EXHIBIT 10.1
Amendment No. 5 to Amended and Restated Motor Vehicle Installment Contract
Loan and Security Agreement
This Amendment is entered into by and between Ugly Duckling Corporation,
successor in interest to Ugly Duckling Holdings, Inc. ("Ugly Duckling"), a
Delaware corporation; Ugly Duckling Car Sales and Finance Corporation
("UDCSFC"), an Arizona corporation formerly known as Duck Ventures, Inc.; Ugly
Duckling Credit Corporation ("UDCC") formerly known as Champion Acceptance
Corporation, an Arizona corporation; Ugly Duckling Car Sales, Inc. ("Sales"); an
Arizona corporation; Champion Financial Services, Inc. ("Champion"), an Arizona
corporation; Ugly Duckling Car Sales Florida, Inc. ("Car Sales Florida"), a
Florida corporation; Ugly Duckling Car Sales Texas, L.L.P. ("Car Sales Texas"),
an Arizona limited liability partnership; Ugly Duckling Car Sales New Mexico,
Inc. ("Car Sales New Mexico"), a New Mexico corporation; Ugly Duckling Car Sales
California, Inc. ("Car Sales California"), a California corporation; Ugly
Duckling Car Sales Georgia, Inc. ("Car Sales Georgia"), a Georgia corporation;
Cygnet Financial Corporation ("Cygnet'), a Delaware corporation; Cygnet Dealer
Finance, Inc. ("Dealer Finance"), an Arizona corporation; Cygnet Finance
Alabama, Inc. ("Cygnet Alabama"), an Arizona corporation; Cygnet Support
Services, Inc. ("Services"), an Arizona corporation; Cygnet Financial Services,
Inc. ("Cygnet Services"), an Arizona corporation; Cygnet Financial Portfolio,
Inc. ("Cygnet Portfolio"), an Arizona corporation (all of the foregoing entities
collectively referred to herein as "Borrower"); and General Electric Capital
Corporation, a New York corporation ("Lender").
RECITALS
A. Borrower and Lender are parties to an Amended and Restated Motor
Vehicle Installment Contract Loan and Security Agreement dated as of August 15,
1997, as amended by an Assumption and Amendment Agreement dated October 23,
1997, Amendment No. 1 dated December 22, 1997, Amendment No. 2 dated September
9, 1998, Amendment No. 3 dated January 18, 1999, and Amendment No. 4 with
effective date of June 30, 1999 (the Amended and Restated Motor Vehicle
Installment Contract Loan and Security Agreement as so amended is referred to
herein as 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 the Agreement on the terms and
conditions 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
amended as follows:
(a) Deletion of Borrower, Ugly Duckling Car Sales Texas, L.L.P. Pursuant to
the execution of that certain Articles of Merger of Ugly Duckling Car
Sales Texas, L.L.P., an Arizona limited liability partnership, into Ugly
Duckling Car Sales Inc., an Arizona corporation, Car Sales Texas agreed
to merge into Sales, with Sales to be the surviving corporation. Sales
agreed to assume all of the liabilities and obligations (collectively,
the "obligations") of Car Sales Texas. As a result of the merger and the
assumption of the obligations, Borrower and Lender agree to delete Car
Sales Texas as a Borrower under the Agreement.
(b) Loan Facilities. Section 2.1 (C) of the Agreement, Dealer Contract
Facility, is amended by deleting the third and fourth sentences of the
section and replacing them with the following:
"The term of the Dealer Contract Facility shall commence on January
15, 1999 and shall expire on February 15, 2000. Borrower may
terminate the Dealer Contract Facility at any time prior to February
15, 2000 by Borrower's delivery to Lender of written notice of
termination of the Dealer Contract Facility and payment of all
amounts outstanding under the Dealer Contract Facility."
(c) Loan Facilities. The last sentence in Section 2.1 (C) of the
Agreement, Dealer Contract Facility, is amended by deleting the word
"effect" and replacing it with the word "affect".
