STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT dated as of May 14, 1999 (the
"Pledge Agreement") among UGLY DUCKLING CAR SALES AND FINANCE CORPORATION, an
Arizona corporation formerly known as Duck Ventures, Inc. ("Pledgor"), as owner
of all of the outstanding capital stock in Ugly Duckling Receivables Corp.
("UDRC"), a Delaware corporation, and Ugly Duckling Receivables Corp. II, a
Delaware corporation ("UDRC II"), UGLY DUCKLING CORPORATION, a Delaware
corporation ("UDC") and ▇▇▇▇▇▇ TRUST AND SAVINGS BANK, as collateral agent (in
such capacity, together with its successors in such capacity, the "Collateral
Agent") for the Lenders from time to time party to the Loan Agreement referred
to below.
INTRODUCTORY STATEMENTS
Pledgor is the sole holder of fifty (50) shares of common
stock, $.01 par value per share in UDRC and fifty (50) shares of common stock,
$.01 par value per share, in UDRC II (collectively, together with the capital
stock of each New Issuer (as defined below) pledged or required to be pledged
hereunder, the "Pledged Shares"). UDC, as borrower, has on the date hereof
entered into a Senior Secured Loan Agreement with certain lenders (such lenders,
together with their successors and assigns, the "Lenders") and the Collateral
Agent (as such agreement may be amended, supplemented or otherwise modified from
time to time, the "Loan Agreement") pursuant to which UDC has borrowed money
from the Lenders. Pledgor, which is a wholly owned subsidiary of UDC, will
receive substantial direct and indirect benefits from the loans made to UDC
under the Loan Agreement and Pledgor has agreed to (i) guarantee the Obligations
(as defined in the Loan Agreement) pursuant to the Guaranty (as defined in the
Loan Agreement), and (ii) pledge the Pledged Shares and any proceeds thereof as
security for Pledgor's obligations under the Guaranty. Accordingly, the Pledged
Shares and any proceeds thereof will secure obligations of Pledgor to Lender.
Terms used herein but not defined herein shall have the meanings assigned to
such terms in the Loan Agreement.
In consideration of the premises and of the agreements herein
contained, Pledgor, Lender and UDC agree as follows:
Section 1. Definitions.
(a) Capitalized terms used but not otherwise defined in this
Pledge Agreement shall have the meanings specified therefor in the Loan
Agreement.
(b) As used herein, the term "Final Date" shall mean the date
upon which all of the Obligations as defined in the Loan Agreement have been
fully paid and performed to the satisfaction of each Lender. The term "Loan
Documents" shall mean the Loan Agreement, the Notes, the Guaranty, the
Collateral Account Agreement, this Pledge Agreement and any and all documents,
instruments and agreements securing and/or relating to the Obligations of UDC or
Pledgor to any Lender.
Section 2. Pledge of Stock and Grant of Security Interest. As
security for the prompt payment and performance in full when due of the Secured
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Obligations (as defined below), Pledgor hereby delivers, pledges and assigns to
the Collateral Agent, for the benefit of the Collateral Agent and the ratable
benefit of the Lenders and grants in favor of the Collateral Agent, for the
benefit of the Collateral Agent and the ratable benefit of the Lenders, a first
priority security interest in all of Pledgor's right, title and interest in and
to the Pledged Shares (which represent all capital stock of each issuer of
Pledged Shares) and all capital stock of each New Issuer (as defined below),
together with all of Pledgor's rights and privileges with respect thereto, all
proceeds, income and profits thereof, all dividends and other distributions in
respect thereof (including, without limitation, any and all investment property
distributed in respect thereof) and all property (including, without limitation,
all investment property) received in exchange thereof or in substitution
therefor (the "Collateral").
This Agreement secures, and the Collateral is collateral
security for, the prompt payment and performance in full when due, whether on a
specified payment date, at stated maturity, by acceleration or otherwise
(including, without limitation, the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code or any similar law) of all obligations of UDC and all obligations of
Pledgor, in each case of every type and nature, now or hereafter existing under
the Loan Documents (including, without limitation, the Guaranty), whether for
principal, interest (including, without limitation, interest that, but for the
filing of a petition in bankruptcy would accrue on such obligations), fees,
expenses, indemnities or otherwise (all such obligations being the "Secured
Obligations"). Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts that constitute part of the Secured
Obligations and would be owed to the Collateral Agent or any Lender under the
Loan Documents but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding.
