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

                                 LOAN AGREEMENT


                          Dated as of November 12, 1998


                                 by and between


                   GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
                             a Delaware corporation
                                   ("Lender")


                                       and


                           UGLY DUCKLING CORPORATION,
                             a Delaware corporation
                                  ("Borrower")


                         $15,000,000 Collateralized Loan


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


















<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I

DEFINITIONS....................................................................1
1.1      Defined Terms.........................................................1
1.2      Other Interpretive Provisions........................................10
1.3      Accounting Principles................................................11
1.4      Times................................................................11

ARTICLE II

THE LOAN......................................................................11
2.1      The Loan.............................................................11
2.2      Payment Upon Collections.............................................11
2.3      Payment Upon Maturity................................................12
2.4      Interest.............................................................12
2.5      Voluntary Prepayments................................................12
2.6      Application of Payments..............................................12
2.7      Prepayment...........................................................13
2.9      Fees and Interest....................................................13
2.10     Payments by Borrower.................................................13

ARTICLE III

SECURITY AGREEMENT AND COLLATERAL.............................................14
3.1      Security for Obligations.............................................14
3.2      Security Documents...................................................14
3.3      Lender's Duty Regarding Collateral...................................14
3.4      Borrower's Duties Regarding Collateral...............................14
3.5      Power of Attorney....................................................15
3.6      Collateral Inspections...............................................16

ARTICLE IV

CONDITIONS PRECEDENT; TERM OF AGREEMENT.......................................16
4.1      Conditions Precedent.................................................16
4.2      Receipt of Documents. ...............................................16
4.3      Term.................................................................17
4.4      Effect of Termination................................................18
















<PAGE>

ARTICLE V

REPRESENTATIONS AND WARRANTIES................................................18
5.1      No Encumbrances......................................................18
5.2      Location of Chief Executive Office; FEIN.............................18
5.3      Due Organization and Qualification; Subsidiaries.....................18
5.4      Due Authorization: No Conflict.......................................19
5.5      Litigation...........................................................20
5.6      Financial Statements; No Material Adverse Change.....................20
5.7      Securitization Documents.  ..........................................20
5.8      ERISA................................................................20
5.9      Environmental and Safety Matters.....................................20
5.10     Tax Matters..........................................................21

ARTICLE VI

AFFIRMATIVE COVENANTS.........................................................21
6.1      Financial Statements and Other Documents.............................21
6.2      Inspection of Property...............................................22
6.3      Default Disclosure...................................................22
6.4      Notices to Lender....................................................22
6.5      Books and Records....................................................23
6.6      Compliance and Preservation..........................................23
6.7      Perfection of Liens..................................................23
6.8      Cooperation..........................................................23

ARTICLE VII

NEGATIVE COVENANTS............................................................24
7.1      Liens................................................................24
7.2      Indebtedness.........................................................24
7.3      Restrictions on Fundamental Changes..................................24
7.4      Disposal of Collateral...............................................24
7.5      Change Name..........................................................24
7.6      Amendments...........................................................24
7.7      Change of Control....................................................24
7.8      Distributions........................................................24
7.9      Standing Dividend Resolutions........................................25
7.10     Change in Location of Chief Executive Office.........................25
7.11     No Prohibited Transactions Under ERISA...............................25
7.12     Stock Buyback Program................................................26
7.13     Verde Subordinated Debt..............................................26
















<PAGE>





ARTICLE VIII

EVENTS OF DEFAULT/REMEDIES....................................................26
8.1      Event of Default.....................................................26
8.2      Lender's Rights and Remedies.........................................27

ARTICLE IX

MISCELLANEOUS.................................................................28
9.1      Amendments and Waivers...............................................28
9.2      Notices..............................................................29
9.3      No Waiver: Cumulative Remedies.......................................30
9.4      Costs and Expenses...................................................30
9.5      Indemnity............................................................30
9.6      Marshaling: Payments Set Aside.......................................31
9.7      Successors and Assigns...............................................31
9.8      Set-off..............................................................31
9.9      Counterparts.........................................................31
9.10     Severability.........................................................32
9.11     No Third Parties Benefited...........................................32
9.12     Time.................................................................32
9.13     Governing Law and Jurisdiction.......................................32
9.14     Entire Agreement.....................................................33
9.15     Interpretation.......................................................33
9.16     Assignment...........................................................33
9.17     Revival and Reinstatement of Obligations.............................33




























<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                 Class B Certificates

Schedule G                 Subordinated Indebtedness

Exhibit A                  UCC-1 Financing Statement(s)

Exhibit B                  UDRC and UDRCII Securitization Documents


































<PAGE>




                                 LOAN AGREEMENT


     This LOAN AGREEMENT (the  "Agreement"),  is entered into as of November 12,
1998, between GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation
("Lender"),  with a place of business located at 600 Steamboat Road,  Greenwich,
Connecticut  06830  and  UGLY  DUCKLING  CORPORATION,   a  Delaware  corporation
("Borrower"),  with a place of  business  located at 2525 East  Camelback  Road,
Suite 500, Phoenix, Arizona 85016.

