AMENDMENT NO. 7 TO MOTOR VEHICLE INSTALLMENT CONTRACT
LOAN AND SECURITY AGREEMENT
This Amendment (the "Amendment") is entered into by and between General
Electric Capital Corporation, a New York corporation ("Lender") and Ugly
Duckling Corporation successor in interest to Ugly Duckling Holdings, Inc.
("Ugly Duckling") a Delaware corporation, Duck Ventures, Inc. ("Ventures"),
Champion Acceptance Corporation formerly known as Ugly Duckling Credit
Corporation ("Credit"), Ugly Duckling Car Sales, Inc. ("Sales"), UDRAC, Inc.
("UDRAC"), Champion Financial Services, Inc. ("Champion") all Arizona
corporations, and Ugly Duckling Car Sales Florida, Inc., a Florida corporation
("UDCSF"), ("Ugly Duckling Ventures, Credit, Sales, Champion, UDRAC, and UDCSF
hereinafter collectively and individually referred to as "Borrower").
RECITALS
A. Borrower and Lender entered into a Motor Vehicle Installment Contract
Loan and Security Agreement dated as of June 1, 1994, as amended ("the
"Agreement") pursuant to which Lender agreed to make Advances to Borrower on
the terms and conditions set forth in the Agreement.
B. Borrower and Lender desire to amend certain provisions of the
Agreement pursuant to the terms set forth in this Amendment.
In consideration of the premises and other good and valuable
consideration, the receipt of which is hereby acknowledged by each of the
parties hereto, the parties agree as follows:
1. Defined Terms. Unless otherwise specified herein, all capitalized
terms used in this Amendment shall have the same meaning given to such term(s)
in the Agreement.
2. Amendments to Agreement. Effective as of the date hereof, the
Agreement is hereby amended as follows:
Financial Condition The second sentence of Section 13.6 "Financial
Condition", is hereby deleted and replaced with the following:
"Borrower shall maintain a Net Worth of at least Seventy-Five Million
Dollars ($75,000,000)."
(b) Borrowing Base. The definition of "Borrowing Base" in Section 1.0
of the Amendment is hereby amended in its entirety to read as follows:
"BORROWING BASE: the amount equal to the lesser of (i) Fifty Million
Dollars ($50,000,000.00), or (ii) the sum of (a) sixty-five percent (65%) of
the Outstanding Principal Balance of all Eligible Contracts during the time
they are included in the Borrowing Base pursuant to Section 3.1, which
Eligible Contracts are originated by any Affiliate of Borrower which is a
captive Dealer to Borrower, (b) Seventy-five percent (75%) of the Outstanding
Principal Balance of all Eligible Contracts which are contracts purchased from
Seminole Finance Company ("Seminole Contracts") as part of a liquidating bulk
purchase which occurred in December 1996 and January 1997, and (c)
ninety-eight percent (98%) of, the Outstanding Principal Balance less unearned
118
discount of all Eligible Contracts, not to exceed one hundred seven percent
(107%) of wholesale Kelly Blue Book for all such Eligible Contracts in the
aggregate during the time they are included in the Borrowing Base pursuant to
Section 3.1 which Eligible Contracts are purchased by Borrower from Dealers
who are not Affiliates of Borrower through Champion Financial Services, Inc."
(c) Capital Structure. The final sentence of Section 14.4 "Capital
Structure", is hereby deleted and replaced with the following:
"Borrower shall not allow a transfer of ownership of Borrower which
results in less than fifteen percent (15%) of the voting stock of Borrower
being owned by Ernest C. Garcia II."
3. Incorporation of Amendment. The parties acknowledge and agree that
this Amendment is incorporated into and made a part of the Agreement, the
terms and provisions of which, unless expressly modified herein, or unless no
longer applicable by their terms, are hereby affirmed and ratified and remain
in full force and effect. To the extent that any term or provision of this
Amendment is or may be deemed expressly inconsistent with any term or
provision of the Agreement, the terms and provisions of this Amendment shall
control. Each reference to the Agreement shall be a reference to the
Agreement as amended by this Amendment. This Amendment, taken together with
the unamended provisions of the Agreement which are affirmed and ratified by
Borrower, contains the entire agreement among the parties regarding the
transactions described herein and supersedes all prior agreement, written or
oral, with respect thereto.
4. Borrower Remains Liable. Borrower hereby confirms that the Agreement
and each document executed by Borrower in connection therewith continue
unimpaired and in full force and effect and shall cover and secure all of
Borrower's existing and future obligations to Lender.
5. Headings. The paragraph headings contained in this Amendment are for
convenience of reference only and shall not be considered a part of this
Amendment in any respect.
6. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Arizona. Nothing herein shall
preclude Lender from bringing suit or taking other legal action in any
jurisdiction.
7. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute one and the
same instrument.
119
IN WITNESS WHEREOF, the undersigned have entered into this Amendment as of
February 10, 1997.
GENERAL ELECTRIC CAPITAL
CORPORATION UGLY DUCKLING CAR SALES, INC.
By: /s/ Farhan Hassan By: /s/ Steven P. Johnson
-------------------------- ---------------------------------
Title: Account Executive Title: Secretary
UGLY DUCKLING CORPORATION UDRAC, INC.
By: /s/ Steven P. Johnson By: /s/ Steven P. Johnson
-------------------------- ---------------------------------
Title: Secretary Title: Secretary
DUCK VENTURES, INC. CHAMPION FINANCIAL SERVICES, INC.
By: /s/ Steven P. Johnson By: /s/ Steven P. Johnson
-------------------------- ---------------------------------
Title: Secretary Title: Secretary
CHAMPION ACCEPTANCE UGLY DUCKLING CAR SALES FLORIDA
CORPORATION formerly known as UGLY INC.
DUCKLING CREDIT CORPORATION
By: /s/ Steven P. Johnson
By: /s/ Steven P. Johnson ---------------------------------
-------------------------- Title: Secretary
Title: Secretary
120