EXHIBIT 10.1
March 16, 1999
Proprietary and Confidential
Mr. Ernest Garcia
Chairman and Chief Executive Officer
Ugly Duckling Corporation
2625 East Camelback Road
Suite 1150
Phoenix, Arizona 85016
Dear Ernie:
We are pleased to confirm the terms under which Ugly Duckling Corporation (the
"Company") proposes to engage Greenwich Capital Markets, Inc. ("Greenwich") as
its exclusive private placement agent in connection with future securitizations
of not less than $300 million of surety bonds secured by the Company's sub-prime
automobile finance receivables, subject to the terms and conditions set forth in
the attached Summary of Terms and in Greenwich's placement agent agreement (for
privately placed securities) (this "Engagement"). Each of the parties hereto
acknowledge that this Engagement is being executed in connection with a
Commitment Letter, dated March 12, 1999, between Greenwich and the Company in
which Greenwich committed to providing the Company with certain financing
facilities.
This Engagement sets forth the entire agreement of Greenwich and the Company
with respect to the subject matter hereof and supersedes all prior discussions
and correspondence. This Engagement will be governed by and construed in
accordance with New York law without regard to its conflicts of law provisions.
Any placement agent agreement entered into between Greenwich and the Company
will supersede the terms of this Engagement; provided, however, the obligation
to engage Greenwich as placement agent per the "Term of Engagement" in the
attached Summary of Terms shall survive.
If terms of this Engagement are acceptable to the Company, please indicate your
agreement to be bound by the provisions of this Engagement, by executing this
Engagement in the space provided below.
Very truly yours,
/S/ IRA PLATT
- -------------
Ira J. Platt
Vice President
Accepted and agreed:
By: /S/ ERNEST C. GARCIA
---------------------
Ernest C. Garcia
Chairman and Chief Executive Officer
SUB-PRIME AUTOMOBILE FINANCE RECEIVABLES
SECURITIZATION ENGAGEMENT
Summary of Terms
Engagement: Greenwich is engaged to act as sole and exclusive
private placement agent for securitizations of the
Company's sub-prime automobile and light duty truck
receivables for the term of this Engagement.
Term of the
Engagement: Greenwich's Engagement is for all of the Company's
sub-prime automobile finance receivable
securitizations until not less than $300,000,000
aggregate amount of surety-enhanced securities have
been issued. In addition, the Engagement is to
encompass not less than three distinct securitization
transactions.
Placement Fees: The Company shall pay Greenwich a placement fee for
each securitization as follows:
Applicable Fees as a Percentage
of the Par Value of Type of
Type of Securities Securities Issued
------------------- ------------------
AAA-Rated 0.50%
A-Rated 0.75%
Greenwich will privately place the offered securities
on a best efforts basis at a market spread determined
as of the pricing date.
Conditions
Precedent: The placement by Greenwich of the Company's
securities will be conditioned upon the following:
(i) Execution of definitive documentation relating to the
issuance of the securities in form and substance
satisfactory to Greenwich;
(ii) Receipt of legal opinions customary in rated
asset-backed securities transactions which are
satisfactory to Greenwich;
(iii)The execution by the Company of Greenwich's standard
placement agency agreement, relating to Greenwich's
placement of the securities pursuant to the Engagement,
which agreements will provide, among other things, for
the indemnification by the Company of Greenwich, its
affiliates, directors, officers, employees, agents,
consultants and counsel for material misstatements or
omissions or alleged misstatements or omissions
contained in any offering document prepared by the
Company in connection with the offering of securities;
(iv) No change of control shall have occurred with respect
to the Company or any of its subsidiaries or
affiliates;
(v) No material adverse change shall have occurred in the
financial or operating condition, business or prospects
of the Company or any of its subsidiaries or
affiliates; and
(vi) The performance of the Company's outstanding
securitized transactions and the credit quality of the
receivables underlying the subject securitizations
shall not have materially deteriorated.
In addition, Greenwich reserves the right to conduct
continuing due diligence of the Company, its affiliates,
directors, officers, employees and significant shareholders
and, to the extent Greenwich at any time discovers any new
or previously existing but undiscovered event or condition
which in Greenwich's sole discretion materially and
adversely affects (a) the expected performance of the
receivables, (b) the market for asset-backed securities of
this type, (c) the condition (financial or otherwise) of the
Company or its affiliates, or (d) the ability of the
Company, Greenwich or its affiliates to fulfill its or their
obligations under the Engagement, Greenwich shall have no
further obligation under the Engagement.
Representations
And Warranties: The Company will make, as of the cut-off date for the
Securitization, customary representations and
warranties in form and content as may be required by
Greenwich, rating agencies or a credit enhancement
provider.
Expenses: The Company shall reimburse Greenwich for all
out-of-pocket expenses (except for travel and related
expenses of Greenwich employees) associated with the
transactions, including without limitation legal and
rating agency costs and expenses incurred in
connection with the preparation and negotiation of
securitization-related documentation (including the
fees and expenses of Greenwich's counsel), up-front
and ongoing custodial and trustee fees and expenses,
bond insurer premiums, fees and expenses (if
applicable), due diligence contractors and
accountants' comfort letters, whether advanced by the
Company or by Greenwich as incurred. Where possible,
Greenwich will negotiate fee and/or expense caps on
behalf of the Company.