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EXHIBIT 10.3
[UGLY DUCKLING LETTERHEAD]
UGLY DUCKLING CORPORATION
March 25, 1998
VIA FACSIMILE (847-304-3338)
Mr. Farhaan Hassan
GE Capital
Asset Based Financing
800 Hart Road, Suite 200
Barrington, Illinois 60010
Re: Requests for GECC approvals
Dear Farhaan:
Over the last few weeks I have submitted requests for GECC's approval
of four matters relating to the Ugly Duckling Amended and Restated Loan
Agreement (the "Loan Agreement"). You asked that I combine these four requests
in a single letter. The four requests are restated as follows:
1. TIMING OF CONTRACT PAYMENTS. Section 4.1 of the Loan Agreement
provides that all remittances received by the Borrower shall
be deposited into the depository account "...as soon as
possible, but no later than two business days following
receipt..." Apparently, the agreements between Ugly Duckling
and all other contract owners provide for deposit within three
business days. I understand that you are aware of this and are
willing to allow Ugly Duckling to deposit receipts within
three business days rather than the two business days required
by the Loan Agreement.
2. SALE LEASEBACK. Ugly Duckling Corporation has entered into a
nonbinding commitment letter to sell and leaseback
substantially all of the properties owned by the Ugly Duckling
entities. The Buyer and Landlord is Imperial Credit Commercial
Investment Corp. or one of its affiliates ("Imperial").
Enclosed is a copy of the Commitment Letter between Ugly
Duckling and Imperial. We hope to close the sale/leaseback
transaction within the next 30 days. The proceeds of the
transaction will be used by Ugly Duckling for working capital.
GECC has a lien on substantially all the assets of Ugly
Duckling. However, GECC does not have mortgages on the Ugly
Duckling properties. Therefore, the Ugly Duckling properties
can be conveyed without a release of the security interests of
GECC in the assets of Ugly Duckling. Nonetheless, I would like
to obtain GECC's consent to the sale/leaseback transaction.
3. CYGNET FINANCE INVESTMENT. Section 13.15 of the Loan Agreement
provides that Ugly Duckling Corporation shall not invest more
than $20 million into Cygnet Finance, Inc. Last October, you
agreed to increase the $20 million limit to $30 million. The
investment in Cygnet Finance, Inc. is now or soon will be, in
excess of $30 million. Eric Splaver of Ugly Duckling has
spoken to you about an increase in the investment limitation
to $40 million. I would appreciate your acknowledgment of the
increase in the Cygnet investment limitation to $40 million.
UDH.GE:CFH33.DOC
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Farhaan Hassan
March 25, 1998
Page Two
4. GREENWICH SECURITIZATION COMMITMENT. Ugly Duckling has entered
into a securitization commitment with Greenwich Capital
Markets. I have never requested GECC's consent to this
securitization arrangement between Ugly Duckling and
Greenwich. Enclosed is the commitment letter setting forth the
terms of this securitization commitment. I would appreciate
your acknowledgment and approval of the securitization
arrangement between Ugly Duckling and Greenwich.
Please acknowledge GECC's approval of these four requests by signing
this letter and returning it to me at your earliest convenience.
Thank you for your cooperation.
Cordially,
/s/ Steven P. Johnson
Steven P. Johnson
General Counsel
SPJ:ag
Accepted and approved this 30 day of March, 1998.
General Electric Capital Corporation
By: /s/ Farhaan Hassan
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Name: Farhaan Hassan
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Its: Account Executive
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UDH.GE:CFH33.DOC