================================================================================

                              AMENDED AND RESTATED


                          SENIOR SECURED LOAN AGREEMENT


                            Dated as of July 19, 2002


                                  by and among


                           UGLY DUCKLING CORPORATION,


                             a Delaware corporation


                                  ("Borrower")


                   THE LENDERS FROM TIME TO TIME PARTY HERETO


                                       and


                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION


                               as Collateral Agent


                         $45,000,000 Senior Secured Loan



================================================================================



<PAGE>


<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

<S>               <C>                                                                                           <C>

ARTICLE I. DEFINITIONS............................................................................................1
----------------------

         1.1      Defined Terms...................................................................................1
         1.2      Other Interpretive Provisions..................................................................17
         1.3      Accounting Principles..........................................................................18
         1.4      Times..........................................................................................18

ARTICLE II. the loan.............................................................................................19

         2.1      The Loan.......................................................................................19
         2.2      Payment Upon Collection; Monthly Amortization..................................................19
         2.3      Payment Upon Maturity..........................................................................19
         2.4      Interest.......................................................................................19
         2.5      Voluntary Prepayments; Deposits to Collateral Account..........................................20
         2.6      Application of Payments........................................................................20
         2.7      Prepayment.....................................................................................21
         2.8      Fees...........................................................................................21
         2.9      Fees and Interest..............................................................................21
         2.10     Payments by Borrower; Payments by Collateral Agent.............................................21
         2.11     Taxes..........................................................................................22
         2.12     Sharing of Payments, Etc.......................................................................23
         2.13     Suspension of LIBOR............................................................................24
         2.14     Increased Costs, Etc...........................................................................24
         2.15     Promissory Notes...............................................................................25

ARTICLE III. security agreement and collateral...................................................................25

         3.1      Security for Obligations.......................................................................25
         3.2      Security Documents.............................................................................26
         3.3      Duties Regarding Collateral....................................................................26
         3.4      Borrower's Duties Regarding Collateral.........................................................26
         3.5      Power of Attorney..............................................................................27
         3.6      Collateral Inspections.........................................................................27

ARTICLE IV. CONDITIONS PRECEDENT; TERM OF AGREEMENT..............................................................27

         4.1      Conditions Precedent...........................................................................27
         4.2      Receipt of Documents...........................................................................28
         4.3      Payment of Interest under Existing Loan Agreement..............................................29
         4.4      Term...........................................................................................29
         4.5      Effect of Termination..........................................................................29

ARTICLE V. REPRESENTATIONS AND WARRANTIES........................................................................30

         5.1      No Encumbrances................................................................................30
<PAGE>

         5.2      Location of Chief Executive Office; FEIN.......................................................30
         5.3      Due Organization and Qualification; Subsidiaries...............................................30
         5.4      Due Authorization:  No Conflict................................................................30
         5.5      Litigation.....................................................................................31
         5.6      Financial Statements; No Material Adverse Change...............................................32
         5.7      Securitization Documents.......................................................................32
         5.8      ERISA..........................................................................................32
         5.9      Environmental and Safety Matters...............................................................32
         5.10     Tax Matters....................................................................................33
         5.11     [Reserved].....................................................................................33
         5.12     Ownership of Properties........................................................................33
         5.13     Investment Company Status......................................................................33
         5.14     Solvency.......................................................................................33

ARTICLE VI. AFFIRMATIVE COVENANTS................................................................................33

         6.1      Financial Statements and Other Documents.......................................................34
         6.2      Inspection of Property.........................................................................34
         6.3      Default Disclosure.............................................................................35
         6.4      Notices to Lenders and the Collateral Agent....................................................35
         6.5      Books and Records..............................................................................35
         6.6      Compliance and Preservation....................................................................35
         6.7      Perfection of Liens............................................................................36
         6.8      Cooperation....................................................................................36
         6.9      Use of Proceeds................................................................................36
         6.10     Securitizations................................................................................36
         6.11     Payment of Indebtedness........................................................................36
         6.12     Tangible Net Worth.............................................................................36
         6.13     Consolidated EBITDA to Consolidated Interest Expense...........................................37
         6.14     Consolidated Senior Debt to Consolidated Total Capitalization..................................37
         6.15     Minimum Residual Certificate Cash Flows........................................................37
         6.16     Minimum Capital Base...........................................................................37
         6.17     Minimum Other Interest Coverage................................................................37
         6.18     [Reserved].....................................................................................37
         6.19     Collateral Account.............................................................................37
         6.20     Back-up Servicer...............................................................................37
         6.21     Maintenance of Properties......................................................................37
         6.22     Maintenance of Insurance.......................................................................38
         6.23     Reorganization.................................................................................38
         6.24     DriveTime Name Change..........................................................................38
         6.25     Designated Senior Indebtedness.................................................................38

ARTICLE VII. NEGATIVE COVENANTS..................................................................................38

         7.1      Liens..........................................................................................39
         7.2      Indebtedness...................................................................................39
         7.3      Restrictions on Fundamental Changes............................................................39

<PAGE>

         7.4      Disposal of Collateral, Residual Certificates, Additional Residual Certificates................39
         7.5      Change Name....................................................................................39
         7.6      Amendments.....................................................................................39
         7.7      Change of Control..............................................................................40
         7.8      Distributions..................................................................................40
         7.9      Standing Dividend Resolutions..................................................................40
         7.10     Change in Location of Chief Executive Office...................................................40
         7.11     No Prohibited Transactions Under ERISA.........................................................40
         7.12     Changes in Nature of Business..................................................................41
         7.13     Transactions with Affiliates...................................................................41

ARTICLE VIII. EVENTS OF DEFAULT/REMEDIES.........................................................................41

         8.1      Event of Default...............................................................................41
         8.2      Rights and Remedies............................................................................43

ARTICLE IX. THE COLLATERAL AGENT.................................................................................44

         9.1      Authorization and Action.......................................................................44
         9.2      Collateral Agent's Reliance, Etc...............................................................44
         9.3      Wells Fargo Bank Minnesota, National Association and Affiliates................................45
         9.4      Lender Credit Decision.........................................................................45
         9.5      Indemnification................................................................................45
         9.6      Successor Collateral Agents....................................................................45
         9.7      Monthly Duties of Collateral Agent.............................................................46

ARTICLE X. MISCELLANEOUS.........................................................................................46

         10.1     Amendments and Waivers.........................................................................46
         10.2     Notices........................................................................................47
         10.3     No Waiver:  Cumulative Remedies................................................................48
         10.4     Costs and Expenses.............................................................................48
         10.5     Indemnity......................................................................................49
         10.6     Marshaling:  Payments Set Aside................................................................49
         10.7     Successors and Assigns.........................................................................49
         10.8     Set-off........................................................................................49
         10.9     Counterparts...................................................................................50
         10.10    Severability...................................................................................50
         10.11    No Third Parties Benefited.....................................................................50
         10.12    Time     50
         10.13    Governing Law and Jurisdiction.................................................................50
         10.14    Entire Agreement...............................................................................51
         10.15    Interpretation.................................................................................52
         10.16    Assignment; Register...........................................................................52
         10.17    Revival and Reinstatement of Obligations.......................................................53
         10.18    Survival 53

<PAGE>

         10.19    Confidentiality................................................................................53
         10.20    Actions by Portfolio Advisor...................................................................53


ARTICLE XI. Acceptance Fees.......................................................................................6


ARTICLE XII. Additional Lender....................................................................................6


ARTICLE XIII. -...................................................................................................6


ARTICLE XIV. $1,000.00 per annum per Lender.......................................................................6
</TABLE>





<PAGE>



                             SCHEDULES AND EXHIBITS


Schedule A........Borrower's Subsidiaries

Schedule B........Warrants, Options, etc.

Schedule C........Litigation

Schedule D........Exceptions to Financial Statements

Schedule E........Permitted Liens

Schedule F........Residual Certificates

Schedule G........Subordinated Indebtedness

Schedule H........Collateral Agent Fees

Schedule I........Administrative Forms

Exhibit A.........UDRC II, UDRC III and UDRC IV Securitization Documents

Exhibit B.........Form of Collateral Account Agreement

Exhibit C.........Form of Assignment and Acceptance

Exhibit D.........Form of Promissory Note

Exhibit E.........Form of Guaranty



<PAGE>


                          SENIOR SECURED LOAN AGREEMENT


     This AMENDED AND RESTATED SENIOR SECURED LOAN AGREEMENT (the  "Agreement"),
is entered into as of July 19, 2002, among UGLY DUCKLING CORPORATION, a Delaware
corporation  ("Borrower"),  with a place of business located at 4020 East Indian
School Road,  Phoenix,  Arizona 85018,  the Lenders party hereto  (together with
their  respective  successors  and  assigns,  "Lenders")  and WELLS  FARGO  BANK
MINNESOTA,   NATIONAL  ASSOCIATION,  as  Collateral  Agent  (together  with  its
successors and assigns in such capacity, "Collateral Agent").

                                 R E C I T A L S

     WHEREAS,  Borrower,  certain  financial  institutions and BNY Midwest Trust
Company are parties to that certain Senior Secured Loan  Agreement,  dated as of
January 11, 2001 (as amended,  supplemented  or otherwise  modified prior to the
date hereof, the "Existing Loan Agreement"); and

     WHEREAS,  the  Borrower  and the  Lenders  wish to amend  and  restate  the
Existing Loan  Agreement in the form of this  Agreement to make available to the
Borrower the senior secured loan (the "Loan") as provided herein;

     NOW,  THEREFORE,  in  consideration  of the  premises  and the  agreements,
provisions and covenants  herein  contained,  the Borrower,  the Lenders and the
Collateral  Agent agree that the Existing Loan  Agreement is hereby  amended and
restated in full as follows:

                                    ARTICLE I
                                   DEFINITIONS

1.1  Defined  Terms.  In  addition  to  the  terms  defined  elsewhere  in  this
Agreement, the following terms have the following meanings:

     "Additional  Residual  Certificates"  shall mean all Class B Notes, Class C
Certificates  (other than Excluded Class C  Certificates),  Class D Certificates
and other  certificates of beneficial  interest or similar  interests which both
(i) are issued by a Securitization Trust or other similar entity with respect to
which UDRC II, UDRC III,  UDRC IV or any other  Affiliate  of UDC or UDCC is the
seller or issuer (or equivalent),  and (ii) represent the securitization of Ugly
Duckling Collateral.

     "Administrative Form" means an administrative details form delivered by the
Collateral  Agent and any Lender to Collateral  Agent and Borrower.  The initial
Administrative Forms are attached hereto as Schedule I. The Collateral Agent and
each Lender may change its  Administrative  Form at any time by delivering a new
Administrative Form to the Collateral Agent and Borrower.

     "Affiliate"  means, as to any Person,  any other Person which,  directly or
indirectly, is in control of, is controlled by, or is under common control with,
such  Person.  A  Person  shall be  deemed  to  control  another  Person  if the

<PAGE>

controlling  Person  possesses,  directly or indirectly,  the power to direct or
cause the direction of the management and policies of the other Person,  whether
through the ownership of voting  securities,  by contract or otherwise.  Without
limitation,  any  director,  executive  officer  or  beneficial  owner of twenty
percent  (20%) or more of the equity of a Person  shall for the purposes of this
Agreement,  be deemed to control the other Person.  In no event shall any Lender
be deemed an "Affiliate" of Borrower.

     "Agreement"   means  this  Senior  Secured  Loan  Agreement,   as  amended,
supplemented or modified from time to time in accordance with the terms hereof.

     "AIG" means AIG Global Investment Corp., and its successors and assigns.

     "Assignment  and   Acceptance"   means  an  assignment  and  acceptance  in
substantially the form of Exhibit C.

     "Attorney  Costs" means and includes all fees and  disbursements of any law
firm or other external or internal counsel.

     "Base Rate" means a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be equal to the highest of: (a)
either (1) the "prime rate"  published in the "Money Rates"  section of the Wall
Street  Journal,  as such "prime  rate" may change from time to time or, if such
rate  ceases to be  published,  (2) the rate of interest  announced  publicly by
Wells  Fargo Bank  Minnesota,  National  Association  from time to time as Wells
Fargo Bank  Minnesota,  National  Association's  prime rate;  and (b) 1/2 of one
percent per annum above the Federal Funds Rate.

     "Bankruptcy  Code" means the United States Bankruptcy Code (11 U.S.C.ss.101
et seq.), as amended, and any successor statute.

     "Bond  Insurance  Policy"  shall mean a  financial  guaranty  or  financial
insurance  policy issued by (i) MBIA or any of its  Affiliates,  (ii) XL Capital
Assurance Inc. or any of its Affiliates or (iii) any other  financial  guarantor
in respect of one or more classes of investor  certificates  or other  interests
issued by a Securitization Trust.

     "Borrower Taxes" means any federal,  state, local or foreign income,  gross
receipts,  license, payroll,  employment,  excise, severance, stamp, occupation,
premium,  windfall  profits,  environmental,  customs,  duties,  capital  stock,
franchise,  profits,  withholding,  social security (or similar),  unemployment,
disability,  real property,  personal property,  intangible,  ad valorem, sales,
use,  transfer,  registration,  value  added,  alternative  or  add-on  minimum,
estimated  or other tax or other  governmental  charge  of any kind  whatsoever,
including any interest, penalty or additions thereto.

     "Borrower's  Books" means all of  Borrower's  books and records  including:
ledgers, records indicating,  summarizing or evidencing Borrower's properties or
assets (including the Collateral and the assets of any Subsidiaries of Borrower)
or liabilities;  all information  relating to Borrower's  business operations or
financial condition;  and all computer programs,  disk or tape files, printouts,
runs or other computer prepared information.
<PAGE>

     "Borrowing  Base" means,  as of any date of  determination,  the sum of the
products obtained by multiplying the Residual Certificate Value of each Residual
Certificate as of the most recent  Calculation  Date by the Advance Rate (as set
forth below)  applicable to such  Residual  Certificate  as of such  Calculation
Date:

<TABLE>
<CAPTION>

<S>        <C>                                           <C>
  Complete Months of Seasoning Since
     Securitization Cut-Off Date                         Advance Rate
 ...................................                     ............
            0 - 3 months                                     15%
            4 - 5 months                                     30%
            6 - 9 months                                     35%
           10 - 12 months                                    40%
           13 - 18 months                                    45%
           19 - 23 months                                    55%
 Greater than or equal to 24 months                          60%
</TABLE>


     Notwithstanding the foregoing or any other provision hereof or of any other
Loan Document to the contrary,  (i) no Additional Residual Certificates shall be
included  in  the  calculation  of the  Borrowing  Base  unless  and  until  the
provisions  of  Section  3.1  have  been  complied  with  with  respect  to such
Additional Residual Certificates, (ii) Lenders shall be entitled to exclude from
the Borrowing Base any Residual Certificate (or any portion thereof) as to which
(A)  Required  Lenders  determine  that  the  Collateral  Agent  does not have a
perfected first priority, valid and enforceable security interest either in such
Residual  Certificate  directly or in 100% of the capital stock of the holder of
such Residual Certificate,  or (B) a Securitization  Default exists and (iii) to
the extent that the Residual  Certificates  under any three (3)  Securitizations
represent  in excess of 50% of the  Borrowing  Base,  the amount of such  excess
shall be excluded from the Borrowing Base.

     "Business  Day" means a day of the year on which banks are not  required or
authorized by law to close in Los Angeles, California or Minneapolis,  Minnesota
and, if the applicable Business Day relates to any Eurodollar Rate Advances,  on
which dealings are carried on in the London interbank market.

     "Calculation  Date" means the second  Business Day prior to the 15th day of
each month.

     "Capital  Base"  means,  at  any  time  of  determination,  the  sum of (i)
Borrower's  Tangible Net Worth at such time plus (ii) the aggregate  outstanding
principal  amount of all  Subordinated  Debt of Borrower and its Subsidiaries at
such time  (other than any such  Subordinated  Debt that is due within 12 months
from such date of determination).
<PAGE>

     "CERCLA" shall mean the Comprehensive Environmental Response,  Compensation
and Liability Act (49 U.S.C. Section 9601, et seq.).

     "Change of Control"  shall be deemed to have occurred at such time as (i) a
"person" or "group"  (within the meaning of Sections  13(d) and  14(d)(2) of the
Securities Exchange Act of 1934) other than Ernest C. Garcia (or an entity under
the control of Ernest C. Garcia) becomes, after the date of this Agreement,  the
"beneficial  owner" (as defined in Rule 13(d)(3) under the  Securities  Exchange
Act of 1934), directly or indirectly, of more than 25% of the total voting power
of all classes of stock then  outstanding  of  Borrower  entitled to vote in the
election of  directors  or (ii) Ernest C. Garcia (or an entity under the control
of Ernest C.  Garcia)  shall cease to be the record and  beneficial  owner of at
least  15% of the  capital  stock  of  Borrower,  entitled,  in the  absence  of
contingencies  (whether or not any of such contingencies has occurred),  to vote
in the election of directors of Borrower or (iii) Borrower ceases to own 100% of
the capital  stock of UDCSFC,  or (iv) UDCSFC  ceases to own 100% of the capital
stock of UDRC II , UDRC III and UDRC IV. An  entity  shall be deemed to be under
the  control of Ernest C.  Garcia if Ernest C.  Garcia  possesses,  directly  or
indirectly,  the power to direct or cause the  direction of the  management  and
policies of such entity, whether through the ownership of voting securities,  by
contract or otherwise.

     "Closing Date" means the date on which all  conditions  precedent set forth
in Section  4.1 are either  satisfied  or waived by each  Lender and each Lender
makes its ratable portion of the Loan.

     "Code"  means  the  Internal  Revenue  Code of 1986,  as  amended,  and any
regulations promulgated thereunder.

     "Collateral"  means all "Collateral"  referred to in the Security Documents
and all other  property  that is subject to any Lien in favor of the  Collateral
Agent or any Lender.

     "Collateral  Account" means the collateral account or accounts  established
and maintained  pursuant to Section 6.19 or pursuant to the  Collateral  Account
Agreement.

     "Collateral  Account Agreement" means the cash collateral account agreement
in substantially the form of Exhibit B.

     "Collateral  Agent"  has the  meaning  set  forth in the  preamble  to this
Agreement  and  shall  also  include  such  other  Collateral  Agents  as may be
appointed from time to time pursuant to Section 9.6.

     "Collateral  Servicing  Report" means a report of the Borrower with respect
to  the  Residual  Certificate  Values,  Residual  Certificate  Cash  Flows  and
Borrowing  Base and such other  information  as Required  Lenders may request in
form and detail acceptable to Required Lenders.

     "Collections"  means all proceeds of,  payments or other  distributions  of
principal,  interest or other  amounts on, and other  amounts  received by or on
behalf  of  Borrower  or  any of  its  Affiliates  in  respect  of any  Residual

<PAGE>

Certificate or any Collateral, including all amounts paid to Collateral Agent or
any Lender pursuant to any Dividend Direction Letter.

     "Consolidated"  refers to the  consolidation of accounts in accordance with
GAAP.

     "Consolidated  EBITDA" means for any period, net income (or net loss) plus,
to the extent deducted in determining  such net income (or net loss), the sum of
(a) interest expense,  (b) income tax expense,  (c) depreciation expense and (d)
amortization  expense,  in  each  case  determined  for  the  Borrower  and  its
Subsidiaries on a Consolidated basis for such period in conformity with GAAP.

     "Consolidated  Interest  Expense"  means,  for any period,  total  interest
expense (including the interest component of capitalized leases) of the Borrower
and its Subsidiaries on a Consolidated  basis for such period in conformity with
GAAP, including,  without limitation, all commissions,  discounts and other fees
and charges  owed with  respect to any  financings  or letters of credit and net
costs under hedge agreements.

     "Consolidated  Net Worth"  means the excess of (i) the total  assets of the
Borrower and its Subsidiaries  determined on a Consolidated  basis in conformity
with  GAAP,  over (ii) all  liabilities  of the  Borrower  and its  Subsidiaries
determined on a Consolidated basis in conformity with GAAP.

     "Consolidated   Senior   Debt"  means,   at  any  time  of   determination,
Consolidated Total Debt minus Subordinated Debt and Non-Recourse Debt.

     "Consolidated  Total  Capitalization"  means, at any time of determination,
the sum of (i) Consolidated Total Debt, and (ii) Consolidated Net Worth, in each
case, as of such time.

     "Consolidated  Total  Debt"  means,  at  any  time  of  determination,  all
indebtedness for borrowed money (including  capitalized leases), in each case of
the Borrower and its  Subsidiaries  at such time  determined  on a  Consolidated
basis.

     "Debt" or  "Indebtedness"  means (i) indebtedness for borrowed money,  (ii)
obligations  evidenced  by  bonds,   debentures,   notes,  matured  reimbursable
obligations  under  letters  of  credit  or  other  similar  instruments,  (iii)
obligations  to pay the deferred  purchase  price of property or services  other
than  trade  payables  incurred  in  the  ordinary  course  of  business,   (iv)
obligations  as lessee  under  leases  that  shall  have  been or should  be, in
accordance with GAAP recorded as capital leases, (v) obligations under direct or
indirect guaranties in respect of, and obligations  (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of,  indebtedness  or  obligations of others of the kinds referred to in
clauses (i) through (iv),  and (vi)  liabilities  in respect of unfunded  vested
benefits under Pension Plans covered by Title IV of ERISA.