Section 3. Dividends, Options, or Other Adjustments. Until the
Final Date, Pledgor shall deliver as Collateral to the Collateral Agent, and, as
security for the full and complete payment and performance of all of the Secured
Obligations hereby grants to the Collateral Agent a continuing security interest
in, any and all additional shares of stock or any other property (including,
without limitation, investment property) of any kind distributable on or by
reason of the Collateral, whether in the form of or by way of stock dividends,
warrants, total or partial liquidation, conversion, prepayments, redemptions or
otherwise, including cash dividends and any cash interest payments. If any such
dividends, interest payments, additional shares of capital stock, instruments,
or other property, a security interest in which can only be perfected by
possession, which are distributable on or by reason of the Collateral pledged
hereunder, shall come into the possession or control of Pledgor, Pledgor shall
forthwith transfer and deliver such property to the Collateral Agent as
Collateral hereunder.
Section 4. Delivery of Share Certificates; Stock Powers.
Pledgor shall promptly deliver to the Collateral Agent, or cause UDRC or UDRC II
or any other entity issuing the Collateral to deliver directly to Lender, share
certificates or other instruments representing any Collateral issued to,
acquired or received by Pledgor after the date of this Pledge Agreement with a
stock or bond power duly executed in blank by Pledgor. If, at any time the
Collateral Agent notifies Pledgor that it requires additional stock powers
endorsed in blank, Pledgor shall promptly execute in blank and deliver the
requested power to the Collateral Agent.
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Section 5. Power of Attorney. Pledgor hereby constitutes and
irrevocably appoints the Collateral Agent as Pledgor's true and lawful
attorney-in-fact, with the power, after the occurrence of an "Event of Default"
under and as defined in the Loan Agreement, to the full extent permitted by law,
to affix to any certificates and documents representing the Collateral, the
stock or bond powers delivered with respect thereto, and to transfer or cause
the transfer of Collateral, or any part thereof, on the books of UDRC or UDRC II
or any other entity issuing such Collateral, to the name of the Collateral Agent
or any nominee of either, and thereafter to exercise with respect to such
Collateral all the rights, powers and remedies of an owner. The power of
attorney granted pursuant to this Pledge Agreement and all authority hereby
conferred are granted and conferred solely to protect the Collateral Agent's
interest in the Collateral and shall not impose any duty upon the Collateral
Agent to exercise any power. This power of attorney shall be irrevocable as one
coupled with an interest until the Final Date.
Section 6. Inducing Representations of Pledgor. Pledgor
represents and warrants to the Collateral Agent and each Lender that:
(a) The Pledged Shares are validly issued, fully paid for and
non-assessable.
(b) The Pledged Shares of UDRC and UDRC II represent all of
the issued and outstanding capital stock of UDRC and UDRC II, respectively.
(c) Pledgor is the sole legal and beneficial owner of, and
has good and marketable title to, the Pledged Shares, free and clear of all
pledges, liens, security interests and other encumbrances except the security
interest created by this Pledge Agreement, and Pledgor has the unqualified right
and authority to execute and perform this Pledge Agreement.
(d) No options, warrants or other agreements with respect to
the Collateral are outstanding.
(e) Any consent, approval or authorization of or designation
or filing with any authority on the part of Pledgor which is required in
connection with the pledge and security interest granted under this Pledge
Agreement has been obtained or effected.
(f) Neither the execution and delivery of this Pledge
Agreement by Pledgor, the consummation of the transaction contemplated hereby
nor the satisfaction of the terms and conditions of this Pledge Agreement:
(i) conflicts with or results in any breach or
violation of any provision of the articles of incorporation or bylaws
of Pledgor or any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award currently in effect having
applicability to Pledgor or any of its properties, including
regulations issued by an administrative agency or other governmental
authority having supervisory powers over Pledgor;
(ii) conflicts with, constitutes a default (or an
event which with the giving of notice or the passage of time, or both,
would constitute a default) by Pledgor under, or a breach of or
contravenes any provision of, any agreement to which Pledgor or any of
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its subsidiaries is a party or by which it or any of their properties
is or may be bound or affected, including without limitation any loan
agreement, mortgage, indenture or other agreement or instrument; or
(iii) results in or requires the creation of any lien
upon or in respect of any of Pledgor's assets except the lien created
by this Pledge Agreement.