     Lender has agreed to make to Borrower a  collateralized  loan (the  "Loan")
upon the terms and conditions set forth in this Agreement.

     NOW, THEREFORE,  in consideration of the mutual agreements,  provisions and
covenants contained herein, the parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     I.1  Defined  Terms.  In addition to the terms  defined  elsewhere  in this
Agreement, the following terms have the following meanings:

     "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
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 Lender be
deemed an "Affiliate" of Borrower.

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

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

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












                                    Page - 1
<PAGE>

     "Bond  Insurance  Policy"  shall mean a  financial  guaranty  or  financial
insurance  policy  issued by MBIA Corp.  or any of its  Affiliates  or any other
financial  guarantor in respect of one or more classes of investor  certificates
or other interests issued by a Securitization Trust.

     "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.

     "Business  Day" means any day other  than a  Saturday,  Sunday or  national
holiday.

     "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 a
"person" or "group"  (within the meaning of Sections  13(d) and  14(d)(2) of the
Securities Exchange Act of 1934) 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.

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

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

     "Collateral"  means all of the  outstanding  capital stock of UDRC and UDRC
II.

     "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 in respect of the  Collateral,  including all amounts paid to
Lender pursuant to the UDRC Dividend  Direction  Letter and the UDRC II Dividend
Direction Letter.

     "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








                                    Page - 2
<PAGE>

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.

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

     "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) 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.

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

     "FEIN" means Federal Employer Identification Number.







                                    Page - 3
<PAGE>

     "Financing  Statements"  means  the  Financing  Statements  on  Form  UCC-1
together with an attachment thereto in the form attached hereto as Exhibit A, to
perfect the security  interests in the Collateral  pursuant to the provisions of
Article III that can be perfected by filing.

     "Fiscal Quarter" means a fiscal quarter of Borrower.

     "Fiscal Year" means a fiscal year of Borrower.

     "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.

     "GECC" means General Electric Capital Corporation, a New York corporation.

     "GECC  Agreement"  shall  mean  the  Amended  and  Restated  Motor  Vehicle
Installment  Contract Loan and Security Agreement,  dated as of August 15, 1997,
by and  between  Borrower,  GECC and  certain  other  parties  thereto,  as such
agreement may be amended from time to time.

     "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.

     "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.









                                    Page - 4
<PAGE>



     "Indemnified Liabilities" has the meaning specified in Section 9.5.

     "Indemnified Person" has the meaning specified in Section 9.5.

     "Initial  Principal  Amount"  means the amount of Fifteen  Million  Dollars
($15,000,000).

     "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
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 Lender;  (b) reasonable
out-of-pocket  fees or charges  paid or  incurred by Lender in  connection  with
Lender's   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 Lender in the
disbursement  of funds to Borrower (by wire transfer or  otherwise);  (c) actual
out-of-pocket  charges paid or incurred by Lender resulting from the dishonor of
checks;  (d)  reasonable  out-of-pocket  costs and expenses  paid or incurred by
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 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 Lender in enforcing or defending the Loan  Documents or
in  connection  with the  transactions  contemplated  by the Loan  Documents  or
Lender's relationship with Borrower;  and (g) Lender'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.

     "LIBOR" shall mean, with respect to an Interest  Accrual  Period,  the rate
per annum  equal to the rate  appearing  on  Bloomberg  on the first day 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 at page 3750 of the Telerate  Screen on the first day of such Interest
Accrual Period,  or if neither such rate shall be so quoted,  the rate per annum
at which Lender is offered Dollar deposits at or about 11:00 a.m., New York City
time, on such date by prime banks in the interbank  eurodollar  market where the








                                    Page - 5
<PAGE>



eurodollar  and foreign  currency  exchange  operations of Lender are then being
conducted, for delivery on the first day of such Interest Accrual Period for the
number of days in such Interest Accrual Period,  and in an amount  comparable to
the amount of the Loan on such day.

     "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, the Stock Pledge Agreement, the UDRC
Dividend  Direction Letter, the UDRC II Dividend Direction Letter, the Financing
Statements, and all documents delivered to Lender in connection therewith.

     "Material  Adverse  Change" or "Material  Adverse  Effect" means a material
adverse change in, or a material adverse effect upon, any of (a) the operations,
business,  properties,  condition  (financial  or  otherwise)  or  prospects  of
Borrower or an  Affiliate  of  Borrower,  (b) the ability of Borrower 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.

     "Maturity Date" shall mean the date that is three hundred  sixty-four (364)
days  following  the Closing  Date,  unless such date is not a Business  Day, in
which case the Maturity Date shall be the immediately preceding Business Day.

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

     "Payment  Date"  shall mean the 15th day of each  month  during the term of
this Agreement.

     "Permitted Liens" means (a) Liens held by Lender and (b) each lien existing
at or prior to the date of this  Agreement  that is  identified on Schedule E to
this Agreement.







                                    Page - 6
<PAGE>



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

     "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.