     "Default" means any event or circumstance which, with the giving of notice,
the  lapse of  time,  or  both,  would  (if not  cured  or  otherwise  remedied)
constitute an Event of Default.

     "Dividend  Direction  Letter"  means  (i) the  UDRC II  Dividend  Direction
Letter, (ii) the UDRC III Dividend Direction Letter,  (iii) the UDRC IV Dividend

<PAGE>

Direction Letter, and (iv) each letter agreement or other agreement entered into
after the date  hereof  with  respect to any  Additional  Residual  Certificates
providing for payment of  distributions  in respect of such Additional  Residual
Certificates  (or  payments and  distributions  in respect of the stock or other
equity interests of the holder of such Additional  Residual  Certificates) to be
made  directly to the  Collateral  Account for  application  to the  Obligations
and/or release to Borrower in accordance with the Collateral  Account  Agreement
and Section 2.6.

     "Dollars," "dollars" and "$" each mean lawful money of the United States.

     "DriveTime"  means the  proposed  new  business  name for  Borrower and its
Affiliates, as more particularly described in Section 6.24.

     "Environmental  and Safety Laws" means all  Federal,  state and local laws,
regulations and ordinances,  relating to the discharge, handling, disposition or
treatment of Hazardous  Materials and other  substances or the protection of the
environment or of employee health and safety,  including  CERCLA,  the Hazardous
Materials  Transportation  Act (49 U.S.C.  Section 1801, et seq.),  the Resource
Conservation  and Recovery Act (42 U.S.C.  Section 7401, et seq.), the Clean Air
Act (42 U.S.C.  Section 7401,  et seq.),  the Toxic  Substances  Control Act (15
U.S.C. Section 2601, et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651, et seq.) and the Emergency Planning and Community Right-To-Know Act
(42  U.S.C.  Section  11001,  et  seq.),  each as the  same may be  amended  and
supplemented.

     "Environmental  Liabilities  and  Costs"  means,  as  to  any  Person,  all
liabilities, obligations,  responsibilities,  remedial actions, losses, damages,
punitive damages,  consequential  damages,  treble damages,  contribution,  cost
recovery,  costs and expenses (including all fees, disbursements and expenses of
counsel,  expert and consulting fees, and costs of investigation and feasibility
studies),  fines, penalties,  sanctions and interest incurred as a result of any
claim or demand,  by any Person,  whether  based in contract,  tort,  implied or
express warranty, strict liability,  criminal or civil statute, permit, order or
agreement  with any  Federal,  state or local  governmental  authority  or other
Person, arising from environmental,  health or safety conditions, or the release
or threatened release of a contaminant, pollutant or Hazardous Material into the
environment,  resulting from the operations of such Person or its  subsidiaries,
or breach of any  Environmental  and Safety Law or for which such  Person or its
subsidiaries is otherwise liable or responsible.

     "Equity  Interests"  means,  with  respect to a Person,  any common  stock,
preferred stock,  partnership interest (whether general or limited),  membership
interest or other equity or participating interest in such Person.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time, and regulations promulgated thereunder.

     "ERISA Affiliate" of any Person means any other Person that for purposes of
Title IV of ERISA is a member of such Person's controlled group, or under common
control  with such  Person,  within the meaning of Section  414 of the  Internal
Revenue Code.

     "ERISA  Event" with  respect to any Person  means (a) the  occurrence  of a
reportable  event,  within the meaning of Section 4043 of ERISA, with respect to
any Plan of such Person or any of its ERISA Affiliates  unless the 30-day notice

<PAGE>

requirement  with  respect  to such event has been  waived by the PBGC;  (b) the
provision  by the  administrator  of any Plan of such Person or any of its ERISA
Affiliates  of a notice of intent to  terminate  such Plan,  pursuant to Section
4041(a)(2) of ERISA  (including any such notice with respect to a plan amendment
referred to in Section  4041(e) of ERISA);  (c) the cessation of operations at a
facility  of such  Person or any of its ERISA  Affiliates  in the  circumstances
described in Section 4062(e) of ERISA;  (d) the withdrawal by such Person or any
of its ERISA  Affiliates  from a Multiple  Employer  Plan during a plan year for
which it was a substantial  employer, as defined in Section 4001(a)(2) of ERISA;
(e) the failure by such Person or any of its ERISA  Affiliates to make a payment
to a Plan  required  under  Section  302(f)(1) of ERISA;  (f) the adoption of an
amendment to a Plan of such Person or any of its ERISA Affiliates  requiring the
provision of security to such Plan, pursuant to Section 307 of ERISA; or (g) the
institution by the PBGC of proceedings to terminate a Plan of such Person or any
of its ERISA Affiliates, pursuant to Section 4042 of ERISA, or the occurrence of
any event or condition  described in Section 4042 of ERISA that could constitute
grounds for the  termination  of, or the appointment of a trustee to administer,
such Plan.

     "Event of Default"  means any of the events or  circumstances  specified in
Section 8.1.

     "Excluded  Class C  Certificate"  means  Class C  Certificates  or  similar
residual  certificates of beneficial interest issued to UDFC or its successor in
connection with any  securitization of Ugly Duckling  Collateral but only to the
extent  the value of such  Class C  Certificates  does not exceed 2% of the face
amount of all notes and  certificates  issued  with  respect  to the  applicable
securitization.

     "Existing Loan Agreement"  means the Senior Secured Loan Agreement dated as
of  January  11,  2001,  by and among the  Borrower,  the  Collateral  Agent (as
successor to Harris  Trust and Savings  Bank) and the Lenders  party  thereto as
amended to the date hereof.

     "Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight  Federal  funds  transactions  with members of the Federal  Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next  preceding  Business Day) by the Federal
Reserve  Bank,  or,  if such  rate  is not so  published  for any day  that is a
Business Day, the average of the quotations  for such day for such  transactions
received by  Collateral  Agent from three  Federal  funds  brokers of recognized
standing selected by it.

     "FEIN" means Federal Employer Identification Number.

     "Financing  Statements"  means  the  Financing  Statements  on  Form  UCC-1
relating  to and  filed  in  connection  with  the  Collateral  and  naming  the
Collateral Agent as secured party.

     "Fiscal Quarter" means a fiscal quarter of Borrower.

     "Fiscal Year" means a fiscal year of Borrower.
<PAGE>

     "GAAP" means generally accepted  accounting  principles set forth from time
to time in the opinions and  pronouncements  of the Accounting  Principles Board
and the American  Institute of Certified  Public  Accountants and statements and
pronouncements  of the Financial  Accounting  Standards  Board (or agencies with
similar  functions of  comparable  stature and authority  within the  accounting
profession),  or in such  other  statements  by such  other  entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.

     "Governing   Documents"  means,   with  respect  to  Borrower,   Borrower's
certificate of incorporation and bylaws.

     "Governmental Authority" means any nation or government, any state or other
political  subdivision  thereof,  any  central  bank  (or  similar  monetary  or
regulatory authority) thereof, any entity, body, authority,  bureau,  department
or instrumentality exercising executive,  legislative,  judicial,  regulatory or
administrative functions of or pertaining to government,  and any corporation or
other  entity  owned or  controlled,  through  stock  or  capital  ownership  or
otherwise, by any of the foregoing.

     "Greenwich  Capital" means Greenwich  Capital Financial  Products,  Inc., a
Delaware corporation.

     "Guaranty"  means the  guaranty  executed  by UDCSFC on the date  hereof in
substantially the form of Exhibit E.

     "Guarantor" means (i) UDCSFC and (ii) each other Subsidiary of the Borrower
that, after the date hereof, becomes a party to the Guaranty.

     "Hazardous  Materials"  means (a) any material or  substance  defined as or
included  in the  definition  of  "hazardous  substances,"  "hazardous  wastes,"
"hazardous  materials," "toxic substances" or any other formulations intended to
define, list or classify  substances by reason of their deleterious  properties,
(b) any  oil,  petroleum  or  petroleum  derived  substance,  (c) any  flammable
substances or explosives,  (d) any  radioactive  materials,  (e) asbestos in any
form,  (f)  electrical  equipment  that  contains  any oil or  dielectric  fluid
containing  levels of  polychlorinated  biphenyls  in excess of fifty  parts per
million,  (g)  pesticides  or (h) any other  chemical,  material  or  substance,
exposure to which is prohibited, limited or regulated by any governmental agency
or  authority  or which may or could  pose a hazard to the  health and safety of
persons in the vicinity thereof.

     "Indebtedness" see "Debt".

     "Indemnified Liabilities" has the meaning specified in Section 10.5.

     "Indemnified Person" has the meaning specified in Section 10.5.

     "Initial  Funding  Amount"  means the  amount of Forty  Two  Million  Seven
Hundred Fifty Thousand Dollars ($42,750,000).
<PAGE>

     "Initial  Principal  Amount" means the amount of Forty Five Million Dollars
($45,000,000).

     "Insufficient  Ratings Period" means the period, if any,  commencing on the
31st day after the Closing Date and continuing until the first date on which the
Lenders have received  written  confirmation  from (i) Fitch IBCA, Inc. that the
obligations  hereunder  shall be rated by them no lower than B+, (ii) Standard &
Poor's Ratings Services that the obligations hereunder shall be rated by them no
lower than B- and (iii) Moody's  Investors  Service,  Inc. that the  obligations
hereunder shall be rated by them no lower than B3.

     "Intercreditor   Agreement"  means  that  certain   Greenwich/Wells   Fargo
Intercreditor  Agreement,  dated as of July 18, 2001,  by and between  Greenwich
Capital and Collateral Agent.

     "Interest  Accrual  Period"  shall  mean  the  one-month  period  from  and
including a Payment Date to the close of business on the day  preceding the next
Payment Date,  except that the first  Interest  Accrual Period shall commence on
the Closing Date and end at the close of business on the day preceding the first
Payment Date.

     "Lender  Costs" or  "Lender  Expenses"  means  all:  (a) costs or  expenses
(including taxes and insurance  premiums)  required to be paid by Borrower under
any of the Loan  Documents  that are paid or incurred by Collateral  Agent,  any
Lender or any of their respective affiliates;  (b) reasonable out-of-pocket fees
or charges paid or incurred by Collateral Agent or any Lender in connection with
Lenders'   transactions   with   Borrower,   including,   fees  or  charges  for
photocopying, notarization, couriers and messengers,  telecommunication,  public
record searches  (including tax lien,  litigation and UCC searches and including
searches  with the patent and  trademark  office,  the  copyright  office or the
department of motor vehicles), filing, recording,  publication,  appraisals, due
diligence,  actual out-of-pocket costs and expenses incurred by Collateral Agent
or any Lender in the  disbursement  of funds to  Borrower  (by wire  transfer or
otherwise);  (c) actual  out-of-pocket  charges  paid or incurred by  Collateral
Agent or any  Lender  resulting  from the  dishonor  of checks;  (d)  reasonable
out-of-pocket  costs and expenses  paid or incurred by  Collateral  Agent or any
Lender to correct any default or enforce any provision of the Loan Documents, or
in gaining possession of, maintaining,  handling, preserving, storing, shipping,
selling,  preparing  for sale, or  advertising  to sell the  Collateral,  or any
portion thereof,  irrespective of whether a sale is consummated;  (e) reasonable
costs  and  expenses  paid or  incurred  by  Collateral  Agent or any  Lender in
examining  Borrower's  Books; (f) reasonable out-of pocket costs and expenses of
third party claims or any other suit paid or incurred by Collateral Agent or any
Lender in enforcing or defending the Loan  Documents or in  connection  with the
transactions  contemplated  by the Loan  Documents  or  Collateral  Agent or any
Lender's relationship with Borrower; and (g) Collateral Agent's, any Lender's or
any of their  respective  Affiliate's  reasonable  Attorney  Costs  incurred  in
advising,   structuring,   drafting,   reviewing,    administering,    amending,
terminating,   enforcing,   defending,   or  concerning   the  Loan   Documents,
irrespective  of whether suit is brought  (including,  without  limitation,  any
negotiations in the nature of a work-out). For purposes of this definition,  the
term  "Lender"  shall  include  any  portfolio  advisor  or  collateral  manager
(including,  without limitation,  SunAmerica Investment Advisor, Inc.) acting on
behalf of any Lender or in connection with such Lender's Loan hereunder.
<PAGE>

     "LIBOR" shall mean, with respect to an Interest  Accrual  Period,  the rate
per annum equal to the rate  appearing at page 3750 of the  Telerate  Screen two
LIBOR Business Days prior to the beginning of such Interest Accrual Period,  for
the one-month term  corresponding  to such Interest  Accrual Period,  or if such
rate shall not be so quoted then the  applicable  rate appearing on Bloomberg on
the day two LIBOR Business Days prior to the beginning of such Interest  Accrual
Period,  or if  neither  such rate  shall be so quoted,  the  "London  Interbank
Offered Rates (LIBOR)" (one month) published in the "Money Rates" section of the
Wall  Street  Journal two LIBOR  Business  Days prior to the  beginning  of such
Interest Accrual Period.

     "LIBOR  Business  Day" shall mean any day which is a Business Day and which
is also a day on which  dealings  in U.S.  Dollars  are carried on in the London
interbank market.

     "Lien or Encumbrance" or "Liens and Encumbrances" means any mortgage,  deed
of trust,  pledge,  hypothecation,  assignment,  charge or deposit  arrangement,
encumbrance, lien (statutory or other) or preference, priority or other security
interest or preferential arrangement of any kind or nature whatsoever (including
those created by,  arising under or evidenced by any  conditional  sale or other
title  retention  agreement,  the  interest  of a lessor  under a capital  lease
obligation, any financing lease having substantially the same economic effect as
any of the foregoing,  or the filing of any financing statement naming the owner
of the  asset to  which  such  lien  relates  as  debtor,  under  the UCC or any
comparable  law) and any  contingent  or other  agreement  to provide any of the
foregoing.

     "Loan  Documents"  means this  Agreement,  each  Note,  the  Guaranty,  the
Security  Documents,   the  Stock  Pledge  Agreement,   the  Collateral  Account
Agreement,  each Dividend  Direction Letter, the Financing  Statements,  and all
documents delivered to Collateral Agent or any Lender in connection therewith.

     "Loan Party" means  Borrower,  UDCSFC and each other  Affiliate of Borrower
that is a party to any Loan Document.

     "Material  Adverse  Change" or "Material  Adverse  Effect" means a material
adverse change in, or a material adverse effect upon, any of (a) the operations,
performance,   business,  properties,  condition  (financial  or  otherwise)  or
prospects  of any Loan  Party or of  Borrower  and its  Subsidiaries  taken as a
whole,  (b) the ability of Borrower or any other Loan Party to perform under any
Loan  Document and avoid any Event of Default,  or (c) the  legality,  validity,
binding  effect or  enforceability  of any Loan  Document or the  perfection  or
priority of any Lien created or purported to be created thereunder.

     "Maturity Date" shall mean January 15, 2005.

     "MBIA" shall mean MBIA Insurance Corporation.

     "Monthly Amortization Amount" means:

          (i) with  respect to any Payment Date  occurring  prior to January 15,
     2004,  the greater of (A)  $1,500,000.00,  and (B) the  amount,  if any, by
     which  the  then  Outstanding  Principal  Amount  of the Loan  exceeds  the

<PAGE>

     Borrowing  Base as of such  date as set forth in the  Collateral  Servicing
     Report required to be delivered with respect to such Payment Date; and

          (ii) with  respect to any Payment Date  occurring on or after  January
     15, 2004, the greater of (A) $2,250,000.00,  and (B) the amount, if any, by
     which  the  then  Outstanding  Principal  Amount  of the Loan  exceeds  the
     Borrowing  Base as of such  date as set forth in the  Collateral  Servicing
     Report required to be delivered with respect to such Payment Date.

     "Multiemployer  Plan" of any Person means a multiemployer  plan, as defined
in  Section  4001(a)(3)  of  ERISA,  to which  such  Person  or any of its ERISA
Affiliates  is making or accruing an obligation  to make  contributions,  or has
within any of the preceding six plan years made or accrued an obligation to make
contributions.

     "Multiple  Employer  Plan" of any Person means a single  employer  plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
such Person or any of its ERISA  Affiliates  and at least one Person  other than
such Person and its ERISA  Affiliates or (b) was so maintained and in respect of
which such  Person or any of its ERISA  Affiliates  could have  liability  under
Section  4064 or 4069 of ERISA  in the  event  such  plan has been or were to be
terminated.

     "Non-Recourse Debt" means (i) the Securitizations  identified on Exhibit A,
(ii)  Debt  under  one or more  warehouse  facilities  or  securitizations  of a
Subsidiary  of Borrower  that is a bankruptcy  remote or other  similar  special
purpose   entity  so  long  as  such  Debt   satisfies  each  of  the  following
requirements:  (a) the  sole  collateral  for such  Debt  are  loan  receivables
purchased by such  bankruptcy  remote or other  special  purpose  entity and the
recourse  of the  lenders  under  such  warehouse  facility  is  limited to such
collateral and other collateral described in the Intercreditor Agreement, (b) no
Loan Party (1) provides credit support of any kind  (including any  undertaking,
agreement  or  instrument  that  would  constitute  Debt),  (2) is  directly  or
indirectly  liable as a guarantor or otherwise,  or (3)  constitutes  the lender
(provided that a Loan Party may be the Servicer of the collateral  securing such
warehouse  facility or securitization and in such capacity may provide customary
indemnification or incur customary repurchase obligations with respect to breach
of representations  regarding such collateral);  (b) the lenders with respect to
such Debt have been notified,  and have  acknowledged  in writing or pursuant to
the terms of the  instruments  and agreements  governing such Debt, in each case
prior to the  incurrence  of such Debt,  that they will not have any recourse to
the stock or assets of any Loan Party,  and (c) the Lenders have received notice
of the amount and  principal  terms of such Debt  prior to its  incurrence,  and
(iii) other Debt approved by the Required Lenders as Non-Recourse Debt.

     "Note"  means a  promissory  note of the  Borrower  in favor of a Lender in
substantially  the form of Exhibit D evidencing  the  Borrower's  obligations to
such Lender in respect of the principal  amount of the Loan made by or otherwise
owing to such Lender.

     "Obligations" means all Debt, advances,  debts,  liabilities,  obligations,
covenants and duties owing by Borrower to Collateral Agent or any Lender, of any
kind or  nature,  present  or  future,  whether  or not  evidenced  by any note,
guaranty or other  instrument,  arising under this Agreement,  any Note or under

<PAGE>

any other Loan  Document,  absolute or  contingent,  due or to become  due,  now
existing or hereafter arising and however acquired.

     "Outstanding Principal Amount" means the Initial Principal Amount minus all
amounts applied to the repayment of the Loan pursuant to Section 2.6(d).

     "Payment  Date"  shall mean the 15th day of each  month  during the term of
this Agreement commencing on January 15, 2003.

     "PBGC" means the Pension Benefit Guaranty Corporation.

     "Permitted  Liens" means (a) Liens held by Collateral  Agent or any Lender,
(b)  each  lien  existing  at or prior  to the  date of this  Agreement  that is
identified  on Schedule E to this  Agreement,  (c) the Liens  referred to in the
Intercreditor Agreement, (d) capitalized leases up to an aggregate amount at any
time outstanding of $6,000,000,  and (e) liens securing  indebtedness to finance
the  purchase  of  inventory  in an  aggregate  principal  amount  not to exceed
$50,000,000 at anytime outstanding.

     "Permitted  Subsidiary  Indebtedness"  means (a)  Indebtedness  outstanding
under the  Principal  Warehouse  Agreement  as such  agreements  may be amended,
supplemented  or  modified  from time to time but  without  any  increase in the
aggregate commitments or Indebtedness  available to be borrowed (or other credit
available  to  be  extended)  thereunder,   (b)  Non-Recourse  Debt,  (c)  other
Indebtedness in an aggregate  principal amount not to exceed  $15,000,000 at any
time outstanding and (d) indebtedness to finance the purchase of inventory in an
aggregate  principal amount not to exceed  $50,000,000 at any time  outstanding.
For purposes of calculating  the amount of  Indebtedness  outstanding  under the
foregoing clause (c), obligations in respect of capitalized leases (as described
in clause (iv) of the  definition of "Debt") shall be excluded to the extent the
aggregate  principal  amount of all such  obligations  (determined in accordance
with GAAP) does not exceed $6,000,000.

     "Person" means a natural person, partnership,  corporation, business trust,
joint  stock  company,  trust,  unincorporated  association,  limited  liability
company, joint venture or Governmental Authority.

     "Plan" means a Single Employer Plan or a Multiple Employer Plan.

     "Pledge and Security  Agreement"  means that  certain  Amended and Restated
Pledge and Security  Agreement  dated as of the date hereof among  UDCSFC,  Ugly
Duckling Credit  Corporation,  Ugly Duckling Car Sales,  Inc., and Ugly Duckling
Finance Corporation, as Pledgor, in favor of Collateral Agent.

