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LOAN AGREEMENT
Dated as of November 12, 1998
by and between
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
a Delaware corporation
("Lender")
and
UGLY DUCKLING CORPORATION,
a Delaware corporation
("Borrower")
$15,000,000 Collateralized Loan
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS....................................................................1
1.1 Defined Terms.........................................................1
1.2 Other Interpretive Provisions........................................10
1.3 Accounting Principles................................................11
1.4 Times................................................................11
ARTICLE II
THE LOAN......................................................................11
2.1 The Loan.............................................................11
2.2 Payment Upon Collections.............................................11
2.3 Payment Upon Maturity................................................12
2.4 Interest.............................................................12
2.5 Voluntary Prepayments................................................12
2.6 Application of Payments..............................................12
2.7 Prepayment...........................................................13
2.9 Fees and Interest....................................................13
2.10 Payments by Borrower.................................................13
ARTICLE III
SECURITY AGREEMENT AND COLLATERAL.............................................14
3.1 Security for Obligations.............................................14
3.2 Security Documents...................................................14
3.3 Lender's Duty Regarding Collateral...................................14
3.4 Borrower's Duties Regarding Collateral...............................14
3.5 Power of Attorney....................................................15
3.6 Collateral Inspections...............................................16
ARTICLE IV
CONDITIONS PRECEDENT; TERM OF AGREEMENT.......................................16
4.1 Conditions Precedent.................................................16
4.2 Receipt of Documents. ...............................................16
4.3 Term.................................................................17
4.4 Effect of Termination................................................18
ARTICLE V
REPRESENTATIONS AND WARRANTIES................................................18
5.1 No Encumbrances......................................................18
5.2 Location of Chief Executive Office; FEIN.............................18
5.3 Due Organization and Qualification; Subsidiaries.....................18
5.4 Due Authorization: No Conflict.......................................19
5.5 Litigation...........................................................20
5.6 Financial Statements; No Material Adverse Change.....................20
5.7 Securitization Documents. ..........................................20
5.8 ERISA................................................................20
5.9 Environmental and Safety Matters.....................................20
5.10 Tax Matters..........................................................21
ARTICLE VI
AFFIRMATIVE COVENANTS.........................................................21
6.1 Financial Statements and Other Documents.............................21
6.2 Inspection of Property...............................................22
6.3 Default Disclosure...................................................22
6.4 Notices to Lender....................................................22
6.5 Books and Records....................................................23
6.6 Compliance and Preservation..........................................23
6.7 Perfection of Liens..................................................23
6.8 Cooperation..........................................................23
ARTICLE VII
NEGATIVE COVENANTS............................................................24
7.1 Liens................................................................24
7.2 Indebtedness.........................................................24
7.3 Restrictions on Fundamental Changes..................................24
7.4 Disposal of Collateral...............................................24
7.5 Change Name..........................................................24
7.6 Amendments...........................................................24
7.7 Change of Control....................................................24
7.8 Distributions........................................................24
7.9 Standing Dividend Resolutions........................................25
7.10 Change in Location of Chief Executive Office.........................25
7.11 No Prohibited Transactions Under ERISA...............................25
7.12 Stock Buyback Program................................................26
7.13 Verde Subordinated Debt..............................................26
ARTICLE VIII
EVENTS OF DEFAULT/REMEDIES....................................................26
8.1 Event of Default.....................................................26
8.2 Lender's Rights and Remedies.........................................27
ARTICLE IX
MISCELLANEOUS.................................................................28
9.1 Amendments and Waivers...............................................28
9.2 Notices..............................................................29
9.3 No Waiver: Cumulative Remedies.......................................30
9.4 Costs and Expenses...................................................30
9.5 Indemnity............................................................30
9.6 Marshaling: Payments Set Aside.......................................31
9.7 Successors and Assigns...............................................31
9.8 Set-off..............................................................31
9.9 Counterparts.........................................................31
9.10 Severability.........................................................32
9.11 No Third Parties Benefited...........................................32
9.12 Time.................................................................32
9.13 Governing Law and Jurisdiction.......................................32
9.14 Entire Agreement.....................................................33
9.15 Interpretation.......................................................33
9.16 Assignment...........................................................33
9.17 Revival and Reinstatement of Obligations.............................33
SCHEDULES AND EXHIBITS
Schedule A Borrower's Subsidiaries
Schedule B Warrants, Options, etc.
Schedule C Litigation
Schedule D Exceptions to Financial Statements
Schedule E Permitted Liens
Schedule F Class B Certificates
Schedule G Subordinated Indebtedness
Exhibit A UCC-1 Financing Statement(s)
Exhibit B UDRC and UDRCII Securitization Documents
LOAN AGREEMENT
This LOAN AGREEMENT (the "Agreement"), is entered into as of November 12,
1998, between GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation
("Lender"), with a place of business located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and UGLY DUCKLING CORPORATION, a Delaware corporation
("Borrower"), with a place of business located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
Lender has agreed to make to Borrower a collateralized loan (the "Loan")
upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
I.1 Defined Terms. In addition to the terms defined elsewhere in this
Agreement, the following terms have the following meanings:
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of twenty
percent (20%) or more of the equity of a Person shall for the purposes of this
Agreement, be deemed to control the other Person. In no event shall Lender be
deemed an "Affiliate" of Borrower.
"Agreement" means this Loan Agreement, as amended, supplemented or modified
from time to time in accordance with the terms hereof.
"Attorney Costs" means and includes all fees and disbursements of any law
firm or other external counsel.
"Bankruptcy Code" means the United States Bankruptcy Code (11 ▇.▇.▇.▇▇. 101
et seq.), as amended, and any successor statute.
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"Bond Insurance Policy" shall mean a financial guaranty or financial
insurance policy issued by MBIA Corp. or any of its Affiliates or any other
financial guarantor in respect of one or more classes of investor certificates
or other interests issued by a Securitization Trust.
"Borrower's Books" means all of Borrower's books and records including:
ledgers, records indicating, summarizing, or evidencing Borrower's properties or
assets (including the Collateral and the assets of any Subsidiaries of Borrower)
or liabilities; all information relating to Borrower's business operations or
financial condition; and all computer programs, disk or tape files, printouts,
runs, or other computer prepared information.
"Business Day" means any day other than a Saturday, Sunday or national
holiday.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act (49 U.S.C. Section 9601, et seq.).
"Change of Control" shall be deemed to have occurred at such time as a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becomes, after the date of this Agreement, the
"beneficial owner" (as defined in Rule 13(d)(3) under the Securities Exchange
Act of 1934), directly or indirectly, of more than 25% of the total voting power
of all classes of stock then outstanding of Borrower entitled to vote in the
election of directors.
"Closing Date" means the date on which all conditions precedent set forth
in Section 4.1 are either satisfied or waived by Lender and Lender makes the
Loan.
"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
"Collateral" means all of the outstanding capital stock of UDRC and UDRC
II.
"Collections" means all proceeds of, payments or other distributions of
principal, interest or other amounts on, and other amounts received by or on
behalf of Borrower in respect of the Collateral, including all amounts paid to
Lender pursuant to the UDRC Dividend Direction Letter and the UDRC II Dividend
Direction Letter.
"Debt" or "Indebtedness" means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes, matured reimbursable
obligations under letters of credit or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services other
than trade payables incurred in the ordinary course of business, (iv)
obligations as lessee under leases that shall have been or should be, in
accordance with GAAP recorded as capital leases, (v) obligations under direct or
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indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in
clauses (i) through (iv), and (vi) liabilities in respect of unfunded vested
benefits under Pension Plans covered by Title IV of ERISA.
"Default" means any event or circumstance which, with the giving of notice,
the lapse of time, or both, would (if not cured or otherwise remedied)
constitute an Event of Default.
"Dollars", "dollars" and "$" each mean lawful money of the United States.
"Environmental and Safety Laws" means all Federal, state and local laws,
regulations and ordinances, relating to the discharge, handling, disposition or
treatment of Hazardous Materials and other substances or the protection of the
environment or of employee health and safety, including CERCLA, the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801, et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 7401, et seq.), the Clean Air
Act (42 U.S.C. Section 7401, et seq.), the Toxic Substances Control Act (15
U.S.C. Section 2601, et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651, et seq.) and the Emergency Planning and Community Right-To-Know Act
(42 U.S.C. Section 11001, et seq.), each as the same may be amended and
supplemented.
