, with the consent of the Holders of all of the Notes, has
agreed to amend the Indenture and certain related documents and instruments,
to reflect such shortened maturity, such required principal payments and
certain other amendment, all on the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the terms and conditions set forth herein,
and for other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. DEFINITIONS. Unless otherwise defined herein, capitalized terms used
- -- -----------
in this Amendment shall have the meanings ascribed to such terms in the
Indenture.
2. LIMITED WAIVER BY HOLDERS OF NOTES. The Holders of all of the Notes
- -- ----------------------------------
hereby waive (a) any mandatory prepayment of the Notes which would otherwise
- --
be deemed to occur under Section 3.01(c) of the Indenture arising solely as a
result of the Alleged Change of Control and (b) any Default or Event of
Default arising solely as a result of the Alleged Change of Control.
3. AMENDMENTS TO INDENTURE. Subject to satisfaction of the conditions set
- -- -----------------------
forth in Section 7 hereof, Company and Trustee, with the consent of the
Holders of all Notes, agree to amend the Indenture as follows:
(a) The definition of the term "Notes" in the second paragraph of the
Indenture is hereby amended from "the 12% Convertible Senior Subordinated
Notes due 2001" to "the 12% Convertible Senior Subordinated Notes due 2001 as
amended and restated by the Amended and Restated 12% Senior Subordinated Notes
due 1999" and the former clause is hereby deleted and replaced with the later
clause in each place the former clause appears in the Indenture and in Exhibit
B to the Indenture.
(b) The defined terms "Common Stock," "Conversion Date," "Conversion
Price," "Conversion Shares," and "Supplemental Indenture" and all references
to such terms in the Indenture are hereby deleted.
(c) Section 4.07(b) of the Indenture is hereby deleted and replaced with
the following:
(b) the sum of (i) $12,669,639 plus (ii) 65% of Consolidated Net
Income (without any deduction or offset for losses) for each year after
December 31, 1993.
(d) The following new Section 4.22 is hereby added to the end of
Article 4 of the Indenture:
SECTION 4.22. ROTHSCHILD DEBT. The Company represents and warrants that
the maturity date of all Notes (as defined in that certain Amended and
Restated Note Purchase Agreement dated as of January 9, 1996 (as amended or
otherwise modified from time to time, the "Rothschild Note Purchase
Agreement") between Monaco Finance, Inc. and Rothschild North America, Inc.)
and all other Indebtedness issued pursuant to the Rothschild Note Purchase
Agreement or otherwise owed by Company or any Subsidiary thereof to Rothschild
North America, Inc. or any of its Affiliates (collectively, the "Rothschild
Debt") is on or after October 1, 1999 and the aggregate scheduled quarterly
principal payments on the Rothschild Debt are $450,000 or less. The Company
shall not permit the maturity date of any of the Rothschild Debt to be prior
to October 1, 1999 without the written consent of the Majority Holders and the
Company shall not permit the aggregate amount of principal payments on the
Rothschild Debt during any quarter to exceed $450,000 unless it increases each
monthly principal payment payable to the Holders under the Notes during such
quarter by one-third (1/3) of such amount (it being the intention of the
parties that the Holders receive increased principal payments on the Notes on
a dollar-for-dollar basis if the Company increases the amount of its principal
payments on the Rothschild Debt). Except for a $200,000 prepayment in July,
1998, there have been no prepayments of the Rothschild Debt.
(e) Article 10 of the Indenture is hereby deleted in its entirety and
replaced with the following:
[INTENTIONALLY DELETED]
(f) Exhibit A to the Indenture is hereby deleted in its entirety and
replaced with Exhibit A hereto.
----------
4. AMENDMENTS TO PURCHASE AGREEMENT. Subject to satisfaction of the
---------------------------------
conditions set forth in Section 7 hereof, Company and the Holders of all Notes
agree to amend the Purchase Agreement as follows:
(f) All references to the term "Conversion Shares" in the Purchase
Agreement are hereby deleted.
