Dated as of March 18, 1999
by and between
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
a Delaware corporation
UGLY DUCKLING CORPORATION,
a Delaware corporation
$20,000,000 Collateralized Loan
TABLE OF CONTENTS
1.1 Defined Terms................................................1
1.2 Other Interpretive Provisions...............................10
1.3 Accounting Principles.......................................11
2.1 The Loan....................................................11
2.2 Payment Upon Collections....................................12
2.3 Payment Upon Maturity.......................................12
2.5 Voluntary Prepayments.......................................12
2.6 Application of Payments.....................................13
2.9 Fees and Interest...........................................13
2.10 Payments by Borrower........................................13
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......................15
3.5 Power of Attorney...........................................15
3.6 Collateral Inspections......................................16
CONDITIONS PRECEDENT; TERM OF AGREEMENT.............................16
4.1 Conditions Precedent........................................16
4.2 Receipt of Documents. ......................................16
4.4 Effect of Termination.......................................18
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............19
5.4 Due Authorization: No Conflict..............................19
5.6 Financial Statements; No Material Adverse Change............20
5.7 Securitization Documents. .................................20
5.9 Environmental and Safety Matters............................21
5.10 Tax Matters.................................................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...........................................23
6.5 Books and Records...........................................23
6.6 Compliance and Preservation.................................23
6.7 Perfection of Liens.........................................23
6.9 Use of Proceeds.............................................23
6.11 Compliance with Covenants...................................24
6.12 Payment of Indebtedness.....................................24
6.13 Tangible Net Worth..........................................24
6.14 Debt to Tangible Net Worth..................................24
7.3 Restrictions on Fundamental Changes.........................24
7.4 Disposal of Collateral......................................25
7.5 Change Name.................................................25
7.7 Change of Control...........................................25
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
EVENTS OF DEFAULT/REMEDIES........................................27
8.1 Event of Default............................................27
8.2 Lender's Rights and Remedies................................28
9.1 Amendments and Waivers......................................29
9.3 No Waiver: Cumulative Remedies..............................30
9.4 Costs and Expenses..........................................31
9.6 Marshaling: Payments Set Aside..............................32
9.7 Successors and Assigns......................................32
9.11 No Third Parties Benefited..................................32
9.13 Governing Law and Jurisdiction..............................33
9.14 Entire Agreement............................................33
9.17 Revival and Reinstatement of Obligations....................34
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 UDRC and UDRCII Securitization Documents
This LOAN AGREEMENT (the "Agreement"), is entered into as of March 18,
1999, between GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation
("Lender"), with a place of business located at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000 and UGLY DUCKLING CORPORATION, a Delaware corporation
("Borrower"), with a place of business located at 0000 Xxxx Xxxxxxxxx Xxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx 00000.
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:
I.1 Defined Terms. In addition to the terms defined elsewhere in this
Agreement, the following terms have the following meanings:
"1998-D Spread Account Reduction Amount" means the amount (if any, but in
any event not to exceed 2.00% of the Pool Balance) that is released from the
Spread Account under the 1998-D PSA on a one-time basis (by means of a reduction
in the percentage specified in the definition of Specified Spread Account
Amount) with the consent of the Insurer. Capitalized terms used in this
definition and not otherwise defined in this Agreement shall have the meanings
they are given in the 1998-D PSA.
"1998-D PSA" means the Pooling and Servicing Agreement dated as of December
22, 1998 among UDRC II, UDCC and Xxxxxx Bank & Trust Company, as
"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 U.S.C.ss.101
et seq.), as amended, and any successor statute.
"Bond Insurance Policy" shall mean a financial guaranty or financial
insurance policy issued by MBIA 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
"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
"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 UDRCII.
"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, but excluding (so long as no Default or Event of Default has
occurred and is continuing at the time it is paid to UDRC II) the 1998-D Spread
Account Reduction Amount, if any.
"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
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
"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
"FEIN" means Federal Employer Identification Number.
"Financing Statements" means the Financing Statements on Form UCC-1
relating to the Collateral filed in connection with the Pledge Agreement, dated
as of November 12, 1998, between Pledgor and Lender.
"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.
"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 Twenty Million Dollars
"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
"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
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
"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 December 15, 1999.
"MBIA" shall mean MBIA Insurance Corporation.
"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
"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
"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
"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 A 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.
"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
"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 Xxxxxx 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
"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.
"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 March 18, 1999 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 March 18, 1999
in which Lender, UDRC II, UDCC and Trustee agree that Trustee shall pay all
distributions (other than the 1998-D Spread Account Reduction Amount, if any) 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 A hereto, (ii) the pooling and servicing agreements
listed on Exhibit A 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
"UDRC II Securitization Documents" shall mean each of (i) the purchase
agreements listed on Exhibit A hereto, (ii) the pooling and servicing agreements
listed on Exhibit A 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
"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
"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
(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
(c) Certain Common Terms.
