Document:

AIRCRAFT LEASE AGREEMENT

Agreement Date:         April 1, 2002

Lessor:                 Verde Investments, Inc.
                        4020 East Indian School Road, Suite A
                        Phoenix, Arizona 85018

Lessee:                 Ugly Duckling Corporation
                        4020 East Indian School Road
                        Phoenix, Arizona 85018

Aircraft:               Raytheon Hawker 125-700A
                        Manufacturer's Serial No. NA0280
                        U.S. Registration No. N280AJ
                        described in Exhibit A

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                            Aircraft Lease Agreement

     This Aircraft Lease  Agreement  (this "Lease") is made by and between Verde
Investments,   Inc.,  an  Arizona  corporation   ("Lessor")  and  Ugly  Duckling
Corporation,  a Delaware corporation  ("Lessee"),  effective as of April 1, 2002
(the "Lease Date").

                                    Recitals.

     The parties  acknowledge that the following recitals are correct statements
of fact and are relied upon as a material part of this Agreement:

     1. Lessor is the owner of one (1) Raytheon Hawker 125-700A  (commonly known
as Hawker 125-700A) aircraft,  bearing  manufacturer's  serial number NA0280 and
U.S.  registration  number N280AJ,  together with two (2) installed  Garrett TFE
731-3R-1H  engines,  bearing  manufacturer's  serial  numbers P84227 and P84236,
auxiliary power unit, avionics, instruments, equipment, and components installed
in or attached to the  airframe  and  engines,  and related  aircraft log books,
maintenance and flight manuals, wiring diagrams, and any other documentation and
equipment  specific  to the  Aircraft  currently  owned  by and in the  Lessor's
possession,  as  described  in  Exhibit  A  attached  hereto  (collectively  the
"Aircraft");

     2.  Lessor  desires  to lease to Lessee  and  Lessee  desires to lease from
Lessor the Aircraft on a "dry lease" basis.

     NOW,  THEREFORE,  in  consideration of the covenants,  representations  and
warranties  of the  parties  stated  herein,  the  performances  of the  parties
required hereby and the benefits accruing to the parties  hereunder,  Lessor and
Lessee mutually agree and expressly intend to be legally bound as follows:

Section 1.  Terms of Lease

     1.1 Lease Grant.  Subject to the terms and  conditions  of this  Agreement,
Lessor leases the Aircraft to Lessee and Lessee leases the Aircraft from Lessor.
Lessor shall deliver possession of the Aircraft to Lessee on the Lease Date.

     1.2 Lease Term. The term of this Lease (the "Lease Term") shall commence on
the Lease  Date and  expire  March  31,  2003 (the  "Expiration  Date").  On the
Expiration Date the Lease Term shall automatically renew and the Expiration Date
shall be extended on a year-to-year  basis under the same terms and  conditions,
unless either party gives written notice of termination of the Lease at least 30
days prior to the Expiration Date, or any extention thereof.

     1.3.  Use of  Aircraft.  Lessee  shall  use the  Aircraft  exclusively  for
Lessee's commercial purposes (the "Permitted Use"). Lessee shall not charter the
Aircraft,  "dry lease" the  Aircraft,  sublet the Aircraft or otherwise  use the
Aircraft as a commercial carrier. Nor shall the Aircraft be used for a use which
would have a permanent and material adverse effect on the value of the Aircraft.
Lessee  shall not  create or suffer  to exist any  public or  private  nuisance,