     "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.

     "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, as
they may  hereafter  be amended,  modified  and/or  supplemented,  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.

     "Securitization Default" means any 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 default or event of default,  by UDRC,  UDRC II or any seller to
UDRC or UDRC II in their respective  obligations  under the UDRC  Securitization
Documents  or the UDRC II  Securitization  Documents,  which has not been  cured
within any applicable period thereunder.

     "Securitization Trust" shall mean any trust formed pursuant to a purchasing
agreement or a pooling and servicing  agreement specified on Exhibit B hereto or
contemplated in clause (iii) of the definitions of UDRC Securitization Documents
and UDRC II Securitization Documents.

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

     "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 Lender.









                                    Page - 7
<PAGE>




     "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.

     "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) plus  Subordinated  Debt of
Borrower  and its  consolidated  Subsidiaries,  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.

     "Tax" 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.

     "Trustee" means Harris Trust and Savings Bank.

     "UCC" means the Uniform  Commercial  Code as in effect from time to time in
the State of Arizona,  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.

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

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

     "UDRC II"  shall  means  Ugly  Duckling  Receivable  Corp.  II, a  Delaware
corporation.

     "UDRC Class B Certificates"  shall mean the issued and outstanding  Class B
Certificates issued by each  Securitization  Trust with respect to which UDRC is
the seller, including those set forth on Schedule F, which constitute all of the
UDRC Class B Certificates in existence on the Closing Date.







                                    Page - 8
<PAGE>



     "UDRC  II  Class B  Certificates"  shall  mean  the  currently  issued  and
outstanding,  and all further issued and then outstanding,  Class B Certificates
issued by each of  Securitization  Trust  with  respect  to which UDRC II is the
seller,  including  those set forth on Schedule F, which  constitute  all of the
UDRCII Class B Certificates in existence on the Closing Date.

     "UDRC Dividend  Direction  Letter" means the letter dated November __, 1998
in which  Lender,  UDRC,  UDCC and  Trustee  agree  that  Trustee  shall pay all
distributions in respect of the UDRC Class B Certificates directly to Lender.

     "UDRC II Dividend  Direction  Letter"  means the letter dated  November __,
1998 in which Lender, UDRC II, UDCC and Trustee agree that Trustee shall pay all
distributions in respect of the UDRC II Class B Certificates directly to Lender.

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

     "UDRC II  Securitization  Documents"  shall  mean each of (i) the  purchase
agreements listed on Exhibit B hereto, (ii) the pooling and servicing agreements
listed on Exhibit B hereto, (iii) any similar purchase agreements or pooling and
servicing agreements entered into or acknowledged by Borrower,  UDCC, UDRC II or
any  Affiliate  of any of them  after  the  date  hereof,  and  (iv)  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 Standing Dividend  Resolution"  shall mean the resolution  adopted on
January  27,  1998  by  the  board  of  directors  of  UDRC  (formerly  Champion
Receivables  Corp.) to the effect that any amounts  received as distributions on
the UDRC Class B Certificates should be promptly distributed to Lender.

     "UDRC II Standing Dividend Resolution" shall mean the resolution adopted on
January  27,  1998 by the  board  of  directors  of UDRC II  (formerly  Champion
Receivables  Corp. II) to the effect that any amounts  received as distributions
on the UDRC II Class B Certificates should be promptly distributed to Lender.

     "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.







                                    Page - 9
<PAGE>



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

     "Voidable Transfer" has the meaning set forth in Section 9.17.

     I.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".

     (d) Performance; Time. Whenever any performance obligation hereunder (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.







                                   Page - 10
<PAGE>



                  (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.

                  I.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 Lender  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 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.

                  I.4      Times.  All times of the day herein are New York City
time.

                                   ARTICLE II

                                    THE LOAN

                  II.1 The Loan. Lender, on the terms and conditions hereinafter
set  forth  and  the  conditions  precedent  pursuant  to  Section  4.1 of  this
Agreement, agrees to make the Loan to Borrower in the Initial Principal Amount.

                  II.2 Payment Upon Collections.  Upon Borrower's receipt of any
Collections,  Borrower  shall promptly (and in any event within one (1) Business
Day) pay such Collections to Lender. Lender shall apply such Collections and any








                                   Page - 11
<PAGE>



Collections paid directly to Lender by Trustee in accordance with the procedures
set forth in Section 2.6; provided,  however, Lender shall remit to Borrower any
Collections  received by Lender on or prior to November 30, 1998, except for the
portion  of such  Collections  equal to the amount of  accrued  interest  on the
Obligations  through  the date on which such  Collections  are  received,  which
retained  Collections  shall be applied in accordance  with the  procedures  set
forth in Section 2.6.

                  II.3 Payment Upon  Maturity.  On the Maturity  Date,  Borrower
will pay to Lender an amount equal to the  Outstanding  Principal  Amount of the
Loan,  together  with all accrued and unpaid  interest on the Loan and any other
accrued and unpaid Obligations.