"Environmental Liabilities and Costs" means, as to any Person, all
liabilities, obligations, responsibilities, remedial actions, losses, damages,
punitive damages, consequential damages, treble damages, contribution, cost
recovery, costs and expenses (including all fees, disbursements and expenses of
counsel, expert and consulting fees, and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim or demand, by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, permit, order or
agreement with any Federal, state or local governmental authority or other
Person, arising from environmental, health or safety conditions, or the release
or threatened release of a contaminant, pollutant or Hazardous Material into the
environment, resulting from the operations of such Person or its subsidiaries,
or breach of any Environmental and Safety Law or for which such Person or its
subsidiaries is otherwise liable or responsible.
"Equity Interests" means, with respect to a Person, any common stock,
preferred stock, partnership interest (whether general or limited) or other
equity or participating interest in such Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and regulations promulgated thereunder.
"Event of Default" means any of the events or circumstances specified in
Section 8.1.
"FEIN" means Federal Employer Identification Number.
Page - 3
"Financing Statements" means the Financing Statements on Form UCC-1
together with an attachment thereto in the form attached hereto as Exhibit A, to
perfect the security interests in the Collateral pursuant to the provisions of
Article III that can be perfected by filing.
"Fiscal Quarter" means a fiscal quarter of Borrower.
"Fiscal Year" means a fiscal year of Borrower.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"GECC" means General Electric Capital Corporation, a New York corporation.
"GECC Agreement" shall mean the Amended and Restated Motor Vehicle
Installment Contract Loan and Security Agreement, dated as of August 15, 1997,
by and between Borrower, GECC and certain other parties thereto, as such
agreement may be amended from time to time.
"Governing Documents" means, with respect to Borrower, Borrower's
certificate of incorporation and bylaws.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity, body, authority, bureau, department
or instrumentality exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any corporation or
other entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Hazardous Materials" means (a) any material or substance defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "toxic substances" or any other formulations intended to
define, list or classify substances by reason of their deleterious properties,
(b) any oil, petroleum or petroleum derived substance, (c) any flammable
substances or explosives, (d) any radioactive materials, (e) asbestos in any
form, (f) electrical equipment that contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts per
million, (g) pesticides or (h) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental agency
or authority or which may or could pose a hazard to the health and safety of
persons in the vicinity thereof.
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"Indemnified Liabilities" has the meaning specified in Section 9.5.
"Indemnified Person" has the meaning specified in Section 9.5.
"Initial Principal Amount" means the amount of Fifteen Million Dollars
($15,000,000).
"Interest Accrual Period" shall mean the one-month period from and
including a Payment Date to the close of business on the day preceding the next
Payment Date, except that the first Interest Accrual Period shall commence on
the Closing Date and end at the close of business on the day preceding the
Payment Date.
"Lender Costs" or "Lender Expenses" means all: (a) costs or expenses
(including taxes and insurance premiums) required to be paid by Borrower under
any of the Loan Documents that are paid or incurred by Lender; (b) reasonable
out-of-pocket fees or charges paid or incurred by Lender in connection with
Lender's transactions with Borrower, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation and UCC searches and including
searches with the patent and trademark office, the copyright office or the
department of motor vehicles), filing, recording, publication, appraisals, due
diligence, actual out-of-pocket costs and expenses incurred by Lender in the
disbursement of funds to Borrower (by wire transfer or otherwise); (c) actual
out-of-pocket charges paid or incurred by Lender resulting from the dishonor of
checks; (d) reasonable out-of-pocket costs and expenses paid or incurred by
Lender to correct any default or enforce any provision of the Loan Documents, or
in gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated; (e) reasonable
costs and expenses paid or incurred by Lender in examining Borrower's Books; (f)
reasonable out-of pocket costs and expenses of third party claims or any other
suit paid or incurred by Lender in enforcing or defending the Loan Documents or
in connection with the transactions contemplated by the Loan Documents or
Lender's relationship with Borrower; and (g) Lender's reasonable Attorney Costs
incurred in advising, structuring, drafting, reviewing, administering, amending,
terminating, enforcing, defending, or concerning the Loan Documents,
irrespective of whether suit is brought.
"LIBOR" shall mean, with respect to an Interest Accrual Period, the rate
per annum equal to the rate appearing on Bloomberg on the first day of such
Interest Accrual Period, for the one-month term corresponding to such Interest
Accrual Period, or if such rate shall not be so quoted then the applicable rate
appearing at page 3750 of the Telerate Screen on the first day of such Interest
Accrual Period, or if neither such rate shall be so quoted, the rate per annum
at which Lender is offered Dollar deposits at or about 11:00 a.m., New York City
time, on such date by prime banks in the interbank eurodollar market where the
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eurodollar and foreign currency exchange operations of Lender are then being
conducted, for delivery on the first day of such Interest Accrual Period for the
number of days in such Interest Accrual Period, and in an amount comparable to
the amount of the Loan on such day.
"Lien or Encumbrance"or "Liens and Encumbrances" means any mortgage, deed
of trust, pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preference, priority or other security
interest or preferential arrangement of any kind or nature whatsoever (including
those created by, arising under or evidenced by any conditional sale or other
title retention agreement, the interest of a lessor under a capital lease
obligation, any financing lease having substantially the same economic effect as
any of the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the UCC or any
comparable law) and any contingent or other agreement to provide any of the
foregoing.
"Loan Documents" means this Agreement, the Stock Pledge Agreement, the UDRC
Dividend Direction Letter, the UDRC II Dividend Direction Letter, the Financing
Statements, and all documents delivered to Lender in connection therewith.
"Material Adverse Change" or "Material Adverse Effect" means a material
adverse change in, or a material adverse effect upon, any of (a) the operations,
business, properties, condition (financial or otherwise) or prospects of
Borrower or an Affiliate of Borrower, (b) the ability of Borrower to perform
under any Loan Document and avoid any Event of Default, or (c) the legality,
validity, binding effect or enforceability of any Loan Document.
"Maturity Date" shall mean the date that is three hundred sixty-four (364)
days following the Closing Date, unless such date is not a Business Day, in
which case the Maturity Date shall be the immediately preceding Business Day.
"Obligations" means all Debt, advances, debts, liabilities, obligations,
covenants and duties owing by Borrower to Lender, of any kind or nature, present
or future, whether or not evidenced by any note, guaranty or other instrument,
arising under this Agreement or under any other Loan Document, absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired.
"Outstanding Principal Amount" means the Initial Principal Amount minus all
amounts applied to the repayment of the Loan pursuant to Section 2.6(c).
"Payment Date" shall mean the 15th day of each month during the term of
this Agreement.
"Permitted Liens" means (a) Liens held by Lender and (b) each lien existing
at or prior to the date of this Agreement that is identified on Schedule E to
this Agreement.
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"Person" means a natural person, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, limited liability
company, joint venture or Governmental Authority.
"Repayment Date" means the earlier of (i) the Maturity Date or (ii) the
date that the Outstanding Principal Amount of the Loan outstanding hereunder,
together with all accrued interest in respect thereof and all other Obligations,
has been reduced to zero.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Responsible Officer" means the chief executive officer or the president of
Borrower, or any other officer having substantially the same authority and
responsibility or, with respect to financial matters, the chief financial
officer or the treasurer of Borrower, or any other officer having substantially
the same authority and responsibility.
"Security Documents" means the writings described in Article III hereof, as
they may hereafter be amended, modified and/or supplemented, and all other
writings now or hereafter executed to create, evidence and/or perfect any
Lien(s) to secure the Loan or any portion(s) thereof.
"Securitization Default" means any default or event of default, or event or
occurrence which, with the passage of time or the giving of notice or both,
would become a default or event of default, by UDRC, UDRC II or any seller to
UDRC or UDRC II in their respective obligations under the UDRC Securitization
Documents or the UDRC II Securitization Documents, which has not been cured
within any applicable period thereunder.
"Securitization Trust" shall mean any trust formed pursuant to a purchasing
agreement or a pooling and servicing agreement specified on Exhibit B hereto or
contemplated in clause (iii) of the definitions of UDRC Securitization Documents
and UDRC II Securitization Documents.