<PAGE>

hazardous  or illegal  condition  or waste on or with  respect to the  Aircraft.
Lessee  shall  not use,  occupy  or  permit  any of the  Aircraft  to be used or
occupied,  nor do or permit anything to be done in or on any of the Aircraft, in
a manner  which would (a) make void or voidable  any  insurance  which Lessee is
required  hereunder  to  maintain  then  in  force  with  respect  to any of the
Aircraft,  or (b) affect the  ability  of Lessee to obtain any  insurance  which
Lessee is  required  to  furnish  hereunder,  (c) impair  Lessor's  title to the
Aircraft,  or in such manner as might reasonably make possible a claim or claims
of adverse usage or adverse possession by the public, as such, or third persons,
or (d) conflict  with the terms or  conditions  of any  instrument  or agreement
between  Lessor and  Lessee.  Nothing  contained  in this Lease and no action by
Lessor  shall be  construed  to mean that  Lessor  has  granted  to  Lessee  any
authority  to do any act or make any  agreement  that may  create any such third
party or public right, title,  interest,  lien, charge or other encumbrance upon
the estate of the Lessor in the Aircraft.  Lessee shall, at its expense,  comply
with and shall  cause the  Aircraft to comply  with all  governmental  statutes,
laws, rules, orders, regulations and ordinances, as the same may be amended from
time to time, all federal aviation administration regulations, and any other law
the failure to comply with which at any time would  materially  affect Lessor or
the  Aircraft or any part  thereof,  or the use thereof,  including  those which
require  the making of any  structural,  unforeseen  or  extraordinary  changes,
whether  or not any of the same  involve  a change  of policy on the part of the
body enacting the same.  Lessee shall,  at its expense,  comply with all changes
required in order to obtain the Required Insurance (as hereinafter defined), and
with the provisions of all contracts,  agreements,  instruments and restrictions
existing at the  commencement of this Lease or thereafter  suffered or permitted
by Lessee affecting the Aircraft or any part thereof or the ownership, occupancy
or use thereof.

     1.4. Quiet  Enjoyment.  For so long as no Event of Default (as  hereinafter
defined) has occurred and is continuing hereunder,  Lessor warrants peaceful and
quiet  enjoyment  of the  Aircraft  by Lessee  against  acts of Lessor or anyone
claiming through Lessor,  provided that Lessor and its agents may enter upon and
examine the Aircraft at  reasonable  times.  Exercise by Lessor of its rights to
come  upon the  Aircraft  as set forth in this  Lease  shall  not  constitute  a
violation  of this  Section.  To secure a loan made to  Lessor  to  acquire  the
Aircraft,  Lessor has granted a security  interest  in the  Aircraft to Bank One
Arizona  ("Lender") and Lessor shall pay when due all amounts  payable to Lender
in connection with the loan secured by the Aircraft.

Section 2.  Rents.
-----------------

     2.1 Basic Rent. Lessee shall pay to Lessor in advance rent in the amount of
$100,000.00  per  calendar  month for each month of the Lease  Term (the  "Basic
Rent").

     2.2 Additional  Rent.  Lessee shall pay and discharge before the imposition
of any fine,  lien,  interest or penalty may be added  thereto for late  payment
thereof, all other amounts and obligations which Lessee assumes or agrees to pay
or discharge pursuant to this Lease, together with every fine, penalty, interest
and cost  which  may be  added by the  party  to whom  such  payment  is due for
nonpayment  or late payment  thereof  ("Additional  Rent").  In the event of any
failure by Lessee to pay or discharge  any of the  foregoing,  Lessor shall have
all the same rights,  powers and remedies  provided herein, by law or otherwise,
as in the event of nonpayment of Basic Rent.
<PAGE>

     2.3 Late Charge.  If any  installment of Basic Rent is not paid within five
(5) days  after the same is due and not paid,  Lessee  shall pay to  Lessor,  on
demand,  as  Additional  Rent, a late charge equal to three percent (3%) on such
overdue installment of Basic Rent (the "Late Charge").  Such payment shall be in
addition  to, and not in lieu of, all other  remedies  provided  in the Lease or
applicable law.