     "Principal Warehouse Agreement" means that certain Master Loan and Security
Agreement,  dated as of April 13, 2001 by and between  Borrower,  UDCSFC,  UDCC,
Ugly Duckling Car Sales,  Inc., an Arizona  corporation  and UDFC,  Borrower and
Greenwich  Capital as lender, as such agreement is amended,  restated,  renewed,
refinanced, modified and extended from time to time.
<PAGE>

     "Repayment  Date"  means the earlier of (i) the  Maturity  Date or (ii) the
date that the Outstanding  Principal Amount of the Loan  outstanding  hereunder,
together with all accrued interest in respect thereof and all other Obligations,
has been reduced to zero.

     "Required  Lenders" means Lenders  holding greater than fifty percent (50%)
of the aggregate principal amount of the Loan.

     "Requirement  of  Law"  means,  as to any  Person,  any law  (statutory  or
common),  treaty,  rule or regulation or  determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.

     "Residual  Certificate" means the UDRC II Residual  Certificates,  the UDRC
III Residual Certificates,  the UDRC IV Residual Certificates and all Additional
Residual Certificates.

     "Residual   Certificate  Cash  Flows"  means,  for  any  period,  all  cash
distributions  with  respect  to a Residual  Certificate  and  Excluded  Class C
Certificates  together  with all  related  spread  account  or  reserve  account
distributions,  in each case to the extent received by the Collateral  Agent and
deposited to the Collateral Account, during such period; provided, however, upon
termination  of a  Securitization  Trust  at  recapture  or the  exercise  of an
optional  repurchase  right,  the  Residual  Certificate  Cash  Flows  for  such
Securitization  Trust in the month of such termination shall be (i) the Residual
Certificate  Value  of such  Securitization  Trust  as of the  Calculation  Date
immediately  preceding  the date of  termination  multiplied by (ii) the Advance
Rate (as set forth in the  definition  of "Borrowing  Base")  applicable to such
Securitization Trust on such preceding Calculation Date.

     "Residual  Certificate  Value" means, as of any date of determination  with
respect to the Residual  Certificates  for a  securitization,  the amount of the
entire cash balance in the spread  account or reserve  account  relating to such
Residual  Certificates plus the difference between (a) the outstanding principal
balance of auto loans in the pool of collateral securing such securitization and
(b) the outstanding principal balance of all certificates and other interests or
rights to payment in respect of such  securitization  senior in priority to such
Residual  Certificates,  in each  case as set  forth in the then  most  recently
delivered Collateral Servicing Report.

     "Responsible Officer" means the chief executive officer or the president of
Borrower,  or any other  officer  having  substantially  the same  authority and
responsibility  or,  with  respect to  financial  matters,  the chief  financial
officer or the treasurer of Borrower,  or any other officer having substantially
the same authority and responsibility.

     "Security  Documents"  means the  writings  described in Article III hereof
(including,  without  limitation,  the Stock Pledge  Agreement,  the  Collateral
Account Agreement and each other document,  agreement or instrument creating, or
purporting to create a security interest in favor of the Collateral Agent in any
Residual  Certificate or any other Collateral or proceeds thereof),  as they may
hereafter  be amended,  modified  and/or  supplemented,  the Pledge and Security
Agreement and all other writings now or hereafter  executed to create,  evidence
and/or perfect any Lien(s) to secure the Loan or any portion(s) thereof.
<PAGE>

     "Securitization  Default" means any termination event,  default or event of
default, or event or occurrence which, with the passage of time or the giving of
notice or both,  would become a termination  event,  default or event of default
under  any  Securitization  Document,  which  has  not  been  cured  within  any
applicable period thereunder.

     "Securitization  Documents"  shall  mean  (i) each  UDRC II  Securitization
Document,  (ii)  each  UDRC III  Securitization  Document,  (iii)  each  UDRC IV
Securitization  Document,  (iv)  each  purchase  agreement  and/or  pooling  and
servicing  agreement (or comparable  document)  entered into or  acknowledged by
Borrower, UDCC, UDRC II, UDRC III, UDRC IV or any Affiliate of any of them after
the date hereof with respect to any Additional  Residual  Certificates,  and (v)
the other  agreements,  instruments,  certificates and documents entered into or
acknowledged  by  Borrower,  UDCC,  or any  Affiliate  of any  of  them  or by a
Securitization  Trust (or  comparable  vehicle)  with respect to any  Additional
Residual Certificates.

     "Securitization  Trust" shall mean any trust formed  pursuant to a purchase
agreement or a pooling and servicing  agreement specified on Exhibit A hereto or
contemplated in clause (iii) of the definition of Securitization Documents.

     "Single  Employer  Plan" of any Person  means a single  employer  plan,  as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
such Person or any of its ERISA  Affiliates and no Person other than such Person
and its ERISA  Affiliates or (b) was so maintained  and in respect of which such
Person or any of its ERISA Affiliates could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.

     "Standing  Dividend  Resolutions"  shall  mean  (i) the  UDRC  II  Standing
Dividend Resolution,  (ii) the UDRC III Standing Dividend Resolution,  (iii) the
UDRC IV Standing Dividend Resolution,  and (iv) all other resolutions adopted by
the board of directors of Borrower or any of its Affiliates or  Subsidiaries  to
the effect that any amounts received as distributions on any Additional Residual
Certificates  or in respect of spread  accounts  (or the like) will be  promptly
distributed to Collateral Agent for the ratable account of the Lenders.

     "Stock Pledge Agreement" means that certain Stock Pledge  Agreement,  dated
as of the date hereof,  among UDCSFC as Pledgor,  Borrower and Collateral Agent,
pursuant to which UDCSFC grants to Collateral  Agent a security  interest in one
hundred  percent (100%) of the issued and  outstanding  capital stock of each of
UDRC II, UDRC III and UDRC IV.

     "Subordinated  Debt"  shall  mean the Debt set forth on  Schedule G and any
Debt  incurred  after the date hereof as to which the repayment of principal and
interest is  subordinated  to  repayment of the Loan  pursuant to  subordination
provisions that have been approved in writing by Required Lenders.

     "Subsidiary"  of  a  Person  means  a  corporation,   partnership,  limited
liability  partnership,  limited liability company or other entity in which that
Person  directly or  indirectly  owns or  controls  the shares of stock or other
ownership  interests  having  ordinary  voting  power to elect a majority of the
board of directors (or appoint other comparable  managers) of such  corporation,
partnership,  limited liability partnership,  limited liability company or other
entity.
<PAGE>

     "Tangible Net Worth" of Borrower shall mean the total of Borrower's and its
consolidated  Subsidiaries'   shareholders'  equity  (including  capital  stock,
additional paid-in capital and retained earnings),  less (i) the total amount of
all  Indebtedness   owing  to  Borrower  from  its  consolidated   Subsidiaries,
Affiliates,  shareholders,  officers or employees,  and (ii) the total amount of
any intangible assets of Borrower and its consolidated  Subsidiaries,  including
unamortized discounts, deferred charges and goodwill.

     "Trustee"  means (i) BNY Midwest Trust Company,  in its capacity as trustee
under certain  Securitization  Documents and its  successors and assigns in such
capacity, (ii) Wells Fargo Bank Minnesota, National Association, in its capacity
as  trustee  under  certain  Securitization  Documents  and its  successors  and
assigns, and (iii) such other Person as may from time to time be a trustee under
Securitization Documents.

     "UCC" means the Uniform  Commercial  Code as in effect from time to time in
the State of New York, and in any and all other states in which Borrower  and/or
any of its Subsidiaries conduct, or are authorized to conduct business.

     "UDCC" means Ugly Duckling  Credit Corp., an Arizona  corporation  formerly
known as Champion Acceptance Corporation.

     "UDCSFC" means Ugly Duckling Car Sales and Finance Corporation,  an Arizona
corporation formerly known as Duck Ventures, Inc.

     "UDFC" means Ugly Duckling Finance Corporation, an Arizona corporation.

     "UDRC II"  shall  mean  Ugly  Duckling  Receivables  Corp.  II, a  Delaware
corporation.

     "UDRC III"  shall  mean Ugly  Duckling  Receivables  Corp.  III, a Delaware
corporation.

     "UDRC IV" shall mean Ugly Duckling  Receivables  Corporation IV, a Delaware
corporation.

     "UDRC II  Residual  Certificates"  shall  mean  the  currently  issued  and
outstanding,  and all further issued and then outstanding,  Class B Certificates
or with respect to any securitization occurring after August 1, 1999, the issued
and  outstanding  Class B Notes,  Class C Certificates  (other than the Excluded
Class C Certificates) and the Class D Certificates issued by each Securitization
Trust with  respect to which UDRC II or an owner trust is the seller,  including
those set forth on  Schedule  F, which  constitute  all of the UDRC II  Residual
Certificates in existence on the Closing Date.

     "UDRC III  Residual  Certificates"  shall  mean the  currently  issued  and
outstanding,  and all further issued and then outstanding Class B Notes, Class C
Certificates  (other than the  Excluded  Class C  Certificates)  and the Class D
Certificates issued by each Securitization  Trust with respect to which UDRC III
or an owner trust is the seller,  including those set forth on Schedule F, which
constitute all of the UDRC III Residual Certificates in existence on the Closing
Date.
<PAGE>

     "UDRC IV  Residual  Certificates"  shall  mean  the  currently  issued  and
outstanding, and all further issued and then outstanding, Class B Notes, Class C
Certificates  (other than the  Excluded  Class C  Certificates)  and the Class D
Certificates issued by each  Securitization  Trust with respect to which UDRC IV
or an owner trust is the seller,  including those set forth on Schedule F, which
constitute all of the UDRC IV Residual  Certificates in existence on the Closing
Date.

     "UDRC II Dividend  Direction  Letter" means the letter dated July 18, 2002,
in which Collateral Agent,  Lender, UDRC II, UDCC and Trustee agree that Trustee
shall pay all distributions in respect of the UDRC II Residual  Certificates and
Excluded Class C Certificates directly to the Collateral Account for application
to the Obligations  and/or release to Borrower in accordance with the Collateral
Account Agreement and Section 2.6.

     "UDRC III Dividend  Direction Letter" means the letter dated July 18, 2002,
in which Collateral Agent, Lender, UDRC III, UDCC and Trustee agree that Trustee
shall pay all distributions in respect of the UDRC III Residual Certificates and
Excluded Class C Certificates directly to the Collateral Account for application
to the Obligations  and/or release to Borrower in accordance with the Collateral
Account Agreement and Section 2.6.

     "UDRC IV Dividend  Direction  Letter" means the letter dated July 18, 2002,
in which Collateral Agent,  Lender, UDRC IV, UDCC and Trustee agree that Trustee
shall pay all distributions in respect of the UDRC IV Residual  Certificates and
Excluded Class C Certificates directly to the Collateral Account for application
to the Obligations  and/or release to Borrower in accordance with the Collateral
Account Agreement and Section 2.6.

     "UDRC II  Securitization  Documents"  shall  mean each of (i) the  purchase
agreements  listed on Exhibit A hereto,  (ii) the pooling and  servicing or sale
and  servicing  agreements  listed  on  Exhibit  A  hereto,  and (iii) the other
agreements, instruments, certificates and documents entered into or acknowledged
by  Borrower,  UDCC,  UDRC  II  or  any  Affiliate  of  any  of  them  or  by  a
Securitization Trust.

     "UDRC III  Securitization  Documents"  shall mean each of (i) the  purchase
agreements  listed on Exhibit A hereto,  (ii) the pooling and  servicing or sale
and  servicing  agreements  listed  on  Exhibit  A  hereto,  and (iii) the other
agreements, instruments, certificates and documents entered into or acknowledged
by  Borrower,  UDCC,  UDRC  III  or  any  Affiliate  of  any  of  them  or  by a
Securitization Trust.

     "UDRC IV  Securitization  Documents"  shall  mean each of (i) the  purchase
agreements  listed on Exhibit A hereto,  (ii) the pooling and  servicing or sale
and  servicing  agreements  listed  on  Exhibit  A  hereto,  and (iii) the other
agreements, instruments, certificates and documents entered into or acknowledged
by  Borrower,  UDCC,  UDRC  IV  or  any  Affiliate  of  any  of  them  or  by  a
Securitization Trust.

     "UDRC II Standing Dividend Resolution" shall mean the resolution adopted on
September  30,  1999 by the board of  directors  of UDRC II  (formerly  Champion
Receivables  Corp. II) to the effect that any amounts  received as distributions

<PAGE>

on the UDRC II Residual  Certificates  should be  distributed  as  dividends  to
UDCSFC or any other holder or assignee of the Common Stock of UDRC II.

     "UDRC III Standing Dividend  Resolution" shall mean the resolution  adopted
on December  18, 2000 by the board of  directors  of UDRC III to the effect that
any amounts  received as  distributions  on the UDRC III  Residual  Certificates
should be  distributed as dividends to UDCSFC or any other holder or assignee of
the Common Stock of UDRC III.

     "UDRC IV Standing Dividend Resolution" shall mean the resolution adopted on
June  14,  2002 by the  board of  directors  of UDRC IV to the  effect  that any
amounts received as distributions on the UDRC IV Residual Certificates should be
distributed as dividends to UDCSFC or any other holder or assignee of the Common
Stock of UDRC IV.

     "Ugly  Duckling  Collateral"  shall  mean  any  installment   contracts  or
conditional sales contracts, with any amendments thereto, originated by Borrower
or its Subsidiaries  pursuant to which a person has: (i) purchased a new or used
motor vehicle,  (ii) granted a security interest in the motor vehicle, and (iii)
agreed  to pay the  unpaid  purchase  price and a  finance  charge  in  periodic
installments.

     "United States" and "U.S." each means the United States of America.

     "Voidable Transfer" has the meaning set forth in Section 10.17.

1.2  Other Interpretive Provisions.

          (a) Defined Terms. Unless otherwise  specified herein or therein,  all
     terms defined in this Agreement  shall have the defined  meanings when used
     in any certificate or other document made or delivered pursuant hereto. The
     meaning of defined  terms shall be equally  applicable  to the singular and
     plural forms of the defined terms.  Terms (including  uncapitalized  terms)
     not otherwise  defined  herein,  and that are defined in the UCC shall have
     the meanings therein described.

          (b) The Agreement. The words "hereof," "herein," "hereunder" and words
     of similar import when used in this Agreement shall refer to this Agreement
     as a whole  and not to any  particular  provision  of this  Agreement;  and
     section,  schedule  and exhibit  references  are to this  Agreement  unless
     otherwise specified.

          (c) Certain Common Terms.

          (i) The term "documents" includes any and all instruments,  documents,
     agreements,  certificates,  indentures, notices and other writings, however
     evidenced.

          (ii) The term "including" is not limiting and means "including without
     limitation."

          (iii)  The term  "or"  has,  except  where  otherwise  indicated,  the
     inclusive meaning represented by the phrase "and/or."
<PAGE>

          (d) Performance;  Time. Whenever any performance  obligation hereunder
     or under any Note (other than a payment  obligation)  shall be stated to be
     due or required to be  satisfied on a day other than a Business  Day,  such
     performance shall be made or satisfied on the next succeeding Business Day.
     In the  computation  of  periods of time from a  specified  date to a later
     specified date, the word "from" means "from and including";  the words "to"
     and "until" each mean "to but excluding";  and the word "through" means "to
     and  including."  If any provision of this  Agreement  refers to any action
     taken or to be taken by any Person, or which such Person is prohibited from
     taking, such provision shall be interpreted to encompass any and all means,
     direct or indirect, of taking, or not taking, such action.

          (e) Contracts.  Unless otherwise expressly provided herein, references
     to agreements and other contractual  instruments shall be deemed to include
     all subsequent amendments and other modifications  thereto, but only to the
     extent such  amendments and other  modifications  are not prohibited by the
     terms of any Loan Document.

          (f) Laws.  References to any statute or regulation are to be construed
     as  including  all  statutory  and  regulatory  provisions   consolidating,
     amending,   replacing,   supplementing   or  interpreting  the  statute  or
     regulation.

          (g)  Captions.  The captions and  headings of this  Agreement  are for
     convenience of reference only and shall not affect the construction of this
     Agreement.

          (h)  Independence  of Provisions.  The parties  acknowledge  that this
     Agreement and other Loan Documents may use several  different  limitations,
     tests or  measurements  to regulate the same or similar  matters,  and that
     such  limitations,  tests and  measurements are cumulative and must each be
     performed, except as expressly stated to the contrary in this Agreement.

1.3  Accounting Principles.

     (a) Unless the context otherwise clearly requires, all accounting terms not
expressly  defined  herein shall be construed,  and all  financial  computations
required  under  this  Agreement   shall  be  made,  in  accordance  with  GAAP,
consistently  applied.  In the event that GAAP  changes  during the term of this
Agreement  such  that the  covenants  contained  in  Article  VI  would  then be
calculated in a different manner or with different components,  (i) Borrower and
Lenders  agree to amend this  Agreement  in such  respects as are  necessary  to
conform  those  covenants  as  criteria  for  evaluating   Borrower's  financial
condition to  substantially  the same criteria as were  effective  prior to such
change in GAAP and (ii) Borrower  shall be deemed to be in  compliance  with the
covenants  contained in Article VI  following  any such change in GAAP if and to
the  extent  that  Borrower  would  have  been  (and  would  continue  to be) in
compliance therewith under GAAP as in effect immediately prior to such change.

     (b) References  herein to "fiscal year" and "fiscal  quarter" refer to such
fiscal periods of Borrower.

1.4  Times.

     All times of the day herein are Los Angeles, California time.
<PAGE>

                                   ARTICLE II.
                                    THE LOAN

     2.1 The Loan.  Each Lender,  on the terms and  conditions  hereinafter  set
forth and subject to the  conditions  precedent  pursuant to Section 4.1 of this
Agreement,  severally agrees to make the Loan to Borrower in the ratable portion
of the Initial  Funding  Amount set forth  opposite  such  Lender's  name on the
signature  pages  hereto.  The  Borrower  acknowledges  and agrees  that (i) all
principal  amounts  outstanding  on the  Closing  Date under the  Existing  Loan
Agreement shall be and become principal amounts  outstanding  hereunder and (ii)
the Loan is being funded on a discounted  basis and that  immediately  following
the funding of the Initial  Funding Amount,  the Loan shall be outstanding,  and
payable in accordance with the terms hereof, in the full principal amount of the
Initial Principal Amount.

     2.2 Payment Upon Collection; Monthly Amortization. Upon receipt by Borrower
or any of its Affiliates of any Collections, Borrower shall promptly (and in any
event within one (1) Business Day) pay (or cause to be paid) such Collections to
Collateral Agent for deposit in the Collateral Account.  Subject to Section 2.6,
Borrower shall, on each Payment Date, repay the Outstanding  Principal Amount in
an amount equal to the Monthly  Amortization  Amount for such Payment Date. Each
Lender shall, upon receipt of any such  Collections,  apply such Collections and
any  Collections  paid  directly  to Lender by  Trustee or  Collateral  Agent in
accordance  with the procedures set forth in Section 2.6 (but subject to Section
2.12).

     2.3 Payment Upon Maturity.  On the Maturity Date, Borrower will pay to each
Lender  an amount  equal to the  Outstanding  Principal  Amount of the Loan then
owing to such  Lender,  together  with all accrued  and unpaid  interest on such
Outstanding  Principal Amount and any other accrued and unpaid  Obligations then
owing to such Lender.

     2.4 Interest.

     (a)  Interest  Rate.  Interest  shall accrue on the  Outstanding  Principal
Amount of the Loan during each Interest Accrual Period at a rate per annum equal
to the greater of (A) LIBOR for such Interest  Accrual  Period,  and (B) 2.125%,
plus  five  hundred  (500)  basis  points  at all  times  other  than  during an
Insufficient  Ratings  Period and eight  hundred  (800) basis  points  during an
Insufficient Ratings Period. In addition, after the occurrence of and during the
continuance  of any Event of Default  under Section 8.1 of this  Agreement,  the
Outstanding  Principal  Amount of the Loan  together with all accrued and unpaid
interest  on the Loan and any  other  accrued  and  unpaid  Obligations  due and
payable to Lender under this Agreement  shall bear interest during each Interest
Accrual  Period at a rate per annum  equal to (I) the  greater  of (A) LIBOR for
such Interest  Accrual  Period,  and (B) 2.125%,  plus seven hundred (700) basis
points or (II) if LIBOR pricing has been suspended  pursuant to Section 2.13(a),
the Base Rate plus six hundred (600) basis points at all times other than during
an  Insufficient  Ratings  Period and nine hundred  (900) basis points during an
Insufficient  Ratings Period.  Upon determining  LIBOR for each Interest Accrual
Period, the Collateral Agent shall notify the Lenders and Borrower of such LIBOR
determination and the rate thereof.

     (b) Limitation on Interest Rate. The obligations of Borrower  hereunder and
under the Notes shall be subject to the limitation  that payments of interest to

<PAGE>

any Lender,  plus any other amounts paid to such Lender in  connection  herewith
and  therewith,  shall not be  required,  to the extent (but only to the extent)
that  contracting for or receiving such payment by such Lender would be contrary
to the provisions of any law applicable to such Lender limiting the highest rate
of interest which may be lawfully  contracted  for,  charged or received by such
Lender,  and in such event  Borrower  shall pay such Lender  interest  and other
amounts at the highest rate permitted by applicable law.