"Stock Pledge Agreement" means that certain Stock Pledge Agreement, dated
as of the date hereof, among UDCS as Pledgor, Borrower and Lender, pursuant to
which UDCS grants Lender a security interest in one hundred percent (100%) of
the issued and outstanding capital stock of each of UDRC and UDRC II.
"Subordinated Debt" shall mean the Debt set forth on Schedule G and any
Debt incurred after the date hereof as to which the repayment of principal and
interest is subordinated to repayment of the Loan pursuant to subordination
provisions that have been approved in writing by Lender.
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"Subsidiary" of a Person means a corporation, partnership, limited
liability partnership, limited liability company, or other entity in which that
Person directly or indirectly owns or controls the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors (or appoint other comparable managers) of such corporation,
partnership, limited liability partnership, limited liability company, or other
entity.
"Tangible Net Worth" of Borrower shall mean the total of Borrower's and its
consolidated Subsidiaries' shareholders' equity (including capital stock,
additional paid-in capital and retained earnings) plus Subordinated Debt of
Borrower and its consolidated Subsidiaries, less (i) the total amount of all
Indebtedness owing to Borrower from its consolidated Subsidiaries, Affiliates,
shareholders, officers or employees, and (ii) the total amount of any intangible
assets of Borrower and its consolidated Subsidiaries, including unamortized
discounts, deferred charges and goodwill.
"Tax" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs, duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, intangible, ad valorem, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated or other tax
or other governmental charge of any kind whatsoever, including any interest,
penalty or additions thereto.
"Trustee" means ▇▇▇▇▇▇ Trust and Savings Bank.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of Arizona, and in any and all other states in which Borrower and/or
any of its Subsidiaries conduct, or are authorized to conduct business.
"UDCC" means Ugly Duckling Credit Corp., an Arizona corporation formerly
known as Champion Acceptance Corporation.
"UDCS" means Ugly Duckling Car Sales and Finance Corporation, an Arizona
corporation formerly known as Duck Ventures, Inc.
"UDRC" shall mean Ugly Duckling Receivables Corp., a Delaware corporation.
"UDRC II" shall means Ugly Duckling Receivable Corp. II, a Delaware
corporation.
"UDRC Class B Certificates" shall mean the issued and outstanding Class B
Certificates issued by each Securitization Trust with respect to which UDRC is
the seller, including those set forth on Schedule F, which constitute all of the
UDRC Class B Certificates in existence on the Closing Date.
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"UDRC II Class B Certificates" shall mean the currently issued and
outstanding, and all further issued and then outstanding, Class B Certificates
issued by each of Securitization Trust with respect to which UDRC II is the
seller, including those set forth on Schedule F, which constitute all of the
UDRCII Class B Certificates in existence on the Closing Date.
"UDRC Dividend Direction Letter" means the letter dated November __, 1998
in which Lender, UDRC, UDCC and Trustee agree that Trustee shall pay all
distributions in respect of the UDRC Class B Certificates directly to Lender.
"UDRC II Dividend Direction Letter" means the letter dated November __,
1998 in which Lender, UDRC II, UDCC and Trustee agree that Trustee shall pay all
distributions in respect of the UDRC II Class B Certificates directly to Lender.
"UDRC Securitization Documents" shall mean each of (i) the purchase
agreements listed on Exhibit B hereto, (ii) the pooling and servicing agreements
listed on Exhibit B hereto, (iii) any similar purchase agreements or pooling and
servicing agreements entered into or acknowledged by Borrower, UDCC, UDRC or any
Affiliate of any of them after the date hereof, and (iv) the other agreements,
instruments, certificates and documents entered into or acknowledged by
Borrower, UDCC, UDRC or any Affiliate of any of them or by a Securitization
Trust.
"UDRC II Securitization Documents" shall mean each of (i) the purchase
agreements listed on Exhibit B hereto, (ii) the pooling and servicing agreements
listed on Exhibit B hereto, (iii) any similar purchase agreements or pooling and
servicing agreements entered into or acknowledged by Borrower, UDCC, UDRC II or
any Affiliate of any of them after the date hereof, and (iv) the other
agreements, instruments, certificates and documents entered into or acknowledged
by Borrower, UDCC, UDRC II or any Affiliate of any of them or by a
Securitization Trust.
"UDRC Standing Dividend Resolution" shall mean the resolution adopted on
January 27, 1998 by the board of directors of UDRC (formerly Champion
Receivables Corp.) to the effect that any amounts received as distributions on
the UDRC Class B Certificates should be promptly distributed to Lender.
"UDRC II Standing Dividend Resolution" shall mean the resolution adopted on
January 27, 1998 by the board of directors of UDRC II (formerly Champion
Receivables Corp. II) to the effect that any amounts received as distributions
on the UDRC II Class B Certificates should be promptly distributed to Lender.
"Ugly Duckling Collateral" shall mean any installment contracts or
conditional sales contracts, with any amendments thereto, originated by Borrower
or its Subsidiaries pursuant to which a person has: (i) purchased a new or used
motor vehicle, (ii) granted a security interest in the motor vehicle, and (iii)
agreed to pay the unpaid purchase price and a finance charge in periodic
installments.
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"United States" and "U.S." each means the United States of America.
"Voidable Transfer" has the meaning set forth in Section 9.17.
I.2 Other Interpretive Provisions.
(a) Defined Terms. Unless otherwise specified herein or therein, all terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto. The meaning of
defined terms shall be equally applicable to the singular and plural forms of
the defined terms. Terms (including uncapitalized terms) not otherwise defined
herein, and that are defined in the UCC shall have the meanings therein
described.
(b) The Agreement. The words "hereof", "herein", "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; and section,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(c) Certain Common Terms.
(i)......The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii).....The term "including" is not limiting and means "including
without limitation".
(iii)....The term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or".
(d) Performance; Time. Whenever any performance obligation hereunder (other
than a payment obligation) shall be stated to be due or required to be satisfied
on a day other than a Business Day, such performance shall be made or satisfied
on the next succeeding Business Day. In the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding"; and the
word "through" means "to and including". If any provision of this Agreement
refers to any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be interpreted to encompass any and
all means, direct or indirect, of taking, or not taking, such action.
(e) Contracts. Unless otherwise expressly provided herein, references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of any
Loan Document.
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(f) Laws. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or regulation.
(g) Captions. The captions and headings of this Agreement are
for convenience of reference only and shall not affect the construction of this
Agreement.
(h) Independence of Provisions. The parties acknowledge that
this Agreement and other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
I.3 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied. In the event that GAAP changes
during the term of this Agreement such that the covenants contained in Article
VI would then be calculated in a different manner or with different components,
(i) Borrower and Lender agree to amend this Agreement in such respects as are
necessary to conform those covenants as criteria for evaluating Borrower's
financial condition to substantially the same criteria as were effective prior
to such change in GAAP and (ii) Borrower shall be deemed to be in compliance
with the covenants contained in Article VI following any such change in GAAP if
and to the extent that Borrower would have been in compliance therewith under
GAAP as in effect immediately prior to such change.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of Borrower.
I.4 Times. All times of the day herein are New York City
time.
ARTICLE II
THE LOAN
II.1 The Loan. Lender, on the terms and conditions hereinafter
set forth and the conditions precedent pursuant to Section 4.1 of this
Agreement, agrees to make the Loan to Borrower in the Initial Principal Amount.
II.2 Payment Upon Collections. Upon Borrower's receipt of any
Collections, Borrower shall promptly (and in any event within one (1) Business
Day) pay such Collections to Lender. Lender shall apply such Collections and any
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Collections paid directly to Lender by Trustee in accordance with the procedures
set forth in Section 2.6; provided, however, Lender shall remit to Borrower any
Collections received by Lender on or prior to November 30, 1998, except for the
portion of such Collections equal to the amount of accrued interest on the
Obligations through the date on which such Collections are received, which
retained Collections shall be applied in accordance with the procedures set
forth in Section 2.6.
II.3 Payment Upon Maturity. On the Maturity Date, Borrower
will pay to Lender an amount equal to the Outstanding Principal Amount of the
Loan, together with all accrued and unpaid interest on the Loan and any other
accrued and unpaid Obligations.
II.4 Interest.