(d) Dealer Contract Facility Fee and Termination Fee. Section 2.2(D) of
the Agreement is replaced in its entirety by the following Sections
2.2(D) and 2.2(E):
"(D) Borrower shall pay to Lender the Termination Fee in the event
that Borrower prepays the Loan (other than as a result of Lender's
acceleration due to an Event of Default) in full prior to the end of
the Initial Term.
(E) On the fifteenth day of each month beginning in February, 1999
and ending on the fifteenth day of June, 1999 Borrower shall pay to
Lender a Dealer Contract Facility Fee of Twenty Thousand Dollars
($20,000). Borrower shall pay to Lender an Additional Dealer Contract
Facility Fee of Two Hundred Fifty Thousand Dollars ($250,000), which
shall be assessed and paid in six (6) separate installments. On the
date of execution of Amendment No. 5 to Amended and Restated Motor
Vehicle Loan and Security Agreement, Borrower shall be assessed an
initial installment of One Hundred Sixty Thousand Dollars ($160,000).
On the fifteenth day of each month beginning September, 1999 and
continuing during the term of the Dealer Contract Facility, Borrower
shall pay to Lender (or be assessed with) an installment of the
Additional Dealer Contract Facility Fee of Eighteen Thousand Dollars
($18,000) per month. If, however, on or before October 15, 1999
Borrower prepays in full all amounts outstanding under the Dealer
Contract Facility, the Additional Dealer Contract Facility Fee shall
be reduced to a total of One Hundred Thousand Dollars ($100,000), and
all amounts assessed as the Additional Dealer Contract Facility Fee
by the Lender in excess of One Hundred Thousand Dollars ($100,000)
shall be applied to reduce the balance outstanding under the
Installment Contract Facility."
(e) Payments by Borrower. Section 4.0, Payments by Borrower, is amended
by adding a new Section (H), as follows:
"(H) On November 16, 1999 Borrower shall pay to Lender the amount
by which the Dealer Contract Facility exceeds Ten Million Dollars
($10,000,000.00). On January 16, 2000 Borrower shall pay to Lender
the amount by which the Dealer Contract Facility exceeds Five
Million Dollars ($5,000,000.00). On February 15, 2000 Borrower
shall pay to Lender the entire outstanding balance of the Dealer
Contract Facility."
(f) Additional Contract Facility Fee. The following definition is added
to Section 16.0 of the Agreement:
Additional Contract Facility Fee:the fee specified in Section 2.2(E).
(g) Dealer Contract Advance Value: The following definition of Dealer
Contract Advance Value is amended in its entirety to read:
"Dealer Contract Advance Value: the lesser of (i) Fifteen Million
Dollars ($15,000,000) through November 15, 1999, Ten Million
Dollars ($10,000,000.00), from November 16, 1999 through January
15, 2000, Five Million Dollars ($5,000,000.00), from January 16,
2000 through February 15, 2000, and Zero Dollars ($0), on and after
February 16, 2000 and (ii) fifty percent of Cygnet Borrower's net
investment in Eligible Dealer Contracts. For the purpose of this
definition, (i) Cygnet Borrower's net investment in Eligible Dealer
Contracts is equal to the gross finance receivable for the
underlying installment contracts minus the sum of unearned
interest, Cygnet Borrower discounts and refundable reserves, and
(ii) Cygnet Borrower's net investment in Eligible Dealer Contracts
shall not include the balances outstanding under a Dealer Contract
with respect to motor vehicle installment contracts which are more
than 45 days past due or which are not included by Cygnet Borrower
in the active outstandings under the Dealer Contract. "
(h) Debtor In Possession Loan. The following definition is added to
Section 16.0 of the Agreement:
"DIP Loan": An Eleven Million Dollar ($11,000,000.00) revolving
credit facility loan which Ugly Duckling, as lender, has with First
Merchants Acceptance Corporation ("FMAC"), as borrower, under a
certain Credit and Security Agreement dated July 17, 1997, and
amendment 1 dated January 21, 1998, amendment 2 dated April 1, 1998,
amendment 3 dated July 29, 1999 and any subsequent amendments."