(g) With respect to all Pledged Shares heretofore delivered to
and currently held by Lender, and upon delivery to the Collateral Agent of any
Pledged Shares hereafter issued to, acquired or received by Pledgor, the
Collateral Agent has (and, with respect to Pledged Shares hereafter delivered,
will have) a valid, perfected first priority security interest in and to the
Collateral, enforceable as such against all other creditors of Pledgor and
against all persons purporting to purchase any of the Collateral from Pledgor.
(h) The board of directors of UDRC and UDRC II have duly
adopted the resolutions identified on Exhibits A-1 and A-2, respectively,
attached hereto (the "Standing Dividend Resolutions"), and such resolutions
remain in full force and effect and have not been rescinded, amended, altered,
revoked or modified in any respect. Pursuant to the Standing Dividend
Resolutions, Pledgor has delivered the UDRC Dividend Direction Letter and the
UDRC II Dividend Direction Letter to the Trustee.
Section 7. Obligations of UDC and Pledgor. Pledgor further
represents, warrants and covenants to the Collateral Agent and each Lender that:
(a) Pledgor will not sell, transfer or convey any interest in,
or suffer or permit any lien or encumbrance to be created upon or to exist with
respect to, any of the Collateral during the term of this Pledge Agreement,
other than the lien granted hereunder and the lien granted to General Electric
Capital Corporation ("GECC") pursuant to the Amended and Restated Motor Vehicle
Installment Contract Loan and Security Agreement entered into as of August 15,
1997 among GECC, UDC, Pledgor, and certain other entities, as such Agreement may
be amended from time to time.
(b) During the Securitization Period, Pledgor will not cause
or permit UDRC or UDRC II to enter into any securitization agreement or
arrangement other than as set forth in the UDRC Securitization Documents or the
UDRC II Securitization Documents, or substantially similar agreements and
arrangements in the future, without the prior written consent of Lender.
(c) Pledgor will not effect any securitizations through any
subsidiary or affiliate other than UDRC II unless (i) either (A) Pledgor pledges
to Lender all of the capital stock of any such subsidiary or affiliate (the "New
Issuer") and Pledgor delivers to Lender a dividend direction letter executed by
the New Issuer and supported by a standing dividend resolution of the board of
directors of New Issuer, which dividend direction letter and standing dividend
resolution are each substantially similar to the UDRC II Dividend Direction
Letter and the UDRC II Standing Dividend Resolution, or (B) the New Issuer
pledges directly to Lender all of its interests in any trust or other entity
which issues interests in a securitization, or (C) UDC or Pledgor otherwise
complies with the provisions of Section 3.1 of the Loan Agreement, and (ii) all
other matters in connection with such securitization are reasonably satisfactory
in form and substance to the Required Lenders.
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(d) Pledgor will, at Pledgor's expense, at any time and from
time to time at the request of the Collateral Agent or the Required Lenders do,
make, procure, execute and deliver all acts, things, writings, assurances and
other documents as may be reasonably proposed by Lender to preserve, establish,
demonstrate or enforce the rights, interests and remedies of the Collateral
Agent and the Lenders as created by, provided in, or emanating from this Pledge
Agreement.
(e) Pledgor will not take any action which would cause UDRC or
UDRC II or any New Issuer to issue any other capital stock without the prior
written consent of the Required Lenders.
(f) Pledgor will not consent to any amendment to the articles
of incorporation of UDRC or UDRC II or any New Issuer without the prior written
consent of the Required Lenders.
(g) Pledgor will not take any action which would cause, and
will not consent to, any transfer by UDRC or UDRC II or any New Issuer of the
UDRC Class B Certificates, the UDRC II Class B Certificates or any Additional
Class B Certificates.
