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                                                                    EXHIBIT 10.5

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT


AGREEMENT DATE:                             AUGUST 1, 1997


DV:                                         DUCK VENTURES, INC.
                                            AN ARIZONA CORPORATION
                                            2525 EAST CAMELBACK ROAD, SUITE 1150
                                            PHOENIX, ARIZONA 85016


ADDINK:                                     DONALD L. ADDINK
                                            2833 EAST HILLARY DRIVE
                                            PHOENIX, ARIZONA 85032
                                            SOCIAL SECURITY NO. ###-##-####



                                    RECITALS

         The parties acknowledge that the following recitals are true, correct
and a material part of this Amended and Restated Employment Agreement (this
"Agreement"):

         1. DV is an Arizona corporation wholly owned by Ugly Duckling
Corporation ("UDC").

         2. DV owns companies engaged in sales and financing of used vehicles
(the "Vehicle Businesses").

         3. One or more affiliates of UDC ("Affiliates") may engage in other
businesses from time to time affiliated with the Vehicle Business (the
"Affiliate Businesses").

         4. Addink has professional expertise and experience in financial
analysis, financial investments, business operations, insurance and other
commercial activities and seeks to use his professional expertise and experience
as a full-time employee of DV for the benefit of the Vehicle Businesses and the
Affiliate Businesses.

         5. This Agreement amends and restates the Employment Agreement between
DV and Addink dated June 1, 1995 (the "Prior Agreement").

         NOW, THEREFORE, in consideration of the covenants, representations and
warranties of the parties stated herein, the performances of the parties
required hereby and the benefits to
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be obtained by the parties herefrom, DV and Addink mutually agree and expressly
intend to be legally bound as follows:

SECTION 1.  EMPLOYMENT.

         Commencing as of the Agreement Date, DV shall employ Addink on a
full-time basis to render the services required by this Agreement (the
"Services"). Addink shall render the Services on a full-time basis faithfully,
promptly and professionally as a full-time employee of DV. All Services rendered
by Addink as a full-time employee of DV shall be rendered for the benefit of DV,
the Insurance Business and Vehicle Businesses. Addink represents and warrants
unto DV that he has not entered into any agreement that would prohibit or
prevent Addink from rendering the Services.

SECTION 2.  OBLIGATIONS OF ADDINK.

         2.1 SERVICES. The Services rendered by Addink shall be rendered to the
best of Addink's ability, utilizing all of his experience, knowledge, talents
and ingenuity. All Services shall be rendered in compliance with all applicable
laws, the highest standards of ethics and the instructions of the board of
directors of DV or UDC and or officers of DV or UDC (collectively, the "Board").
The Services to be rendered by Addink include, but may not be limited to, the
following:

                  2.1.1 OFFICES. Addink shall serve as the Vice President-Senior
         Analyst of UDC and shall serve as an officer of the Affiliates from
         time to time as requested by the Board.

                  2.1.2 VEHICLE BUSINESSES. Addink shall perform and provide
         financial analysis, investment and operations advice and other
         assistance to the Vehicle Businesses. Addink shall advise the Board on
         actions that can be taken to improve the profitability of the Vehicle
         Businesses. Addink shall execute and perform all directives and orders
         of the Board regarding the Vehicle Businesses.

                  2.1.3 AFFILIATE BUSINESSES. Addink shall perform and provide
         financial analysis, investment and operations advice and other
         assistance to the Affiliate Businesses. Addink shall advise the Board
         and or the owners of the Affiliates, on actions that can be taken to
         improve the profitability of the Affiliate Businesses.

                  2.1.4 OTHER. Addink shall perform and provide all other
         services and duties customarily performed and provided by an executive
         of a commercial enterprise and all other services and duties required
         by the Board.

         2.2 RESTRICTIONS. Addink acknowledges that as an executive officer of
the Insurance Business he shall have the authority to act on behalf of DV and to
thereby incur obligations, debts and liabilities on behalf of DV.
Notwithstanding such authority, Addink shall not execute any contract, incur any
debt or incur any other liability on behalf of DV unless the same is 


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either in the ordinary course of the Insurance Business or is first authorized
by the Board. Addink shall not make any misrepresentations to any person or
entity regarding DV, UDC, the Insurance Business, the Vehicle Businesses or
Addink's authority. Addink acknowledges that the Board may from time to time
establish budgets, policies and other regulations regarding the Insurance
Business and Vehicle Businesses. Addink shall at all times perform the Services
in compliance with such budgets, policies and regulations established by the
Board.