                  II.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 LIBOR for such  Interest  Accrual  Period plus four hundred basis
points (the "Initial Interest Rate").  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
at a rate per annum which shall be 500 basis points  above the Initial  Interest
Rate.

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

                  II.5 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).  Borrower shall give Lender at least
one Business Day prior notice of its intention to prepay, specifying the date of
payment,  the total  amount and  portion of the Loan to be paid on such date and
the amount of interest to be paid with such prepayment.

                  II.6  Application of Payments.  All payments on the Loan shall
be applied, without duplication, in the following order:

                  (a)      First, to Lender for application to overdue interest
on the Obligations;

                  (b)      Second, to Lender for application to accrued interest
 on the Obligations;

                                   Page - 12
<PAGE>



                  (c)      Third, to Lender for application to the Outstanding
Principal Amount;

                  (d) Fourth,  to Lender for any and all sums advanced by Lender
as are reasonably  necessary in order to preserve the Collateral or its security
interest 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 Lender of its rights under this  Agreement,
together with reasonable Attorney Costs; and

                  (e) Fifth, to all other accrued and unpaid Obligations.

                  II.7  Prepayment.  Upon any  prepayment of the Loan,  Borrower
shall pay to  Lender  the  principal  amount to be  prepaid,  together  with all
accrued and unpaid  interest on the Loan through the date of prepayment.  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.

                  II.8     Fees.

                  (a) Commitment Fee.  Borrower shall pay to Lender a commitment
fee equal to one percent (1.00%) of the Initial  Principal Amount on the Closing
Date, which fee shall be subtracted on the Closing Date from the proceeds of the
Loan.

                  (b) Late Payment Fee. In the event the  Outstanding  Principal
Amount of the Loan,  together  with all accrued and unpaid  interest on the Loan
and any other accrued and unpaid Obligations are not paid in full on or prior to
the  Maturity  Date,  Borrower  shall pay Lender a late payment fee equal to one
percent (1.00%) of the Initial Principal Amount.

                  II.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 Lender all accrued
and unpaid interest on each Payment Date.

                  II.10    Payments by Borrower.


                                   Page - 13
<PAGE>


                  (a)  All  payments  (including  prepayments)  to  be  made  by
Borrower on account of  principal,  interest,  fees and other  amounts  required
hereunder shall be made without set-off,  deduction,  recoupment or counterclaim
and shall,  except as otherwise  expressly provided herein, be made to Lender at
Lender's  office  as set  forth  in  the  preamble  hereto,  in  dollars  and in
immediately  available  funds,  no later  than 3:00 p.m.  on the date  specified
herein.  Any payment  which is received by Lender later than 3:00 p.m.  shall be
deemed to have been received on the immediately  succeeding Business Day and any
applicable interest or fee shall continue to accrue.

                  (b) Whenever any payment  hereunder  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.

                  (c) If any  payment  of  interest  or Lender  Expenses  is not
received  by  Lender,  within  ten (10)  days of the date  when the same is due,
Borrower  shall pay to Lender a late charge in an amount  equal to five  percent
(5%) of the amount not so paid.


                                   ARTICLE III

                        SECURITY AGREEMENT AND COLLATERAL

                  III.1  Security for  Obligations.  As security for the payment
and  performance of the  Obligations  under this Agreement and all other present
and future  debts,  obligations  and  liabilities  of any nature  whatsoever  of
Borrower to Lender, and all modifications, renewals, replacements and extensions
thereof,  UDCS shall grant Lender a security interest in the Collateral pursuant
to the Stock Pledge Agreement.  Borrower shall cause UDCS to execute and deliver
the Stock Pledge Agreement and to perform its obligations  thereunder.  Borrower
will  execute,  and  shall  cause  UDCS to  execute,  any  security  agreements,
collateral assignments, financing statements for filing and/or recording and any
other Lien  writings  reasonably  required by Lender to evidence and perfect the
Liens  and  security  interests  of  Lender.  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.

                  III.2 Security  Documents.  Borrower shall promptly execute or
cause  to  be  executed  the  Financing  Statements  and  such  other  financing
statements and notices as are necessary to properly  perfect  Lender's  security
interest in the Collateral.

                  III.3 Lender's Duty Regarding Collateral. Lender shall have no
duty or obligation to protect, insure, collect or realize upon the Collateral or
preserve rights in it against prior parties.  Borrower releases Lender from, and
shall indemnify Lender against,  any liability for any act or omission  relating
to the  Collateral,  except for any liability  directly  resulting from Lender's
gross negligence or willful misconduct.

                  III.4 Borrower's Duties Regarding Collateral. Borrower agrees
as follows:


                                   Page - 14
<PAGE>


                  (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 Lender,  mechanic's liens, Permitted
Liens,  and any Liens in favor of  Lender);  (ii) shall  defend  the  Collateral
against all claims and legal  proceedings  by persons  other than Lender;  (iii)
shall pay and  discharge  when due all taxes,  levies and other charges upon the
Collateral; (iv) shall cause UDCS 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  and, upon  Lender's  request,  execute all writings and take all other
actions  reasonably  deemed advisable by Lender to preserve the Collateral or to
establish,  and  determine  priority of,  perfection,  continued  perfection  or
enforce Lender's interest in the Collateral.