Section 8. Dividends. Pledgor has not and will not permit UDRC
or UDRC II or any New Issuer to, rescind, amend, alter, revoke or modify any
Standing Dividend Resolutions, the UDRC Dividend Direction Letter or the UDRC II
Dividend Direction Letter, as the case may be, in any respect without the prior
written consent of the Required Lenders.
Section 9. Voting Proxy. Pledgor hereby grants to the
Collateral Agent an irrevocable proxy to vote the Pledged Shares at the
direction of the Required Lenders with respect to any matter permitted under the
Articles of Incorporation of UDRC and UDRC II and each New Issuer, as the case
may be, which proxy shall continue until the Final Date. Pledgor represents and
warrants that it has directed UDRC and UDRC II and each New Issuer, in
accordance with Section 217 of the Delaware General Corporation Law, to reflect
on UDRC's and UDRC II's and such New Issuer's books, respectively, the right of
the Collateral Agent to vote the Pledged Shares at the direction of the Required
Lenders. Upon the request of the Collateral Agent or the Required Lenders,
Pledgor shall deliver to the Collateral Agent and the Lenders such further
evidence of such irrevocable proxy to vote the Collateral as Collateral Agent or
Required Lenders may request pursuant hereto.
Section 10. Rights of the Collateral Agent and the Lenders.
The Collateral Agent or any Lender may, at any time and without notice,
discharge any taxes, liens, security interests or other encumbrances levied or
placed on the Collateral, pay for the maintenance and preservation of the
Collateral, or pay for insurance on the Collateral; the amount of such payments,
plus any and all reasonable fees, costs and expenses of the Collateral Agent and
each such Lender (including attorneys' fees and disbursements) in connection
therewith, shall be reimbursed by UDC within five (5) days of demand, with
interest thereon from the date paid at the rate provided in the Loan Agreement.
Section 11. Remedies Upon Event of Default under the Loan
Agreement. The Collateral Agent may exercise any one or more of the following
remedies:
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(a) Upon the occurrence of an "Event of Default" pursuant to
the Loan Agreement, the Collateral Agent may, without notice to Pledgor:
(i) cause the Collateral to be transferred to the
Collateral Agent's name or to the name of a nominee of the Collateral
Agent, and thereafter exercise as to such Collateral all of the rights,
powers and remedies of an owner;
(ii) collect by legal proceedings or otherwise all
dividends, interest, principal payments, capital distributions and
other sums now or hereafter payable on account of the Collateral, and
hold all such sums as part of the Collateral, or apply such sums to the
payment of the Secured Obligations in such manner and order as the
Collateral Agent shall decide at the direction of the Required Lenders;
or
(iii) enter into any extension, subordination,
reorganization, deposit, merger, or consolidation agreement, or any
other agreement relating to or affecting the Collateral, and in
connection therewith deposit or surrender control of the Collateral
thereunder, and accept other property in exchange therefor and hold and
apply such property or money so received in accordance with the
provisions hereof.
(b) In addition to all the rights and remedies of a secured
party under the Uniform Commercial Code as in effect in any applicable
jurisdiction, upon the occurrence of an "Event of Default" pursuant to the Loan
Agreement, the Collateral Agent shall have the right, without demand of
performance or other demand, advertisement or notice of any kind, except as
specified below, to or upon Pledgor or any other person (all and each of which
demands, advertisements and/or notices are hereby expressly waived to the extent
permitted by law), to proceed forthwith to collect, receive, appropriate and
realize upon the Collateral, or any part thereof in one or more parcels in
accordance with applicable securities laws and in a manner designed to ensure
that such sale will not result in a distribution of the Pledged Shares in
violation of Section 5 of the Securities Act of 1933, as amended (the
"Securities Act") and on such terms (including a requirement that any purchaser
of all or any part of the Collateral shall be required to purchase any
securities constituting the Collateral solely for investment and without any
intention to make a distribution thereof) as the Collateral Agent, at the
direction of the Required Lenders, deems appropriate without any liability for
any loss due to a decrease in the market value of the Collateral during the
period held. If any notification to Pledgor of intended disposition of the
Collateral is required by law, such notification shall be deemed reasonable and
properly given if mailed to Pledgor, postage prepaid, at least ten (10) days
before any such disposition at the address indicated by Pledgor's signature. Any
disposition of the Collateral or any part thereof may be for cash or on credit
or for future delivery without assumption of any credit risk, with the right of
the Collateral Agent to purchase all or any part of the Collateral so sold at
any such sale or sales, public or private, free of any equity or right of
redemption in Pledgor, which right of equity is, to the extent permitted by
applicable law, hereby expressly waived or released by Pledgor.
