EXHIBIT 10.2
March 17, 1999
Proprietary and Confidential
Mr. Ernest C. Garcia II
Chairman and Chief Executive Officer
Ugly Duckling Corporation
2625 East Camelback Road
Suite 1150
Phoenix, Arizona 85016
Dear Ernie:
Greenwich Capital Markets, Inc., together with its affiliate Greenwich Capital
Financial Products, Inc., (together "Greenwich") is pleased to provide Ugly
Duckling Corporation (the "Company") with a financing commitment in connection
with the Company's expressed desire for a surety-enhanced revolving credit
facility substantially upon the terms and conditions of the Term Sheet attached
as Exhibit A. The provisions and conditions of the Term Sheet set out in Exhibit
A form part of this letter as if they were fully set forth in this letter.
Our Commitment to enter into the Facilities is expressly conditioned upon the
following and upon any additional conditions precedent set forth in the attached
Summary of Terms: (i) execution of definitive documentation relating to the
Facilities in form and substance satisfactory to Greenwich and its legal
counsel; (ii) receipt of the legal opinions described in the attached Summary of
terms and such other opinions as may be reasonably requested by Greenwich or its
legal counsel; (iii) no change of control shall have occurred with respect to
the Company or any of its subsidiaries or affiliates; (iv) 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 (v) the
entering into the transactions contemplated by this Commitment by GCFP will not
contravene any applicable rules or regulations.
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 that, in Greenwich's
sole discretion, materially and adversely effects (a) the expected performance
of the receivables, (b) the condition (financial or otherwise) of the Company or
its affiliates, or (c) the ability of the Company, Greenwich or its affiliates
to fulfill its or their obligations under this Commitment, Greenwich shall have
no further obligation under this Commitment.
This Commitment 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 Commitment will be governed by and construed in
accordance with New York law without regard to its conflicts of law provisions.
Any underwriting or placement agent agreement entered into between Greenwich and
the Company will supersede the terms of this Commitment.
If terms of this Commitment are acceptable to the Company, please indicate your
agreement to be bound by the provisions of this Commitment, by executing this
Commitment in the space provided below.
We appreciate the opportunity to be of service to you and look forward to
working with you.
Very truly yours,
/S/ IRA PLATT
- -------------
Ira J. Platt
Vice President
Accepted and agreed as of the date first written above:
By: /S/ ERNEST C. GARCIA
--------------------
Ernest C. Garcia
Chairman and Chief Executive Officer
March 16, 1999
Proprietary & Confidential
Exhibit A
Ugly Duckling Corporation
$100,000,000 Surety-Enhanced Revolving Credit Facility
Facility Size: $100,000,000.
Facility Structure: Warehouse facility providing for the
issuance of Variable Funding Notes (collectively, the
"Note") secured by eligible sub-prime automobile
finance receivables originated and/or purchased by
UDC entities. The note will be 100% wrapped by the
Surety Provider.
Issuer: A bankruptcy-remote,special purpose subsidiary of UDC
acceptable to the Surety Provider will hold all
pledged loan collateral and issue the Note.
Note Purchaser: Greenwich Capital Markets, Inc. or one of its
affiliates ("GCM") will commit to purchase the Note.
Surety Provider: MBIA Insurance Corporation.
Term: 364-day term, renewable at the discretion of GCM /
MBIA.
Collateral Advance Rate: To be determined by the Surety Provider. Advance
should approximate the net advance rates for
surety-wrapped securities on recent UDC term
securitizations.
Interest Rate: One month LIBOR plus 1.10%, with an internally capped
rate of 10%.
Eligibility Criteria: To be determined by Surety Provider, though expected
to closely mirror those in existence for UDC term
securitizations.
Funding Frequency: Weekly, in increments of no less than $5mm.
Takedown Provision: 75% of the receivables sold into the Facility to be
securitized no less frequently than every 6 months.
Alternatively, a six month aging provision may be
required.
Commitment Fee: $100,000, due at closing.
Non-Use Fee: 10 bp on that portion of the Facility not utilized,
calculated and paid on a monthly basis. This fee is
to be waived in the event that the average funding
balance for the month exceeds $50mm.
MBIA Constraints: Standard MBIA credit provisions for
receivable pool performance, pool attribute
considerations and UDC financial statement covenants.
Standard MBIA Event of Default provisions, including
rapid amortization events.
Hedging Requirement: UDC will be responsible for either (a)
hedging the facility borrowing rate through the
purchase of an interest rate cap or (b) bearing the
implied enhancement cost associated with an internal
cap of 10%.
Origination Expenses: UDC to bear all legal and due diligence expenses of
GCM / MBIA in constructing the Facility.