     2.5 Voluntary Prepayments; Deposits to Collateral Account.

     (a) Voluntary Prepayments. Borrower shall have the right, at its option, to
prepay  its  obligations  under  the  Loan in whole or in part at any time (in a
minimum amount of $100,000 and an integral  multiple of $10,000,  or such lesser
amount as is then  outstanding);  provided,  however,  that each such  voluntary
prepayment  shall be applied  ratably among the Lenders and shall be accompanied
by payment of any  amounts  owing under  Section  10.4(d)  with  respect to such
prepayment.  Borrower  shall give each Lender at least ten  Business  Days prior
notice of its  intention to prepay,  specifying  the date of payment,  the total
amount and  portion  of the Loan of such  Lender to be paid on such date and the
amount of interest to be paid with such prepayment.

     (b) Deposits to Collateral Account. In the event the Outstanding  Principal
Amount  shall at any time exceed the sum of the  Borrowing  Base plus the amount
then on  deposit in the  Collateral  Account,  the  Borrower  shall  immediately
deposit cash in the amount of such excess to the Collateral Account.

     2.6  Application  of  Payments.  All payments on the Loan shall be applied,
without duplication, in the following order:

     (a)  First,  to  Collateral  Agent  and  each  Lender  for any and all sums
advanced  or  incurred  by  Collateral  Agent or such  Lender as are  reasonably
necessary in order to preserve the  Collateral or the security  interests in the
Collateral and all reasonable expenses of taking, holding, preparing for sale or
lease,  selling or otherwise  disposing of or realizing on the  Collateral or of
any exercise by Collateral Agent or any Lender (or any portfolio advisor for any
Lender) of its rights under this Agreement or any other Loan Document,  together
with reasonable Attorney Costs and unpaid fees and expenses; and

     (b) Second,  ratably to each Lender for application to overdue  interest on
the Obligations;

     (c) Third,  ratably to each Lender for  application to accrued  interest on
the Obligations;

     (d)  Fourth,  ratably to each  Lender for  application  to the  Outstanding
Principal  Amount in an amount  equal to such  Lender's  ratable  portion of any
Monthly Amortization Amount then due and payable;

     (e) Fifth,  ratably to each  Lender in  payment  of all other  accrued  and
unpaid Obligations owing to such Lender.
<PAGE>

     Any provision hereof or of the Collateral Account Agreement to the contrary
notwithstanding, any amounts held by Collateral Agent pursuant to the Collateral
Account  Agreement and not otherwise  required to be applied to the  Obligations
shall,  at the written  direction of Borrower,  be applied to repay  Obligations
hereunder  (to be applied as set forth in this Section 2.6) or, if the Borrowing
Base  plus  such  amount  on  deposit  in the  Collateral  Account  exceeds  the
Outstanding  Principal  Amount at such time and no Default has  occurred  and is
continuing,  such amounts held in the  Collateral  Account  shall,  upon written
request by  Borrower  to  Collateral  Agent,  be  released to Borrower up to the
amount of such  excess;  provided,  however,  that any  release to  Borrower  of
amounts  on deposit in the  Collateral  Account  shall only be made on a Payment
Date and only after  giving  effect to the payment of all amounts due  hereunder
and under the other Loan Documents on such Payment Date.

     2.7 Prepayment. Upon any prepayment of the Loan, Borrower shall pay to each
Lender  such  Lender's  ratable  share of the  principal  amount to be  prepaid,
together  with all  accrued  and unpaid  interest  thereon  through  the date of
prepayment and any applicable premium payable pursuant to Section 2.5. Notice of
prepayment  having  been  given in  accordance  with  Section  2.5,  the  amount
specified to be prepaid  shall become due and payable on the date  specified for
prepayment.

     2.8 Fees.

          (a) Reserved.

          (b) Collateral Agent Fees. Borrower shall pay to the Collateral Agent,
     as and when due, the non-refundable fees set forth on Schedule H.

     2.9 Fees and Interest.  All  computations  of fees and interest  under this
Agreement  shall be made on the basis of a 360-day year and actual days elapsed,
which  results in more  interest  being paid than if  computed on the basis of a
365-day year. Interest and fees shall accrue during each Interest Accrual Period
during which  interest or such fees are  computed  from the first day thereof to
the last day  thereof.  Borrower  shall pay to Lenders  all  accrued  and unpaid
interest on August 15, 2002 and on each Payment Date thereafter.

     2.10 Payments by Borrower; Payments by Collateral Agent.

     (a) All  payments  (including  prepayments)  to be made by or on  behalf of
Borrower on account of  principal,  interest,  fees and other  amounts  required
hereunder or under any Note shall be made without set-off, deduction, recoupment
or counterclaim and shall,  except as otherwise  expressly  provided herein,  be
made to  Collateral  Agent at  Collateral  Agent's  office  as set  forth on its
Administrative Form or as otherwise directed in writing by the Collateral Agent,
in dollars and in immediately  available  funds, no later than 11:00 a.m. on the
date specified  herein.  Any payment which is received by Collateral Agent later
than  11:00  a.m.  shall be  deemed  to have been  received  on the  immediately
succeeding  Business Day and any  applicable  interest or fee shall  continue to
accrue.  The Collateral  Agent will promptly after receipt of each payment cause
to be  distributed  like funds relating to the payment of principal and interest
ratably to each  Lender,  and like funds  relating  to the  payment of any other

<PAGE>

amount  payable  to any  Lender to such  Lender,  in each case to be  applied in
accordance  with,  and  subject  to,  the  terms  of this  Agreement.  Upon  its
acceptance  of an Assignment  and  Acceptance  and recording of the  information
contained  therein in the Register pursuant to Section 10.16, from and after the
effective date specified in such Assignment and Acceptance, the Collateral Agent
shall  make all  payments  hereunder,  under any Note and  under any other  Loan
Document  in respect of the  interest  assigned  thereby to the Lender  assignee
thereunder,  and the parties to such  Assignment and  Acceptance  shall make all
appropriate  adjustments  in such payments for periods  prior to such  effective
date directly between themselves.

     (b) Whenever any payment  hereunder or under any Note shall be stated to be
due on a day,  other than a Business Day, such payment shall be made on the next
succeeding  Business  Day,  and such  extension  of time  shall in such  case be
included in the computation of interest or fees, as the case may be.

     2.11 Taxes.

     (a) Withholding  Taxes. Any and all payments by the Borrower  hereunder and
under any Note shall be made free and clear of and without deduction for any and
all  present  or  future  taxes,  levies,   imposts,   deductions,   charges  or
withholdings,  and all liabilities with respect thereto,  excluding, in the case
of each Lender and the  Collateral  Agent,  net income taxes that are imposed by
the United States and  franchise  taxes and net income taxes that are imposed on
such Lender or the Collateral Agent by the state or foreign  jurisdiction  under
the laws of which such  Lender or the  Collateral  Agent (as the case may be) is
organized or any political  subdivision thereof and, in the case of each Lender,
franchise  taxes and net  income  taxes that are  imposed on such  Lender by the
state or foreign  jurisdiction of such Lender's Applicable Lending Office or any
political  subdivision  thereof (all such non-excluded taxes,  levies,  imposts,
deductions,  charges, withholdings and liabilities being hereinafter referred to
as "Taxes").  If the Borrower  shall be required by law to deduct any Taxes from
or in respect of any sum payable  hereunder (or under any Note) to any Lender or
the Collateral Agent, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional  sums payable  under this Section  2.11(a))  such Lender Party or the
Collateral  Agent (as the case may be)  receives  an amount  equal to the sum it
would have received had no such  deductions  been made,  (ii) the Borrower shall
make such  deductions and (iii) the Borrower shall pay the full amount  deducted
to the  relevant  taxation  authority  or other  authority  in  accordance  with
applicable law.

     (b) Other Taxes. In addition,  the Borrower shall pay any present or future
stamp,  documentary,  excise,  property or similar taxes, charges or levies that
arise from any payment made  hereunder or under any Note or from the  execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document (hereinafter referred to as "Other Taxes").

     (c)  Indemnification.  The  Borrower  shall  indemnify  each Lender and the
Collateral  Agent for the full amount of Taxes and Other Taxes, and for the full
amount of taxes  imposed  by any  jurisdiction  on  amounts  payable  under this
Section  2.11 paid by such Lender or the  Collateral  Agent (as the case may be)
and any liability (including penalties, additions to tax, interest and expenses)
arising therefrom or with respect thereto.  This  indemnification  shall be made

<PAGE>

within 30 days from the date such  Lender or the  Collateral  Agent (as the case
may be) makes written demand therefor.

     (d)  Evidence of  Payment.  Within 30 days after the date of any payment of
Taxes,  the Borrower  shall  furnish to the each Lender the original  receipt of
payment thereof or a certified copy of such receipt.  In the case of any payment
hereunder or under any Note by the Borrower through an account or branch outside
the United  States or on behalf of the  Borrower by a payor that is not a United
States person,  if the Borrower  determines that no Taxes are payable in respect
thereof,  the Borrower shall furnish,  or shall cause such payor to furnish,  to
each Lender an opinion of counsel  acceptable  to such Lender  stating that such
payment is exempt from Taxes. For purposes of this subsection (d) and subsection
(e),  the terms  "United  States"  and  "United  States  person"  shall have the
meanings specified in Section 7701 of the Internal Revenue Code.

     (e) Foreign Lenders and Issuing Banks. Each Lender organized under the laws
of a  jurisdiction  outside the United States shall,  on or prior to the date it
becomes a party to this  Agreement,  and from time to time  thereafter  upon the
reasonable  request in writing by the Borrower or the Collateral Agent (but only
so long thereafter as such Lender remains  lawfully able to do so),  provide the
Collateral  Agent and the Borrower  with Internal  Revenue  Service Form 1001 or
4224  (or  other  appropriate  form),  as  appropriate,  or any  successor  form
prescribed  by the  Internal  Revenue  Service,  certifying  that such Lender is
exempt from or is entitled to a reduced rate of United States withholding tax on
payments under this Agreement. If the form provided by a Lender at the time such
Lender  first  becomes  a party to this  Agreement  indicates  a  United  States
interest  withholding  tax rate in excess of zero,  withholding tax at such rate
shall be considered  excluded  from Taxes unless and until such Lender  provides
the  appropriate   form  certifying  that  a  lesser  rate  applies,   whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form;  provided,  however,  that, if at the date of
the  assignment  pursuant  to which a Lender  assignee  becomes  a party to this
Agreement,  the Lender assignor was entitled to payments under subsection (a) in
respect of United States  withholding  tax with respect to interest paid at such
date,  then,  to such  extent,  the term Taxes  shall  include  (in  addition to
withholding  taxes that may be imposed in the future or other amounts  otherwise
includable in Taxes)  United States  withholding  tax, if any,  applicable  with
respect to the Lender assignee on such date.

     (f) Failure to Provide Forms. For any period with respect to which a Lender
has failed to provide  the  Borrower  with the  appropriate  form  described  in
Section  2.11(e) (other than if such failure is due to a change in law occurring
after the date on which a form originally was required to be provided or if such
form otherwise is not required under Section  2.11(e)),  such Lender Party shall
not be entitled to indemnification under Section 2.11(a) or Section 2.11(c) with
respect to Taxes imposed by the United States; provided,  however, that should a
Lender become subject to Taxes because of its failure to deliver a form required
hereunder,  the Borrower  shall take such steps as such Lender shall  reasonably
request to assist such Lender to recover such Taxes.

     2.12 Sharing of  Payments,  Etc. If any Lender shall obtain at any time any
payment (whether  voluntary,  involuntary,  through the exercise of any right of
set-off,  or otherwise)  (a) on account of  Obligations  due and payable to such

<PAGE>

Lender  hereunder or under any Note at such time in excess of its ratable  share
(according  to the  proportion  of (i) the  amount of such  Obligations  due and
payable  to such  Lender  at  such  time to (ii)  the  aggregate  amount  of the
Obligations due and payable to all Lenders hereunder and under the Notes at such
time) of payments on account of the  Obligations  due and payable to all Lenders
hereunder  and under the Notes at such time  obtained by all the Lenders at such
time or (b) on account of  Obligations  owing (but not due and  payable) to such
Lender  hereunder or under any Note at such time in excess of its ratable  share
(according to the proportion of (i) the amount of such Obligations owing to such
Lender at such time to (ii) the aggregate  amount of the Obligations  owing (but
not due and payable) to all Lenders  hereunder and under the Notes at such time)
of payments on account of the Obligations owing (but not due and payable) to all
Lenders  hereunder  and under the Notes at such time obtained by all the Lenders
at such time, such Lender shall  forthwith  purchase from the other Lenders such
participations  in the Obligations due and payable or owing to them, as the case
may be,  as shall be  necessary  to cause  such  purchasing  Lender to share the
excess payment ratably with each of them; provided,  however, that if all or any
portion of such excess  payment is  thereafter  recovered  from such  purchasing
Lender,  such  purchase from each other Lender shall be rescinded and such other
Lender shall repay to the purchasing  Lender the purchase price to the extent of
such other  Lender's  ratable  share  (according  to the  proportion  of (i) the
purchase price paid to such Lender to (ii) the aggregate  purchase price paid to
all Lenders) of such  recovery  together  with an amount equal to such  Lender's
ratable  share  (according  to the  proportion  of (i) the  amount of such other
Lender's  required  repayment  to (ii) the total  amount so  recovered  from the
purchasing  Lender)  of any  interest  or other  amount  paid or  payable by the
purchasing  Lender in respect of the total  amount so  recovered.  The  Borrower
agrees  that any  Lender so  purchasing  a  participation  from  another  Lender
pursuant  to this  Section  2.12 may, to the fullest  extent  permitted  by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

     2.13 Suspension of LIBOR.

     (a) Illegality.  Notwithstanding any other provision of this Agreement,  if
the  introduction  of or any  change in or in the  interpretation  of any law or
regulation  shall make it unlawful,  or any central  bank or other  governmental
authority  shall  assert  that it is  unlawful,  for any Lender to  perform  its
obligations  hereunder  to make,  fund or maintain  its portion of the Loan as a
LIBOR based  obligation,  then,  on notice  thereof and demand  therefor by such
Lender to the  Borrower,  the interest  rate  applicable to the Loan pursuant to
Section 2.4 shall thereafter be the Base Rate plus six hundred fifty (650) basis
points at all times other than during an  Insufficient  Ratings  Period and nine
hundred (900) basis points during an Insufficient Ratings Period.

     (b) Other Circumstances. If any Lender shall determine in good faith (which
determination  shall be  conclusive)  that (A)  LIBOR  cannot be  determined  in
accordance with the definition  thereof,  or (B) LIBOR for any Interest  Accrual
Period will not adequately reflect the cost to such Lender of making, funding or
maintaining  such Lender's ratable portion of the Loan for such Interest Period,
such  Lender  shall  forthwith  so notify the  Borrower  and the other  Lenders,
whereupon the interest  rate  applicable to the Loan pursuant to Section 2.4 for
such Lender shall  thereafter be the Base Rate plus 5.0%. 2.14 Increased  Costs,
Etc.
<PAGE>

     (a)  Increased  Costs.  If,  due to either (i) the  introduction  of or any
change  in or in  the  interpretation  of any  law or  regulation  or  (ii)  the
compliance  with  any  guideline  or  request  from  any  central  bank or other
governmental  authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or of making, funding
or maintaining  its portion of the Loan based on LIBOR,  then the Borrower shall
from time to time,  upon  demand by such  Lender pay to such  Lender  additional
amounts  sufficient  to  compensate  such  Lender  for  such  increased  cost  A
certificate as to the amount of such increased  cost,  submitted to the Borrower
by such  Lender,  shall be  conclusive  and  binding  for all  purposes,  absent
manifest error.

     (b) Capital Requirements.  If, due to either (i) the introduction of or any
change  in or in  the  interpretation  of any  law or  regulation  or  (ii)  the
compliance  with  any  guideline  or  request  from  any  central  bank or other
governmental  authority (whether or not having the force of law), there shall be
any increase in the amount of capital  required or expected to be  maintained by
such Lender or any corporation  controlling  such Lender as a result of or based
upon the existence of such Lender's  commitment to lend  hereunder,  then,  upon
demand by such Lender, the Borrower shall pay to such Lender,  from time to time
as specified by such Lender,  additional  amounts  sufficient to compensate such
Lender in the  light of such  circumstances,  to the  extent  that  such  Lender
reasonably  determines such increase in capital to be allocable to the existence
of such Lender's commitment to lend hereunder.  A certificate as to such amounts
submitted to the Borrower by such Lender,  shall be  conclusive  and binding for
all purposes, absent manifest error.

     2.15 Promissory  Notes.  The Borrower hereby agrees that if, in the opinion
of any  Lender,  a  promissory  note or  other  evidence  of  debt is  required,
appropriate or desirable to reflect or enforce the  indebtedness of the Borrower
resulting  from the Loan made by or otherwise  owing to such  Lender,  then upon
request of such Lender, the Borrower shall (in the case of any such request by a
Lender that is not an initial party hereto,  in accordance  with Section  10.16)
promptly execute and deliver to such Lender, a promissory note  substantially in
the form of Exhibit D, payable to the order of such Lender in an amount equal to
the principal amount of the Loan made by or otherwise owing to such Lender.

                                  ARTICLE III.
                        SECURITY AGREEMENT AND COLLATERAL

     3.1 Security for  Obligations.  As security for the payment and performance
of the  Obligations  under this  Agreement and the other Loan  Documents and all
other  present  and future  debts,  obligations  and  liabilities  of any nature
whatsoever  of  Borrower  to  Collateral  Agent or any Lender in respect of this
Agreement  and  the  other  Loan  Documents,  and all  modifications,  renewals,
replacements  and extensions  thereof,  UDCSFC shall grant Collateral Agent (for
Collateral  Agent's  benefit and the ratable  benefit of the Lenders) a security
interest  in  the  Collateral  pursuant  to  the  Stock  Pledge  Agreement,  the
Collateral   Account  Agreement  and  such  other   agreements,   documents  and
instruments as Required Lenders may reasonably  require.  Such security interest
shall be subject to the terms and  conditions  of the  Intercreditor  Agreement.
Borrower  shall cause UDCSFC to execute and deliver the Stock  Pledge  Agreement
and to perform its obligations thereunder.  Borrower will, prior to the creation
of any  Additional  Residual  Certificates,  take and cause its  Affiliates  and
Subsidiaries  to take, such actions and execute such  agreements,  documents and
instruments  (and  deliver  such  opinions of counsel) as may be necessary or as
Collateral Agent or Required Lenders may reasonably request in order to create a
perfected first priority  security interest securing the Obligations in favor of
Collateral Agent (for Collateral  Agent's benefit and the ratable benefit of the
Lenders)  in such  Additional  Residual  Certificates  or in 100% of the capital

<PAGE>

stock or other equity  interests of the entity owning such  Additional  Residual
Certificates, including, without limitation, compliance with Section 7(c) of the
Stock  Pledge  Agreement.  Borrower  will  execute,  and shall cause  UDCSFC and
Borrower's  other  Affiliates  and  Subsidiaries,   to  execute,   any  security
agreements,  collateral  assignments,  financing  statements  for filing  and/or
recording and any other agreements, documents or instruments reasonably required
by  Collateral  Agent or Required  Lenders to evidence and perfect the Liens and
security  interests  of  Collateral  Agent.  A  carbon,  photographic  or  other
reproduced copy of this Agreement and/or any financing statement relating hereto
shall be sufficient for filing and/or recording as a financing statement.

     3.2 Security  Documents.  The Financing  Statements shall remain on file in
the appropriate jurisdictions and Borrower shall promptly execute or cause to be
executed any other financing statements and notices as are necessary to properly
perfect Collateral Agent's security interest in the Collateral.

     3.3 Duties Regarding  Collateral.  Neither  Collateral Agent nor any Lender
(nor any portfolio  advisor for any Lender) shall have any duty or obligation to
protect, insure, collect or realize upon the Collateral or preserve rights in it
against prior parties.  Borrower releases  Collateral Agent and each Lender (and
each  portfolio  advisor) from, and shall  indemnify  Collateral  Agent and each
Lender  (and each  portfolio  advisor)  against,  any  liability  for any act or
omission relating to the Collateral,  except with respect to any such Person for
any liability  directly resulting from such Person's gross negligence or willful
misconduct.

     3.4 Borrower's Duties Regarding Collateral. Borrower agrees as follows:

     (a)  General  Maintenance  of  Collateral.  Borrower:  (i)  shall  keep the
Collateral  free from all Liens  (other  than the Liens of ad  valorem  property
taxes which are not delinquent, any statutory landlords' liens which are covered
by lien waivers  satisfactory to Required Lenders,  mechanic's liens,  Permitted
Liens,  and any  Liens in favor  of  Collateral  Agent  for the  benefit  of the
Lenders);  (ii)  shall  defend  the  Collateral  against  all  claims  and legal
proceedings by persons other than Collateral Agent and Lenders;  (iii) shall pay
and discharge when due all taxes,  levies and other charges upon the Collateral;
(iv) shall cause UDCSFC and Borrower's  other Affiliates and Subsidiaries not to
sell, lease or otherwise dispose of the Collateral; and (v) shall not permit the
Collateral  to be used in violation of any  Requirement  of Law or any policy of
insurance.