(c) At the direction of the Required Lenders, the Collateral
Agent shall sell the Collateral on any credit terms which the Required Lenders
deem reasonable. The out-of-pocket costs and expenses of such sale shall be for
the account of Pledgor. The sale of any of the Collateral on credit terms shall
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not relieve Pledgor of its liability with respect to the Secured Obligations.
All payments received in respect of any sale of the Collateral by the Collateral
Agent or any Lender shall be applied to the Secured Obligations as and when such
payments are received and any price received by the Collateral Agent or any
Lender in respect of such sale shall be conclusive and binding upon Pledgor.
(d) Pledgor recognizes that it may not be feasible to effect a
public sale of all or a part of the Collateral by reason of certain prohibitions
contained in the Securities Act, and that it may be necessary to sell privately
to a restricted group of purchasers who will be obliged to agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view for the distribution or resale thereof. Pledgor agrees that private
sales may be at prices and other terms less favorable to the Seller than if the
Collateral were sold at public sale, and that the Collateral Agent has no
obligation to delay the sale of any Collateral for the period of time necessary
to permit the registration of the Collateral for public sale under the
Securities Act. Pledgor agrees that a private sale or sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner.
(e) If any consent, approval or authorization of any state,
municipal or other governmental department, agency or authority shall be
necessary to effectuate any sale or other disposition of the Collateral or any
partial disposition of the Collateral, Pledgor will execute all such
applications and other instruments as may be required in connection with
securing any such consent, approval or authorization, and will otherwise use its
best efforts to secure the same.
(f) The Collateral Agent shall have the right to deliver,
assign and transfer to the purchaser thereof the Collateral so sold or disposed
of, free from any other claim or right of whatever kind, including any equity or
right of redemption of Pledgor. Pledgor specifically waives, to the extent
permitted by applicable law, all rights of redemption, stay or appraisal which
it may have under any rule of law or statute now existing or hereafter adopted.
(g) The Collateral Agent shall not be obligated to make any
sale or other disposition of the Collateral permitted under this Pledge
Agreement, unless the terms thereof shall be satisfactory to the Collateral
Agent. The Collateral Agent may, without notice or publication, adjourn any such
private or public sale and, upon five (5) days' prior notice to Pledgor, hold
such sale at any time or place to which the same may be so adjourned. In case of
any such sale of all or any part of the Collateral on credit or future delivery,
the Collateral so sold may be retained by the Collateral Agent or any Lender
until the selling price is paid by the purchaser thereof, but neither the
Collateral Agent nor any Lender shall incur any liability in case of the failure
of such purchaser to take up and pay for the property so sold and, in the case
of any such failure, such property may again be sold as herein provided.
(h) All of the rights and remedies granted to the Collateral
Agent and the Lenders, including but not limited to the foregoing, shall be
cumulative and not exclusive and shall be enforceable alternatively,
successively or concurrently as the Collateral Agent or such Lender may deem
expedient.
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Section 12. Limitation on Liability.
(a) None of the Collateral Agent, any Lender nor any of their
respective directors, officers, employers or agents shall be liable to Pledgor,
UDC, UDRC, UDRC II or any New Issuer for any action taken or omitted to be taken
by it or them hereunder, or in connection herewith, except that each of the
Collateral Agent and each Lender shall be liable for its own (and only for its
own) gross negligence, bad faith or willful misconduct.