     2.4 Security Deposit.  To secure the faithful  performance by Lessee of the
covenants,  conditions and agreements set forth in this Lease to be performed by
it, Lessee shall deposit with Lessor,  on the Commencement  Date, and thereafter
at all times during the continuance of this Lease shall maintain on deposit with
Lessor, a security deposit of $100,000.00 ("Security Deposit"). Lessee shall pay
the Security Deposit on the  understanding  (a) that the Security Deposit or any
portion  thereof  may be applied to the  curing of any  default  that may exist,
without  prejudice  to any other  remedy or  remedies  that  Lessor  may have on
account thereof, and upon such application Lessee shall pay Lessor on demand the
amount so applied which shall be added to the Security  Deposit so that the same
will be  restored  to the  required  amount;  (b) that  should the  Aircraft  be
transferred by Lessor, the Security Deposit or any balance thereof may be turned
over to Lessor's  successor or  transferee,  and Lessee agrees to look solely to
such successor or transferee for such application or return;  (c) that Lessor or
its successors shall not be obligated to hold the Security Deposit as a separate
fund, but may commingle it with other funds; (d) that the Security Deposit shall
not be deemed prepaid rent; and (e) that if Lessee shall faithfully  perform all
of the covenants and agreements in this Lease contained on the part of Lessee to
be performed, the Security Deposit, or any then remaining balance thereof, shall
be returned to Lessee, without interest,  within 30 days after the expiration of
the Lease Term.

     2.5 True Lease. Lessor and Lessee agree that this Lease is a true lease and
does not  represent  a  financing  arrangement.  Each party  shall  reflect  the
transactions  represented  by this Lease in all  applicable  books,  records and
reports  (including,  without  limitation,  income  tax  filings)  in  a  manner
consistent with "true lease" treatment rather than "financing" treatment.

     2.6 Net  Lease;  Non-Terminability.  This is an  absolutely  net  lease  to
Lessor. It is the intent of the parties hereto that the Basic Rent payable under
this Lease shall be an absolutely net return to Lessor and that Lessee shall pay
all costs and  expenses  relating to the  Aircraft and  operation  thereof.  Any
amount or  obligation  herein  relating to the Aircraft  which is not  expressly
declared to be that of Lessor shall be deemed to be an  obligation  of Lessee to
be timely performed by Lessee at Lessee's expense.  Basic Rent,  Additional Rent
and all other sums payable  hereunder by Lessee,  shall be paid without  notice,
demand, set-off, counterclaim,  abatement,  suspension, deduction or defense. To
the extent  permitted by applicable  law, Lessee waives all rights which may now
or hereafter be conferred by law (i) to quit,  terminate or surrender this Lease
or the  Aircraft  or any part  thereof,  or (ii) to any  abatement,  suspension,
deferment  or  reduction  of the Basic Rent,  Additional  Rent or any other sums
payable under this Lease.

<PAGE>

Section 3.  Maintenance and Repair.
----------------------------------

     3.1 Maintenance and Repair.  Lessee  acknowledges  that it has received the
Aircraft in good condition,  repair and  appearance.  Lessee agrees that, at its
expense, it will keep and maintain the Aircraft in good condition and repair. It
will make promptly,  all structural and nonstructural,  foreseen and unforeseen,
ordinary and  extraordinary  changes and repairs or  replacements  of every kind
which may be required to be made to keep and  maintain the Aircraft in such good
condition, repair and appearance.  Lessee agrees that its obligation to maintain
and  repair the  Aircraft  as set forth in this Lease  benefit  both  Lessor and
Lessee, are the sole responsibility of Lessee, and may not be delegated.  Lessor
shall not be required to maintain, repair or rebuild, or to make any alterations
of any  nature  to the  Aircraft,  or any  part  thereof,  whether  ordinary  or
extraordinary,  structural or  nonstructural,  foreseen or not  foreseen,  or to
maintain the Aircraft or any part thereof in any way.  Lessee  hereby  expressly
waives the right to make  repairs at the expense of Lessor which may be provided
for in any law in  effect  at the time of the  commencement  of the term of this
Lease or which may thereafter be enacted.