     (b)  Perfection  and  Priority.  Borrower  shall pay all Lender's  Expenses
necessary to, take all actions necessary to, and, upon Collateral Agent's or any
Lender's request,  execute all writings and take and cause Borrower's Affiliates
and  Subsidiaries  to take all other  actions  reasonably  deemed  advisable  by
Collateral Agent or any Lender to, preserve the Collateral or to establish,  and
determine  priority of, perfection,  continued  perfection or enforce Collateral
Agent's interest in the Collateral.
<PAGE>

     (c) Records and Inspections. Upon reasonable notice to Borrower, any Lender
may examine and conduct  audits of the  Collateral,  and Borrower's and UDCSFC's
and  Borrower's  other  Affiliates'  and  Subsidiaries'  records  concerning it,
wherever  located,  and make copies of such  records,  at any time during normal
business  hours,  and Borrower  shall  assist such Lender in so doing.  Borrower
shall keep accurate,  complete and current records respecting the Collateral. In
addition to the specific requirements of Section 6.1, Borrower shall, within ten
(10)  Business  Days of any  request by any  Lender,  furnish  to such  Lender a
detailed statement,  certified as being substantially  accurate by a Responsible
Officer,  setting  forth the current  status,  value and  location of all or any
portion of the Collateral.

     3.5 Power of Attorney.  Borrower  hereby  makes,  constitutes  and appoints
Collateral  Agent and each Lender and its portfolio  advisor the true and lawful
attorney-in-fact  of  Borrower,  in the name,  place and stead of  Borrower,  or
otherwise,  upon the  occurrence of any Event of Default  which remains  uncured
following the receipt of a notice pursuant to Section 10.2:

     (a) To take all actions and to execute, acknowledge, obtain and deliver any
and all writings  necessary  or deemed  advisable  by  Collateral  Agent or such
Lender  in  order to  exercise  any  rights  of  Borrower  with  respect  to the
Collateral or to receive and enforce any payment or performance  due to Borrower
with respect to the Collateral;

     (b) To give any notices, instructions or other communications to any person
or entity in connection with the Collateral;

     (c) To demand and receive all performances due under or with respect to the
Collateral  and to take all lawful  steps to enforce  such  performances  and to
compromise  and settle any claim or cause of action of Borrower  arising from or
related to the Collateral and give  acquittances and other  discharges  relating
thereto; and

     (d) To file any claim or  proceeding  or to take any other  action,  in the
name of  Collateral  Agent or such  Lender,  Borrower or  otherwise,  to enforce
performances  due under or related to the  Collateral or to protect and preserve
the right, title and interest of Collateral Agent or such Lender thereunder.

     The  foregoing  power of attorney is a power  coupled  with an interest and
shall be  irrevocable  and unaffected by the disability of the principal so long
as any portion of the Obligations remains contingent,  unmatured,  unliquidated,
unpaid or  unperformed.  Neither the Collateral  Agent nor the Lender shall have
any obligation to exercise any of the foregoing rights and powers in any event.

     3.6 Collateral Inspections. Collateral Agent and each Lender shall have the
right (but not the  obligation)  to do a  physical  on-site  examination  of the
Collateral.  All costs and expenses  associated  therewith  shall be included in
Lender Expenses.

                                  ARTICLE IV.
                     CONDITIONS PRECEDENT; TERM OF AGREEMENT

     4.1 Conditions  Precedent.  No Lender shall be required to make the Loan to
be made by it  hereunder if Borrower has not  fulfilled to the  satisfaction  of

<PAGE>

such Lender and its counsel,  each of the following  conditions on or before the
Closing  Date;  provided,  however,  that each Lender,  in its sole and absolute
discretion, may waive any of the following conditions.

     4.2 Receipt of  Documents.  Each  Lender  shall have  received  each of the
following  documents,  duly  executed,  and each such document  shall be in full
force and effect:

     (a) This Agreement executed by Borrower, Collateral Agent and each Lender;

     (b) The Notes duly  executed,  the Guaranty duly  executed,  the Collateral
Account  Agreement  duly executed and the Stock Pledge  Agreement  duly executed
together with the  certificates  representing  100% of the capital stock of UDRC
II, UDRC III and UDRC IV and undated stock powers relating thereto duly endorsed
in blank;

     (c) The UDRC II Dividend Direction Letter;

     (d) The UDRC III Dividend Direction Letter;

     (e) The UDRC IV Dividend Direction Letter;

     (f)  The  UDRC II  Standing  Dividend  Resolution  certified  by UDRC  II's
Secretary;

     (g) The UDRC III  Standing  Dividend  Resolution  certified  by UDRC  III's
Secretary;

     (h)  The  UDRC IV  Standing  Dividend  Resolution  certified  by UDRC  IV's
Secretary;

     (i) Such  Amendments  to the  Intercreditor  Agreement as may be reasonably
necessary to evidence the transactions pursuant hereto;

     (j) A consent by MBIA to the pledge of the Collateral to Collateral Agent;

     (k)  Certified  copies  of the  resolutions  of the board of  directors  of
Borrower  approving and authorizing  the execution,  delivery and performance by
Borrower  of this  Agreement  and  the  other  Loan  Documents  to be  delivered
hereunder,  and  authorizing  the Loan,  certified as of the Closing Date by the
Secretary or an Assistant Secretary of Borrower;

     (l) A  certificate  of the  Secretary  or  Assistant  Secretary of Borrower
certifying the names and true signatures of the officers of Borrower  authorized
to execute, deliver and perform, as applicable, this Agreement, the Stock Pledge
Agreement and all other Loan Documents to be delivered hereunder;

     (m) Certified copies of the resolutions of the board of directors of UDCSFC
approving and authorizing  the execution,  delivery and performance by UDCSFC of
the  applicable  Loan Documents to be delivered  hereunder,  certified as of the
Closing Date by the Secretary or an Assistant Secretary of UDCSFC;
<PAGE>

     (n) A  certificate  of the  Secretary  or  Assistant  Secretary  of  UDCSFC
certifying the names and true signatures of the officers of UDCSFC authorized to
execute, deliver and perform the Stock Pledge Agreement and all other applicable
Loan Documents to be delivered hereunder;

     (o) Copies of each of Borrower's,  UDCSFC's, UDRC II's, UDRC III's and UDRC
IV's  certificate  of  incorporation  certified by the Secretary of the State of
their respective  jurisdictions  of incorporation  and bylaws certified by their
respective Secretaries or Assistant Secretaries;

     (p) Good standing  certificates for the  jurisdiction of incorporation  and
the  jurisdiction  in which the chief  executive  office is located  for each of
Borrower, UDCSFC, UDRC II, UDRC III and UDRC IV;

     (q) A copy  of  lien  searches,  completed  as of a  recent  date,  against
Borrower  and UDCSFC,  UDRC II, UDRC III and UDRC IV, in such  jurisdictions  as
shall be satisfactory to Lenders and its counsel;

     (r)  Legal   opinions  from  counsel  for  Borrower  with  respect  to  the
transactions contemplated by the Loan Documents, which opinions shall be in form
and substance  satisfactory to Lenders and from counsel satisfactory to Lenders;
and

     (s) The  obligations  hereunder  shall  have  been  rated "B" or above by a
rating agency acceptable to the Required Lenders.

     (t) There shall have occurred since December 31, 2001, no Material  Adverse
Change.

     (u) Lenders shall have received Borrower's audited financial statements for
the fiscal year ended December 31, 2001 and unaudited  financial  statements for
the 3 month period ended March 31, 2002.

     (v) Officers  Certificate as to no default and truth of representations and
warranties.

     4.3 Payment of Interest under Existing Loan  Agreement.  The Borrower shall
have paid all accrued  and unpaid  interest to and  including  the Closing  Date
under the Existing Loan Agreement.

     4.4 Term.  This  Agreement  shall become  effective  upon the execution and
delivery hereof by Borrower,  Collateral Agent and Lenders and shall continue in
full force and effect for a term  ending on the  earliest  of (a) the  Repayment
Date, or (b) the date of termination  of this  Agreement in accordance  with its
terms after the occurrence and during the continuation of an Event of Default.

     4.5  Effect  of  Termination.  Upon  termination  of  this  Agreement,  all
Obligations shall become due and payable  immediately  without notice or demand.
No termination of this Agreement,  however,  shall relieve or discharge Borrower

<PAGE>

of  Borrower's  duties,  Obligations,  or covenants  hereunder,  and  Collateral
Agent's  continuing  security  interest in the Collateral shall remain in effect
until all Obligations have been fully and finally discharged.

                                   ARTICLE V.
                         REPRESENTATIONS AND WARRANTIES

     In order to induce  Lenders to enter into this Agreement and make the Loan,
Borrower makes the following representations and warranties which shall be true,
correct,  and complete in all respects as of the date hereof, and shall be true,
correct,  and  complete in all  respects as of the Closing  Date  (except to the
extent that such  representations  and  warranties  relate  solely to an earlier
date) and such  representations  and warranties  shall survive the execution and
delivery of this Agreement:

     5.1  No  Encumbrances.  UDCSFC  has  good  and  indefeasible  title  to the
Collateral, free and clear of Liens except for Permitted Liens.

     5.2 Location of Chief Executive Office; FEIN. The chief executive office of
Borrower is located at the address  indicated in the preamble to this  Agreement
and  Borrower's  FEIN is  86-0721358.  The chief  executive  office of UDCSFC is
located at the address of Borrower  indicated in the preamble to this  Agreement
and UDCSFC's FEIN is 86-0657074.

     5.3 Due Organization and Qualification; Subsidiaries.

     (a)  Each  Loan  Party  is duly  organized,  validly  existing  and in good
standing under the laws of the jurisdiction of its  incorporation  and qualified
and  licensed to do business  in, and in good  standing  in, any state where the
failure to be so licensed or  qualified  reasonably  could be expected to have a
Material Adverse Effect.

     (b) Set forth on Schedule A is a complete and accurate  list of  Borrower's
direct  and  indirect  Subsidiaries,  showing:  (i) the  jurisdiction  of  their
incorporation;  (ii) the  number  of shares  of each  class of Equity  Interests
authorized  for  each  of  such  Subsidiaries;  and  (iii)  the  number  and the
percentage  of the  outstanding  shares of each such  class  owned  directly  or
indirectly by Borrower.  All of the  outstanding  Equity  Interests of each such
Subsidiary have been validly issued and are fully paid and non-assessable.

     (c)  Except  as set  forth  on  Schedule  B, no  Equity  Interests  (or any
securities,  instruments,  warrants,  options,  purchase  rights,  conversion or
exchange rights, calls,  commitments or claims of any character convertible into
or  exercisable  for Equity  Interests) of any direct or indirect  Subsidiary of
Borrower  is subject  to the  issuance  of any  security,  instrument,  warrant,
option,  purchase right, conversion or exchange right, call, commitment or claim
of any right, title, or interest therein or thereto.

     5.4 Due Authorization: No Conflict.

     (a) The execution,  delivery, and performance by each Loan Party of each of
the Loan  Documents  to which it is a party  have  been duly  authorized  by all
necessary corporate action.
<PAGE>

     (b) The execution,  delivery, and performance by each Loan Party of each of
the Loan  Documents  to which it is a party do not and will not (i)  violate any
provision of federal,  state, or local law or regulation (including  Regulations
T, U, and X of the Federal  Reserve  Board)  applicable to such Loan Party,  the
Governing Documents of such Loan Party, or any order, judgment, or decree of any
court or other  Governmental  Authority binding on any Loan Party, (ii) conflict
with,  result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any material  contractual  obligation or material lease of
any Loan Party,  (iii)  result in or require the creation or  imposition  of any
Lien of any nature  whatsoever  upon any properties or assets of any Loan Party,
other than pursuant to the Security  Documents,  or (iv) require any approval of
stockholders  or any  approval  or  consent  of any  Person  under any  material
contractual  obligation  of  any  Loan  Party.  No  Loan  Party  or  any  of its
Subsidiaries  is in  violation  of  any  law,  rule,  regulation,  order,  writ,
judgment,  injunction,  decree,  determination or award or in breach of any such
contract,  loan agreement,  indenture,  mortgage,  deed of trust, lease or other
instrument,  the  violation  or breach of which  could have a  Material  Adverse
Effect.

     (c) Other than the taking of any other action expressly required under this
Agreement  or any of the other Loan  Documents,  the  execution,  delivery,  and
performance by each Loan Party of this Agreement and the other Loan Documents to
which such Loan Party is a party do not and will not  require  any  registration
with,  consent,  or approval  of, or notice to, or other  action with or by, any
federal, state, foreign, or other Governmental Authority or other Person.

     (d) This  Agreement,  the other  Loan  Documents  and all  other  documents
contemplated  hereby and thereby,  when executed and delivered by any Loan Party
party  thereto,  will be the legally valid and binding  obligations of such Loan
Party,  enforceable  against such Loan Party in accordance with their respective
terms,  except as  enforcement  may be limited  by  equitable  principles  or by
bankruptcy, insolvency, reorganization,  moratorium, or similar laws relating to
or limiting creditors' rights generally.

     (e) The Stock Pledge Agreement and the stock powers delivered in connection
therewith,  and the Collateral  Account Agreement when executed and delivered by
UDCSFC and UDC, will be the legally valid and binding  obligations of UDCSFC and
UDC,  enforceable  against  each of  UDCSFC  and UDC in  accordance  with  their
respective terms,  except as enforcement may be limited by equitable  principles
or by  bankruptcy,  insolvency,  reorganization,  moratorium,  or  similar  laws
relating to or limiting creditors' rights generally.

     (f) The Lien  granted  by  UDCSFC  and UDC on the  Collateral  is a validly
created and perfected  first  priority Lien, and the Collateral is subject to no
other  Liens  other than Liens in favor of  Collateral  Agent and the  Permitted
Liens.

     5.5 Litigation.  Except as set forth in Schedule C, there are no actions or
proceedings  pending by or against  Borrower before any court or  administrative
agency  and  Borrower  does  not  have  knowledge  or  belief  of  any  pending,
threatened,  or imminent  litigation,  governmental  investigations,  or claims,
complaints, actions, or prosecutions involving Borrower, except for: (a) ongoing
collection  matters in which  Borrower is the  plaintiff,  (b) matters  that, if
decided adversely to Borrower,  would not have a Material Adverse Effect and (c)

<PAGE>

matters as to which Borrower has provided  notice to the Lenders and which could
not reasonably be expected to be decided adversely to Borrower.

     5.6  Financial  Statements;  No  Material  Adverse  Change.  All  financial
statements  relating to  Borrower,  UDRC II, UDRC III and UDRC IV that have been
delivered  by Borrower to Lenders  have been  prepared in  accordance  with GAAP
(except,  in the  case  of  unaudited  financial  statements,  for  the  lack of
footnotes and being subject to year-end  audit  adjustments)  and fairly present
the financial condition as of the date thereof and the results of operations for
the period then ended for Borrower and its consolidated Subsidiaries,  except as
disclosed on Schedule D. No information, exhibit or report furnished by Borrower
or any other Loan Party to the Collateral Agent or any Lender in connection with
the  negotiation  of the Loan  Documents  or  pursuant  to the terms of the Loan
Documents  contained any untrue statement of a material fact or omitted to state
a material fact  necessary to make the statements  made therein not  misleading.
There has not been a Material  Adverse  Change with  respect to  Borrower  since
December 31, 2001. For purposes of this Section 5.6, so long as Borrower has not
failed to comply with Section 6.24 hereof, the requirement to refinance the GECC
Agreement shall not constitute a Material Adverse Change.

     5.7 Securitization  Documents.  Borrower, UDRC II, UDRC III and UDRC IV and
each  of  their   Affiliates  are  in  full  compliance  with  their  respective
obligations under the Securitization  Documents,  and no Securitization  Default
exists.

     5.8 ERISA. No accumulated  funding deficiency (as defined in Section 302 of
ERISA and Section 412 of the Code),  whether or not waived,  exists with respect
to any plan (other  than a  multiemployer  plan).  No  liability  to the Pension
Benefit Guaranty  Corporation has been or is expected by Borrower to be incurred
with respect to any plan (other than a multiemployer  plan) by Borrower which is
or would have a Material Adverse Effect.  Borrower has not incurred and does not
presently expect to incur any withdrawal  liability under Title IV of ERISA with
respect to any  multiemployer  plan which is or would be  materially  adverse to
Borrower.  The  execution  and  delivery  of this  Agreement  and the other Loan
Documents will not involve any transaction  which is subject to the prohibitions
of  Section  406 of ERISA or in  connection  with  which a tax could be  imposed
pursuant to section  4975 of the Code.  For the purpose of this Section 5.8, the
term "plan" shall mean an "employee pension benefit plan" (as defined in section
3 of  ERISA)  which  is or has  been  established  or  maintained,  or to  which
contributions  are or have been made,  by Borrower or by any trade or  business,
whether or not  incorporated,  which,  together with  Borrower,  is under common
control,  as  described  in  Section  414(b)  or (c) of the  Code;  and the term
"multiemployer  plan"  shall mean any plan which is a  "multiemployer  plan" (as
such term is defined in Section  4001(a)(3) of ERISA). No plan providing welfare
benefits to retired  former  employees  of Borrower has been  established  or is
maintained for which the present value of future benefits payable,  in excess of
irrevocably  designated  funds for such  purpose,  is or would  have a  Material
Adverse Effect.

     5.9  Environmental  and Safety  Matters.  Borrower  (a) has complied in all
material  respects with all applicable  material  Environmental and Safety Laws,
and Borrower  has not received (i) notice of any material  failure so to comply,
(ii) any  letter or  request  for  information  under  Section  104 of CERCLA or
comparable  state  laws or (iii) any  information  that would lead it to believe
that  it is the  subject  of  any  Federal  or  state  investigation  concerning
Environmental and Safety Laws; (b) does not manage, generate, discharge or store
any Hazardous Materials in material violation of any material  Environmental and
Safety Laws; (c) does not own, operate or maintain any underground storage tanks

<PAGE>

or surface impoundments; and (d) except as disclosed to Lenders in writing prior
to the date hereof,  is not aware of any conditions or circumstances  associated
with its currently or previously  owned or leased  properties or operations  (or
those of its tenants) which may give rise to any  Environmental  Liabilities and
Costs which could have a Material Adverse Effect.

     5.10 Tax Matters.  Each of Borrower and its  Subsidiaries has filed all tax
returns  that it was  required to file.  All such tax returns  were  correct and
complete in all material  respects.  All Borrower  Taxes owed by any of Borrower
and its Subsidiaries have been paid.

     5.11 [Reserved].

     5.12  Ownership of  Properties.  Each Loan Party and its  Subsidiaries  has
good,  marketable  and  insurable  title in fee simple to, or a valid  leasehold
interest  in, all its real  property,  and good  title to, or a valid  leasehold
interest in, all its other Property.

     5.13  Investment  Company  Status.  Neither  any Loan  Party nor any of its
Subsidiaries  is an  "investment  company,"  or an  "affiliated  person"  of, or
"promoter"  or "principal  underwriter"  for, an  "investment  company," as such
terms are defined in the Investment Company Act of 1940, as amended. Neither the
making of the Loan nor the  application of the proceeds or repayment  thereof by
Borrower,  nor the consummation of the other transactions  contemplated  hereby,
will violate any  provision of such Act or any rule,  regulation or order of the
Securities and Exchange Commission thereunder.

     5.14  Solvency.  Each Loan Party is,  individually  and  together  with its
Subsidiaries,  Solvent.  For purposes  hereof,  the term "Solvent"  means,  with
respect to any Person on a particular date, that on such date (a) the fair value
of the property of such Person is greater than the total amount of  liabilities,
including,  without limitation,  contingent liabilities, of such Person, (b) the
present  fair  salable  value of the assets of such  Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become  absolute and matured,  (c) such Person does not intend to,
and does not  believe  that it will,  incur  debts or  liabilities  beyond  such
Person's ability to pay as such debts and liabilities mature and (d) such Person
is not  engaged  in  business  or a  transaction,  and is not about to engage in
business or a transaction,  for which such Person's property would constitute an
unreasonably  small  capital.  The amount of contingent  liabilities at any time
shall  be  computed  as the  amount  that,  in the  light of all the  facts  and
circumstances  existing at such time,  represents the amount that can reasonably
be expected to become an actual or matured liability.

                                  ARTICLE VI.
                              AFFIRMATIVE COVENANTS

     Borrower  covenants and agrees that, so long as any credit  hereunder shall
be available  and until full and final  payment of the  Obligations,  and unless
Required  Lenders shall otherwise  consent in writing,  Borrower shall do all of
the following:
<PAGE>

     6.1 Financial  Statements  and Other  Documents.  Borrower shall deliver to
Lenders in form and detail satisfactory to Required Lenders:

     (a)  Within  45 days of the end of each  fiscal  quarter  (except  the last
fiscal quarter of each fiscal year), Borrower's consolidated unaudited financial
statements for such quarter, and, within 90 days of the end of Borrower's fiscal
year,  Borrower's  consolidated  audited  financial  statements for such period,
certified  by  Borrower's  Chief  Financial   Officer  or  Treasurer  as  fairly
presenting in all material  respects,  in accordance with GAAP (subject,  in the
case of  unaudited  financial  statements,  to  ordinary,  good  faith  year-end
adjustments and to the absence of footnote  disclosure),  the financial position
and  results of  operations  of  Borrower  and  together,  in each case,  with a
certificate  of the  Chief  Financial  Officer  of  Borrower  stating  that  the
representations  and  warranties  herein are true and  correct  in all  material
respects as of the date of such certificate and that no Default has occurred and
is continuing or, if a default has occurred and is continuing, a statement as to
the nature  thereof and the action that  Borrower has taken and proposes to take
with respect  thereto and setting forth in  reasonable  detail  satisfactory  to
Required  Lenders the calculations  demonstrating  compliance with Sections 6.13
through 6.16;

     (b) Promptly upon receipt  thereof,  any  financial  statements of Borrower
distributed to other lenders or financing parties;

     (c) On or prior to each  Calculation  Date, a Collateral  Servicing  Report
certified  as true and  correct by an  officer of  Borrower  and  including  the
calculation  of the Borrowing  Base as of such  Calculation  Date and certifying
such calculation as true and correct.