                  (c)  Records  and  Inspections.   Upon  reasonable  notice  to
Borrower,  Lender  may  examine  and  conduct  audits  of  the  Collateral,  and
Borrower's and UDCS's records  concerning it, wherever located,  and make copies
of such records,  at any time during normal business  hours,  and Borrower shall
assist 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
Lender, furnish to 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.

                  III.5 Power of Attorney.  Borrower  hereby makes,  constitutes
and appoints  Lender 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 9.2:

                  (a) To take all actions and to  execute,  acknowledge,  obtain
and deliver any and all  writings  necessary  or deemed  advisable  by 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


                                   Page - 15
<PAGE>


                  (d) To file any  claim  or  proceeding  or to take  any  other
action, in the name of 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 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. Lender shall have no obligation to exercise any of the foregoing
rights and powers in any event.

                  III.6 Collateral Inspections. 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

                  IV.1  Conditions  Precedent.  Lender  shall  not make the Loan
hereunder if Borrower has not  fulfilled to the  satisfaction  of Lender and its
counsel,  each of the  following  conditions  on or  before  the  Closing  Date;
provided,  however, that Lender, in its sole and absolute discretion,  may waive
any of the following conditions.

                  IV.2 Receipt of Documents.  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 and Lender;

                  (b)      The Stock Pledge Agreement;

                  (c)      The certificate or certificates representing the
                           Collateral, together with stock  powers  executed  in
                           blank (the "Stock Powers");

                  (d)      The Financing Statements executed by Borrower and
                           Lender;

                  (e)      The UDRC Dividend Direction Letter;

                  (f)      The UDRC II Dividend Direction Letter;

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

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

                                   Page -16
<PAGE>


                  (i) A consent and  subordination  from GECC  consenting to the
         execution,  delivery and  performance  by Borrower and UDCS of the Loan
         Documents  and  subordinating  to  Lender  GECC's  Lien  on any  assets
         constituting Collateral;

                  (j)  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;

                  (k) 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;

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

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

                  (n) Copies of each of Borrower's, UDCS's, UDRC's and UDRC II'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;

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

                  (p) A copy of lien  searches,  completed  as of a recent date,
         against   Borrower  and  UDCS,  in  such   jurisdictions  as  shall  be
         satisfactory to Lender and its counsel;

                  (q) 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 Lender and from counsel
         satisfactory to Lender.


                                   Page - 17
<PAGE>


                  IV.3 Term.  This  Agreement  shall become  effective  upon the
execution and delivery  hereby by Borrower and Lender 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.
                  IV.4  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 of Borrower's duties,  Obligations,  or covenants  hereunder,
and Lender'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  Lender 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:

                  V.1      No  Encumbrances.  UDCS has  good and  indefeasible
title to the  Collateral,  free and clear of Liens except for Permitted Liens.

                  V.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.

                  V.3      Due Organization and Qualification; Subsidiaries.

                  (a)  Borrower  is  duly  organized  and  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.


                                   Page - 18
<PAGE>


                  (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.

                  V.4      Due Authorization: No Conflict.

                  (a) The execution,  delivery,  and  performance by Borrower of
this  Agreement  and the Loan  Documents  to which it is a party  have been duly
authorized by all necessary corporate action.

                  (b) The execution,  delivery,  and  performance by Borrower of
this Agreement and 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 G, T, U, and X of the Federal Reserve Board)  applicable
to Borrower,  the Governing Documents of Borrower,  or any order,  judgment,  or
decree of any court or other  Governmental  Authority binding on Borrower,  (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 Borrower,  (iii) result in or require the creation or imposition of any
Lien of any nature  whatsoever  upon any  properties or assets of such Borrower,
other than Permitted  Liens, or (iv) require any approval of stockholders or any
approval or consent of any Person under any material  contractual  obligation of
Borrower.

                  (c)  Other  than the  taking  of any  other  action  expressly
required under this Agreement and the Loan Documents,  the execution,  delivery,
and  performance  by Borrower of this  Agreement and the Loan Documents to which
Borrower 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 Loan Documents and all other documents
contemplated hereby and thereby,  when executed and delivered by Borrower,  will
be the legally valid and binding  obligations of Borrower,  enforceable  against
Borrower 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 Pledge  Agreement and the Stock Powers,  when executed
and  delivered by UDCS,  will be the legally  valid and binding  obligations  of
Borrower,  enforceable  against  Borrower 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 UDCS on the  Collateral  is a validly
created and perfected Lien, subject to no other Liens.

                                   Page - 19
<PAGE>


                  V.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 and (b) matters
that,  if decided  adversely  to  Borrower,  would not have a  Material  Adverse
Effect.

