UGLY DUCKLING CORPORATION
TO
HARRIS TRUST AND SAVINGS BANK
Trustee
Second Supplemental Indenture
Dated as of April 15, 2000
To
Indenture
Dated as of October 15, 1998
11% Subordinated Debentures due 2007
SECOND SUPPLEMENTAL INDENTURE, dated as of April 15, 2000, between
Ugly Duckling Corporation, a corporation duly organized and existing under the
laws of the State of Arizona (herein called the "Company"), having its principal
office at 2525 East Camelback Road, Suite 500, Phoenix, Arizona 85016, and
Harris Trust and Savings Bank, an Illinois banking corporation, as Trustee
(herein called the "Trustee") under the Indenture dated as of October 15, 1998
between the Company and the Trustee (as amended from time to time, the
"Indenture").
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Recitals of the Company
The Company has executed and delivered the Indenture to the Trustee to
provide for the issuance from time to time of its unsecured debentures, notes or
other evidences of indebtedness (the "Securities"), said Securities to be issued
in one or more series as in the Indenture provided.
Pursuant to the terms of the Indenture, the Company desires to provide
for the establishment of a new series of its Securities to be known as its 11%
Subordinated Debentures due 2007 (herein called the "Debentures"), the form and
substance of such Debentures and the terms, provisions and conditions thereof to
be set forth as provided in the Indenture and this Second Supplemental
Indenture.
All things necessary to make this Second Supplemental Indenture a valid
agreement of the Company, and to make the Debentures, when executed by the
Company and authenticated and delivered by the Trustee, the valid obligations of
the Company, have been done.
Now, Therefore, This Second Supplemental Indenture Witnesseth:
For and in consideration of the premises and the purchase of the
Debentures by the Holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Debentures and the
terms, provisions and conditions thereof, it is mutually agreed, for the equal
and proportionate benefit of all Holders of the Debentures, as follows:
ARTICLE One
General Terms and Conditions of the Debentures
Section 101. There shall be and is hereby authorized a series of Securities
designated the "11% Subordinated Debentures due 2007", limited in aggregate
principal amount to $27,500,000, which amount shall be as set forth in any
written order of the Company for the authentication and delivery of Debentures.
The Debentures shall mature and the principal shall be due and payable together
with all accrued and unpaid interest thereon on April 15, 2007, and shall be
issued in the form of registered Debentures without coupons in denominations of
$1.00 and any integral multiple thereof.
Section 102. Except as provided in Section 103 herein, the Debentures shall be
issued in certificated form. Principal and interest on the Debentures issued in
certificated form will be payable, the transfer of such Debentures will be
registrable and such Debentures will be exchangeable for the Debentures bearing
identical terms and provisions at the Corporate Trust Office of the Trustee from
time to time, which is initially in Chicago, Illinois; provided, however, that
payment of interest may be made at the option of the Company by check mailed to
the registered holder at such address as shall appear in the Security Register.
Section 103. Each Debenture will bear interest at the rate of 11% per annum from
the original date of issuance until the principal thereof becomes due and
payable, and on any overdue principal, payable semiannually on April 15 and
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October 15 of each calendar year (each, an "Interest Payment Date"), commencing
on October 15, 2000, to the person in whose name such Debenture or any
predecessor Debenture is registered, at the close of business on each April 1
and October 1 next preceding such Interest Payment Date. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the registered holders on such Regular Record Date, and may be paid
to the person in whose name the Debenture (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date to
be fixed by the Trustee for the payment of such defaulted interest, notice
whereof shall be given to the registered holders of the Debentures not less than
10 days prior to such Special Record Date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Debentures may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. Interest will accrue from the
date of original issuance to, but not including, the relevant payment date. In
the event that any date on which interest is payable on the Debentures is not a
Business Day, then payment of interest payable on such date will be made on the
next succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), in each case with the same force and
effect as if made on such date.
Section 104. The Debentures shall be defeasible pursuant to Section 1302 and
Section 1303 of the Indenture.