(a) Interest Rate. Interest shall accrue on the Outstanding
Principal Amount of the Loan during each Interest Accrual Period at a rate per
annum equal to LIBOR for such Interest Accrual Period plus four hundred basis
points (the "Initial Interest Rate"). In addition, after the occurrence of and
during the continuance of any Event of Default under Section 8.1 of this
Agreement, the Outstanding Principal Amount of the Loan together with all
accrued and unpaid interest on the Loan and any other accrued and unpaid
Obligations due and payable to Lender under this Agreement shall bear interest
at a rate per annum which shall be 500 basis points above the Initial Interest
Rate.
(b) Limitation on Interest Rate. The obligations of Borrower
hereunder shall be subject to the limitation that payments of interest, plus any
other amounts paid in connection herewith, shall not be required, to the extent
(but only to the extent) that contracting for or receiving such payment by
Lender would be contrary to the provisions of any law applicable to Lender
limiting the highest rate of interest which may be lawfully contracted for,
charged or received by Lender, and in such event Borrower shall pay Lender
interest and other amounts at the highest rate permitted by applicable law.
II.5 Voluntary Prepayments. Borrower shall have the right, at
its option, to prepay its obligations under the Loan in whole or in part at any
time (in a minimum amount of $100,000 and an integral multiple of $10,000, or
such lesser amount as is then outstanding). Borrower shall give Lender at least
one Business Day prior notice of its intention to prepay, specifying the date of
payment, the total amount and portion of the Loan to be paid on such date and
the amount of interest to be paid with such prepayment.
II.6 Application of Payments. All payments on the Loan shall
be applied, without duplication, in the following order:
(a) First, to Lender for application to overdue interest
on the Obligations;
(b) Second, to Lender for application to accrued interest
on the Obligations;
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(c) Third, to Lender for application to the Outstanding
Principal Amount;
(d) Fourth, to Lender for any and all sums advanced by Lender
as are reasonably necessary in order to preserve the Collateral or its security
interest in the Collateral and all reasonable expenses of taking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral or of any exercise by Lender of its rights under this Agreement,
together with reasonable Attorney Costs; and
(e) Fifth, to all other accrued and unpaid Obligations.
II.7 Prepayment. Upon any prepayment of the Loan, Borrower
shall pay to Lender the principal amount to be prepaid, together with all
accrued and unpaid interest on the Loan through the date of prepayment. Notice
of prepayment having been given in accordance with Section 2.5, the amount
specified to be prepaid shall become due and payable on the date specified for
prepayment.
II.8 Fees.
(a) Commitment Fee. Borrower shall pay to Lender a commitment
fee equal to one percent (1.00%) of the Initial Principal Amount on the Closing
Date, which fee shall be subtracted on the Closing Date from the proceeds of the
Loan.
(b) Late Payment Fee. In the event the Outstanding Principal
Amount of the Loan, together with all accrued and unpaid interest on the Loan
and any other accrued and unpaid Obligations are not paid in full on or prior to
the Maturity Date, Borrower shall pay Lender a late payment fee equal to one
percent (1.00%) of the Initial Principal Amount.
II.9 Fees and Interest. All computations of fees and interest
under this Agreement shall be made on the basis of a 360-day year and actual
days elapsed, which results in more interest being paid than if computed on the
basis of a 365-day year. Interest and fees shall accrue during each Interest
Accrual Period during which interest or such fees are computed from the first
day thereof to the last day thereof. Borrower shall pay to Lender all accrued
and unpaid interest on each Payment Date.
II.10 Payments by Borrower.
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(a) All payments (including prepayments) to be made by
Borrower on account of principal, interest, fees and other amounts required
hereunder shall be made without set-off, deduction, recoupment or counterclaim
and shall, except as otherwise expressly provided herein, be made to Lender at
Lender's office as set forth in the preamble hereto, in dollars and in
immediately available funds, no later than 3:00 p.m. on the date specified
herein. Any payment which is received by Lender later than 3:00 p.m. shall be
deemed to have been received on the immediately succeeding Business Day and any
applicable interest or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due
on a day, other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be.
(c) If any payment of interest or Lender Expenses is not
received by Lender, within ten (10) days of the date when the same is due,
Borrower shall pay to Lender a late charge in an amount equal to five percent
(5%) of the amount not so paid.
ARTICLE III
SECURITY AGREEMENT AND COLLATERAL
III.1 Security for Obligations. As security for the payment
and performance of the Obligations under this Agreement and all other present
and future debts, obligations and liabilities of any nature whatsoever of
Borrower to Lender, and all modifications, renewals, replacements and extensions
thereof, UDCS shall grant Lender a security interest in the Collateral pursuant
to the Stock Pledge Agreement. Borrower shall cause UDCS to execute and deliver
the Stock Pledge Agreement and to perform its obligations thereunder. Borrower
will execute, and shall cause UDCS to execute, any security agreements,
collateral assignments, financing statements for filing and/or recording and any
other Lien writings reasonably required by Lender to evidence and perfect the
Liens and security interests of Lender. A carbon, photographic or other
reproduced copy of this Agreement and/or any financing statement relating hereto
shall be sufficient for filing and/or recording as a financing statement.
III.2 Security Documents. Borrower shall promptly execute or
cause to be executed the Financing Statements and such other financing
statements and notices as are necessary to properly perfect Lender's security
interest in the Collateral.
III.3 Lender's Duty Regarding Collateral. Lender shall have no
duty or obligation to protect, insure, collect or realize upon the Collateral or
preserve rights in it against prior parties. Borrower releases Lender from, and
shall indemnify Lender against, any liability for any act or omission relating
to the Collateral, except for any liability directly resulting from Lender's
gross negligence or willful misconduct.
III.4 Borrower's Duties Regarding Collateral. Borrower agrees
as follows:
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(a) General Maintenance of Collateral. Borrower: (i) shall
keep the Collateral free from all Liens (other than the Liens of ad valorem
property taxes which are not delinquent, any statutory landlords' liens which
are covered by lien waivers satisfactory to Lender, mechanic's liens, Permitted
Liens, and any Liens in favor of Lender); (ii) shall defend the Collateral
against all claims and legal proceedings by persons other than Lender; (iii)
shall pay and discharge when due all taxes, levies and other charges upon the
Collateral; (iv) shall cause UDCS not to sell, lease or otherwise dispose of the
Collateral; and (v) shall not permit the Collateral to be used in violation of
any Requirement of Law or any policy of insurance.
(b) Perfection and Priority. Borrower shall pay all Lender's
Expenses and, upon Lender's request, execute all writings and take all other
actions reasonably deemed advisable by Lender to preserve the Collateral or to
establish, and determine priority of, perfection, continued perfection or
enforce Lender's interest in the Collateral.
(c) Records and Inspections. Upon reasonable notice to
Borrower, Lender may examine and conduct audits of the Collateral, and
Borrower's and UDCS's records concerning it, wherever located, and make copies
of such records, at any time during normal business hours, and Borrower shall
assist Lender in so doing. Borrower shall keep accurate, complete and current
records respecting the Collateral. In addition to the specific requirements of
Section 6.1, Borrower shall, within ten (10) Business Days of any request by
Lender, furnish to Lender a detailed statement, certified as being substantially
accurate by a Responsible Officer, setting forth the current status, value and
location of all or any portion of the Collateral.
III.5 Power of Attorney. Borrower hereby makes, constitutes
and appoints Lender the true and lawful attorney-in-fact of Borrower, in the
name, place and stead of Borrower, or otherwise, upon the occurrence of any
Event of Default which remains uncured following the receipt of a notice
pursuant to Section 9.2:
(a) To take all actions and to execute, acknowledge, obtain
and deliver any and all writings necessary or deemed advisable by Lender in
order to exercise any rights of Borrower with respect to the Collateral or to
receive and enforce any payment or performance due to Borrower with respect to
the Collateral;
(b) To give any notices, instructions or other communications
to any person or entity in connection with the Collateral;
(c) To demand and receive all performances due under or with
respect to the Collateral and to take all lawful steps to enforce such
performances and to compromise and settle any claim or cause of action of
Borrower arising from or related to the Collateral and give acquittances and
other discharges relating thereto; and
Page - 15
(d) To file any claim or proceeding or to take any other
action, in the name of Lender, Borrower or otherwise, to enforce performances
due under or related to the Collateral or to protect and preserve the right,
title and interest of Lender thereunder.