SECTION 3.  DV OBLIGATIONS.

         DV shall provide the following to Addink for use and utilization by
Addink in connection with, in support of, and for the benefit of, the Services
of Addink.

         3.1 OFFICE. DV shall maintain an office in the Phoenix metropolitan
area and all equipment, supplies, furniture and fixtures as may be reasonably
required by Addink to perform the Services (the "Office").

         3.2 PERSONNEL. DV shall employ or retain such personnel as may be
reasonably required by Addink to perform the Services and shall be responsible
for the compensation thereof (the "Personnel").

         3.3 INSURANCE. DV shall maintain such general liability and casualty
insurance as may be reasonably required by and available to the Insurance
Business and Vehicle Businesses. DV shall also maintain insurance coverage for
the errors and omissions of the directors and officers of DV or any of its
affiliates. DV shall indemnify Addink for liabilities incurred by Addink as an
officer or employee in accordance with the Articles and Bylaws of DV.

         3.4 OTHER. DV shall provide other items and services that may be
requested by Addink and that are reasonably required by Addink to perform the
Services.

SECTION 4.  COMPENSATION.

         During the term of this Agreement and not thereafter, DV shall
compensate Addink for the Services rendered by Addink pursuant to this Agreement
by paying and providing to Addink the following:

         4.1 SALARY. Addink shall receive an annual salary of One Hundred Sixty
Five Thousand Dollars ($165,000.00) (the "Salary"). The Salary shall be payable
in arrears in regularly scheduled installments commencing on the first regular
payday after the Agreement Date. The Salary shall be payable only as it is
earned and upon termination or expiration of this Agreement no Salary shall be
payable thereafter.

         4.2 BONUS. On the Agreement Date Addink shall receive a bonus of Ten
Thousand Dollars ($10,000.00) (the "Bonus").


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         4.3 INSURANCE BENEFITS. On the Commencement Date, Addink shall be
insured by and included in the group medical insurance policy maintained by DV
for its full time employees (the "Insurance Benefits"). All Insurance Benefits
shall be provided under the terms and conditions stated in the policies therefor
and all deductibles, co-payments and other charges payable by employees insured
thereunder shall be paid by Addink without reimbursement by DV.

         4.4 VACATION DAYS. Addink may be absent from the Offices and not
perform Services for fifteen (15) business days during 1997 and each calendar
year thereafter, whether said absence is for vacation, personal business or any
other purposes ("Vacation Days"). Vacation Days not taken in one calendar year
shall not accumulate and shall not be taken in a subsequent calendar year and no
compensation shall be payable to Addink at any time for Vacation Days not taken.

         4.5 EXPENSES. DV shall reimburse Addink for reasonable and necessary
expenses incurred by Addink in performing the Services, including payment of
professional organization membership dues and the cost of the attending meetings
of such organizations as required to maintain Addink's continuing education
requirements, knowledge and expertise in the insurance industry. All such
expenses shall be reimbursed in accordance with DV's expense reimbursement
policies.

         4.6 WITHHOLDINGS. All installments of the Salary and all other funds
paid to Addink pursuant to this Section 4, shall have withheld therefrom all
federal and state income taxes and all other amounts that DV is required by law
to withhold.

         4.7 UDC OPTIONS. Addink was granted and Addink now holds options to
acquire 100,000 shares of common stock of UDC (the "UDC Options") pursuant to
UDC's long term incentive stock option plan (the "Plan"). The UDC Options were
granted on the following dates, in the following amounts and for the following
exercise prices:

<TABLE>
<S>                               <C>                             <C>      
     June, 1995                   58,000 shares                   $ 1.72/share
     June, 1996                   25,000 shares                   $ 6.75/share
     December, 1996               17,000 shares                   $17.69/share
</TABLE>

As an additional benefit to Addink pursuant to this Agreement, the terms of the
award to Addink of the UDC Options are hereby amended to provide that the UDC
Options shall be fully vested on the following dates:

         June, 1995 UDC Options vest on Agreement Date
         June, 1996 UDC Options vest on January 15, 1998
         December, 1996 UDC Options vest on Agreement Date

The foregoing shall not effect any other options to acquire any securities of
UDC now held by Addink or hereafter acquired by Addink. Neither DV nor UDC nor
any of their respective shareholders, directors, officers or employees make any
representation or warranty of any kind 


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regarding the value of the UDC Options or the value of the common stock of UDC
that may be acquired by exercise of the UDC Options.