     (d) Promptly upon preparation thereof, a copy of each other report, if any,
submitted to Borrower by independent  accountants in connection with any annual,
interim or special audit made by them of the books of Borrower;

     (e)  Promptly  after its  submission,  copies of any other  information  or
documents  regularly provided by Borrower to any of its other lenders or holders
of Borrower's Debt;

     (f)  Promptly  upon receipt  thereof,  copies of any other  information  or
documents  received  by  Borrower  pursuant  to  any   Securitization   Document
(including,  without limitation,  monthly servicing reports with respect to each
Securitization);

     (g) With reasonable  promptness,  such other financial data and information
as any Lender may reasonably request; and

     (h)  Promptly  upon  receipt  thereof,  (i) copies of any  federal  revenue
agent's reports (so called "thirty-day letter") issued by the IRS, and copies of
any equivalent documents from state or local tax authorities; (ii) copies of any
federal notice of deficiency (so-called "ninety-day letters") issued by the IRS,
and copies of any equivalent documents from state or local tax authorities;  and
(iii) copies of any  information  requests or document  requests  received  from
federal,  state or local tax authorities  that are not in the ordinary course of
business.

     6.2 Inspection of Property.  Borrower shall permit any Person designated by
any Lender in writing,  to visit and inspect any of the  properties of Borrower,
to examine the corporate books and financial records of Borrower and make copies
thereof or extracts therefrom and to discuss the affairs, finances and accounts

<PAGE>

of any of such corporations with the principal officers of Borrower and its
independent public accountants, all at such reasonable times and as often as any
Lender may reasonably request.

     6.3 Default Disclosure.

     (a)  Borrower  shall  forthwith,  upon a  Responsible  Officer of  Borrower
obtaining knowledge of an Event of Default or Default,  promptly deliver to each
Lender a certificate of a Responsible  Officer  specifying the nature and period
of  existence  thereof and what action  Borrower  proposes to take with  respect
thereto.

     (b)  Borrower  shall  forthwith,  upon a  Responsible  Officer of  Borrower
obtaining  knowledge  of a  Securitization  Default,  deliver  to each  Lender a
certificate  of a  Responsible  Officer  specifying  the  nature  and  period of
existence  thereof,  what  action the  defaulting  party  proposes  to take with
respect thereto, and what action Borrower proposes to take with respect thereto.

     6.4 Notices to Lenders and the  Collateral  Agent.  Borrower shall promptly
notify each Lender and the Collateral Agent in writing of:

     (a) Any lawsuit  over Five  Hundred  Thousand  Dollars  ($500,000)  against
Borrower or any of its Subsidiaries;

     (b) Any substantial dispute between Borrower or any of its subsidiaries and
any Governmental Authority; or

     (c) Any change in any Loan Party's name, address, or legal structure.

     6.5 Books and Records.  Borrower shall maintain  adequate books and records
in accordance with generally accepted accounting principles.

     6.6  Compliance  and  Preservation.  Borrower  shall  and  shall  cause its
Subsidiaries to:

     (a)  Comply  with  the  laws   (including  any  fictitious  name  statute),
regulations  and orders of any government body with authority over its business;
(b)  Maintain and preserve all  privileges  and  franchises  such Person now has
provided,  however,  that neither the Borrower nor any of its Subsidiaries shall
be required to preserve any  privilege or  franchise  (other than the  corporate
existence of each Loan Party,  UDCC, UDRC II, UDRC III and UDRC IV) if the Board
of Directors of the Borrower shall determine that the preservation thereof is no
longer  desirable  in the  conduct  of the  business  of the  Borrower  or  such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to the Borrower, such Subsidiary or the Lenders; and

     (c) Make any repairs,  renewals,  or replacements  reasonably  necessary to
keep such Person's properties in good working condition.
<PAGE>

     6.7  Perfection  of  Liens.  Borrower  shall  take such  actions  as may be
necessary or as  Collateral  Agent or any Lender may request in order to perfect
and protect Collateral Agent's security interests and liens.

     6.8  Cooperation.  Borrower shall take any reasonable  action  requested by
Collateral Agent or any Lender to carry out the intent of this Agreement.

     6.9 Use of  Proceeds.  Borrower  shall use the proceeds of the Loan for (i)
repayment of all amounts  outstanding  under the Existing  Loan  Agreement  (and
Borrower  agrees that a net funding of the Initial Funding Amount may be used to
effect such  repayment)  and  repayment  of other  indebtedness  of the Borrower
(other than  Subordinated  Debt),  (ii) general  working  capital to  facilitate
ongoing growth in Borrower's core operations and (iii)to the extent permitted by
Section 7.8 and by the documents and instruments governing other indebtedness of
the Borrower, the repurchase of common stock of the Borrower.

     6.10 Securitizations. Any securitizations of Ugly Duckling Collateral shall
be executed  through  UDRC II, UDRC III,  UDRC IV or a New Issuer (as defined in
the Stock Pledge  Agreement) that meets the  requirements of Section 7(c) of the
Stock Pledge  Agreement  (and  Borrower  shall ensure that Pledgor  performs its
obligations  pursuant to the Stock  Pledge  Agreement)  or by a person or entity
otherwise  able to satisfy the  requirements  of Section 3.1 with respect to the
related  Additional  Residual  Certificates.  Borrower shall continue to execute
periodic  securitizations  (in an  amount of not less  than  $75,000,000  in any
period of six consecutive  months) of the Ugly Duckling Collateral and each such
securitization  shall  include  Residual  Certificates  constituting  Additional
Residual  Certificates  which  grant  an  affiliate  of UDCC  acceptable  to the
Required  Lenders a 100%  interest  in all  securitization  assets  (other  than
Excluded Class C  Certificates  and Class A interests sold to senior third party
investors)  and with  respect to which the  provisions  of Section 3.1 have been
complied  with. The Borrowing Base shall at all times include no less than seven
(7) separate securitizations, except in the event that Borrower elects to prepay
the securitization  commonly referred to as the "2000-A  Securitization"  during
July of 2002 or to prepay the securitization commonly referred to as the "2000-B
Securitization"  during  October  of 2002,  in which  case the  total  number of
separate  securitizations  may be no less than six (6) for the  period  prior to
December  15,   2002,   upon  and  after  which  date  the  number  of  separate
securitizations  shall be no less than seven (7).  Borrower shall perform,  keep
and observe each term,  provision,  condition or covenant or agreement contained
in each Bond Insurance Policy, the Principal  Warehouse  Agreement and any other
agreement evidencing Indebtedness.

     6.11 Payment of Indebtedness. Borrower shall timely pay and shall cause its
Subsidiaries to timely pay all Indebtedness  which, if not paid, could result in
the imposition of a Lien on any of the assets of UDRC II or UDRC III, UDRC IV or
any holder of Additional Residual Certificates.

     6.12 Tangible Net Worth.  Borrower shall  maintain a consolidated  Tangible
Net  Worth of not less  than the sum of (i)  $130,000,000,  plus (ii) 75% of the
cumulative  net earnings  (but only to the extent  positive)  after taxes of the
Borrower and its  Subsidiaries on a consolidated  basis determined in accordance
with generally accepted accounting principles for each period ending on or after
December 31, 2001 plus (iii) 60% of the  cumulative net proceeds of the issuance
of any  additional  shares of capital stock of Borrower after March 31, 2002. As
used in this Section 6.12, "net proceeds" of the issuance of capital stock shall
mean the gross cash proceeds of such issuance less reasonable and customary fees
and expenses  actually  incurred in  connection  therewith,  including,  without

<PAGE>

limitation,   underwriting  fees,   investment  banking  fees,   attorneys'  and
accountant's  fees,  regulatory  and listing  fees and due  diligence  costs and
expenses.

     6.13 Consolidated EBITDA to Consolidated Interest Expense. Maintain a ratio
of Consolidated EBITDA to Consolidated Interest Expense of not less than 1.25 to
1.0.

     6.14 Consolidated  Senior Debt to Consolidated  Total  Capitalization.  Not
permit at any time Consolidated Senior Debt of the Borrower and its Subsidiaries
on a consolidated basis to exceed 52% of Consolidated Total  Capitalization less
Non-Recourse  Debt;  provided,  however,  that in no  event  shall  the  average
Consolidated  Senior Debt of the Borrower and its Subsidiaries on a consolidated
basis for any  consecutive  three (3) month  period  exceed 44% of  Consolidated
Total Capitalization less Non-Recourse Debt.

     6.15 Minimum Residual Certificate Cash Flows. Not permit aggregate Residual
Certificate  Cash Flows deposited to the Collateral  Account with respect to any
month to be less than  $2,000,000  (it being  understood  that for  purposes  of
determining  compliance with this Section 6.15 the amount deemed  deposited with
respect to any Residual Certificate may not exceed the Residual Certificate Cash
Flow with respect to such Residual Certificate).

     6.16 Minimum  Capital Base.  Borrower  shall maintain a Capital Base of not
less than $145,000,000.

     6.17 Minimum Other Interest Coverage.  Maintain a ratio of operating income
to  "interest  expense,  other"  (as set  forth  on  Borrower's  publicly  filed
financial  statements  for each  fiscal  quarter)  of not less than 2.50 to 1.0;
provided,  however,  that for the fourth fiscal quarter of fiscal year 2002, the
ratio shall not be less than 2.0 to 1.0.

     6.18 [Reserved].

     6.19 Collateral Account.  Borrower shall establish and maintain one or more
collateral  accounts as may be requested by the Collateral Agent or the Required
Lenders. Each such collateral account shall be free and clear of all liens other
than liens in favor of the  Collateral  Agent pursuant to the Loan Documents and
Liens  described  in the  Intercreditor  Agreement  and  shall be on  terms  and
conditions satisfactory to the Collateral Agent and the Required Lenders.

     6.20  Back-up  Servicer.  At all times,  Borrower  shall  maintain  back-up
service  arrangements  with  respect  to each  securitization  of Ugly  Duckling
Collateral,  on terms and conditions  satisfactory to the Required Lenders,  and
with OSI,  Wells Fargo  Financial  America,  Inc., or another  back-up  servicer
satisfactory to the Required Lenders.

     6.21 Maintenance of Properties.  Borrower shall maintain and preserve,  and
cause each of its  Subsidiaries to maintain and preserve,  all of its properties
that are used or useful in the conduct of its business in good working order and
condition,  ordinary  wear and tear excepted and  excepting  replacement  in the
ordinary course of business.
<PAGE>

     6.22 Maintenance of Insurance.  Borrower shall maintain,  and cause each of
its Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or  associations in such amounts and covering such risks as is usually
carried by prudent  companies  engaged in similar  businesses and owning similar
properties  in the same general  areas in which the Borrower or such  Subsidiary
operates.

     6.23 Reorganization.  Lenders acknowledge that Borrower has advised Lenders
that Borrower may enter into a corporate  reorganization pursuant to which a new
entity with the same  direct or indirect  equity  ownership  as Borrower  may be
established  (the "New  Entity").  The New  Entity  would  become  the direct or
indirect  owner  of all or some of UDRC  II,  UDRC  III,  UDRC IV and the  other
special purpose entities formed for the purpose of securitizing assets (or their
respective assets) and would also be the holder of retail installment  contracts
prior to  securitization.  The parties  acknowledge that such restructuring will
require, among other amendments to the Loan Documents,  that the New Entity join
in the Loan  Documents and the grants of security  contained  therein.  Borrower
acknowledges,  therefore,  that any such transaction will be subject to approval
by the  Collateral  Agent and the Lenders and that the  documents in  connection
therewith will be subject to negotiation between Borrower,  Collateral Agent and
Lenders  and  to  such  conditions  (including,  without  limitation,  continued
perfection  of the  security  interests  securing the  Obligations)  as Required
Lenders may reasonably deem necessary,  provided, however, that Collateral Agent
and  Lenders  agree  that  except  for   reimbursement  of  costs  and  expenses
(including, without limitation, fees and disbursements of counsel) in connection
with such  restructuring,  Collateral  Agent and  Lenders  will not  charge  any
"consent" or other similar fee as a condition to such approval.

     6.24 DriveTime Name Change.  Lenders  acknowledge that Borrower has advised
them that Borrower intends to change its name from company and trade names using
the words "Ugly Duckling" to company and trade names using the word  "DriveTime"
or similar names. Lenders hereby consent to such name change and Borrower agrees
to execute and deliver and cause to be executed and delivered  such  amendments,
modifications,  financing  statement  amendments,  and other documents as may be
reasonably  necessary to evidence  such name change and to provide for continued
perfection of all liens and security  interests  granted to Collateral  Agent in
connection with the Loan Documents. Borrower shall pay all costs and expenses of
Collateral  Agent and  Lenders  in  connection  with such  name  change  and the
documents and instruments required to be executed, delivered, filed and recorded
in connection therewith.

     6.25 Designated Senior Indebtedness. Borrower hereby designates the Loan as
"Designated Senior  Indebtedness"  pursuant to the Indenture,  dated October 15,
1998 (the "Indenture"), from Borrower to BNY Midwest Trust Company, as successor
in interest to Harris  Trust and Savings  Bank,  as trustee  (pursuant  to which
existing  Subordinated  Debt  described  on  Exhibit G was  issued and agrees to
maintain  such  designation  at all times.  Borrower  will  promptly  notify the
trustee under the  Indenture of such  designation  and in  connection  with each
supplemental  indenture hereafter entered into in connection with the Indenture,
Borrower  will cause such  supplemental  indenture  to provide  that the Loan is
included as "Designated Senior Indebtedness."

                                  ARTICLE VII.
                               NEGATIVE COVENANTS
<PAGE>

     Borrower  covenants and agrees that, so long as any credit  hereunder shall
be available and until full and final payment of the Obligations,  Borrower will
not do any of the following without Required Lender's prior written consent:

     7.1  Liens.  Create,  incur,  assume,  or  permit  to  exist,  directly  or
indirectly,  any lien on or with  respect to any of the assets of UDRC II,  UDRC
III, or UDRC IV or any holder of Additional Residual Certificates, including the
UDRC II Residual Certificates,  the UDRC III Residual Certificates,  the UDRC IV
Residual Certificates or any Additional Residual Certificates,  or any income or
profits from any of the foregoing, except for Permitted Liens listed on Schedule
E or liens of Collateral Agent for the benefit of Lenders.

     7.2 Indebtedness.

     (a)  Permit  UDRC  II,  UDRC  III or UDRC IV or any  holder  of  Additional
Residual  Certificates  to  incur,  assume,  or permit  to  exist,  directly  or
indirectly any Indebtedness; or

     (b) permit any other Subsidiary of the Borrower to incur, assume, or permit
to  exist,   directly  or  indirectly  any  Indebtedness  other  than  Permitted
Subsidiary  Indebtedness  without  the prior  written  consent  of the  Required
Lenders.

     7.3  Restrictions  on Fundamental  Changes.  Except as described in Section
6.23, enter into any merger, consolidation, reorganization, or recapitalization,
or reclassify its capital stock,  or liquidate,  wind up, or dissolve itself (or
suffer  any  liquidation  or  dissolution),  or  convey,  sell,  assign,  lease,
transfer,   or  otherwise  dispose  of,  in  one  transaction  or  a  series  of
transactions,  all or any  substantial  part of its property or assets or permit
UDCSFC, UDCC, UDRC II, UDRC III or UDRC IV to do any of the foregoing).

     7.4 Disposal of  Collateral,  Residual  Certificates,  Additional  Residual
Certificates.  Except as expressly  consented to by Required Lenders in writing,
sell, lease, assign,  transfer, or otherwise dispose of any of the Collateral or
permit any of its  Affiliates  to do any of the  foregoing  or permit UDRC II to
sell,  lease,  assign,  transfer  or  otherwise  dispose of any UDRC II Residual
Certificates,  or permit UDRC III to sell, lease, assign,  transfer or otherwise
dispose of any UDRC III Residual Certificates, or permit UDRC IV to sell, lease,
assign,  transfer or otherwise dispose of any UDRC IV Residual Certificates,  or
permit  the  Person or entity  that is the  holder  of any  Additional  Residual
Certificates  at the  time  such  Additional  Residual  Certificates  are  first
included in the Borrowing  Base to sell,  lease,  assign,  transfer or otherwise
dispose of any such Additional Residual Certificates.

     7.5 Change Name. Without giving thirty (30) days prior written notification
to Collateral Agent and each Lender, change Borrower's or any other Loan Party's
name, FEIN,  corporate  structure  (within the meaning of Section 9402(7) of the
Code), or identity, or add any new fictitious name.

     7.6  Amendments.  Except as expressly  consented to by Required  Lenders in
writing,  directly or indirectly,  amend, modify, alter, increase, or change any
of the terms or conditions of any Securitization Document.
<PAGE>

     7.7 Change of Control.  Cause,  permit, or suffer,  directly or indirectly,
any Change of Control.

     7.8  Distributions.  Make any  distribution or declare or pay any dividends
(in cash or other property, other than capital stock) on, or purchase,  acquire,
redeem, or retire any of Borrower's capital stock, of any class,  whether now or
hereafter  outstanding,  for cash.  Notwithstanding  any other provision hereof,
Lenders  agree that Borrower may pay in full all  principal,  interest and other
charges outstanding pursuant to that certain Subordinated  Promissory Note dated
as of January 11, 2001 issued by the Borrower to Verde Investments,  Inc. in the
original principal amount of $7,000,000.

     7.9 Standing Dividend Resolutions.  Permit any Standing Dividend Resolution
to be rescinded, amended, modified, revoked or altered in any manner.

     7.10 Change in Location of Chief Executive Office.  Relocate, or permit any
other Loan Party to relocate,  any Loan Party's chief executive  office to a new
location  without  providing  30 days  prior  written  notification  thereof  to
Collateral  Agent and each  Lender  and so long as, at the time of such  written
notification,  Borrower  provides any financing  statements  or fixture  filings
necessary  to  perfect  and  continue  perfected   Collateral  Agent's  security
interests and also provides to Collateral  Agent a Collateral  access  agreement
with respect to such new location.

     7.11 No Prohibited Transactions Under ERISA. Directly or indirectly:

     (a)  Engage,  or permit  any  Subsidiary  of  Borrower  to  engage,  in any
prohibited  transaction  which is reasonably likely to result in a civil penalty
or excise tax described in Sections 406 of ERISA or 4975 of the Code for which a
statutory or class  exemption is not  available or a private  exemption  has not
been previously obtained from the Department of Labor;

     (b)  Permit  to exist  with  respect  to any Plan any  accumulated  funding
deficiency (as defined in Sections 302 of ERISA and 412 of the Code), whether or
not waived;

     (c) Fail,  or permit any  Subsidiary  of  Borrower  to fail,  to pay timely
required  contributions  or annual  installments  due with respect to any waived
funding deficiency to any Plan;

     (d) Terminate, or permit any Subsidiary of Borrower to terminate,  any Plan
where  such  event  would  result in any  liability  of  Borrower  or any of its
Subsidiaries under Title IV of ERISA;

     (e)  Fail,  or permit  any  Subsidiary  of  Borrower  to fail,  to make any
required contribution or payment to any Multiemployer Plan;

     (f) Fail, or permit any Subsidiary of Borrower to fail, to pay any required
installment  or any other payment  required  under Section 412 of the Code on or
before the due date for such installment or other payment;
<PAGE>

     (g) Amend, or permit any Subsidiary of Borrower to amend, a retirement plan
resulting in an increase in current liability for the plan year such that either
of Borrower  or any  Subsidiary  of Borrower is required to provide  security to
such retirement plan under Section 401 (a)(29) of the Code; or

     (h) Withdraw,  or permit any  Subsidiary of Borrower to withdraw,  from any
Multiemployer  Plan where such withdrawal is reasonably  likely to result in any
liability of any such entity under Title IV of ERISA.

     7.12 Changes in Nature of Business. Make, or permit any of its Subsidiaries
to make, any material  change in the nature of its business as carried on at the
date hereof.

     7.13  Transactions with Affiliates.  Not engage,  and not permit any of its
Subsidiaries  to engage,  in any  transaction  with any Affiliate of Borrower or
such  Subsidiary  except  on terms  that are  fair  and  reasonable  and no less
favorable  to the  Borrower  or  such  Subsidiary  than  it  would  obtain  in a
comparable  arm's-length  transaction  with a Person not an Affiliate  (it being
understood  that the  foregoing  shall not  prohibit any  transaction  otherwise
permitted   hereunder   among  the   Borrower   and  any  of  its  wholly  owned
Subsidiaries).