(b) The Collateral Agent and each Lender shall be protected
and shall incur no liability to any party in relying upon the accuracy, acting
in reliance upon the contents, and assuming the genuineness of any notice,
demand, certificate, signature, instrument or other document the Collateral
Agent or such Lender, as the case may be, reasonably believes to be genuine and
to have been duly executed by the appropriate signatory, and (absent actual
knowledge to the contrary of any officer of the Collateral Agent or such Lender,
as the case may be) neither the Collateral Agent nor any Lender shall be
required to make any independent investigation with respect thereto. The
Collateral Agent and each Lender shall at all times be free independently to
establish to its reasonable satisfaction, but shall have no duty to
independently verify, the existence or nonexistence of facts that are a
condition to the exercise or enforcement of any right or remedy hereunder.
(c) The Collateral Agent and each Lender may consult with
qualified counsel, financial advisors or accountants and shall not be liable for
any action taken or omitted to be taken by it hereunder in good faith and in
accordance with the advice of such counsel, financial advisors or accountants.
(d) The Collateral Agent shall not be required to exercise any
discretion or take any action under this Pledge Agreement, but shall be required
to act or refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders, and the Collateral Agent shall
not be liable to the Pledgor or any Lender with respect to any action taken or
omitted at the direction of the Required Lenders, provided that the Collateral
Agent shall not be required to take any action that exposes the Collateral Agent
in its sole judgment to personal liability or that is contrary to this Pledge
Agreement or applicable law.
Section 13. Indemnification. UDC and Pledgor jointly and
severally agree to indemnify each of the Collateral Agent, each Lender, each of
their respective Affiliates and Subsidiaries (as such terms are defined in the
Loan Agreement) and their respective directors, officers, employees and agents,
for, and hold each of the Collateral Agent, each Lender, each of their
respective Affiliates and Subsidiaries and all of their respective directors,
officers, employees and agents harmless against, any loss, liability or expense
(including the costs and expenses of defending against any claim of liability)
arising out of or in connection with this Pledge Agreement and the transactions
contemplated hereby, except that no indemnitee shall be entitled to
indemnification to the extent any such loss, liability or expense results from
the gross negligence, bad faith or willful misconduct of such indemnitee. The
obligation of UDC and Pledgor under this Section shall survive the termination
of this Pledge Agreement.
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Section 14. Termination. This Pledge Agreement shall continue
in full force and effect until the Final Date. Subject to any sale or other
disposition of the Collateral pursuant to and in accordance with this Pledge
Agreement, the Collateral shall be returned to Pledgor on the Final Date. The
obligation of UDC under Sections 13 and 15 of this Pledge Agreement shall
survive the termination of this Pledge Agreement.
Section 15. Compensation and Reimbursement. UDC agrees for the
benefit of each Lender and the Collateral Agent and as part of the Secured
Obligations to reimburse each Lender and the Collateral Agent upon its request
for all reasonable expenses, disbursements and advances incurred or made by such
Lender or the Collateral Agent in accordance with any provision of, or carrying
out its duties and obligations under, this Pledge Agreement (including the
reasonable compensation and fees and the expenses and disbursements of its
agents, any independent certified public accounts and independent counsel),
except no Person shall be entitled to reimbursement for any expense,
disbursement or advances as may be attributable to gross negligence, bad faith
or willful misconduct on the part of such Person.
Section 16. Foreclosure Expenses. All expenses (including
reasonable fees and disbursements of counsel) incurred in compliance with this
Pledge Agreement by the Collateral Agent or any Lender in connection with any
actual or attempted sale, exchange of, or any enforcement, collection,
compromise or settlement respecting this Pledge Agreement or the Collateral, or
any other action taken in compliance with this Pledge Agreement by the
Collateral Agent or any Lender hereunder, whether directly or as
attorney-in-fact pursuant to a power of attorney or other authorization herein
conferred, for the purpose of satisfaction of the Secured Obligations shall be
deemed an Secured Obligation for all purposes of this Pledge Agreement and each
of the Collateral Agent and each Lender may apply the Collateral to payment of
or reimbursement of itself for such liability.