                  V.6 Financial  Statements;  No Material  Adverse  Change.  All
financial  statements  relating  to  Borrower,  UDRC and UDRC II that  have been
delivered  by  Borrower to Lender 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. There has not been a Material  Adverse  Change  with
respect to Borrower since the date of the latest financial  statements submitted
to Lender on or before the Closing Date.

                  V.7 Securitization  Documents.  Borrower, UDRC and UDRC II and
each  of  their   Affiliates  are  in  full  compliance  with  their  respective
obligations   under  the  UDRC   Securitization   Documents   and  the  UDRC  II
Securitization Documents, and no Securitization Default exists.

                  V.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 or
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.


                                   Page - 20
<PAGE>


                  V.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
or surface  impoundments;  and (d) except as disclosed to Lender in writing,  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.

                 V.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 Taxes owed by any of Borrower
and its Subsidiaries have been paid.

                                   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  Lender shall  otherwise  consent in writing,  Borrower
shall do all of the following:

     VI.1 Financial  Statements and Other  Documents.  Borrower shall deliver to
Lender in form and detail satisfactory to Lender:

     (a) Within 45 days of the end of each fiscal quarter,  Borrower's unaudited
financial  statements  for  such  quarter,  and,  within  90  days of the end of
Borrower's fiscal year, Borrower's 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;

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

     (c) 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;

     (d)  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;


                                   Page - 21
<PAGE>


     (e)  Promptly  upon receipt  thereof,  copies of any other  information  or
documents received by borrower pursuant to the UDRC Securitization Documents and
the UDRC II Securitization Documents;

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

     (g)  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.

     VI.2 Inspection of Property. Borrower shall permit any Person designated by
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
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
Lender may reasonably request.

     VI.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
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,  promptly deliver to 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.

     VI.4 Notices to Lender.  Borrower shall  promptly  notify Lender in writing
of:

     (a) Any  lawsuit  over One  Hundred  Thousand  Dollars  ($100,000)  against
Borrower;

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

     (c) Any change in Borrower's name, address, or legal structure.
                                   Page - 22
<PAGE>



                  VI.5     Books and Records.  Borrower shall maintain adequate
books and records.

                  VI.6     Compliance and Preservation.  Borrower shall:

                  (a)  Comply  with  the laws  (including  any  fictitious  name
statute),  regulations  and orders of any  government  body with  authority over
Borrower's business;

                  (b)     Maintain and  preserve all privileges  and  franchises
Borrower now has; and

                  (c)  Make any repairs,  renewals,  or replacements  reasonably
necessary to keep Borrower's properties in good working condition.

                  VI.7  Perfection of Liens.  Borrower shall help Lender perfect
and protect its security interests and liens.

                  VI.8  Cooperation.  Borrower shall take any reasonable  action
requested by Lender to carry out the intent of this Agreement.

                  VI.9 Use of Proceeds.  Borrower  shall use the proceeds of the
Loan for general working capital to facilitate ongoing growth in Borrower's core
operations.

                  VI.10   Securitizations.   Any  securitizations  of  the  Ugly
Duckling  Collateral  executed  during the term of this Agreement  shall be done
through UDRC II. Borrower shall continue to execute quarterly securitizations of
the Ugly Duckling Collateral during the term of this Agreement.

                  VI.11 Compliance with Covenants.  Borrower shall perform, keep
or observe any term, provision,  condition or covenant or agreement contained in
each  Bond  Insurance  Policy,  the  GECC  Agreement  and  any  other  agreement
evidencing Indebtedness.

                  VI.12 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 or UDRC
II.

                  VI.13    Tangible Net Worth.  Borrower shall  maintain a
consolidated  Tangible Net Worth of net less than $100,000,000.

                  VI.14   Debt to Tangible Net Worth.  Borrower shall maintain a
ratio of (i) the  principal  amount  of Debt of  Borrower  and its  consolidated
Subsidiaries to (ii) Tangible Net Worth of no greater than 2.1 to 1.


                                   Page - 23
<PAGE>


                                   ARTICLE VII

                               NEGATIVE COVENANTS

                  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  Lender's prior
written consent:

                  VII.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
and  UDRC  II,  including  the UDRC  Class B  Certificates,  the UDRC II Class B
Certificates,  or any income or profits  from any of the  foregoing,  except for
Permitted Liens listed on Schedule E or liens of Lender.

                  VII.2 Indebtedness.  Permit UDRC or UDRC II to incur,  assume,
or permit to exist, directly or indirectly any Indebtedness.

                  VII.3  Restrictions  on  Fundamental  Changes.  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.

                  VII.4 Disposal of Collateral. Except as expressly consented to
by Lender in writing, sell, lease, assign, transfer, or otherwise dispose of any
of the Collateral.

                  VII.5  Change  Name.  Without  giving  thirty  (30) days prior
written  notification  to  Lender,   change  Borrower's  name,  FEIN,  corporate
structure  (within the meaning of Section 9402(7) of the Code), or identity,  or
add any new fictitious name.

                  VII.6 Amendments.  Except as expressly  consented to by Lender
in writing,  directly or indirectly,  amend, modify, alter,  increase, or change
any of the terms or conditions of the UDRC Securitization  Documents or the UDRC
II Securitization Documents.