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SECTION 5.  TERM AND TERMINATION.

         5.1 TERM. This Agreement shall commence as of the Agreement Date and
shall expire on May 31, 2000 (the "Expiration Date"), unless terminated prior
thereto. Neither party has any obligation to extend this Agreement upon its
expiration. If a party does not intend to extend this Agreement beyond the
Expiration Date, then said party shall notify the other of its intention not to
extend by delivery of written notice thereof thirty (30) or more days prior to
the Expiration Date. If neither party gives written notice of its intention not
to extend this Agreement, then this Agreement shall automatically be extended
and continued on a month-to-month basis and may be terminated by either party at
any time effective thirty (30) days after delivery of written notice of
termination.

         5.2 TERMINATION BY ADDINK. Addink may terminate this Agreement at any
time, with or without cause, by delivery of written notice of termination to DV
thirty (30) or more days prior to the effective date of the termination. DV
shall continue to pay the Salary and provide Insurance Benefits during said
thirty (30) day period but may suspend Addink from his position at any time
during said thirty (30) day period. If Addink terminates this Agreement all of
Addink's rights under this Agreement shall terminate except for the right to
receive the Salary and Insurance Benefits during said thirty (30) day period and
Addink shall not receive nor be entitled to receive any additional or other
benefits after Addink's delivery of written notice of termination.

         5.3 TERMINATION BY DV.  DV may terminate this Agreement as follows:

                  5.3.1 TERMINATION WITHOUT CAUSE. DV may terminate this
         Agreement immediately or at any time, and without cause, by delivery of
         written notice to Addink on, or at any time prior to, the effective
         date of the termination. If DV terminates this Agreement without cause,
         then DV shall continue to pay the Salary to Addink for twelve (12)
         months after the termination of this Agreement, but not beyond the
         Expiration Date. The continuation of the Salary for a limited time
         after termination of this Agreement pursuant to this Section 5.3.1
         shall constitute a severance or termination fee (the "Termination Fee")
         and shall be the exclusive remedy of Addink for the termination of the
         Agreement by DV without cause. In the event of termination of this
         Agreement pursuant to this Section 5.3.1, Addink shall not receive nor
         be entitled to any additional benefits from and after the effective
         date of termination of this Agreement. No Termination Fee shall be
         payable to Addink in the event of the expiration or termination of this
         Agreement pursuant to Section 5.1, the termination of this Agreement by
         Addink pursuant to Section 5.2 or in the event of termination of this
         Agreement by DV pursuant to Section 5.3.2 or 5.3.3.

                  5.3.2 TERMINATION WITH CAUSE. Notwithstanding any other
         provision of this Agreement, if any of the following events or actions
         occur, DV may immediately terminate this Agreement by delivery of
         written notice of termination to Addink and no Termination Fee shall be
         payable in the event of termination pursuant to this Section 5.3.2:


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                           5.3.2.1 Addink commits any fraud, embezzlement or
                  other act of dishonesty, commits any criminal act, makes any
                  material misrepresentation regarding DV, UDC, the Vehicle
                  Businesses or the Affiliate Businesses.

                           5.3.2.2 Addink knowingly violates any laws, rules or
                  regulations applicable to the Vehicle Businesses or Affiliate
                  Businesses.

                           5.3.2.3 Addink engages in any conduct or action that
                  materially and personally harms or threatens to materially and
                  personally harm any employee or customer of DV, UDC or their
                  affiliates, the Vehicle Businesses, the Affiliate Businesses
                  or any person with whom DV, UDC or their affiliates, the
                  Vehicle Businesses or the Affiliate Businesses is involved
                  with.

                           5.3.2.4 Addink breaches any of the covenants made in
                  Section 6 hereof and DV, UDC, the Vehicle Businesses or the
                  Affiliate Businesses are materially harmed or damaged as a
                  result of Addink's breach.