(g) The first and second sentences of Section 1 of the Purchase Agreement
are hereby deleted in their entirety and replaced with the following:
The Company proposes to issue and sell (the "Offering") to Heller
--------
Financial, Inc. ("Heller"), Black Diamond Advisors, Inc. ("Black Diamond") and
------ -------------
the other purchasers listed on Annex 1 hereto (together with Heller and Black
Diamond, each an "Initial Purchaser" and collectively, the "Initial
------------------ -------
Purchasers"), an aggregate of $5,000,000 principal amount of 12% Convertible
Senior Subordinated Notes due 2001 (as amended and amended and restated,
including without limitation, as amended and restated by the aggregate of
$5,000,000 principal amount of Amended and Restated 12% Senior Subordinated
Notes due 1999, the "Notes"). Interest on the Notes is payable at the rate of
-----
12% per annum.
(h) The second sentence of the second paragraph of Section 1 of the
Purchase Agreement is hereby deleted and replaced with the following:
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Notes shall
bear substantially the following legend (except that the last sentence shall
not appear on Notes issued to Black Diamond or its affiliates or principals as
provided in the Indenture):
(i) Section 5(m) of the Purchase Agreement is hereby deleted in its
entirety and replaced with the following:
(m) For so long as Heller and Black Diamond and their respective
affiliates or principals (such Persons collectively, the "Investors") own at
---------
least 50% of the Notes (the "Minimum Note Amount") purchased by the Initial
-------------------
Purchasers hereunder, a representative designated by Heller shall have the
right, but not the obligation, to attend as an observer all of the Company's
board of directors meetings, and, if such representative attends, such
representative shall timely report thereon to the Initial Purchasers. The
Company agrees to pay any and all out-of-pocket fees and expenses of such
observers as it customarily provides to members of its board of directors.
(j) A new Section 11 is hereby added immediately following the end of
Section 10 of the Purchase Agreement as follows:
11. Agreements Among Initial Purchasers. Each of the Initial
--------------------------------------
Purchasers hereby agree as follows:
(a) Each Initial Purchaser acknowledges that it has, independently and
without reliance upon any other Initial Purchaser and based on such documents
and information as it has deemed appropriate, made its own credit and
financial analysis of the Company and its own decision to enter into this
Agreement. Each Initial Purchaser also acknowledges that it will,
independently and without reliance upon any other Initial Purchaser and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement.
(b) In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default, each Initial Purchaser is
hereby authorized at any time or from time to time, without notice to the
Company or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and to apply any and all balances held by it at
any of its offices for the account of the Company (regardless of whether such
balances are then due to the Company) and any other properties or assets any
time held or owing by that Initial Purchaser to or for the credit or for the
account of the Company against and on account of any of the obligations under
the Notes which are not paid when due. Any Initial Purchaser exercising a
right to set off or otherwise receiving any payment on account of the
obligations under the Notes in excess of its Pro Rata Share thereof shall
purchase for cash (and the other Initial Purchasers shall sell) such
participations in each such other Initial Purchaser's Pro Rata Share of the
obligations under the Notes as would be necessary to cause such Initial
Purchaser to share the amount so set off or otherwise received with each other
Initial Purchaser in accordance with their respective Pro Rata Shares. The
Company agrees, to the fullest extent permitted by law, that (i) any Initial
Purchaser may exercise its right to set off with respect to amounts in excess
of its Pro Rata Share of the obligations under the Notes and may sell
participations in Pro Rata Share of the obligations under the Notes to other
Initial Purchasers and (ii) any Initial Purchaser purchasing such a
participation may exercise all rights of set-off, bankers' lien, counterclaim
or similar rights with respect to such participation as fully as if such
Initial Purchaser were a direct holder of the obligations under the Notes in
the amount of such participation. Notwithstanding the foregoing, if all or
any portion of the set-off amount or payment otherwise received is thereafter
recovered from the Initial Purchaser that has exercised the right of set-off,
the purchase of participations by that Initial Purchaser shall be rescinded
and the purchase price restored without interest.
(c) Heller shall be the Lead Holder; provided, however, that Heller's
-------- -------
designation as Lead Holder shall not in any way affect the rights or duties of
any Purchaser under this Agreement, the Indenture or the Notes.