The foregoing power of attorney is a power coupled with an interest and shall be
irrevocable and unaffected by the disability of the principal so long as any
portion of the Obligations remains contingent, unmatured, unliquidated, unpaid
or unperformed. Lender shall have no obligation to exercise any of the foregoing
rights and powers in any event.
III.6 Collateral Inspections. Lender shall have the right (but
not the obligation) to do a physical on-site examination of the Collateral. All
costs and expenses associated therewith shall be included in Lender Expenses.
ARTICLE IV
CONDITIONS PRECEDENT; TERM OF AGREEMENT
IV.1 Conditions Precedent. Lender shall not make the Loan
hereunder if Borrower has not fulfilled to the satisfaction of Lender and its
counsel, each of the following conditions on or before the Closing Date;
provided, however, that Lender, in its sole and absolute discretion, may waive
any of the following conditions.
IV.2 Receipt of Documents. Lender shall have received each of
the following documents, duly executed, and each such document shall be in full
force and effect:
(a) This Agreement executed by Borrower and Lender;
(b) The Stock Pledge Agreement;
(c) The certificate or certificates representing the
Collateral, together with stock powers executed in
blank (the "Stock Powers");
(d) The Financing Statements executed by Borrower and
Lender;
(e) The UDRC Dividend Direction Letter;
(f) The UDRC II Dividend Direction Letter;
(g) The UDRC Standing Dividend Resolution certified by
UDRC's Secretary;
(h) The UDRC II Standing Dividend Resolution certified by
UDRCII's Secretary;
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(i) A consent and subordination from GECC consenting to the
execution, delivery and performance by Borrower and UDCS of the Loan
Documents and subordinating to Lender GECC's Lien on any assets
constituting Collateral;
(j) Certified copies of the resolutions of the board of
directors of Borrower approving and authorizing the execution, delivery
and performance by Borrower of this Agreement and the other Loan
Documents to be delivered hereunder, and authorizing the Loan,
certified as of the Closing Date by the Secretary or an Assistant
Secretary of Borrower;
(k) A certificate of the Secretary or Assistant Secretary of
Borrower certifying the names and true signatures of the officers of
Borrower authorized to execute, deliver and perform, as applicable,
this Agreement, the Stock Pledge Agreement and all other Loan Documents
to be delivered hereunder;
(l) Certified copies of the resolutions of the board of
directors of UDCS approving and authorizing the execution, delivery and
performance by UDCS of the applicable Loan Documents to be delivered
hereunder, certified as of the Closing Date by the Secretary or an
Assistant Secretary of UDCS;
(m) A certificate of the Secretary or Assistant Secretary of
UDCS certifying the names and true signatures of the officers of UDCS
authorized to execute, deliver and perform the Stock Pledge Agreement
and all other applicable Loan Documents to be delivered hereunder;
(n) Copies of each of Borrower's, UDCS's, UDRC's and UDRC II's
certificate of incorporation certified by the Secretary of the State of
their respective jurisdictions of incorporation and bylaws certified by
their respective Secretaries or Assistant Secretaries;
(o) Good standing certificates for the jurisdiction of
incorporation and the jurisdiction in which the chief executive office
is located for each of Borrower, UDCS, UDRC and UDRC II;
(p) A copy of lien searches, completed as of a recent date,
against Borrower and UDCS, in such jurisdictions as shall be
satisfactory to Lender and its counsel;
(q) Legal opinions from counsel for Borrower with respect to
the transactions contemplated by the Loan Documents, which opinions
shall be in form and substance satisfactory to Lender and from counsel
satisfactory to Lender.
Page - 17
IV.3 Term. This Agreement shall become effective upon the
execution and delivery hereby by Borrower and Lender and shall continue in full
force and effect for a term ending on the earliest of (a) the Repayment Date, or
(b) the date of termination of this Agreement in accordance with its terms after
the occurrence and during the continuation of an Event of Default.
IV.4 Effect of Termination. Upon termination of this
Agreement, all Obligations shall become due and payable immediately without
notice or demand. No termination of this Agreement, however, shall relieve or
discharge Borrower of Borrower's duties, Obligations, or covenants hereunder,
and Lender's continuing security interest in the Collateral shall remain in
effect until all Obligations have been fully and finally discharged.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and
make the Loan, Borrower makes the following representations and warranties which
shall be true, correct, and complete in all respects as of the date hereof, and
shall be true, correct, and complete in all respects as of the Closing Date
(except to the extent that such representations and warranties relate solely to
an earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement:
V.1 No Encumbrances. UDCS has good and indefeasible
title to the Collateral, free and clear of Liens except for Permitted Liens.
V.2 Location of Chief Executive Office; FEIN. The chief
executive office of Borrower is located at the address indicated in the preamble
to this Agreement and Borrower's FEIN is ▇▇-▇▇▇▇▇▇▇.
V.3 Due Organization and Qualification; Subsidiaries.
(a) Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its incorporation and qualified
and licensed to do business in, and in good standing in, any state where the
failure to be so licensed or qualified reasonably could be expected to have a
Material Adverse Effect.
(b) Set forth on Schedule A is a complete and accurate list of
Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their incorporation; (ii) the number of shares of each class of Equity Interests
authorized for each of such Subsidiaries; and (iii) the number and the
percentage of the outstanding shares of each such class owned directly or
indirectly by Borrower. All of the outstanding Equity Interests of each such
Subsidiary have been validly issued and are fully paid and non-assessable.
Page - 18
(c) Except as set forth on Schedule B, no Equity Interests (or
any securities, instruments, warrants, options, purchase rights, conversion or
exchange rights, calls, commitments or claims of any character convertible into
or exercisable for Equity Interests) of any direct or indirect Subsidiary of
Borrower is subject to the issuance of any security, instrument, warrant,
option, purchase right, conversion or exchange right, call, commitment or claim
of any right, title, or interest therein or thereto.
V.4 Due Authorization: No Conflict.
(a) The execution, delivery, and performance by Borrower of
this Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary corporate action.
(b) The execution, delivery, and performance by Borrower of
this Agreement and the Loan Documents to which it is a party do not and will not
(i) violate any provision of federal, state, or local law or regulation
(including Regulations G, T, U, and X of the Federal Reserve Board) applicable
to Borrower, the Governing Documents of Borrower, or any order, judgment, or
decree of any court or other Governmental Authority binding on Borrower, (ii)
conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under any material contractual obligation or material
lease of Borrower, (iii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any properties or assets of such Borrower,
other than Permitted Liens, or (iv) require any approval of stockholders or any
approval or consent of any Person under any material contractual obligation of
Borrower.
(c) Other than the taking of any other action expressly
required under this Agreement and the Loan Documents, the execution, delivery,
and performance by Borrower of this Agreement and the Loan Documents to which
Borrower is a party do not and will not require any registration with, consent,
or approval of, or notice to, or other action with or by, any federal, state,
foreign, or other Governmental Authority or other Person.
(d) This Agreement, the Loan Documents and all other documents
contemplated hereby and thereby, when executed and delivered by Borrower, will
be the legally valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their respective terms, except as enforcement may be
limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.
(e) The Pledge Agreement and the Stock Powers, when executed
and delivered by UDCS, will be the legally valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally.
(f) The Lien granted by UDCS on the Collateral is a validly
created and perfected Lien, subject to no other Liens.
Page - 19
V.5 Litigation. Except as set forth in Schedule C, there are
no actions or proceedings pending by or against Borrower before any court or
administrative agency and Borrower does not have knowledge or belief of any
pending, threatened, or imminent litigation, governmental investigations, or
claims, complaints, actions, or prosecutions involving Borrower, except for: (a)
ongoing collection matters in which Borrower is the plaintiff and (b) matters
that, if decided adversely to Borrower, would not have a Material Adverse
Effect.
V.6 Financial Statements; No Material Adverse Change. All
financial statements relating to Borrower, UDRC and UDRC II that have been
delivered by Borrower to Lender have been prepared in accordance with GAAP
(except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and fairly present
the financial condition as of the date thereof and the results of operations for
the period then ended for Borrower and its consolidated Subsidiaries, except as
disclosed on Schedule D. There has not been a Material Adverse Change with
respect to Borrower since the date of the latest financial statements submitted
to Lender on or before the Closing Date.