                           5.3.2.5  The death of Addink.

                  5.3.3 DISABILITY. If Addink is unable to perform the Services
         on a full-time basis for sixty (60) days, whether due to illness,
         injury or any other physical or mental condition, then Addink shall be
         deemed disabled. In such event, DV may then reduce the Salary to Five
         Thousand Dollars ($5,000.00) per month until Addink is able to perform
         the Services on a full-time basis in the same manner as prior to being
         disabled. If Addink remains disabled for sixty (60) days such that
         Addink has not fully performed the Services on a full-time basis for a
         total of one hundred twenty (120) days, then DV may at any time
         terminate this Agreement and no Termination Fee shall be payable in the
         event of termination pursuant to this Section 5.3.3. This Section 5.3.3
         is not intended to effect any disability benefits that Addink may be
         entitled to under any governmental or private disability benefits
         program but DV does not make any representations or warranties
         regarding the effect of this Section 5.3.3 on any governmental or
         private disability benefits program.

         5.4 EFFECT OF TERMINATION. If this Agreement is terminated, DV shall
have no obligation to Addink except for the payment of Salary and Insurance
Benefits earned prior to the effective date of the termination and payment of
the Termination Fee, if a Termination Fee is payable in connection with the
termination. If this Agreement is terminated, Addink shall not be entitled to
any additional Salary, Insurance Benefits, Vacation Days or other amounts or
benefits other than those earned and received by Addink prior to the effective
date of the termination, and the Termination Fee if a Termination Fee is payable
in connection with the termination. Notwithstanding any other provision of this
Agreement, upon termination of this Agreement by Addink pursuant to Section 5.2
or by DV pursuant to Sections 5.3.1 or 5.3.3, and upon the death of Addink, any
UDC Options not then fully vested shall automatically be fully vested and may be


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exercised by Addink or his heirs at any time within fifteen (15) months
following the termination or death.

SECTION 6.  CONFIDENTIALITY, BUSINESS PROPERTY AND NON-COMPETITION.

         6.1 CONFIDENTIALITY. Addink acknowledges that certain information
regarding DV, UDC and their affiliates, the Vehicle Businesses and Affiliate
Businesses may be business secrets and that the confidentiality thereof is a
valuable right of DV. At all times during and after the term of this Agreement,
Addink shall use his best efforts to maintain the confidentiality of such
information. At all times during and after the term of this Agreement Addink
shall not knowingly or intentionally disclose such information to persons not
authorized to receive such information without the prior written consent of the
Board, unless the disclosure is either required by law or is made in the
ordinary course of business.

         6.2 BUSINESS PROPERTY. Addink acknowledges that all tangible and
intangible property of DV, UDC and their affiliates and the Vehicle Businesses,
including, but not limited to, records, files, data, contracts and information
regarding employees and customers belong exclusively to DV and Addink shall not
own nor acquire any interest therein. Upon expiration or termination of this
Agreement, all such property in the possession of Addink shall be immediately
surrendered and returned to the Office.

         6.3 NON-COMPETITION.

                  6.3.1 DURING AGREEMENT. During the term of this Agreement
         Addink shall not render any services to any person or entity in any
         business that competes with DV, UDC or their affiliates, the Vehicle
         Businesses or the Affiliate Businesses without the prior written
         consent of the Board. During the term of this Agreement Addink shall
         not engage in any activity that conflicts or interferes with, impedes
         or hampers Addink's performance of the Services required by this
         Agreement on a full-time basis or that is prejudicial or harmful to DV,
         UDC or their affiliates, the Vehicle Businesses or the Affiliate
         Businesses.

                  6.3.2 AFTER AGREEMENT. For thirty (30) days after the
         expiration or termination of this Agreement, Addink shall not, directly
         or indirectly, be employed by, provide any services to, or hold any
         interest in, any business that competes with the Vehicle Businesses or
         Affiliate Businesses. For twelve (12) months after the expiration or
         termination of this Agreement, Addink shall not communicate with the
         owners, operators, employees or customers of DV, UDC or their
         affiliates, the Vehicle Businesses or the Affiliate Businesses for the
         purpose of inducing such persons to terminate or not renew their
         relations with DV, UDC or their affiliates, the Vehicle Businesses or
         the Affiliate Businesses. Addink acknowledges that the covenants of
         Addink stated in this Section 6.3.2 are fair, reasonable and
         appropriate.