(d) Neither the Company nor any other party other than the Purchasers is
intended to receive any benefits from this Section 11.
(k) The first paragraph of Exhibit A to the Purchase Agreement is hereby
deleted in its entirety and replaced with the following:
Reference is made to the Purchase Agreement (the "Agreement") dated as of
January 9, 1996 among Monaco Finance, Inc. (the "Company") and certain
purchasers of the Company's Amended and Restated 12% Subordinated Notes due
1999 (the "Notes") listed on the Purchaser Schedule thereto. All capitalized
terms used but not otherwise defined herein are used with the meanings
ascribed to such terms in the Agreement.
5. AMENDMENTS TO REGISTRATION RIGHTS AGREEMENT. Subject to satisfaction
-------------------------------------------
of the conditions precedent set forth in Section 7 hereof, the Company and the
Holders of all Notes agree to amend the Registration Rights Agreement as
follows:
(a) The first paragraph of the Registration Rights Agreement is hereby
amended by deleting "12% Convertible Senior Subordinated Notes due 2000" and
replacing it with "12% Convertible Senior Subordinated Notes due 2001 as
amended and restated by the Company's Amended and Restated 12% Senior
Subordinated Notes due 1999."
(l) The defined term "Conversion Share Registration Statement" is hereby
deleted in each place in the Registration Rights Agreement in which it
appears.
(m) Section 2 of the Registration Rights Agreement is hereby deleted in
its entirely and replaced with the following:
[INTENTIONALLY OMITTED]
6. AMENDMENTS TO PROFIT SHARING AGREEMENTS. Subject to satisfaction of
---------------------------------------
the conditions set forth in Section 7 hereof, Black Diamond, Guaranty Title &
Trust Co., Heller and Lisa W. Zenni hereby amend the Profit Sharing Agreements
dated as of January 9, 1996 between Black Diamond and each of the foregoing by
deleting the Section entitled "Audit Rights" and deleting the Section entitled
"Board of Directors Representation."
7. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective
---------------------------
upon the prior or concurrent satisfaction of the following conditions, all in
a manner satisfactory to Trustee:
(a) Trustee shall have received a fully executed copy of this Amendment.
(b) Trustee shall have received fully executed new Amended and Restated
12% Senior Subordinated Notes due 1999 payable to each Holder in the amount of
such Holder's cancelled existing Note and otherwise in the form attached
hereto as Exhibit A.
(c) Trustee shall have received certified copies of all resolutions of
Company approving the execution, delivery and performance of this Amendment
and the transactions contemplated hereby.
(d) Trustee shall have received legal opinions from outside counsel
acceptable to the Holders of the majority of the aggregate principal amount of
the Notes as to the matters described in Sections 8.1 and 8.2 hereof.
(e) Latham & Watkins, counsel to Black Diamond and Heller, shall have
received from Company $40,000 plus any additional costs and expenses demanded
pursuant to Section 11 hereof. In the event the legal fees and expenses of
Latham & Watkins in connection with the Credit Documents prior to June 12,
1998 are less then $40,000, Latham & Watkins will promptly return the
difference to the Company.
(f) The Holders shall have received a $135,000 June principal payment, a
$135,000 July principal payment and a $135,000 August principal payment on the
12% Convertible Senior Subordinated Notes due 2001, in addition to all
interest accrued thereon through July 31, 1998. Each of the Holders of the
Notes hereby acknowledges that the June and July principal payments and all
interest accrued through June 30, 1998 have been paid.