     3.2 No Liens. Lessee will not, directly or indirectly,  create or permit to
be created or to remain,  and shall  within  thirty  (30) days of filing of any,
mechanics,  contractors or other liens,  discharge or bond, at its expense,  any
liens with  respect to, the  Aircraft or any part  thereof or Lessee's  interest
therein or the Basic Rent, Additional Rent or other sums payable by Lessee under
this Lease,  other than the lien for ad valorem  taxes which are not yet due and
payable.  Notice is hereby  given that  Lessor will not be liable for any labor,
services or  materials  furnished  or to be  furnished  to Lessee,  or to anyone
holding the Aircraft or any part thereof,  and that no mechanic's or other liens
for any such labor services or materials  shall attach to or affect the interest
of Lessor in and to the Aircraft.

Section 4.  Insurance; Indemnification.
--------------------------------------

     4.1 Insurance.  Lessee shall  maintain,  or cause to be maintained,  at its
sole  expense,  the  following  insurance  on the  Aircraft  (herein  called the
"Required Insurance"):

          (a) Insurance  against loss or damage to the Aircraft under a fire and
     broad form of all risk extended coverage  insurance policy together with an
     agreed value endorsement.  Such insurance shall be in amounts sufficient to
     prevent  Lessor or Lessee from becoming a co-insurer  under the  applicable
     policies,  and not less than the full  replacement  cost of the Aircraft as
     reasonably  determined  from time to time by Lessor but not more frequently
     than once in any 12 month  period.  Such  insurance  policies  may  contain
     reasonable  exclusions and  deductible  amounts as are common to properties
     similar to the Aircraft.

          (b)  General  public  liability  insurance  for the benefit of Lessor,
     Lessee  and  Lender  against  claims  for  damages  to person  or  property
     occurring on, in or about the Aircraft  with a combined  single limit of at
     least One Hundred Million Dollars ($100,000,000.00) for personal injury and
     property  damage,  such insurance to include full coverage of the indemnity
     set forth in this  Section.  Policies for such  insurance  shall be for the
     mutual benefit of Lessor,  Lessee and Lender, as their respective interests
     may appear.
<PAGE>

     4.2  Permitted  Insurers.  The  Required  Insurance  shall  be  written  by
companies of  recognized  financial  standing  and have Bests  ratings of A X or
better.  The Required  Insurance  shall name as the insured  parties  thereunder
Lessor and Lessee,  as their  interests may appear,  and Lender as an additional
insured under a standard "mortgagee"  endorsement or its equivalent satisfactory
to Lessor.  Lessor shall not be required to prosecute any claim  against,  or to
contest any  settlement  proposed  by, an insurer.  Lessee may, at its  expense,
prosecute  any such claim or contest any such  settlement in the name of Lessor,
Lessee or both with the  consent of  Lessor,  and  Lessor  will join  therein at
Lessee's  written request upon the receipt by Lessor of an indemnity from Lessee
against all costs, liabilities and expenses in connection therewith.

     4.3  Insurance  Claims.   Insurance  claims  by  reason  of  damage  to  or
destruction  of any  portion of the  Aircraft  shall be  primarily  adjusted  by
Lessee,  but both Lessor and Lender  shall have the right to join with Lessee in
adjusting any such loss and approve any adjustment proposed by Lessee.

     4.4 Insured  Parties.  Any loss under any such policy shall be made payable
to Lessor (or, if Lessor so elects,  to Lender),  subject to the requirements of
this Section. Every policy of Required Insurance shall contain an agreement that
the insurer will not cancel such policy  except after thirty (30) days'  written
notice to Lessor and Lender and that any loss otherwise payable thereunder shall
be payable  notwithstanding  any act or negligence  of Lessor,  Lessee or Lender
which might,  absent such agreement,  result in a forfeiture of all or a part of
such insurance payment and  notwithstanding  (a) any foreclosure or other action
taken by a creditor  pursuant to any provision of any loan upon the happening of
a default or Event of Default  thereunder  or (b) any change in ownership of the
Aircraft.