                                 ARTICLE VIII.
                           EVENTS OF DEFAULT/REMEDIES

     8.1 Event of Default.  Any of the following  shall  constitute an "Event of
Default":

     (a) If Borrower  fails to pay when due and payable or when declared due and
payable,  any portion of the Obligations (whether of principal,  interest,  fees
and charges due Collateral  Agent or any Lender,  reimbursement of Lender Costs,
or other amounts constituting Obligations) or if Borrower fails to make when due
any deposit to the Collateral Account required pursuant to Section 2.5(b);

     (b) If Borrower  fails to perform,  keep,  or observe any term,  provision,
condition,  covenant,  or agreement  contained in this Agreement,  in any of the
Loan  Documents,  or in any other  future  agreement  between  Borrower  and any
Lender;

     (c) If there is a Material Adverse Change with respect to Borrower, UDCSFC,
UDRC II, UDRC III or UDRC IV or any holder of Additional  Residual  Certificates
(the occurrence or  non-occurrence  of which shall be determined by the Required
Lenders in the exercise of reasonable discretion);

     (d) If Borrower is enjoined or restrained,  by court order from  continuing
to conduct all or any material part of its business  affairs,  unless such order
is stayed;

     (e) If notices of any Lien, levy, or assessment in excess of $250,000 other
than of Permitted  Liens are filed of record with  respect to any of  Borrower's
properties  or assets  which have not been cured  within ten (10) days after the
Lien has been filed;

     (f) Any judgment or order for the payment of money in excess of  $1,000,000
not covered by insurance as to which the insurer has acknowledged coverage shall

<PAGE>

be  rendered  against  any Loan Party or UDRC II, UDRC III or UDRC IV and either
(i) enforcement  proceedings shall have been commenced by any creditor upon such
judgment or order and are not stayed or  dismissed  within 45 days or (ii) there
shall be any period of 45  consecutive  days during which such judgment  remains
unpaid or unbonded  and a stay of  enforcement  of such  judgment  or order,  by
reason of a pending appeal or otherwise, shall not be in effect;

     (g) If  Borrower  makes any  payment  on account  of  Indebtedness  that is
contractually   subordinated   in  right  of  payment  to  the  payment  of  the
Obligations,  except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;

     (h)  If  any  material  misstatement  or  misrepresentation  exists  now or
hereafter in any  warranty,  representation,  statement,  or report  (including,
without limitation,  any Collateral  Servicing Report) made to Collateral Agent,
any Lender by Borrower or any officer, employee, agent, or director of Borrower,
or if any such warranty or representation is withdrawn;

     (i) If any Standing  Dividend  Resolution is rescinded,  amended,  altered,
revoked or modified in any manner;

     (j) If a default or event of default  occurs under the Principal  Warehouse
Agreement or under the terms of any other Indebtedness  aggregating in excess of
$3,000,000  (with  respect  to any  particular  item of  Indebtedness  or in the
aggregate and in each case after any  applicable  cure or grace period) or there
is a  termination  event  under the terms of any Bond  Insurance  Policy (or the
policy  of  another  bond  insurer),  regardless  of  whether  such  default  or
termination event is waived or amended;

     (k) If Borrower or any of its Subsidiaries  makes a general  assignment for
the  benefit  of  creditors,   or  an  order,  judgment  or  decree  is  entered
adjudicating the Borrower or any of its Subsidiaries  bankrupt or insolvent,  or
any order for relief with respect to the Borrower or any of its  Subsidiaries is
entered  under  the  Federal   Bankruptcy  Code,  or  Borrower  or  any  of  its
Subsidiaries  petitions  or applies to any  tribunal  for the  appointment  of a
custodian,   trustee,   receiver  or  liquidator  of  Borrower  or  any  of  its
Subsidiaries or of any substantial  part of the assets of the Borrower or any of
its Subsidiaries, or commences any proceeding relating to the Borrower or any of
its Subsidiaries under any bankruptcy, reorganization,  arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction, or any
such  petition or  application  is filed,  or any such  proceeding  is commenced
against the Borrower or any of its Subsidiaries; or

     (l) Any ERISA Event shall have  occurred with respect to a Plan of any Loan
Party or any of its ERISA  Affiliates  and the liability of the Loan Parties and
their ERISA  Affiliates  related to such ERISA Event and any and all other ERISA
Events which shall have occurred and then exist with respect to any Plans of the
Loan Parties and their ERISA Affiliates exceeds $1,000,000; or

     (m) any  provision  of any Loan  Document  shall for any reason cease to be
valid and binding on or  enforceable  against any Loan Party party to it, or any
such Loan Party shall so state in writing; or
<PAGE>

     (n) any Security  Document shall for any reason (other than pursuant to the
terms thereof) cease to create a valid and perfected  first priority Lien on the
Collateral purported to be covered thereby.

     8.2 Rights and Remedies. Upon the occurrence,  and during the continuation,
of an Event of  Default,  Required  Lenders  may (and may direct the  Collateral
Agent to, and upon such  direction the  Collateral  Agent shall,  subject to the
provisions of this Agreement),  at their sole and absolute  discretion,  without
further notice, do any one or more of the following, all of which are authorized
by Borrower:

     (a) declare all Obligations, whether evidenced by this Agreement, by any of
the other Loan  Documents,  or otherwise,  immediately due and payable (and upon
the  occurrence  of any  Event  of  Default  described  in  Section  8.1(k)  all
Obligations  shall  automatically  and without action by Collateral Agent or any
Lender be and become immediately due and payable);

     (b) terminate  this Agreement and any of the other Loan Documents as to any
future  liability  or  obligation  of each  Lender,  but without  affecting  any
Lender's  or  the  Collateral  Agent's  rights  and  security  interests  in the
Collateral and without affecting the Obligations;

     (c) without  notice to or demand upon  Borrower,  make such payments and do
such acts as Required  Lenders  consider  necessary or reasonable to protect the
security interests of the Collateral Agent in the Collateral;

     (d) without notice to Borrower (such notice being  expressly  waived),  and
without  constituting  a  retention  of any  collateral  in  satisfaction  of an
obligation  (within the  meaning of Section  9-620 and 9-621 of the UCC) (or any
successor  provision),  set off and  apply  to the  Obligations  any and all (i)
balances and deposits of Borrower held by any Lender,  or (ii)  indebtedness  at
any time  owing to or for the  credit or the  account  of  Borrower  held by any
Lender; or

     (e)  direct the  Collateral  Agent to  collect,  receive,  appropriate  and
realize upon the Collateral,  on such terms as Required  Lenders,  in their sole
and absolute discretion, deem appropriate without any liability for any loss due
to a decrease  in the market  value of the  Collateral  during the period  held,
without demand of performance  or other demand,  advertisement  or notice of any
kind,  except as specified  below,  to or upon Borrower or any other person (all
and each of which demands,  advertisements  and/or notices are hereby  expressly
waived to the extent  permitted  by law).  If any  notification  to  Borrower of
intended  disposition  of the  Collateral is required by law, such  notification
shall be deemed  reasonable  and properly  given if mailed to Borrower,  postage
prepaid,  at least ten (10) days  before  any such  disposition  at the  address
indicated by Borrower's signature. Any disposition of the Collateral or any part
thereof shall be free of any equity or right of  redemption  in Borrower,  which
right of equity is, to the extent  permitted by applicable law, hereby expressly
waived or released by Borrower.  Borrower further agrees that such sale or sales
made under the  foregoing  circumstances  shall be deemed to have been made in a
commercially reasonable manner. Neither Collateral Agent nor any Lender shall be
obligated  to make any sale or other  disposition  of the  Collateral  permitted
under this Loan  Agreement,  unless the terms thereof shall be  satisfactory  to
Required Lenders.
<PAGE>

     The rights and  remedies of  Collateral  Agent and each  Lender  under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.  No
exercise  by  Collateral  Agent or any  Lender of one  right or remedy  shall be
deemed an election, and no waiver by Collateral Agent or any Lender of any Event
of Default shall be deemed a continuing  waiver. No delay by Collateral Agent or
any Lender shall constitute a waiver, election, or acquiescence by it.

                                  ARTICLE IX.
                              THE COLLATERAL AGENT

     9.1  Authorization  and Action.  Each Lender hereby appoints and authorizes
the Collateral  Agent to take such action as agent on its behalf and to exercise
such powers under this  Agreement and the other Loan  Documents as are delegated
to the  Collateral  Agent by the terms  hereof and thereof,  together  with such
powers as are reasonably incidental thereto. Except as specifically provided for
by the Loan  Documents,  the Collateral  Agent shall not be required to exercise
any discretion or take any action under any of the Loan Documents,  but shall be
required to act or to refrain  from acting (and shall be fully  protected  in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding upon all Lenders and the Collateral Agent
shall  not be liable to the  Borrower  or any  Lender  for any  action  taken or
omitted at the direction of the Required Lenders;  provided,  however,  that the
Collateral  Agent  shall not be  required  to take any action  that  exposes the
Collateral  Agent,  in its  sole  judgment,  to  personal  liability  or that is
contrary to this  Agreement or applicable  law. The  Collateral  Agent agrees to
give to each Lender  prompt  notice of each  written  notice  given to it by the
Borrower pursuant to the terms of this Agreement.

     9.2 Collateral Agent's Reliance,  Etc. Neither the Collateral Agent nor any
of its directors,  officers,  agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection  with the Loan
Documents,  except for its or their own gross negligence or willful  misconduct.
Without limitation of the generality of the foregoing, the Collateral Agent: (i)
may treat the Lender that made any portion of the Loan as the holder of the debt
resulting  therefrom until the Collateral Agent receives notice of an assignment
by such Lender;  (ii) may consult with legal counsel  (including counsel for any
Loan Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel,  accountants or experts; (iii)
makes no warranty or  representation  to any Lender and shall not be responsible
to any Lender for any  statements,  warranties  or  representations  made by any
Person  other  than  the  Collateral  Agent  in or in  connection  with the Loan
Documents;  (iv)  shall not have any duty to  ascertain  or to inquire as to the
performance  or observance  of any of the terms,  covenants or conditions of any
Loan  Document  on the  part  of any  Loan  Party  or to  inspect  the  property
(including  the  books  and  records)  of  any  Loan  Party;  (v)  shall  not be
responsible   to  any  Lender  for  the  due  execution,   legality,   validity,
enforceability,  genuineness,  sufficiency  or value of any Loan Document or any
other instrument or document  furnished  pursuant hereto or thereto;  (vi) shall
incur no liability  under or in respect of any Loan  Document by acting upon any
notice,  consent,  certificate  or other  instrument or writing (which may be by
telegram,  telecopy,  cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties; and (vii) shall not be under any obligation
to expend or risk its own funds in connection  with acting as  Collateral  Agent
hereunder.
<PAGE>

     9.3 Wells Fargo Bank Minnesota,  National Association and Affiliates. Wells
Fargo  Bank  Minnesota,  National  Association  and its  affiliates  may  accept
deposits  from,  lend money to,  act as  trustee  under  indentures  of,  accept
investment banking engagements from and generally engage in any kind of business
with, any Loan Party, any of its Subsidiaries and any Person who may do business
with or own securities of any Loan Party or any such Subsidiary, all as if Wells
Fargo Bank Minnesota,  National  Association  were not the Collateral  Agent and
without any duty to account therefor to the Lender Parties.

     9.4  Lender  Credit  Decision.   Each  Lender  acknowledges  that  it  has,
independently and without reliance upon the Collateral Agent or any other Lender
and  based on the  financial  statements  referred  to  herein  and  such  other
documents  and  information  as it has deemed  appropriate,  made its own credit
analysis  and  decision  to  enter  into  this   Agreement.   Each  Lender  also
acknowledges  that  it  will,   independently  and  without  reliance  upon  the
Collateral Agent or any other Lender and based on such documents and information
as it shall  deem  appropriate  at the  time,  continue  to make its own  credit
decisions in taking or not taking action under this Agreement.

     9.5  Indemnification.   Each  Lender  severally  agrees  to  indemnify  the
Collateral  Agent (to the extent not promptly  reimbursed by the Borrower)  from
and against such Lender's ratable share of any and all liabilities, obligations,
losses,  damages,  penalties,  actions,  judgments,  suits,  costs,  expenses or
disbursements of any kind or nature  whatsoever that may be imposed on, incurred
by, or asserted  against the Collateral  Agent in any way relating to or arising
out of the Loan Documents or any action taken or omitted by the Collateral Agent
under the Loan Documents;  provided, however, that no Lender shall be liable for
any  portion  of such  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments,  suits, costs, expenses or disbursements resulting from the
Collateral Agent's gross negligence or willful misconduct. Without limitation of
the  foregoing,  each Lender agrees to reimburse the  Collateral  Agent promptly
upon  demand  for its  ratable  share of any costs and  expenses  payable by the
Borrower  under  Section 10.4,  to the extent that the  Collateral  Agent is not
promptly reimbursed for such costs and expenses by the Borrower.

     9.6 Successor  Collateral  Agents.  The Collateral  Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrower and may be
removed  at any  time  with  cause  by  the  Required  Lenders.  Upon  any  such
resignation or removal,  the Required  Lenders shall have the right to appoint a
successor  Collateral Agent. If no successor Collateral Agent shall have been so
appointed by the Required  Lenders,  and shall have accepted  such  appointment,
within  30 days  after  the  retiring  Collateral  Agent's  giving  of notice of
resignation or the Required  Lenders' removal of the retiring  Collateral Agent,
then the retiring Collateral Agent may, on behalf of the Lender Parties, appoint
a successor  Collateral Agent,  which shall be a commercial bank organized under
the laws of the  United  States or of any State  thereof  and  having a combined
capital  and  surplus  of at  least  $50,000,000.  Upon  the  acceptance  of any
appointment as Collateral  Agent hereunder by a successor  Collateral  Agent and
upon the  execution  and filing or recording of such  financing  statements,  or
amendments  thereto,  and such other instruments or notices, as may be necessary
or desirable,  or as the Required Lenders may request,  in order to continue the
perfection  of the liens  granted or  purported  to be  granted by the  Security
Documents,  such successor  Collateral  Agent shall succeed to and become vested
with all the rights, powers,  discretion,  privileges and duties of the retiring

<PAGE>

Collateral Agent, and the retiring Collateral Agent shall be discharged from its
duties and obligations under the Loan Documents.  After any retiring  Collateral
Agent's  resignation or removal hereunder as Collateral Agent, the provisions of
this Article IX shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Collateral Agent under this Agreement.

     9.7 Monthly  Duties of Collateral  Agent.  Upon receipt of each  Collateral
Servicing  Report  and in no event  later than two (2)  Business  Days after the
Calculation  Date in respect  thereof,  the  Collateral  Agent  shall  check the
following items in such Collateral  Servicing  Report against the  corresponding
numbers in the monthly servicing reports with respect to each Securitization:

     (a)  the  outstanding  principal  balance  of  auto  loans  in the  pool of
collateral securing the related securitization;

     (b)  the  outstanding  principal  balance  of all  certificates  and  other
interests  or rights to  payment in  respect  of such  securitization  senior in
priority to such Residual Certificate;

     (c) the amount of the cash balance in the spread  account  relating to such
Residual Certificate; and

     (d) the Residual Certificate Cash Flows.

     The Collateral  Agent shall also verify the following  rates and amounts on
the Collateral Servicing Report:

     (y)......LIBOR; and

     (z)......the pro rata payments of interest and Monthly  Amortization Amount
made to each Lender.

                                   ARTICLE X.
                                  MISCELLANEOUS

     10.1  Amendments  and Waivers.  No amendment or waiver of any  provision of
this  Agreement or any other Loan  Document,  and no consent with respect to any
departure by Borrower therefrom,  shall be effective unless the same shall be in
writing and signed by Required  Lenders  and  Borrower,  and then such waiver or
consent  shall be effective  only in the specific  instance and for the specific
purpose for which given;  provided,  however,  that (a) no amendment,  waiver or
consent  shall,  unless in writing and signed by all the Lenders,  do any of the
following  at any time:  (i)  change  the  percentage  of the  aggregate  unpaid
principal  amount of the Loan that shall be  required  for the Lenders or any of
them to take  any  action  hereunder,  (ii)  permit  the  creation,  incurrence,
assumption  or  existence  of any Lien on any item of  Collateral  to secure any
obligations  other than  Obligations  owing to the Lenders and Collateral  Agent
under the Loan  Documents,  (iii) amend this  Section  10.1,  (iv)  increase the
outstanding  principal  amount of the Loan,  (v)  reduce  the  principal  of, or
interest  on, the Loan or any fees or other  amounts  payable  hereunder or (vi)
postpone  any date fixed for any payment of  principal  of, or interest  on, the
Loan or any fees or other amounts payable  hereunder;  and provided further that
no  amendment,  waiver or consent  shall,  unless in  writing  and signed by the

<PAGE>

Collateral  Agent in addition to the Lenders required above to take such action,
affect the rights or duties of the Collateral  Agent under this Agreement or any
other Loan Document.

     10.2 Notices.

     (a) All notices,  requests and other communications  provided for hereunder
shall be in writing (including, unless the context expressly otherwise provides,
by facsimile transmission,  provided,  that, any matter transmitted by facsimile
(i) shall be immediately  confirmed by a telephone  call to the  recipient,  and
(ii) shall be followed  promptly by a hard copy  original  thereof by over-night
courier to the address  set forth  below;  or to such other  address as shall be
designated by such party in a written notice to the other party, and as directed
to each other party,  at such other  address as shall be designated by Lender or
Borrower in a written notice to Borrower and Lender.

     If to Borrower:            Ugly Duckling Corporation
                                4020 East Indian School Road
                                Phoenix, Arizona 85018
                                Attn:  General Counsel
                                Facsimile:  (602) 852-6686

     With a copy to:            Snell & Wilmer L.L.P.
                                One Arizona Center
                                Phoenix, Arizona 85004-0001
                                Attn:  David A. Sprentall
                                Facsimile:  (602) 382-6070

     If to any Lender:          As set forth on the Administrative Form
                                of such Lender

     If to Collateral Agent:    Wells Fargo Bank Minnesota, National Association
                                Sixth Street and Marquette Avenue
                                MAC N9311-161
                                Minneapolis, MN  55479
                                Attn: Corporate Trust Services-Asset Backed
                                      Administration
                                Telephone:  (612) 667-8058
                                Facsimile:  (612) 667-3464

     (b) All such notices,  requests and communications  shall, when transmitted
by overnight  delivery or faxed, be effective when delivered for overnight (next
day) delivery,  transmitted by facsimile machine, respectively, or if delivered,
upon delivery, except that notices pursuant to Article II shall not be effective
until actually received by each Lender.

     (c) Borrower acknowledges and agrees that any agreement of Collateral Agent
or any Lender to receive  certain  notices by telephone  and facsimile is solely
for the convenience and at the request of Borrower. Each of Collateral Agent and
each Lender shall be entitled to rely on the authority of any Person  purporting
to be a Person authorized by Borrower to give such notice and neither Collateral
Agent nor any Lender shall have any liability to Borrower or to any other Person
on account of any action taken or not taken by Collateral Agent or any Lender in
reliance upon such telephonic or facsimile  notice.  The obligations of Borrower
hereunder  shall not be  affected  in any way or to any extent by any failure by

<PAGE>

Collateral Agent or any Lender to receive written confirmation of any telephonic
or  facsimile  notice or the  receipt  by  Collateral  Agent or any  Lender of a
confirmation  which is at variance with the terms understood by Collateral Agent
or such Lender to be contained in the telephonic or facsimile notice.

     10.3 No Waiver: Cumulative Remedies. No failure to exercise and no delay in
exercising,  on the part of Collateral Agent or Lender, any right, remedy, power
or privilege hereunder,  shall operate as a waiver thereof; nor shall any single
or partial exercise of any right,  remedy, power or privilege hereunder preclude
any other or  further  exercise  thereof  or the  exercise  of any other  right,
remedy, power or privilege.

     10.4 Costs and Expenses.  Borrower shall,  whether or not the  transactions
contemplated hereby shall be consummated:

     (a) pay or reimburse  Collateral  Agent and each Lender and each  portfolio
advisor  within ten (10)  Business Days after demand for all  reasonable  Lender
Costs incurred by Collateral  Agent or such Lender or such portfolio  advisor in
connection  with the  development,  preparation,  delivery,  administration  and
execution of (and any amendment,  supplement, waiver or modification to (in each
case whether or not consummated)),  this Agreement,  any other Loan Document and
any other  documents  prepared in connection  herewith,  or  therewith,  and the
consummation of the transactions contemplated hereby and thereby,  including the
reasonable  Attorney  Costs  incurred by  Collateral  Agent or any Lender or any
portfolio advisor with respect thereto;

     (b) pay or reimburse  Collateral  Agent and each Lender and each  portfolio
advisor within ten (10) Business Days after demand for all Lender Costs incurred
by Collateral Agent or such Lender or such portfolio  advisor in connection with
the  enforcement,  attempted  enforcement,  or  preservation  of any  rights  or
remedies  under  this  Agreement,  any other Loan  Document,  and any such other
documents,  including  reasonable Attorney Costs incurred by Collateral Agent or
any Lender or any portfolio advisor; and

     (c) pay or reimburse  Collateral  Agent and each Lender and each  portfolio
advisor within ten (10) Business Days after demand for all reasonable  appraisal
(including  the  allocated  cost of internal  appraisal  services),  audit,  due
diligence,  monitoring review, syndication,  environmental inspection and review
(including the allocated cost of such internal  services and the allocated costs
of services of AIG or its Affiliates and Trustee), search and filing costs, fees
and expenses,  rating agency costs, fees and expenses,  transportation costs and
other  out-of-pocket  expenses  incurred or sustained by Collateral  Agent,  any
Lender or any portfolio  advisor,  AIG or any of their respective  affiliates in
connection  with the Loan, the Loan  Documents,  any of the  Obligations and the
matters referred to under (a) and (b) of this Section 10.4.