V.7 Securitization Documents. Borrower, UDRC and UDRC II and
each of their Affiliates are in full compliance with their respective
obligations under the UDRC Securitization Documents and the UDRC II
Securitization Documents, and no Securitization Default exists.
V.8 ERISA. No accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, exists
with respect to any plan (other than a multiemployer plan). No liability to the
Pension Benefit Guaranty Corporation has been or is expected by Borrower to be
incurred with respect to any plan (other than a multiemployer plan) by Borrower
which is or would have a Material Adverse Effect. Borrower has not incurred or
does not presently expect to incur any withdrawal liability under Title IV of
ERISA with respect to any multiemployer plan which is or would be materially
adverse to Borrower. The execution and delivery of this Agreement and the other
Loan Documents will not involve any transaction which is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975 of the Code. For the purpose of this Section
5.8, the term "plan" shall mean an "employee pension benefit plan" (as defined
in section 3 of ERISA) which is or has been established or maintained, or to
which contributions are or have been made, by Borrower or by any trade or
business, whether or not incorporated, which, together with Borrower, is under
common control, as described in Section 414(b) or (c) of the Code; and the term
"multiemployer plan" shall mean any plan which is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA). No plan providing welfare
benefits to retired former employees of Borrower has been established or is
maintained for which the present value of future benefits payable, in excess of
irrevocably designated funds for such purpose, is or would have a Material
Adverse Effect.
Page - 20
V.9 Environmental and Safety Matters. Borrower (a) has
complied in all material respects with all applicable material Environmental and
Safety Laws, and Borrower has not received (i) notice of any material failure so
to comply, (ii) any letter or request for information under Section 104 of
CERCLA or comparable state laws or (iii) any information that would lead it to
believe that it is the subject of any Federal or state investigation concerning
Environmental and Safety Laws; (b) does not manage, generate, discharge or store
any Hazardous Materials in material violation of any material Environmental and
Safety Laws; (c) does not own, operate or maintain any underground storage tanks
or surface impoundments; and (d) except as disclosed to Lender in writing, is
not aware of any conditions or circumstances associated with its currently or
previously owned or leased properties or operations (or those of its tenants)
which may give rise to any Environmental Liabilities and Costs which could have
a Material Adverse Effect.
V.10 Tax Matters. Each of Borrower and its Subsidiaries has
filed all tax returns that it was required to file. All such tax returns were
correct and complete in all material respects. All Taxes owed by any of Borrower
and its Subsidiaries have been paid.
ARTICLE VI
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, and unless Lender shall otherwise consent in writing, Borrower
shall do all of the following:
VI.1 Financial Statements and Other Documents. Borrower shall deliver to
Lender in form and detail satisfactory to Lender:
(a) Within 45 days of the end of each fiscal quarter, Borrower's unaudited
financial statements for such quarter, and, within 90 days of the end of
Borrower's fiscal year, Borrower's audited financial statements for such period,
certified by Borrower's Chief Financial Officer or Treasurer as fairly
presenting in all material respects, in accordance with GAAP (subject, in the
case of unaudited financial statements, to ordinary, good faith year-end
adjustments and to the absence of footnote disclosure), the financial position
and results of operations of Borrower;
(b) Promptly upon receipt thereof, any financial statements of Borrower
distributed to other lenders or financing parties;
(c) Promptly upon preparation thereof, a copy of each other report, if any,
submitted to Borrower by independent accountants in connection with any annual,
interim or special audit made by them of the books of Borrower;
(d) Promptly after its submission, copies of any other information or
documents regularly provided by Borrower to any of its other lenders or holders
of Borrower's Debt;
Page - 21
(e) Promptly upon receipt thereof, copies of any other information or
documents received by borrower pursuant to the UDRC Securitization Documents and
the UDRC II Securitization Documents;
(f) With reasonable promptness, such other financial data as Lender may
reasonably request; and
(g) Promptly upon receipt thereof, (i) copies of any federal revenue
agent's reports (so called "thirty-day letter") issued by the IRS, and copies of
any equivalent documents from state or local tax authorities; (ii) copies of any
federal notice of deficiency (so-called "ninety-day letters") issued by the IRS,
and copies of any equivalent documents from state or local tax authorities; and
(iii) copies of any information requests or document requests received from
federal, state or local tax authorities that are not in the ordinary course of
business.
VI.2 Inspection of Property. Borrower shall permit any Person designated by
Lender in writing, to visit and inspect any of the properties of Borrower, to
examine the corporate books and financial records of Borrower and make copies
thereof or extracts therefrom and to discuss the affairs, finances and accounts
of any of such corporations with the principal officers of Borrower and its
independent public accountants, all at such reasonable times and as often as
Lender may reasonably request.
VI.3 Default Disclosure.
(a) Borrower shall forthwith, upon a Responsible Officer of Borrower
obtaining knowledge of an Event of Default or Default, promptly deliver to
Lender a certificate of a Responsible Officer specifying the nature and period
of existence thereof and what action Borrower proposes to take with respect
thereto.
(b) Borrower shall forthwith, upon a Responsible Officer of Borrower
obtaining knowledge of a Securitization Default, promptly deliver to Lender a
certificate of a Responsible Officer specifying the nature and period of
existence thereof, what action the defaulting party proposes to take with
respect thereto, and what action Borrower proposes to take with respect thereto.
VI.4 Notices to Lender. Borrower shall promptly notify Lender in writing
of:
(a) Any lawsuit over One Hundred Thousand Dollars ($100,000) against
Borrower;
(b) Any substantial dispute between Borrower and any Governmental
Authority; or
(c) Any change in Borrower's name, address, or legal structure.
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VI.5 Books and Records. Borrower shall maintain adequate
books and records.
VI.6 Compliance and Preservation. Borrower shall:
(a) Comply with the laws (including any fictitious name
statute), regulations and orders of any government body with authority over
Borrower's business;
(b) Maintain and preserve all privileges and franchises
Borrower now has; and
(c) Make any repairs, renewals, or replacements reasonably
necessary to keep Borrower's properties in good working condition.
VI.7 Perfection of Liens. Borrower shall help Lender perfect
and protect its security interests and liens.
VI.8 Cooperation. Borrower shall take any reasonable action
requested by Lender to carry out the intent of this Agreement.
VI.9 Use of Proceeds. Borrower shall use the proceeds of the
Loan for general working capital to facilitate ongoing growth in Borrower's core
operations.
VI.10 Securitizations. Any securitizations of the Ugly
Duckling Collateral executed during the term of this Agreement shall be done
through UDRC II. Borrower shall continue to execute quarterly securitizations of
the Ugly Duckling Collateral during the term of this Agreement.
VI.11 Compliance with Covenants. Borrower shall perform, keep
or observe any term, provision, condition or covenant or agreement contained in
each Bond Insurance Policy, the GECC Agreement and any other agreement
evidencing Indebtedness.
VI.12 Payment of Indebtedness. Borrower shall timely pay and
shall cause its Subsidiaries to timely pay all Indebtedness which, if not paid,
could result in the imposition of a Lien on any of the assets of UDRC or UDRC
II.
VI.13 Tangible Net Worth. Borrower shall maintain a
consolidated Tangible Net Worth of net less than $100,000,000.
VI.14 Debt to Tangible Net Worth. Borrower shall maintain a
ratio of (i) the principal amount of Debt of Borrower and its consolidated
Subsidiaries to (ii) Tangible Net Worth of no greater than 2.1 to 1.
Page - 23
ARTICLE VII
NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower will not do any of the following without Lender's prior
written consent:
VII.1 Liens. Create, incur, assume, or permit to exist,
directly or indirectly, any lien on or with respect to any of the assets of UDRC
and UDRC II, including the UDRC Class B Certificates, the UDRC II Class B
Certificates, or any income or profits from any of the foregoing, except for
Permitted Liens listed on Schedule E or liens of Lender.
VII.2 Indebtedness. Permit UDRC or UDRC II to incur, assume,
or permit to exist, directly or indirectly any Indebtedness.
VII.3 Restrictions on Fundamental Changes. Enter into any
merger, consolidation, reorganization, or recapitalization, or reclassify its
capital stock, or liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, assign, lease, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its property or assets.
VII.4 Disposal of Collateral. Except as expressly consented to
by Lender in writing, sell, lease, assign, transfer, or otherwise dispose of any
of the Collateral.