8. REPRESENTATIONS AND WARRANTIES OF COMPANY. Company represents and
-----------------------------------------
warrants to Trustee and each of the Holders of the Notes that:
8.1 Authority. Company has full corporate power, authority and legal
---------
right to enter into this Amendment and the other agreements entered into in
connection herewith to which Company is a party. The execution and delivery
by Company of this Amendment and the other agreements entered into in
connection herewith to which Company is a party and the Credit Documents as
amended hereby: (i) have been duly authorized by all necessary corporate
action on the part of Company; (ii) are not in contravention of the terms of
Company Articles of Incorporation or Bylaws, or of any indenture, agreement or
undertaking to which Company is a party or by which Company or any of its
property is bound; (iii) do not and will not require any governmental consent,
registration or approval; (iv) do not and will not contravene any contractual
or governmental restriction of which Company or any of its property may be
subject; and (v) do not and will not, except as contemplated herein, result in
the imposition of any lien, charge, security interest or encumbrance upon any
property of Company under any existing indenture, mortgage, deed of trust,
loan or credit agreement or other material agreement or instrument to which
Company is a party or by which Company or any of its property may be bound or
affected.
8.2 Binding Effect. This Amendment and all of the other agreements
---------------
entered into by Company in connection herewith and the Credit Documents as
amended hereby have been duly executed and delivered by Company, as
applicable, are the legal, valid and binding obligations of Company and are
enforceable against Company in accordance with their respective terms, except
as enforceability may be limited by Federal bankruptcy laws.
8.3 No Default. No Default or Event of Default has occurred and is
-----------
continuing or would result from the execution and delivery of this Amendment
or the other agreements executed and delivered by Company hereunder or the
consummation of the transactions contemplated hereby.
9. REFERENCE TO AND EFFECT UPON THE INDENTURE AND THE LOAN DOCUMENTS.
------------------------------------------------------------------
9.1 Except as specifically amended above, the Indenture and each of the
Credit Documents, as amended hereby, shall remain in full force and effect and
are hereby ratified and confirmed.
9.2 The execution, delivery and effectiveness of this Amendment shall be
limited precisely as written and shall not be deemed to (i) be a consent to
any waiver or modification of any other term or condition of the Indenture or
any other Credit Document or (ii) prejudice any right, power or remedy which
Trustee or any Holder of any Note may now have or may have in the future under
or in connection with the Indenture or any other Credit Document (after giving
effect to this Amendment). Upon the effectiveness of this Amendment, each
reference in the Indenture or any other Credit Document to "this Agreement",
"hereunder", "hereof", "herein" or words of similar import shall mean and be a
reference to the Indenture or such Credit Document as amended hereby.
10. COUNTERPARTS; FACSIMILE SIGNATURES. This Amendment may be executed in
----------------------------------
any number of counterparts, each of which when so executed shall be deemed an
original, but all such counterparts shall constitute one and the same
instrument. Facsimile copies of signatures hereto shall be deemed originals
for all purposes.
11. COSTS AND EXPENSES. Company agrees to pay on demand all
------------------
reasonable fees, costs and expenses incurred by Trustee in connection with the
negotiation, preparation, execution and delivery of this Amendment (including,
without limitation, reasonable attorney's fees and expenses) and all
reasonable fees, costs and expenses incurred by Heller and Black Diamond
arising after June 12, 1998 in connection with the negotiation, preparation,
execution and delivery of this Amendment (including, without limitation,
reasonable attorneys' fees and expenses); provided, however, that Heller and
Black Diamond agree that they have not used separate counsel for such purpose.
12. LEGAL FEE SETTLEMENT. Notwithstanding anything set forth in the
---------------------
Credit Documents to the contrary, upon satisfaction of the conditions
precedent set forth in Section 8 hereof, Heller and Black Diamond hereby waive
and release the Company from all legal fees incurred by them in connection
with the Credit Documents for services performed on or prior to the date
hereof.
13. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS (AS OPPOSED TO CONFLICT OF
LAWS PROVISIONS) OF THE STATE OF NEW YORK.
14. HEADINGS. Section headings in this Amendment are included herein for
--------
convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.
MONACO FINANCE, INC.
By: /s/ Irwin L. Sandler
-----------------------
Its: Executive Vice President
--------------------------
NORWEST BANK MINNESOTA, N.A.
By: /s/ Jane Schweiger
--------------------
Its: Corporate Trust Officer
-------------------------
<PAGE>
SIGNATURE PAGE TO AMENDMENT
Consented and Agreed:
BLACK DIAMOND ADVISORS, INC.
