EXHIBIT 4
THIS SECURITY AND THE SECURITIES INTO WHICH IT MAY BE CONVERTIBLE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 ("ACT") AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED OTHER THAN TO AFFILIATES OF
THE HOLDER HEREOF UNLESS AND UNTIL REGISTERED UNDER THE ACT OR IN AN OPINION OF
COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE FOR SUCH
OFFER, SALE, OR TRANSFER, PLEDGE OR HYPOTHECATION.
PROMISSORY NOTE
$2,700,000.00 November __, 1999
FOR VALUE RECEIVED, UGLY DUCKLING CAR SALES, INC., an Arizona
corporation ("Maker"), promises to pay to the order of FRESH START CREDIT CORP.,
a Virginia corporation ("Holder"), or such other address as may be designated by
Xxxxxx, the principal sum of TWO MILLION SEVEN HUNDRED THOUSAND DOLLARS
($2,700,000.00) in lawful money of the United States.
This Promissory Note is payable as follows:
1. Payments and Interest. The principal amount of this Promissory Note
shall be payable in ten (10) equal installments in the amount of Two Hundred
Seventy Thousand Dollars ($270,000) plus accrued interest. Interest shall accrue
on the unpaid principal at the rate of seven and one-half percent (7.5%) per
annum. The principal amount and accrued interest shall be payable monthly
commencing on thirty (30) days after the Closing date, and continuing on the
same day each month thereafter until the end of the Promissory Note. In any
event, the entire principal balance together with accrued and unpaid interest
shall become due and payable on September 1, 2000 ("Maturity Date"). If payment
is five (5) days or more late, Maker shall pay a "late fee" equal to five
percent (5%) of the amount of that payment. This late fee may be assessed
without notice, shall be immediately due and payable and shall be in addition to
all other rights and remedies available to the Holder.
2. Assignment. This Promissory Note may not be assigned without the
express written consent of the Holder.
3. Prepayment. This Promissory Note may be prepaid, in whole or in
part, at any time prior to the Maturity Date, without penalty to Maker.
4. Event of Default. Other than as stated in paragraph 1, the failure
of Maker to pay or perform any of Maker's liabilities or obligations to Holder
under this Promissory Note which failure shall remain uncured for five (5) days
after Maker's receipt of notice of such failure shall constitute an event of
default (an "Event of Default") under the Promissory Note.
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5. Conversion. Upon the occurrence of an Event of Default, the
Promissory Note shall be convertible into Parent common stock ("Convertible
Common Stock"). Holder will receive that number of shares of Convertible Common
Stock which is the lesser of (a) the product of the outstanding principal
balance of the Promissory Note plus accrued interest and conversion costs as of
the Default Date, divided by the closing sales price of the Maker's Common Stock
on the National Market (or such other exchange or market as it may then be
traded) as of the Default Date, or (b) the product of $4,050,000, divided by the
closing sale price of the Common Stock on the National Market as of the closing
date of the Agreement of Purchase and Sale of Assets dated November 7, 1999 by
and between Maker and Holder.
6. Registration of Convertible Common Stock. Maker has filed a
registration statement on Form S-3 prior to the execution of this Promissory
Note which covers the resale of the Convertible Common Stock by the Holder and
has caused such registration statement to become effective. As of the date
hereof and as of the date of any conversion into Common Stock, Holder represents
and warrants to Maker that (a) it is an "Accredited Investor" as defined in
Regulation D promulgated under the Securities Act of 1933 and is knowledgeable
and experienced in evaluating business opportunities and making investment
decisions; and (b) Holder has reviewed Maker's periodic reports filed pursuant
to the Securities Act of 1934 which includes information pertaining to Maker's
Common Stock, and has an opportunity to ask questions of and has received
answers from Maker regarding these reports and the affairs and prospects of
Maker.
7 Notice. Any notice to Maker provided for in this Promissory Note
shall be given by mailing such notice by certified mail addressed to Ugly
Duckling Corporation, 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx
00000, Attention: Xxx X. Xxxxxxxx, Esq., or to such other address as Maker may
designate by written notice to Xxxxxx. Any notice to Holder shall be given by
mailing such notice by certified mail, return receipt requested, to Holder at
the address stated in the first paragraph of this Promissory Note with a copy to
Xxxxxxx Xxxxxx, Esq., Xxxxxxxx, Xxxxxx & Xxxx, P.C., 0000 Xxxxxxxxxx Xxxxxxxx,
Xxxxxxxx, Xxxxxxxx 00000, or at such other address as may have been designated
by notice to Maker.
8. Waiver. Neither Maker nor Holder shall by any act of commission or
omission be deemed to waive any of their respective rights or remedies hereunder
unless such waiver be in writing and signed by the party to be bound thereby,
and then only to the extent specifically set forth therein; a waiver of one
event shall not be construed as continuing or as a bar to or waiver of such
right or remedy on a subsequent event. Notwithstanding anything to the contrary
in this Section, Maker hereby waives presentment, demand, protest or other
notice of any kind in the collection of this Promissory Note and in filing suit
hereon.
9. Expenses. Maker shall pay the reasonable attorney's fees and costs
incurred by Xxxxxx in connection with the successful enforcement or protection
of his rights under this Promissory Note.
10. Governing Law. THIS NOTE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF VIRGINIA, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISIONS OR RULE (WHETHER OF THE
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STATE OF VIRGINIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF VIRGINIA TO BE APPLIED. IN FURTHERANCE OF
THE FOREGOING, THE INTERNAL LAW OF THE STATE OF VIRGINIA WILL CONTROL THE
INTERPRETATION AND CONSTRUCTION OF THIS NOTE, EVEN IF UNDER SUCH JURISDICTION'S
CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER
JURISDICTION WOULD ORDINARILY APPLY.
11. Counterparts. This Promissory Note may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12. Headings. The headings of the Sections of this Promissory Note are
for convenience and shall not by themselves determine the interpretation of this
Promissory Note.
IN WITNESS WHEREOF, the undersigned has caused this Promissory Note to
be executed as of the date above set forth, and, if executed by a corporation,
association, or partnership, by officers or partners thereof, properly
authorized in accordance with the enabling instruments of such entity, and a
duly-adopted resolution of the governing body of such entity.
MAKER:
UGLY DUCKLING CAR SALES, INC., an Arizona corporation
By:
Name:
Title:
ACCEPTED AND AGREED TO:
FRESH START CREDIT CORP., a Virginia corporation
By:
Name:
Title:
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The undersigned hereby agrees to unconditionally and irrevocably guarantee the
payment of the amounts due and the performance of the obligations of Maker under
this Promissory Note.
UGLY DUCKLING CORPORATION
By:_____________________________
Name:__________________________
Its:_____________________________