                  VII.7    Change of Control.  Cause,  permit,  or suffer,
directly or  indirectly,  any Change of Control.

                  VII.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, other than the buyback of
1,000,000 shares of Borrower's  common stock  previously  approved by Borrower's
Board of Directors.


                                   Page - 24
<PAGE>


                  VII.9 Standing Dividend  Resolutions.  Permit UDRC to rescind,
amend,  modify,  revoke or alter the UDRC Standing Dividend Resolution or permit
UDRC II to rescind, amend, modify, revoke or alter the UDRC II Standing Dividend
Resolution.

                  VII.10 Change in Location of Chief Executive Office.  Relocate
its chief  executive  office to a new location  without  providing 30 days prior
written  notification  thereof  to  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 Lender's security interests
and also provides to Lender a Collateral  access  agreement with respect to such
new location.

                  VII.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  Benefit  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 Benefit Plan;

                  (d)  Terminate,  or  permit  any  Subsidiary  of  Borrower  to
terminate,  any Benefit 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;

                  (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


                                   Page - 25
<PAGE>


                  (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.

                  VII.12   Stock  Buyback  Program.  Use the  proceeds of the
Loan to  facilitate  a stock  buyback program.

                  VII.13 Verde  Subordinated  Debt. Repay any portion of the $10
million loan from Verde Investments without Lender's prior written consent.



                                  ARTICLE VIII

                           EVENTS OF DEFAULT/REMEDIES

                  VIII.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 Lender,  reimbursement of Lender Costs, or other
amounts constituting Obligations);

                  (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
Lender;

                  (c) If there is a  Material  Adverse  Change  with  respect to
Borrower,  UDRC or UDRC II (the occurrence or  non-occurrence  of which shall be
determined by Lender in the exercise of its 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) If a judgment or other claim in excess of $250,000 becomes
a Lien or  encumbrance  upon any material  portion of  Borrower's  properties or
assets and such judgment is not removed or released  within 15 days of the entry
of such judgment;


                                   Page - 26
<PAGE>


                  (g) If Borrower  makes any payment on account of  Indebtedness
that has been  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 made to
Lender by  Borrower or any  officer,  employee,  agent,  or director of Borrower
which has not been corrected to date, or if any such warranty or  representation
is withdrawn;

                  (i) If Borrower rescinds,  amends, alters, revokes or modifies
(or permits UDRC or UDRC II to rescind, amend, alter, revoke or modify) the UDRC
Standing Dividend  Resolution or the UDRC II Standing Dividend Resolution in any
respect;

                  (j) If a default  or event of  default  occurs  under the GECC
Agreement or under the terms of any other  Indebtedness  in excess of $1,000,000
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; or

                  (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  Company  or  any  of its  Subsidiaries  bankrupt  or
insolvent,  or any order for relief with respect to the Company 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  Company  or  any of its  Subsidiaries,  or  commences  any
proceeding  relating  to  the  Company  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 Company or
any of its Subsidiaries.

                  VIII.2   Lender's   Rights  and   Remedies.   Subject  to  the
occurrence,  and during the continuation,  of an Event of Default,  Lender shall
provide Borrower with written notice thereof and the option to cure. If Borrower
fails to cure such Event of Default  within ten (10) days after delivery of such
written notice, Lender may, at its 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;

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

                                   Page - 27
<PAGE>


                  (c)  Without notice  to or  demand  upon  Borrower,  make such
payments and do such acts as Lender considers necessary or reasonable to protect
its security interests 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 9-505 of the UCC),  set off and
apply to the  Obligations any and all (i) balances and deposits of Borrower held
by Lender,  or (ii)  indebtedness  at any time owing to or for the credit or the
account of Borrower held by Lender; or

                  (e)  Collect,  receive,   appropriate  and  realize  upon  the
Collateral, on such terms as Lender, in its sole and absolute discretion,  deems
appropriate  without  any  liability  for any loss due 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.  Lender  shall  not 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 Lender.

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


                                   ARTICLE IX

                                  MISCELLANEOUS

                  IX.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 Lender and Borrower, and then such waiver
shall be effective  only in the specific  instance and for the specific  purpose
for which given.


                                   Page - 28
<PAGE>


                  IX.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
                                    2525 East Camelback Road
                                    Suite 500
                                    Phoenix, Arizona  85016
                                    Attn: Steven P. Johnson
                                    Facsimile: (602) 552-3139

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

                  If to Lender:.....Greenwich Capital Financial Products, Inc.
                                    600 Steamboat Road
                                    Greenwich, Connecticut 06830
                                    Attn:  Ira J. Platt
                                    Facsimile: (203) 622-2090

                  With a copy to:...Kirkland & Ellis
                                    200 East Randolph
                                    Chicago, Illinois 60601
                                    Attn: Kenneth P. Morrison
                                    Facsimile: (312) 861-2200

                  (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 Lender.