By: /s/ Jim Walker III
---------------------
Its: Principal
---------
Consented and Agreed:
BDC PARTNERS I, L.P.
By: BLACK DIAMOND CAPITAL MANAGEMENT, L.L.C.
By: /s/ James J. Zenni, Jr.
---------------------------
Its: President
---------
Consented and Agreed:
HELLER FINANCIAL, INC.
By: /s/ Renee Rempe
-----------------
Its: Vice President
---------------
<PAGE>
SIGNATURE PAGE TO AMENDMENT
Consented and Agreed:
GUARANTEE TITLE & TRUST CO.
By: /s/ Thomas Mongan
------------------
Its: President
---------
Consented and Agreed:
LISA W. ZENNI
By: /s/ Lisa W. Zenni
--------------------
<PAGE>
EXHIBIT A
---------
New Exhibit A to Indenture
Form of Amended and Restated 12% Senior Subordinated Note due 1999
<PAGE>
------
Exhibit A
(Face of Amended and Restated Note)
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the issuer or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.]
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE. THIS NOTE IS ALSO
SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS
SET FORTH IN AN AGREEMENT DATED AS OF JANUARY 9, 1996, AS AMENDED, BETWEEN THE
HOLDER AND CERTAIN OTHER HOLDERS OF THE COMPANY'S SECURITIES.
<PAGE>
Amended and Restated 12% Senior Subordinated Notes due 1999
No. $___________
MONACO FINANCE, INC.
promises to pay to or registered assigns,
the principal sum of Dollars in monthly installments of $135,000 of
principal, plus interest and Liquidated Damages, with a final installment of
all remaining principal, interest and Liquidated Damages hereunder due on the
earlier of (a) October 1, 1999 or (b) the date the Rothschild Debt is paid in
full.
Payment Dates: 1st day of each month
Record Dates: The day prior to each payment date
Dated:
MONACO FINANCE, INC.
By:
Name:
Title:
By:
Name:
Title:
(SEAL)
Certificate of Authentication:
This is one of the [Global] Notes
referred to in the within-mentioned Indenture:
[Trustee]
By:
Authorized Signatory
Dated:
<PAGE>
(Back of Note)
Amended and Restated 12% Senior Subordinated Notes due 1999
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Payment. Monaco Finance, Inc., a Colorado corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
12% per annum from the date hereof until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay an installment of $135,000 of the
principal amount of this Note, interest and Liquidated Damages monthly on the
1st day of each month, or if any such day is not a Business Day, on the next
succeeding Business Day (each a "Payment Date"), and shall pay all remaining
outstanding principal, interest and Liquidated Damages on the earlier of (a)
October 1, 1999 or (b) the date the Rothschild Debt is paid in full. Interest
on the Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance; provided
that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof and
the next succeeding Payment Date, interest shall accrue from such next
succeeding Payment Date; provided, further, that the first Payment Date shall
be September 1, 1998. The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium, if any, from time to time on demand at a rate that is 3.00% per annum
in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company will pay principal installments and
interest on the Notes (except defaulted interest) and Liquidated Damages on
each Payment Date to the Persons who are registered Holders of Notes at the
close of business on the first day of the month next preceding such Payment
Date, even if such Notes are cancelled after such record date and on or before
such Payment Date, except as provided in Section 2.12 of the Indenture
referred to below with respect to defaulted interest. The Notes will be
payable as to principal, premium, interest and Liquidated Damages at the
office or agency of the Company maintained for such purpose, or, at the option
of the Company, payment of interest and Liquidated Damages may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. Paying Agent and Registrar. Initially, Norwest Bank Minnesota, N.A.,
the Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as of
January 9, 1996 (as heretofore, now or hereafter amended, supplemented,
restated or otherwise modified, the "Indenture") between the Company and the
Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code 77aaa-77bbbb). The Notes are subject to all
such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Notes are unsecured obligations of the Company
limited to $5,000,000 in aggregate principal amount, plus an additional
$5,000,000 which may be issued under the Indenture pursuant to Section 2B of
the Purchase Agreement.