(i) Contract Payments. Section 4.1 of the Agreement is amended in its entirety
to read:
" Contract Payments.
(A) Account Debtor Payments. Borrower shall direct all Contract
Debtors for Pledged Contracts, and all other Persons (including
Contract Rights Payors) who make payments to Borrower relating to
Pledged Contracts, to make, when paying by mail, all payments
directly to the Post Office Box. In the event Borrower receives any
Remittances, Borrower shall, as soon as possible but no later than
two (2) Business Days following receipt, deposit the Remittances in
kind in the Depository Account. Borrower shall hold Remittances in
trust for Lender until delivery to Lender or deposit in the
Depository Account. Borrower shall pay all expenses associated with
the Post Office Box.
(B) DIP Loan Payments. Whenever the amount outstanding under the DIP
Loan is less than fifty percent (50%) of the Dealer Contract Advance
Value, then Lender may, and Borrower shall at Lender's request,
notify FMAC to remit to Lender all payments due to Borrower under
the DIP Loan."
(j)Additional Acts:Section 6.2 of the Agreement is amended to add the following:
"Within ten (10) Business Days from the execution of Amendment No. 5
to Amended and Restated Motor Vehicle Loan and Security Agreement,
Borrower shall provide Lender with all documents required by Lender
in connection with the perfection of Lender's security interest in
the DIP Loan."
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 agreements, 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.
IN WITNESS WHEREOF, the undersigned have entered into this Amendment as
of August 16, 1999.
GENERAL ELECTRIC CAPITAL
CORPORATION UGLY DUCKLING CAR SALES, INC.
By: /S/ XXXX XXXXX By: /S/ XXX X. XXXXXXXX
Title: Account Executive Title: Secretary
UGLY DUCKLING CORPORATION UGLY DUCKLING CAR SALES NEW MEXICO, INC.
By: /S/ XXX X. XXXXXXXX By: /S/ XXX X. XXXXXXXX
Title: Secretary Title: Secretary
UGLY DUCKLING CAR SALES AND CHAMPION FINANCIAL SERVICES, INC.
FINANCE CORPORATION
By: /S/ XXX X. XXXXXXXX By: /S/ XXX X. XXXXXXXX
Title: Secretary Title: Secretary
UGLY DUCKLING CAR SALES FLORIDA, UGLY DUCKLING CREDIT CORPORATION
By: /S/ XXX X. XXXXXXXX By: /S/ XXX X. XXXXXXXX
Title: Secretary Title: Secretary
UGLY DUCKLING CAR SALES TEXAS, UGLY DUCKLING CAR SALES
L.L.P. CALIFORNIA, INC.
By: Ugly Duckling Car Sales, Inc.
Its: General Partner By: /S/ XXX X. XXXXXXXX
Title: Secretary
By: /S/ XXX X. XXXXXXXX
Title: Secretary UGLY DUCKLING CAR SALES GEORGIA, INC.
By: /S/ XXX X. XXXXXXXX
Title: Secretary
CYGNET FINANCIAL CORPORATION CYGNET DEALER FINANCE, INC.
By: /S/ XXXXXX X. XXXXX By: /S/ XXXXXX X. XXXXX
Title: Secretary Title: Secretary
CYGNET FINANCE ALABAMA, INC. CYGNET SUPPORT SERVICES, INC.
By: /S/ XXXXXX X. XXXXX By: /S/ XXXXXX X. XXXXX
Title: Secretary Title: Secretary
CYGNET FINANCIAL SERVICES, INC. CYGNET FINANCIAL PORTFOILIO, INC.
By: /S/ XXXXXX X. XXXXX By: /S/ XXXXXX X. XXXXX
Title: Secretary Title: Secretary