(i)......The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
(ii).....The term "including" is not limiting and means "including without
(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
(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
(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.
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. Lender shall
retain $1,520,888.86 of the Initial Principal Amount and shall apply it to repay
the sum of the outstanding principal amount and accrued interest thereon and any
other accrued and unpaid Obligations with respect thereto through the Closing
Date (such sum, the "1998 Remaining Amount"), of the loan made by Lender to
Borrower pursuant to the Loan Agreement dated as of November 12, 1998 between
Borrower and Lender, whereupon such Loan Agreement shall terminate.
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 Collections
paid directly to Lender by Trustee 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
(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 five hundred (500) 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 five hundred (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
(b) Second, to Lender for application to accrued interest on the
(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.
(a) Commitment Fee. Borrower has paid to Lender Two Hundred Thousand
Dollars ($200,000), of which amount Lender shall apply $184,791.11 as a
commitment fee. The balance of such amount shall be retained by Lender to pay
Lender Expenses and, if not used for such purposes, shall be remitted by Lender
to Borrower on the first Payment Date or, at the Borrower's election, netted
against the interest due on such Payment Date.
(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 second
business date following the Maturity Date, Borrower shall pay Lender Two Hundred
Fifty Thousand Dollars ($250,000) as a late payment fee.
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.
(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.
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. The Financing Statements shall remain on file in
the appropriate jurisdictions and Borrower shall promptly execute or cause to be
executed any 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:
(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
(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.
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
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 UDRC Dividend Direction Letter;
(d) The UDRC II Dividend Direction Letter;
(e) The UDRC Standing Dividend Resolution certified by UDRC's Secretary;
(f) The UDRC II Standing Dividend Resolution certified by UDRC II's
(g) 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
(h) A consent by MBIA to the pledge of the Collateral to Lender;
(i) 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
(j) 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;
(k) 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;
(l) 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;
(m) 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;
(n) 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;
(o) 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;
(p) 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.
(q) An engagement letter executed by Borrower in which Borrower engages
Lender to act as an underwriter with respect to certain securitization
(r) A commitment letter executed by Borrower in which Borrower agrees to
engage Lender as the initial purchaser of a surety-wrapped warehouse
note created pursuant to a revolving credit agreement between
Borrower, Lender and MBIA.
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.
4.4 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.
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 00-0000000.
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
(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.
(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
(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 other than Lien in favor of
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
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.
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
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
(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
(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;
(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
(a) Any lawsuit over One Hundred Thousand Dollars ($100,000) against
(b) Any substantial dispute between Borrower and any Governmental
(c) Any change in Borrower's name, address, or legal structure.
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
(b) Maintain and preserve all privileges and franchises Borrower now has;
(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
(i) repayment of the 1998 Remaining Amount, (ii) general working capital to
facilitate ongoing growth in Borrower's core operations and (iii) to the extent
permitted by Section 7.12, the repurchase of common stock of the Borrower.
VI.10 Securitizations. Any securitizations of Ugly Duckling Collateral
executed during the term of this Agreement shall be executed through either UDRC
II or a New Issuer (as defined in the Stock Pledge Agreement) that meets the
requirements of Section 7(c) of the Stock Pledge Agreement (and Borrower shall
ensure that Pledgor performs its obligations pursuant to the Stock Pledge
Agreement). 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
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 not 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.
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
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
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
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.
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
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
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
(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
(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
VII.12 Stock Buyback Program. Repurchase more than 928,000 shares of
common stock (adjusted, as appropriate, for any stock split, stock dividend or
other comparable issuance of shares) during the calendar year ending December
31, 1999, unless (i) Borrower has effected an offering of debt which is
subordinated to the Obligations (in a manner that is satisfactory in form and
substance to Lender) and (ii) such offering raises net proceeds to Borrower in
excess of $10,000,000.
VII.13 Verde Subordinated Debt. Repay any portion of the $10 million loan
from Verde Investments without Lender's prior written consent.
EVENTS OF DEFAULT/REMEDIES
VIII.1 Event of Default. Any of the following shall constitute an "Event of
(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
(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;
(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
(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;
(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.
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
(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
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
With a copy to:...Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
If to Lender:.....Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxx X. Xxxxx
Facsimile: (000) 000-0000
With a copy to:...Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
(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
(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
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
(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
(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.
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
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
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.
* * * * *
[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/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.,
a Delaware corporation
By: /S/ XXX XXXXX
Name: Xxx Xxxxx
Title: Vice President
SCHEDULES AND EXHIBITS OMITTED