ARTICLE Two
Redemption of the Debentures
Section 201. The Debentures will be redeemable at any time and from time to time
prior to maturity at the option of the Company, as a whole or in part, upon not
less than 30 nor more than 60 days' notice, at the principal amount to be
redeemed, together with accrued interest to the date fixed for redemption.
ARTICLE Three
Additional Covenants
Section 301. Definitions. For purposes of this Article Three, except as
otherwise expressly provided or unless the context otherwise requires:
"Consolidated Net Worth" as of any date of determination means the
consolidated stockholders' equity of the Company and its consolidated
Subsidiaries, as determined in accordance with GAAP, plus all Junior
Subordinated Obligations of the Company and its consolidated Subsidiaries.
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"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
"Junior Subordinated Obligation" means any indebtedness of the Company
or its Subsidiaries that by its terms is expressly subordinated in right of
payment to the Debentures.
Section 302. Minimum Equity. The Company shall, at all times while any of the
Debentures remain Outstanding, maintain Consolidated Net Worth of at least
$100,000,000.
ARTICLE Four
Form of Debentures
Section 401. The Debentures and the Trustee's certificate of authentication to
be endorsed thereon are to be substantially in the following form:
[INSERT OID LEGEND]
UGLY DUCKLING CORPORATION
No. $
-----------------------
CUSIP NO. Date of Original Issuance: __________ __, 2000
--------------------
Ugly Duckling Corporation, a corporation duly organized and existing under
the laws of Delaware (herein called the "Company," which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ______________, or registered assigns, the
principal sum of ___________ Dollars on April 15, 2007, and to pay interest
thereon from the original date of issuance or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on April 15 and October 15 in each year, commencing October 15, 2000, at the
rate of 11% per annum, until the principal hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the April 1 or October 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
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Payment of the principal of (and premium, if any) and any such interest
on this Security will be made at the office or agency of the Company maintained
for that purpose in Chicago, Illinois, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
In Witness Whereof, the Company has caused this instrument to be duly
executed.
UGLY DUCKLING CORPORATION
By_______________________
Attest:
_______________________
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Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of October 15, 1998 (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and Harris Bank and Trust Company, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), and reference is hereby made to the Indenture for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $27,500,000.
The Securities of this series are subject to redemption upon not less
than 30 days' notice by mail, at any time, as a whole or in part, at the
election of the Company, at a Redemption Price equal to 100% of the principal
amount, together with accrued interest to the Redemption Date, but interest
installments whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates
referred to on the face hereof for such interest installments, all as provided
in the Indenture. The Indenture provides that a notice of redemption may be
given that is conditional upon the receipt by the Trustee on or prior to the
Redemption Date of amounts sufficient to pay principal of, and premium, if any,
and interest on, the Securities to be redeemed, and that if such amounts shall
not have been so received, said notice shall be of no force and effect, the
Securities to be redeemed will not become due and payable on the Redemption
Date, and the Company will not be required to redeem such Securities on such
date.
In the event of redemption of this Security in part only, a new
Security or Securities of this series and of like tenor for the unredeemed
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
The Securities of this series are subordinate in right of payment, in
the manner and to the extent set forth in the Indenture, to the prior payment in
full of all Senior Indebtedness of the Company. To the extent and in the manner
provided in the Indenture, Senior Indebtedness must be paid before any payment
may be made to any Holder of this Security. Any Holder by accepting this
Security agrees to the subordination and authorizes the Trustee to give it
effect.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and Events
of Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
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affected under the Indenture at any time by the Company and the Trustee without
the consent of any Holders in certain limited cases, and with the consent of the
Holders of a majority in principal amount of the Securities at the time
Outstanding of each series to be affected subject to certain exceptions. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver shall be conclusive and binding upon the Holder of this Security and upon
all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1.00 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
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Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
ARTICLE Five
Original Issue of Debentures
Section 501. Debentures in the aggregate principal amount of $27,500,000, may,
upon execution of this Second Supplemental Indenture, or from time to time
thereafter, be executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said
Debentures to or upon the written order of the Company, signed by its Chairman,
its President, or any Vice President and its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary, without any further action by the
Company.