     (d) In addition to the  foregoing,  if any payment of principal on the Loan
is made by the Borrower to or for the account of a Lender other than on the last
day of the then  current  Interest  Accrual  Period,  as a result of a  payment,
acceleration  or for any  other  reason,  Borrower  shall,  upon  demand by such
Lender,  pay to such Lender any amounts  required to compensate  such Lender for
any  additional  losses,  costs or expenses  that it may  reasonably  incur as a

<PAGE>

result of such payment, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain the Loan or any portion thereof.

     10.5 Indemnity.  Borrower shall pay, indemnify,  and hold Collateral Agent,
each  Lender,  AIG,  Trustee  and  each  of  their  respective   Affiliates  and
Subsidiaries,  and  each of their  respective  officers,  directors,  employees,
counsel,  agents and attorneys-in-fact  (each, an "Indemnified Person") harmless
from and against any environmental  liabilities and obligations of Borrower, any
of its  Subsidiaries or any of their properties and from and against any and all
claims,  liabilities,   obligations,   losses,  damages,   penalties,   actions,
judgments,  suits, costs, charges, expenses or disbursements (including Attorney
Costs) of any kind or nature  whatsoever  with respect to or in connection  with
the execution,  delivery,  enforcement,  performance and  administration of this
Agreement and any other Loan Documents, or the transactions  contemplated hereby
and thereby,  and with respect to any  investigation,  litigation  or proceeding
related to this  Agreement  or the use of the  proceeds  thereof or any Residual
Certificate, Securitization Document or Securitization Trust, whether or not any
Indemnified  Person is a party  thereto (all the  foregoing,  collectively,  the
"Indemnified Liabilities"); provided, however, Borrower shall have no obligation
hereunder  to any  Indemnified  Person with respect to  Indemnified  Liabilities
arising from the gross  negligence  or willful  misconduct  of such  Indemnified
Person or the breach by such  Indemnified  Person of its obligations  hereunder.
The  agreements  in  this  Section  10.5  shall  survive  payment  of all  other
Obligations and the termination of this Agreement.

     10.6  Marshaling:  Payments  Set Aside.  Neither  Collateral  Agent nor any
Lender shall be under any  obligation to marshal any assets in favor of Borrower
or any other  Person or against or in payment of any or all of the  Obligations.
To the extent that Borrower  makes a payment or payments to Collateral  Agent or
any Lender,  or to the extent  Collateral Agent or any Lender enforces its Liens
or exercises its rights of set-off, and such payment or payments or the proceeds
of such enforcement or set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee,  receiver or any other party in connection  with any  bankruptcy,  or
otherwise,  then to the extent of such  recovery the  obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such  enforcement  or set-off
had not occurred.

     10.7  Successors and Assigns.  The  provisions of this  Agreement  shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors  and assigns,  except that Borrower may not assign or transfer any of
its  rights or  delegate  obligations  under this  Agreement  or any of the Loan
Documents without the prior written consent of each Lender.

     10.8 Set-off. In addition to any rights and remedies of Lenders provided by
law, if an Event of Default  exists,  each Lender is  authorized at any time and
from time to time,  without  prior  notice to  Borrower,  any such notice  being
waived by Borrower to the fullest extent  permitted by law, to set off and apply
any and all monies or  deposits at any time held by, and other  indebtedness  at
any time owing by,  such  Lender to or for the credit or the account of Borrower
against any and all Obligations owing to such Lender, now or hereafter existing,

<PAGE>

irrespective  of whether or not such Lender  shall have made  demand  under this
Agreement or any Loan Document and although such  Obligations  may be contingent
or unmatured.  Each Lender  agrees  promptly to notify  Borrower  after any such
set-off and  application  made by such  Lender;  provided,  however,  that,  the
failure to give such notice  shall not affect the  validity of such  set-off and
application.  The rights of each Lender  under this Section 10.8 are in addition
to the other rights and remedies  (including other rights of set-off) which such
Lender may have.

     10.9  Counterparts.  This  Agreement  may be executed by one or more of the
parties to this Agreement in any number of separate counterparts, each of which,
when so  executed,  shall be deemed an  original,  and all of said  counterparts
taken together  shall be deemed to constitute  but one and the same  instrument.
Such  counterparts may be delivered by facsimile or electronic  delivery and all
documents so delivered shall be effective and treated as original  documents for
all purposes hereunder.

     10.10 Severability.  The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement  required  hereunder  shall not in
any way  affect  or impair  the  legality  or  enforceability  of the  remaining
provisions of this Agreement or any instrument or agreement required hereunder.

     10.11 No Third Parties  Benefited.  This Agreement is made and entered into
for the sole protection and legal benefit of Borrower, Collateral Agent and each
Lender (and its portfolio advisor),  and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal  beneficiary of, or have
any  direct  or  indirect  cause of  action or claim in  connection  with,  this
Agreement or any of the other Loan Documents.  Neither  Collateral Agent nor any
Lender shall have any  obligation to any Person not a party to this Agreement or
other Loan Documents.

     10.12  Time.  Time is of the essence as to each term or  provision  of this
Agreement and each of the other Loan Documents.

     10.13 Governing Law and Jurisdiction.

     THE  VALIDITY  OF  THIS  AGREEMENT  AND  THE  OTHER  LOAN  DOCUMENTS,   THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING  HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED  UNDER,  GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, IT BEING
THE INTENT OF THE PARTIES THAT THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE
RIGHTS AND DUTIES OF THE PARTIES HERETO WITHOUT REGARD TO CHOICE OR CONFLICTS OF
LAW PRINCIPLES; EXCEPT THAT THE PROVISIONS HEREIN THAT PERTAIN TO THE PERFECTION
OR THE  EFFECT OF  PERFECTION  OF  SECURITY  INTERESTS  IN  COLLATERAL  SHALL BE
GOVERNED BY THE LAWS OF SUCH STATE AS ARE SPECIFIED IN SECTION 9-301 OF THE UCC.
<PAGE>

     THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY,  TO THE  NONEXCLUSIVE  JURISDICTION OF ANY NEW YORK STATE COURT OR
FEDERAL COURT OF THE UNITED STATES OF AMERICA  SITTING IN NEW YORK CITY, AND ANY
APPELLATE COURT FROM ANY THEREOF,  IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS  AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS OR
IS TO BE A PARTY,  OR FOR  RECOGNITION OR  ENFORCEMENT OF ANY JUDGMENT,  AND THE
BORROWER  HEREBY  IRREVOCABLY  AND  UNCONDITIONALLY  AGREES  THAT ALL  CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
NEW YORK STATE COURT OR, TO THE EXTENT  PERMITTED BY LAW, IN SUCH FEDERAL COURT.
THE BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER  PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT SHALL AFFECT
ANY RIGHT THAT ANY PARTY MAY  OTHERWISE  HAVE TO BRING ANY ACTION OR  PROCEEDING
RELATING TO THIS  AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS OR
IS TO BE A PARTY IN THE COURTS OF ANY JURISDICTION.

     THE BORROWER IRREVOCABLY AND UNCONDITIONALLY  WAIVES, TO THE FULLEST EXTENT
IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING  ARISING OUT OF OR
RELATING TO THIS  AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS OR
IS TO BE A PARTY IN ANY NEW YORK STATE OR FEDERAL  COURT.  THE  BORROWER  HEREBY
IRREVOCABLY  WAIVES,  TO THE FULLEST EXTENT  PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT  FORUM TO THE  MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

     BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY  CLAIM OR CAUSE  OF  ACTION  BASED  UPON OR  ARISING  OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS  CONTEMPLATED  THEREIN,  INCLUDING CONTRACT
CLAIMS,  TORT  CLAIMS,  BREACH  OF DUTY  CLAIMS,  AND ALL  OTHER  COMMON  LAW OR
STATUTORY  CLAIMS.  BORROWER AND LENDER  REPRESENT  THAT EACH HAS REVIEWED  THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION  WITH LEGAL  COUNSEL.  IN THE EVENT OF  LITIGATION,  A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     10.14  Entire  Agreement.  This  Agreement,  together  with the other  Loan
Documents,  embodies the entire  Agreement  and  understanding  among  Borrower,
Collateral  Agent  and  Lenders  and  supersedes  all  prior or  contemporaneous
agreements and  understandings of such Persons,  verbal or written,  relating to
the  subject  matter  hereof and thereof  and any prior  arrangements  made with
respect to the payment by Borrower (or any indemnification for) any Lender Costs
incurred (or to be incurred) by or on behalf of Collateral Agent or any Lender.
<PAGE>

     10.15 Interpretation.  This Agreement is the result of negotiations between
and has been  reviewed by counsel to  Collateral  Agent,  Lenders,  Borrower and
other  parties,  and is the product of all  parties  hereto.  Accordingly,  this
Agreement and the other Loan Documents shall not be construed against Collateral
Agent or any Lender merely because of Lenders' involvement in the preparation of
such documents and agreements.

     10.16 Assignment;  Register. Each Lender may assign, sell participations in
or pledge its rights hereunder and under the Loan Documents  without the consent
of Borrower; provided, however, that no such assignment shall be effective until
the parties  thereto shall have executed and delivered to the  Collateral  Agent
for  acceptance  and recording in the Register (as defined  below) an Assignment
and Acceptance.  Upon such execution,  delivery,  acceptance and recording, from
and after the effective date specified in such  Assignment and  Acceptance,  (x)
the assignee  thereunder  shall be a party hereto and, to the extent that rights
and  obligations  hereunder have been assigned to it pursuant to such Assignment
and Acceptance,  have the rights and  obligations of a Lender  hereunder and (y)
the Lender assignor  thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such  Assignment and  Acceptance,
relinquish its rights and be released from its obligations  under this Agreement
(and, in the case of an Assignment and Acceptance  covering all or the remaining
portion of an assigning  Lender's rights and  obligations  under this Agreement,
such  Lender  shall  cease to be a party  hereto).  Borrower  may not  assign or
delegate any of its rights,  interest or  obligations  hereunder or under any of
the Loan Documents.

     The  Collateral  Agent,  on behalf of the Borrower,  shall  maintain at the
Collateral Agent's address referred to in Section 10.2 a copy of each Assignment
and  Acceptance  delivered  to  and  accepted  by it  and  a  register  for  the
recordation  of the names and addresses of the Lenders and the principal  amount
of the Loan owing to each Lender from time to time (the "Register"). The entries
in the  Register  shall be  conclusive  and  binding  for all  purposes,  absent
manifest error, and the Borrower, the Collateral Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this  Agreement.  The Register  shall be available for inspection by
the  Borrower  or any Lender at any  reasonable  time and from time to time upon
reasonable prior notice.

     Upon its receipt of an Assignment and  Acceptance  executed by an assigning
Lender and an assignee,  the  Collateral  Agent shall,  if such  Assignment  and
Acceptance  has been  completed  and is in  substantially  the form of Exhibit C
hereto,  (i) accept such Assignment and Acceptance,  (ii) record the information
contained  therein in the Register and (iii) give prompt  notice  thereof to the
Borrower.  Within  five  Business  Days after its  receipt  of  written  request
therefor,  the  Borrower,  at its own expense,  shall execute and deliver to the
Collateral  Agent in exchange for any Note  surrendered  in  connection  with an
assignment hereunder, a new Note to the order of the assignee in an amount equal
to the principal  amount of the Loan assumed by it and, if the assigning  Lender
has  retained  a portion of the Loan  hereunder,  a new Note to the order of the
assigning  Lender in an amount equal to such portion  retained by it  hereunder.
Such new Note or Notes shall be in an  aggregate  principal  amount equal to the
aggregate  principal  amount  of such  surrendered  Note,  shall  be  dated  the
effective date of the applicable  Assignment and Acceptance and shall  otherwise
be in substantially the form of Exhibit D.
<PAGE>

     10.17  Revival and  Reinstatement  of  Obligations.  If the  incurrence  or
payment of the Obligations by Borrower or the transfer by Borrower to Collateral
Agent or any Lender of any property of either or both of such parties should for
any reason  subsequently  be declared to be void or voidable  under any state or
federal  law  relating  to  creditors'  rights,   including  provisions  of  the
Bankruptcy  Code  relating to  fraudulent  conveyances,  preferences,  and other
voidable   or   recoverable   payments  of  money  or   transfers   of  property
(collectively,  a "Voidable Transfer"), and if Collateral Agent or any Lender is
required to repay or restore,  in whole or in part, any such Voidable  Transfer,
or elects to do so upon the  reasonable  advice of its counsel,  then, as to any
such Voidable Transfer,  or the amount thereof that Lender is required or elects
to repay or restore,  and as to all  reasonable  costs,  expenses,  and Attorney
Costs of Lender related thereto,  the liability of Borrower  automatically shall
be revived,  reinstated,  and restored  and shall exist as though such  Voidable
Transfer had never been made.

     10.18  Survival.  Notwithstanding  any  provision of this  agreement or any
other Loan Document to the contrary,  the  provisions  of Sections  2.11,  2.12,
2.13,  2.14,  9.4,  9.5,  10.4 and  10.5  shall  survive  payment  of all  other
Obligations and the termination of this Agreement.

     10.19 Confidentiality.  Each Lender and Collateral Agent agrees to hold any
confidential  information  that it may receive  from  Borrower  pursuant to this
Agreement in confidence,  except for  disclosure:  (a) to other Lenders,  rating
agencies,  trustees,  reference  lenders,  portfolio  advisors,  any  direct  or
indirect  contractual  counterparty  in  swap  agreements  or  such  contractual
counterparty's  professional  advisor,  and any other  parties  relevant  to any
investment  vehicle managed by AIG Global Investment Corp.; (b) to legal counsel
and  accountants  for Borrower,  Collateral  Agent or any Lender or  prospective
Lender; (c) to other professional advisors to Borrower,  Collateral Agent or any
Lender or prospective  Lender; (d) to regulatory  officials;  (e) as required by
law or legal  process;  (f) to  another  proposed  Lender in  connection  with a
proposed assignment permitted hereunder provided that the recipient has accepted
such information subject to a confidentiality agreement substantially similar to
this Section 10.19; and (g) to any prospective purchaser of the Collateral after
the  occurrence  of an Event of  Default  to the extent  permitted  by law.  For
purposes of the foregoing "confidential  information" shall mean any information
respecting  Borrower,  its  Subsidiaries or Affiliates  delivered to Lenders and
marked  confidential,  other  than (i)  information  previously  filed  with any
governmental  agency and available to the public,  (ii)  information  previously
published in any public medium from a source other than directly or  indirectly,
that Lender,  (iii) information  previously  disclosed by Borrower to any Person
not associated with Borrower without a  confidentiality  agreement or obligation
substantially  similar to this Section 10.19, and (iv) any such information that
is or becomes  generally  available  to the  public  other than as a result of a
breach by Collateral Agent or any Lender of its obligations hereunder or that is
or becomes available to Collateral Agent or such Lender from a source other than
Borrower.  Each Lender and the  Collateral  Agent  further  agree that they will
maintain the  confidentiality  of and not disclose  any Ugly  Duckling  customer
information,  and that they will not use Ugly Duckling customer  information for
any purpose, in each case except as permitted by law.

     10.20  Actions by Portfolio  Advisor.  Any rights of a Lender  hereunder or
under any other  Loan  Document  may be  exercised  by such  Lender's  portfolio
advisor or collateral  manager upon delivery to the Collateral Agent of evidence
in writing,  reasonably satisfactory to the Collateral Agent, setting forth such

<PAGE>

authority (which may be in the form of a written  confirmation of such authority
from the applicable Lender).



<PAGE>



                                    * * * * *
                       [Signature Page to Loan Agreement]

     IN WITNESS  WHEREOF,  the parties  hereby have caused this  Agreement to be
executed as of the date first written above.

                      UGLY DUCKLING CORPORATION,
                      a Delaware corporation


                      By:
                           -----------------------------------------------------
                      Name:
                           -----------------------------------------------------
                      Title:
                           -----------------------------------------------------



<PAGE>



                      Lenders:


                      GALAXY CLO 1999-1, LTD.

                      By:      AIG Global Investment Corp.,
                               its Collateral Manager


                      By:
                           -----------------------------------------------------
                      Name:
                           -----------------------------------------------------
                      Title:
                           -----------------------------------------------------

                      Portion of Initial Principal Amount :$16,000,000
                      Ratable Share: 35.56%

                      Address for notices in respect of payment:
                           -------------------------------------
                           -------------------------------------
                           Los Angeles, CA  90067-6022
                      Attn:----------------------------------
                      Facsimile:  _________________

                      Address for all other notices:

                           ----------------------------
                           -----------------------
                           Los Angeles, CA  90067-6022
                           Attn:  ___________
                           Facsimile:  ______________


<PAGE>


                      SUNAMERICA LIFE INSURANCE COMPANY
                      By:
                           -----------------------------------------------------
                      Name:
                           -----------------------------------------------------
                      Title:
                           -----------------------------------------------------

                      Portion of Initial Principal Amount: $18,000,000
                      Ratable Share: 40.0%

                      Address for notices in respect of payment:

                           SunAmerica Investments
                           1 SunAmerica Center
                           Los Angeles, CA  90067-6022
                           Attn: Investment Accounting, 36th Floor
                           acsimile:  (310) 772-6596

                      Address for all other notices:

                           SunAmerica Corporate Finance
                           1 SunAmerica Center
                           Los Angeles, CA  90067-6022
                           Attn:  John Lapham
                           Facsimile:  (310) 772-6078


<PAGE>



                      KZH SOLEIL-2 LLC


                      By:
                           -----------------------------------------------------
                      Name:
                           -----------------------------------------------------
                      Title:
                           -----------------------------------------------------

                      Portion of Initial Principal Amount: $11,000,000
                      Ratable Share: 24.44%

                      Address for Notice:

                           c/o JPMorgan Chase Bank
                           140 East 45th Street, 11th Floor
                           New York, NY  10017
                           Facsimile:  (212) 622-0123
                           Attn:  Virginia Conway



<PAGE>



                      Collateral Agent:


                      WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                      as Collateral Agent


                      By:
                           -----------------------------------------------------
                      Name:
                           -----------------------------------------------------
                      Title:
                           -----------------------------------------------------




<PAGE>


                                   SCHEDULE H

                        WELLS FARGO BANK MINNESOTA, N.A.
                                SCHEDULE OF FEES
                                       AS
                                COLLATERAL AGENT
                          FOR UGLY DUCKLING CORPORATION
                    $38 MILLION SENIOR SECURED LOAN FACILITY





1.         ARTICLE XI. Acceptance Fees                   $1,500.00
           .........................................................

           To include:          -     examination  and  administrative  review
                                      of the  Senior  Secured  Loan Agreement
                                      and all related documents
                                -     establishment of all appropriate accounts
                                -     participation in pre-closing and closing




2.   Annual Administrative Fee...........................$7,500.00


           To include:          -     administration  of covenants of the Senior
                                      Secured Loan Agreement and all related
                                      documents
                                -     compliance monitoring
                                -     payment of principal and interest to
                                      Lenders
                                -     maintenance of certificate holder records
                                      (maximum of 5 Lenders)
                                -     transfer and  assignment of Lender's
                                      beneficial  interest  (maximum 2
                                      transfers per life of facility)
                                -     safekeeping of pledged stock certificates

     ARTICLE XII.Additional    ARTICLE XIII. ARTICLE XIV.$1,000.00 per annum
          Lender                             per Lender

          Additional Transfer              -     $3,500.00 per transfer



<PAGE>


                                   SCHEDULE H

                        WELLS FARGO BANK MINNESOTA, N.A.
                                SCHEDULE OF FEES
                                       AS
                                COLLATERAL AGENT
                          FOR UGLY DUCKLING CORPORATION
                    $45 MILLION SENIOR SECURED LOAN FACILITY
                                   (continued)




3.         Miscellaneous

          Additionally,  the cost of  extraordinary  items that can be  directly
          allocated,  such as legal fees and expenses (if any), travel expenses,
          etc.,  will be billed  separately.  The  foregoing  schedule  has been
          designed  to apply to  collateral  agent  duties  requiring  the usual
          amount of responsibility,  time and attention. All fees are subject to
          our review  and  acceptance  of the  governing  documentation,  and to
          reasonable adjustment as changes in laws, procedures or costs of doing
          business demand.

          Fees for services not  specifically  covered in this  schedule will be
          assessed in an amount commensurate with the services rendered.

          The  acceptance  fee  will  be  billed  upon  acceptance.  The  annual
          administration  fee will be  billed  annually  in  advance.  All other
          activity-based fees will be billed annually, as incurred.












July [___], 2002