VII.5 Change Name. Without giving thirty (30) days prior
written notification to Lender, change Borrower's name, FEIN, corporate
structure (within the meaning of Section 9402(7) of the Code), or identity, or
add any new fictitious name.
VII.6 Amendments. Except as expressly consented to by Lender
in writing, directly or indirectly, amend, modify, alter, increase, or change
any of the terms or conditions of the UDRC Securitization Documents or the UDRC
II Securitization Documents.
VII.7 Change of Control. Cause, permit, or suffer,
directly or indirectly, any Change of Control.
VII.8 Distributions. Make any distribution or declare or pay
any dividends (in cash or other property, other than capital stock) on, or
purchase, acquire, redeem, or retire any of Borrower's capital stock, of any
class, whether now or hereafter outstanding, for cash, other than the buyback of
1,000,000 shares of Borrower's common stock previously approved by Borrower's
Board of Directors.
Page - 24
VII.9 Standing Dividend Resolutions. Permit UDRC to rescind,
amend, modify, revoke or alter the UDRC Standing Dividend Resolution or permit
UDRC II to rescind, amend, modify, revoke or alter the UDRC II Standing Dividend
Resolution.
VII.10 Change in Location of Chief Executive Office. Relocate
its chief executive office to a new location without providing 30 days prior
written notification thereof to Lender and so long as, at the time of such
written notification, Borrower provides any financing statements or fixture
filings necessary to perfect and continue perfected Lender's security interests
and also provides to Lender a Collateral access agreement with respect to such
new location.
VII.11 No Prohibited Transactions Under ERISA. Directly or
indirectly:
(a) Engage, or permit any Subsidiary of Borrower to engage, in
any prohibited transaction which is reasonably likely to result in a civil
penalty or excise tax described in Sections 406 of ERISA or 4975 of the Code for
which a statutory or class exemption is not available or a private exemption has
not been previously obtained from the Department of Labor;
(b) Permit to exist with respect to any Benefit Plan any
accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of
the Code), whether or not waived;
(c) Fail, or permit any Subsidiary of Borrower to fail, to pay
timely required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
(d) Terminate, or permit any Subsidiary of Borrower to
terminate, any Benefit Plan where such event would result in any liability of
Borrower or any of its Subsidiaries under Title IV of ERISA;
(e) Fail, or permit any Subsidiary of Borrower to fail, to
make any required contribution or payment to any Multiemployer Plan;
(f) Fail, or permit any Subsidiary of Borrower to fail, to pay
any required installment or any other payment required under Section 412 of the
Code on or before the due date for such installment or other payment;
(g) Amend, or permit any Subsidiary of Borrower to amend, a
retirement plan resulting in an increase in current liability for the plan year
such that either of Borrower or any Subsidiary of Borrower is required to
provide security to such retirement plan under Section 401 (a)(29) of the Code;
or
Page - 25
(h) Withdraw, or permit any Subsidiary of Borrower to
withdraw, from any Multiemployer Plan where such withdrawal is reasonably likely
to result in any liability of any such entity under Title IV of ERISA.
VII.12 Stock Buyback Program. Use the proceeds of the
Loan to facilitate a stock buyback program.
VII.13 Verde Subordinated Debt. Repay any portion of the $10
million loan from Verde Investments without Lender's prior written consent.
ARTICLE VIII
EVENTS OF DEFAULT/REMEDIES
VIII.1 Event of Default. Any of the following shall constitute
an "Event of Default":
(a) If Borrower fails to pay when due and payable or when
declared due and payable, any portion of the Obligations (whether of principal,
interest, fees and charges due Lender, reimbursement of Lender Costs, or other
amounts constituting Obligations);
(b) If Borrower fails to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in this Agreement, in any
of the Loan Documents, or in any other future agreement between Borrower and
Lender;
(c) If there is a Material Adverse Change with respect to
Borrower, UDRC or UDRC II (the occurrence or non-occurrence of which shall be
determined by Lender in the exercise of its reasonable discretion);
(d) If Borrower is enjoined or restrained, by court order from
continuing to conduct all or any material part of its business affairs, unless
such order is stayed;
(e) If notices of any Lien, levy, or assessment in excess of
$250,000 other than of Permitted Liens are filed of record with respect to any
of Borrower's properties or assets which have not been cured within ten (10)
days after the Lien has been filed;
(f) If a judgment or other claim in excess of $250,000 becomes
a Lien or encumbrance upon any material portion of Borrower's properties or
assets and such judgment is not removed or released within 15 days of the entry
of such judgment;
Page - 26
(g) If Borrower makes any payment on account of Indebtedness
that has been contractually subordinated in right of payment to the payment of
the Obligations, except to the extent such payment is permitted by the terms of
the subordination provisions applicable to such Indebtedness;
(h) If any material misstatement or misrepresentation exists
now or hereafter in any warranty, representation, statement, or report made to
Lender by Borrower or any officer, employee, agent, or director of Borrower
which has not been corrected to date, or if any such warranty or representation
is withdrawn;
(i) If Borrower rescinds, amends, alters, revokes or modifies
(or permits UDRC or UDRC II to rescind, amend, alter, revoke or modify) the UDRC
Standing Dividend Resolution or the UDRC II Standing Dividend Resolution in any
respect;
(j) If a default or event of default occurs under the GECC
Agreement or under the terms of any other Indebtedness in excess of $1,000,000
or there is a termination event under the terms of any Bond Insurance Policy (or
the policy of another bond insurer), regardless of whether such default or
termination event is waived or amended; or
(k) If Borrower or any of its Subsidiaries makes a general
assignment for the benefit of creditors, or an order, judgment or decree is
entered adjudicating the Company or any of its Subsidiaries bankrupt or
insolvent, or any order for relief with respect to the Company is entered under
the Federal Bankruptcy Code, or Borrower or any of its Subsidiaries petitions or
applies to any tribunal for the appointment of a custodian, trustee, receiver or
liquidator of Borrower or any of its Subsidiaries or of any substantial part of
the assets of the Company or any of its Subsidiaries, or commences any
proceeding relating to the Company or any of its Subsidiaries under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, or any such petition or
application is filed, or any such proceeding is commenced against the Company or
any of its Subsidiaries.
VIII.2 Lender's Rights and Remedies. Subject to the
occurrence, and during the continuation, of an Event of Default, Lender shall
provide Borrower with written notice thereof and the option to cure. If Borrower
fails to cure such Event of Default within ten (10) days after delivery of such
written notice, Lender may, at its sole and absolute discretion, without further
notice, do any one or more of the following, all of which are authorized by
Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due
and payable;
(b) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of Lender, but without
affecting Lender's rights and security interests in the Collateral and without
affecting the Obligations;
Page - 27
(c) Without notice to or demand upon Borrower, make such
payments and do such acts as Lender considers necessary or reasonable to protect
its security interests in the Collateral;
(d) Without notice to Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of Section 9-505 of the UCC), set off and
apply to the Obligations any and all (i) balances and deposits of Borrower held
by Lender, or (ii) indebtedness at any time owing to or for the credit or the
account of Borrower held by Lender; or
(e) Collect, receive, appropriate and realize upon the
Collateral, on such terms as Lender, in its sole and absolute discretion, deems
appropriate without any liability for any loss due a decrease in the market
value of the Collateral during the period held, without demand of performance or
other demand, advertisement or notice of any kind, except as specified below, to
or upon Borrower or any other person (all and each of which demands,
advertisements and/or notices are hereby expressly waived to the extent
permitted by law). If any notification to Borrower of intended disposition of
the Collateral is required by law, such notification shall be deemed reasonable
and properly given if mailed to Borrower, postage prepaid, at least ten (10)
days before any such disposition at the address indicated by Borrower's
signature. Any disposition of the Collateral or any part thereof shall be free
of any equity or right of redemption in Borrower, which right of equity is, to
the extent permitted by applicable law, hereby expressly waived or released by
Borrower. Borrower further agrees that such sale or sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner. Lender shall not be obligated to make any sale or other
disposition of the Collateral permitted under this Loan Agreement, unless the
terms thereof shall be satisfactory to Lender.