Section 17. Obligations Absolute. The obligations of Pledgor
under this Pledge Agreement are independent of the Obligations or any other
obligations of any other Loan Party under the Loan Documents, and a separate
action or actions may be brought and prosecuted against Pledgor to enforce this
Pledge Agreement, irrespective of whether any action is brought against the
Borrower or any other Loan Party or whether the Borrower or any other Loan Party
is joined in any such action or actions. The liability of Pledgor under this
Pledge Agreement is joint and several and shall be irrevocable, absolute and
unconditional irrespective of, and Pledgor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any or all of the
following:
(a) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations or any other
obligations of any other Loan Party under the Loan Documents, or any
other amendment or waiver of or any consent to departure from any Loan
Document, including, without limitation, any increase in the
obligations resulting from the extension of additional credit to the
Borrower or any of its Subsidiaries or otherwise;
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(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other obligations of any other Loan Party under the Loan
Documents or any other assets of the Borrower or any of its
Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries;
(f) any failure of the Collateral Agent or any Lender to
disclose to the Borrower or any other Loan Party any information
relating to the financial condition, operations, properties or
prospects of any other Loan Party now or in the future known to any the
Collateral Agent or any Lender (Pledgor hereby waiving any duty on the
part of the Collateral Agent or any Lender to disclose such
information); or
(g) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by the Collateral Agent or any Lender that might
otherwise constitute a defense available to, or a discharge of, the
Borrower, Pledgor, any other Loan Party or any other guarantor or
surety.
This Pledge Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Secured
Obligations is rescinded or must otherwise be returned by the Collateral Agent
or any Lender or any other Person upon the insolvency, bankruptcy or
reorganization of the Borrower or any other Loan Party or otherwise, all as
though such payment had not been made.
Section 18. Waivers and Acknowledgments. (a) Pledgor hereby
waives promptness, diligence, notice of acceptance and any other notice with
respect to any of the Secured Obligations and this Pledge Agreement and any
requirement that the Collateral Agent or any Lender protect, secure, perfect or
insure any Lien or any property subject thereto or exhaust any right or take any
action against the Borrower or any other Person or any collateral.
(b) Pledgor hereby waives any right to revoke this Pledge
Agreement, and acknowledges that this Agreement is continuing in nature and
applies to all Secured Obligations, whether existing now or in the future.
Section 19. Notices. Any notice or other communication given
hereunder shall be in writing and shall be sent by registered mail, postage
prepaid, overnight courier or personally delivered or facsimiles to the
recipient as follows:
Page - 10
To Pledgor:
UGLY DUCKLING CAR SALES
AND FINANCE CORPORATION
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Collateral Agent:
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To UDC:
UGLY DUCKLING CORPORATION
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 20. General Provisions.
(a) The failure of the Collateral Agent or any Lender to
exercise, or any delay in exercising, any right, power or remedy hereunder,
Page - 11
shall not operate as a waiver thereof, nor shall any single or partial exercise
by the Collateral Agent or any Lender of any right, power or remedy hereunder
preclude any other or future exercise thereof, or the exercise of any other
right, power or remedy. The remedies herein provided are cumulative and are not
exclusive of any remedies provided by law or any other agreement.
(b) The representations, covenants and agreements of Pledgor
herein contained shall survive the date hereof; provided, however, that only
Sections 13 and 15 shall survive after the Final Date.
(c) Neither this Pledge Agreement nor the provisions hereof
can be changed, waived or terminated unless any such change, waiver or
termination shall be in writing, signed by the parties hereto. This Pledge
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors, legal representatives and assigns. If any
provision of this Pledge Agreement shall be invalid or unenforceable in any
respect or in any jurisdiction, the remaining provisions shall remain in full
force and effect and shall be enforceable to the maximum extent permitted by
law.
(d) This Pledge Agreement may be executed in counterparts,
each of which shall constitute an original but all of which, when taken
together, shall constitute one instrument.
(e) THE VALIDITY OF THIS PLEDGE 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 SHALL BE DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS PLEDGE AGREEMENT MAY BE TRIED AND LITIGATED IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. PLEDGOR, COLLATERAL
AGENT AND LENDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION.
THE PARTIES 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 AGREEMENT 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 PLEDGE AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Page - 12
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Pledge Agreement on the date first above written.
UGLY DUCKLING CAR SALES AND FINANCE
CORPORATION, an Arizona corporation
By: /S/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: V.P./General Counsel/Secretary
UGLY DUCKLING CORPORATION,
a Delaware corporation
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Sr. V.P./Secretary/General Counsel
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President