         6.4 ENFORCEMENT. Addink acknowledges that DV will incur substantial,
irreparable, immediate and continuing harm if any of the covenants of Addink
stated in this Section 6 are


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violated and that monetary awards will not be adequate remedies for the
violations. Therefore, Addink acknowledges and agrees that equitable remedies
may be sought and obtained by DV including, but not limited to, temporary and
permanent restraining orders and injunctions.

SECTION 7. GENERAL PROVISIONS.

         7.1 NOTICES. All notices and communications hereunder shall be in
writing and shall be given by personal delivery or mailed first class,
registered or certified mail, postage prepaid, and shall be deemed received upon
the earlier of actual delivery or three (3) business days after deposit in the
United States Mail. Notices to the parties shall be delivered or mailed to the
addresses set forth in this Agreement.

         7.2 TIME. Time is of the essence of this Agreement. However, if any
action is required to be taken on a Saturday, Sunday or legal holiday, the
action shall be deemed timely taken if it is taken on the next regular business
day.

         7.3 LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona. Any action brought in
connection with this Agreement shall be brought and prosecuted in a federal or
state court of competent jurisdiction in Arizona.

         7.4 LIABILITY OF AFFILIATES. The parties acknowledge that this
Agreement is made exclusively between DV and Addink and that neither the
shareholders, directors, officers, employees or agents of DV, UDC or their
affiliates, shall have any liability under this Agreement of any kind at any
time.

         7.5 NEGOTIATIONS AND INTEGRATION. The terms and provisions of this
Agreement represent the results of extensive negotiations between the parties.
Each party has obtained, or had the opportunity to obtain, the advice of
independent legal counsel. The terms and provisions of this Agreement shall be
interpreted and construed in accordance with their usual and customary meanings.
All understandings and agreements between the parties are merged in this
Agreement which alone fully and completely expresses their agreement. This
Agreement is entered into after full investigation, neither party relying upon
any statements or representations made by the other not embodied in this
Agreement. This Agreement supersedes all prior employment between DV and Addink
and all personnel policies of DV.

         7.6 ASSIGNMENT AND MODIFICATION. This Agreement may not be assigned,
delegated or subcontracted at any time. DV shall not merge, liquidate or
distribute substantially all of its assets without the prior written consent of
Addink, which consent will not be unreasonably withheld. This Agreement may not
be changed orally, but only by an agreement in writing, signed by the parties.
The parties shall execute all amendments and restatements of this Agreement
recommended by counsel to DV, provided such amendments and restatements do not
substantially modify nor adversely affect any of the material provisions of this
Agreement.

         7.7 SEVERANCE. If any provision of this Agreement or the application of
such provision to any person or circumstance shall be held invalid, the
remainder of this Agreement, 


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or the application of such provision to persons or circumstances other than
those to which it was held invalid, shall not be effected thereby.

         7.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties hereto, their successors and assigns. However, nothing herein shall be
deemed to permit assignment except in strict accordance with the provisions of
this Agreement.

         7.9 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same Agreement.

         IN WITNESS WHEREOF, the parties hereby acknowledge their receipt,
review, understanding and acceptance of every provision of this Agreement as of
the dates stated below, effective as of the Agreement Date.

DV:                                   Duck Ventures, Inc.,
                                      an Arizona corporation

                                      By:      /s/ ERNEST C. GARCIA II
                                              ---------------------------------
                                      Name:        ERNEST C. GARCIA II
                                              ---------------------------------
                                      Its:         PRESIDENT
                                              ---------------------------------
                                      Date:        8/1/97
                                              ---------------------------------

UDC:                                  In approval of Section 4.6,
                                      Ugly Duckling Corporation,
                                      a Delaware corporation

                                      By:      /s/ ERNEST C. GARCIA II
                                              ---------------------------------
                                      Name:        ERNEST C. GARCIA II
                                              ---------------------------------
                                      Its:         CEO
                                              ---------------------------------
                                      Date:        8/1/97
                                              ---------------------------------


Addink:                                 /s/ DONALD L. ADDINK
                                      -----------------------------------------
                                      Donald L. Addink
                                      Date:        8/1/97
                                              ---------------------------------


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