Lender's rights and remedies under this Agreement, the Loan Documents, and all
other agreements shall be cumulative. No exercise by Lender of one right or
remedy shall be deemed an election, and no waiver by Lender of any Event of
Default shall be deemed a continuing waiver. No delay by Lender shall constitute
a waiver, election, or acquiescence by it.
ARTICLE IX
MISCELLANEOUS
IX.1 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by Borrower therefrom, shall be effective unless the
same shall be in writing and signed by Lender and Borrower, and then such waiver
shall be effective only in the specific instance and for the specific purpose
for which given.
Page - 28
IX.2 Notices.
(a) All notices, requests and other communications provided
for hereunder shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided, that, any matter
transmitted by facsimile (i) shall be immediately confirmed by a telephone call
to the recipient, and (ii) shall be followed promptly by a hard copy original
thereof by over-night courier to the address set forth below; or to such other
address as shall be designated by such party in a written notice to the other
party, and as directed to each other party, at such other address as shall be
designated by Lender or Borrower in a written notice to Borrower and Lender.
If to Borrower:...Ugly Duckling Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:...▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender:.....Greenwich Capital Financial Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:...▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery or faxed, be effective when delivered for
overnight (next day) delivery, transmitted by facsimile machine, respectively,
or if delivered, upon delivery, except that notices pursuant to Article II shall
not be effective until actually received by Lender.
Page - 29
(c) Borrower acknowledges and agrees that any agreement of
Lender to receive certain notices by telephone and facsimile is solely for the
convenience and at the request of Borrower. Lender shall be entitled to rely on
the authority of any Person purporting to be a Person authorized by Borrower to
give such notice and Lender shall not have any liability to Borrower or to other
Person on account of any action taken or not taken by Lender in reliance upon
such telephonic or facsimile notice. The obligations of Borrower hereunder shall
not be affected in any way or to any extent by any failure by Lender to receive
written confirmation of any telephonic or facsimile notice or the receipt by
Lender of a confirmation which is at variance with the terms understood by
Lender to be contained in the telephonic or facsimile notice.
IX.3 No Waiver: Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of Lender, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
IX.4 Costs and Expenses. Borrower shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) pay or reimburse Lender within ten (10) Business Days
after demand for all Lender Costs incurred by Lender in connection with the
development, preparation, delivery, administration and execution of (and any
amendment, supplement, waiver or modification to in each case whether or not
consummated), this Agreement, any Loan Document and any other documents prepared
in connection herewith, or therewith, and the consummation of the transactions
contemplated hereby and thereby, including the reasonable Attorney Costs
incurred by Lender with respect thereto;
(b) pay or reimburse Lender within ten (10) Business Days
after demand for all Lender Costs incurred by Lender in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement, any other Loan Document, and any such other documents,
including reasonable Attorney Costs incurred by Lender; and
(c) pay or reimburse Lender within ten (10) Business Days
after demand for all reasonable appraisal (including the allocated cost of
internal appraisal services), audit, due diligence, monitoring review,
environmental inspection and review (including the allocated cost of such
internal services), search and filing costs, fees and expenses, incurred or
sustained by Lender in connection with the Loan, the Loan Documents, any of the
Obligations and the matters referred to under (a) and (b) of this Section 9.4.
Page - 30
IX.5 Indemnity. Borrower shall pay, indemnify, and hold
Lender, its Affiliates and Subsidiaries, and their respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including Attorney Costs) of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement and any other Loan Documents,
or the transactions contemplated hereby and thereby, and with respect to any
investigation, litigation or proceeding related to this Agreement or the use of
the proceeds thereof, whether or not any Indemnified Person is a party thereto
(all the foregoing, collectively, the "Indemnified Liabilities"); provided,
however, Borrower shall have no obligation hereunder to any Indemnified Person
with respect to Indemnified Liabilities arising from the gross negligence, bad
faith or willful misconduct of such Indemnified Person or the breach by Lender
of its obligations hereunder. The agreements in this Section 9.5 shall survive
payment of all other Obligations and the termination of this Agreement.
IX.6 Marshaling: Payments Set Aside. Lender shall not be under
any obligation to marshal any assets in favor of Borrower or any other Person or
against or in payment of any or all of the Obligations. To the extent that
Borrower makes a payment or payments to Lender, or to the extent Lender enforces
its Liens or exercises its rights of set-off, and such payment or payments or
the proceeds of such enforcement or set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party in connection with any
bankruptcy, or otherwise, then to the extent of such recovery the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or set-off had not occurred.
IX.7 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Borrower may not assign or
transfer any of its rights or delegate obligations under this Agreement or any
of the Loan Documents without the prior written consent of Lender.
IX.8 Set-off. In addition to any rights and remedies of Lender
provided by law, if an Event of Default exists, and Borrower fails to cure such
Event of Default within five (5) days after delivery of written notice thereof,
Lender is authorized at any time and from time to time, without prior notice to
Borrower, any such notice being waived by Borrower to the fullest extent
permitted by law, to set off and apply any and all monies or deposits at any
time held by, and other indebtedness at any time owing by, Lender to or for the
credit or the account of Borrower against any and all Obligations owing to
Lender, now or hereafter existing, irrespective of whether or not Lender shall
have made demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. Lender agrees promptly to notify
Borrower after any such set-off and application made by Lender; provided,
however, that, the failure to give such notice shall not affect the validity of
such set-off and application. The rights of Lender under this Section 9.8 are in
addition to the other rights and remedies (including other rights of set-off)
which Lender may have.
Page - 31
IX.9 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement in any number of separate counterparts,
each of which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by both parties shall
be lodged with Borrower and Lender.
IX.10 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
IX.11 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of Borrower and Lender,
and their permitted successors and assigns, and no other Person shall be a
direct or indirect legal beneficiary of, or have any direct or indirect cause of
action or claim in connection with, this Agreement or any of the other Loan
Documents. Lender shall have no obligation to any Person not a party to this
Agreement or other Loan Documents.
IX.12 Time. Time is of the essence as to each term or
provision of this Agreement and each of the other Loan Documents.
IX.13 Governing Law and Jurisdiction.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS,
THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE
RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
IT BEING THE INTENT OF THE PARTIES THAT THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN THE RIGHTS AND DUTIES OF THE PARTIES HERETO WITHOUT REGARD TO CHOICE OR
CONFLICTS OF LAW PRINCIPLES; EXCEPT THAT THE PROVISIONS HEREIN THAT PERTAIN TO
THE PERFECTION OR THE EFFECT OF PERFECTION OF SECURITY INTERESTS IN COLLATERAL
SHALL BE GOVERNED BY THE LAWS OF SUCH STATE AS ARE SPECIFIED IN SECTION 9103 OF
THE UCC.
Page - 32
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
IX.14 Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire Agreement and understanding among
Borrower and Lender and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof and any prior arrangements made with respect to the
payment by Borrower (or any indemnification for) any Lender Costs incurred (or
to be incurred) by or on behalf of Lender.
IX.15 Interpretation. This Agreement is the result of
negotiations between and has been reviewed by counsel to Lender, Borrower and
other parties, and is the product of all parties hereto. Accordingly, this
Agreement and the other Loan Documents shall not be construed against Lender
merely because of Lender's involvement in the preparation of such documents and
agreements.
IX.16 Assignment. Lender may assign its rights hereunder and
under the Loan Documents without the consent of Borrower. Borrower may not
assign or delegate any of its rights, interest or obligations hereunder or under
any of the Loan Documents.
IX.17 Revival and Reinstatement of Obligations. If the
incurrence or payment of the Obligations by Borrower or the transfer by Borrower
to Lender of any property of either or both of such parties should for any
reason subsequently be declared to be void or voidable under any state or
federal law relating to creditors' rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences, and other
voidable or recoverable payments of money or transfers of property
(collectively, a "Voidable Transfer"), and if Lender is required to repay or
restore, in whole or in part, any such Voidable Transfer, or elects to do so
upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Lender is required or elects to repay or
restore, and as to all reasonable costs, expenses, and Attorney Costs of Lender
related thereto, the liability of Borrower automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.
* * * * *
Page - 33
[Signature Page to Loan Agreement]
IN WITNESS WHEREOF, the parties hereby have caused this
Agreement to be executed as of the date first written above.
UGLY DUCKLING CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC., a Delaware corporation
By: /s/ ▇▇▇ ▇▇▇▇▇
-------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Vice President