                                   Page - 29
<PAGE>


                  (c)  Borrower acknowledges  and agrees that any  agreement  of
Lender to receive  certain  notices by telephone and facsimile is solely for the
convenience and at the request of Borrower.  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 Lender shall not have any liability to Borrower or to other
Person on account of any action  taken or not taken by 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 Lender to receive
written  confirmation  of any  telephonic or facsimile  notice or the receipt by
Lender of a  confirmation  which is at  variance  with the terms  understood  by
Lender to be contained in the telephonic or facsimile notice.

                  IX.3 No Waiver:  Cumulative  Remedies.  No failure to exercise
and no delay in exercising,  on the part of 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.

                  IX.4 Costs and Expenses.  Borrower  shall,  whether or not the
transactions contemplated hereby shall be consummated:

                  (a)  pay or  reimburse  Lender within  ten (10)  Business Days
after  demand for all Lender  Costs  incurred by Lender 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 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 Lender with respect thereto;

                  (b)  pay or reimburse  Lender  within  ten (10)  Business Days
after  demand for all Lender  Costs  incurred by Lender 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 Lender; and

                  (c)  pay or reimburse  Lender within  ten (10)  Business  Days
after demand for all  reasonable  appraisal  (including  the  allocated  cost of
internal  appraisal   services),   audit,  due  diligence,   monitoring  review,
environmental  inspection  and  review  (including  the  allocated  cost of such
internal  services),  search and filing costs,  fees and  expenses,  incurred or
sustained by Lender in connection with the Loan, the Loan Documents,  any of the
Obligations and the matters referred to under (a) and (b) of this Section 9.4.


                                   Page - 30
<PAGE>


                  IX.5  Indemnity.  Borrower  shall  pay,  indemnify,  and  hold
Lender,  its  Affiliates  and  Subsidiaries,   and  their  respective  officers,
directors,   employees,   counsel,   agents  and  attorneys-in-fact   (each,  an
"Indemnified  Person")  harmless  from  and  against  any and  all  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  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,  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,  bad
faith or willful  misconduct of such Indemnified  Person or the breach by Lender
of its obligations  hereunder.  The agreements in this Section 9.5 shall survive
payment of all other Obligations and the termination of this Agreement.

                  IX.6 Marshaling: Payments Set Aside. Lender shall not 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 Lender, or to the extent 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.

                  IX.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 Lender.

                  IX.8 Set-off. In addition to any rights and remedies of Lender
provided by law, if an Event of Default exists,  and Borrower fails to cure such
Event of Default within five (5) days after delivery of written notice  thereof,
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, Lender to or for the
credit or the  account of  Borrower  against  any and all  Obligations  owing to
Lender, now or hereafter  existing,  irrespective of whether or not Lender shall
have made demand  under this  Agreement or any Loan  Document and although  such
Obligations  may be contingent or  unmatured.  Lender agrees  promptly to notify
Borrower  after any such  set-off  and  application  made by  Lender;  provided,
however,  that, the failure to give such notice shall not affect the validity of
such set-off and application. The rights of Lender under this Section 9.8 are in
addition to the other  rights and remedies  (including  other rights of set-off)
which Lender may have.


                                   Page - 31
<PAGE>


                  IX.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.  A set of the copies of this Agreement  signed by both parties shall
be lodged with Borrower and Lender.

                  IX.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.

                  IX.11 No Third Parties  Benefited.  This Agreement is made and
entered into for the sole  protection  and legal benefit of Borrower and Lender,
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.  Lender  shall have no  obligation  to any Person not a party to this
Agreement or other Loan Documents.

                  IX.12  Time.  Time  is of  the  essence  as to  each  term  or
provision of this Agreement and each of the other Loan Documents.

                  IX.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 9103 OF
THE UCC.


                                   Page - 32
<PAGE>


                  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.

                  IX.14 Entire  Agreement.  This  Agreement,  together  with the
other Loan  Documents,  embodies the entire  Agreement and  understanding  among
Borrower and Lender 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 Lender.

                  IX.15   Interpretation.   This  Agreement  is  the  result  of
negotiations  between and has been  reviewed by counsel to Lender,  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  Lender
merely because of Lender's  involvement in the preparation of such documents and
agreements.

                  IX.16  Assignment.  Lender may assign its rights hereunder and
under the Loan  Documents  without the  consent of  Borrower.  Borrower  may not
assign or delegate any of its rights, interest or obligations hereunder or under
any of the Loan Documents.

                  IX.17  Revival  and  Reinstatement  of  Obligations.   If  the
incurrence or payment of the Obligations by Borrower or the transfer by Borrower
to 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 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.

                                    * * * * *

                                   Page - 33
<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:      /s/ STEVEN P. JOHNSON
                                    ------------------------------
                                    Name:        Steven P. Johnson
                                    Title:   Senior Vice President



                                    GREENWICH CAPITAL FINANCIAL PRODUCTS,
                                    INC., a Delaware corporation


                                    By:      /s/ IRA PLATT
                                             -------------
                                    Name:        Ira Platt
                                    Title:   Vice President