5. Mandatory Prepayments.
The Company shall prepay the Notes as follows:
(a) Upon the occurrence of any Change of Control, the holders of a
majority in aggregate principal amount of the then outstanding Notes may
demand, by written notice to the Company, that the Company prepay in full, at
the change of control price set forth in the Indenture, all the outstanding
Notes in the manner set forth in the Indenture.
(b) Upon the occurrence of certain merger and sale of assets transactions
by the Company, the holders of a majority in aggregate principal amount of the
then outstanding Notes may demand, by written notice to the Company, that the
Company prepay in full, at the change of control price set forth in the
Indenture, all the outstanding Notes in the manner set forth in the Indenture.
6. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of at least $100,000 and integral multiples
of $50,000 in excess thereof. The transfer of Notes may be registered and
Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to
pay any taxes and fees required by law or permitted by the Indenture. The
Company need not exchange or register the transfer of any Note or portion of a
Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part. Also, it need not exchange or register the transfer
of any Notes for a period of 15 days before a selection of Notes to be
redeemed or during the period between a record date and the corresponding
Payment Date.
7. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
8. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the
consent of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the
Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
9. Defaults and Remedies. Events of Default include: (i) default for 10
days in the payment when due of principal installments, interest or Liquidated
Damages on the Notes; (ii) default for 10 days in payment when due of
principal of or premium, if any, on the Notes or the Make-Whole Amount thereon
when the same becomes due and payable at maturity, upon redemption or
otherwise, (iii) failure by the Company to comply with Section 4.07, 4.08,
4.11, 4.14, 4.17 or 4.22 of the Indenture; (iv) failure by the Company for 30
days after notice to the Company by the Trustee or the Holders of at least 25%
in principal amount of the Notes then outstanding to comply with certain other
agreements in the Indenture or the Notes; (v) default under certain other
agreements relating to Indebtedness of the Company which default results in
the acceleration of such Indebtedness prior to its express maturity; (vi)
certain final judgments for the payment of money that remain undischarged for
a period of 45 days; or (vii) certain events of bankruptcy or insolvency with
respect to the Company or any of its Subsidiaries. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable without further action or
notice. Holders may not enforce the Indenture or the Notes except as provided
in the Indenture. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default
or Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of
Default.
10. Subordination of Notes. The payment of principal of, premium, if any,
and interest on the Notes will be subordinated in right of payment to the
prior payment in full of Senior Debt as set forth in Article Nine of the
Indenture.
11. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
12. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
13. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform
Gifts to Minors Act).
14. Additional Rights of Holders of Transfer Restricted Notes. In
addition to the rights provided to Holders of Notes under the Indenture,
Holders of Transfer Restricted Notes shall have all the rights set forth in
the Registration Rights Agreement dated as of the date of the Indenture,
between the Company and the parties named on the signature pages thereof (the
"Registration Rights Agreement").
15. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
16. Copies on Request. The Company will furnish to any Holder upon
written request and without charge a copy of the Indenture and/or the
Registration Rights Agreement. Requests may be made to:
Monaco Finance, Inc.
Attention: Chief Financial Officer
370 17th Street, Suite 5060
Denver, Colorado 80202
17. Amendment and Restatement; No Novation. This Note amends and
restates a 12% Convertible Senior Subordinated Note due 2001 dated January 9,
1996 (the "Prior Note") made by the Company to the payee hereof.
Notwithstanding anything set forth herein or in any of the other Credit
Documents to the contrary, the terms of this Note are not intended to, and do
not serve to, affect a novation as to the Prior Note. Such Prior Note, as
amended and restated hereby, remains in full force and effect and the terms
and provisions thereof, as amended hereby, are hereby ratified and confirmed.
<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
undersigned thereunto duly authorized.
Date: September 10, 1998
By: /s/ Morris Ginsburg
----------------------------
Morris Ginsburg
Chairman of the Board
By: /s/ Joseph A. Cutrona, Jr.
-------------------------------------
Joseph A. Cutrona, Jr., Chief
Executive Officer, Principal
Financial and Accounting Officer
and Director