ARTICLE Six
Application of Article Fourteen
Section 601. The Debentures will be subject to the subordination provisions of
Article Fourteen of the Indenture. The Debentures will be pari passu with the
12% Subordinated Debentures due 2003 previously issued under the Indenture. The
indebtedness under the Senior Secured Loan Agreement, dated as of May 14, 1999,
as amended from time to time, by and among the Company, the Lenders party
thereto, and the Trustee will be Designated Senior Indebtedness.
ARTICLE Seven
Paying Agent and Registrar
Section 701. The Trustee will be the Paying Agent, transfer agent, and Registrar
for the Debentures.
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ARTICLE Eight
Interest and Original Issue Discount Reporting, Backup Withholding
Section 801. On or before January 31 following each calendar year with respect
to which there are Outstanding Debentures or such other due date prescribed
therefor, as advised to the Trustee by the Company, the Trustee will prepare and
mail to each Holder of Outstanding Debentures at any time during the preceding
calendar year Forms 1099-INT and 1099-OID or such other forms prescribed
therefor by the Internal Revenue Service, as advised to the Trustee by the
Company, containing such information as instructed by the Company, including the
information contained in Section 1009 of the Indenture, together with any letter
prepared by the Company explaining tax issues relating thereto to the extent not
otherwise prohibited by law. Further, on or before February 28 following each
calendar year with respect to which there are Outstanding Debentures or such
other due date prescribed therefor, as advised to the Trustee by the Company,
the Trustee will prepare and file with the Internal Revenue Service or any other
relevant taxing authority, as advised to the Trustee by the Company, by magnetic
tape or other required transmission source, as advised to the Trustee by the
Company, containing the aforementioned information furnished by the Company.
Section 802. During each calendar year with respect to which there are
Outstanding Debentures, the Trustee will satisfy all applicable backup
withholding rules in connection with payments made or deemed made with respect
to the Debentures including, without limitation, payments of interest, accruals
of original issue discount, and payments associated with redemptions and other
dispositions of Debentures.
ARTICLE Nine
Sundry Provisions
Section 901. Except as otherwise expressly provided in this Second Supplemental
Indenture or in the form of Debentures or otherwise clearly required by the
context hereof or thereof, all terms used herein or in said form of Debentures
that are defined in the Indenture shall have the several meanings respectively
assigned to them thereby.
Section 902. The Indenture, as previously supplemented and as supplemented by
this Second Supplemental Indenture, is in all respects ratified and confirmed,
and this Second Supplemental Indenture shall be deemed part of the Indenture in
the manner and to the extent herein and therein provided.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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In Witness Whereof, the parties hereto have caused this Second
Supplemental Indenture to be duly executed all as of the day and year first
above written.
UGLY DUCKLING CORPORATION
By: /S/ JON D. EHLINGER
-----------------------
SECRETARY
Attest: /S/ ANDREA M. RUSHTON
-----------------------------
HARRIS TRUST AND SAVINGS BANK, As Trustee
By: /S/ MEGAN F. CARMODY
------------------------
Megan F. Carmody
Assistant Vice President
Attest: /S/ T. MUZQUIZ
--------------
T. Muzquiz
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State of Arizona )
) ss:
County of Maricopa )
On the 18th day of April, 2000, before me personally came Jon D. Ehlinger, to
me known, who being by me duly sworn, did depose and say that she/he is the
VP/Secretary of Ugly Duckling Corporation, one of the corporations described in
and which executed the foregoing instrument; and that she/he signed her/his name
thereto by the authority of the Board of Directors of said Corporation.
Andrea M. Gabriel
-----------------
Notary Public
Official Seal
State of Illinois )
)ss:
County of Cook )
On the 19th day of April, 2000, before me personally came Megan F. Carmody,
to me known, who being by me duly sworn, did depose and say that she/he is the
Assistant Vice President of Harris Trust and Savings Bank, one of the
corporations described in and which executed the foregoing instrument; that
she/he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation; and that she/he signed her/his name
thereto by like authority.
J. Muzquiz
----------
Notary Public
Official Seal