     4.5 Delivery of Policies. Lessee shall deliver to Lessor promptly after the
delivery of this Lease,  the  original or duplicate  policies or Accord-27  form
certificates of insurers, satisfactory to Lender, evidencing all of the Required
Insurance.  Lessee shall, prior to the expiration of any such policy, deliver to
Lessor another  original or duplicate of such policy or certificates  evidencing
the  renewal  of any such  policy.  If  Lessee  fails to  maintain  or renew any
Required  Insurance,  or  to  pay  the  premium  therefor,  or to  deliver  such
certificate,  then  Lessor,  at its  option,  but without  obligation  to do so,
procure such insurance.  Any sums so expended by Lessor shall be Additional Rent
hereunder  and shall be repaid by Lessee  within  five (5) days after  notice to
Lessee of such  expenditure  and the  amount  thereof.  together  with  interest
thereon at the Interest Rate.

     4.6 No Double Coverage. Lessee shall not obtain or carry separate insurance
covering  the same risks as any Required  Insurance  unless  Lessee,  Lessor and
Lender are included  therein as named insured,  with loss payable as provided in
this Lease and the policy contains a first mortgagee endorsement in favor of the
Lender.  Lessee shall  immediately  notify  Lessor  whenever  any such  separate
insurance is obtained and shall  deliver to Lessor the policies or  certificates
evidencing  the same.  Any  insurance  which  Lessor may elect to carry shall be
excess and not primary coverage.
<PAGE>

     4.7 Blanket  Insurance.  Anything contained in this Section to the contrary
notwithstanding,  all  Required  Insurance  may be carried  under a "blanket" or
"umbrella"  policy or policies covering other property or liabilities of Lessee,
provided that such policies  otherwise  comply with the provisions of this Lease
and specify the coverage and amounts thereof with respect to the Aircraft.

     4.8 Damages for Lessee's Failure to Properly Insure. Lessor or Lender shall
not be  limited  in the proof of any  damages  which  Lessor or Lender may claim
against  Lessee  arising out of or by reason of Lessee's  failure to provide and
keep in force  insurance,  as  provided  above,  to the amount of the  insurance
premium or  premiums  not paid or  incurred  by Lessee and which would have been
payable  under such  insurance;  but Lessor and Lender shall also be entitled to
recover as damages for such breach,  the  uninsured  amount of any loss,  to the
extent of any  deficiency  in the  Required  Insurance  and  damages,  costs and
expenses of suit suffered or incurred by reason of or damage to, or  destruction
of, the Aircraft,  occurring  during any period when Lessee shall have failed to
provide the Required Insurance. Lessee shall indemnify, defend and hold harmless
Lessor and Lender for any liability  incurred by Lessor or Lender arising out of
any deductibles for Required Insurance.

     4.9  Casualty.  If all or any  part of the  Aircraft  shall be  damaged  or
destroyed  by casualty  which is insured or  required  to be insured  under this
Lease,  Lessee  shall  promptly  notify the  Lessor  thereof,  and  shall,  with
reasonable promptness and diligence,  rebuild,  replace and repair any damage or
destruction to the Aircraft, at its expense, in conformity with the requirements
of this  Lease,  in such  manner  as to  restore  the same to the same or better
condition  as existed  prior to such  casualty,  using  materials of the same or
better grade than that of the materials  being  replaced,  and there shall be no
abatement of Basic Rent or Additional  Rent.  Proceeds of casualty  insurance of
$100,000.00  or less shall be paid to Lessee.  Proceeds in excess of $100,000.00
shall be held by Lessor or a proceeds trustee (which may be Lender, an escrow or
title  company,  or a bank or trust  company  designated  by Lessor) and paid to
Lessee,  but only against  certificates of Lessee,  appropriate lien waivers and
such other  information  reasonably  required by Lessor or the proceeds  trustee
delivered  to Lessor from time to time,  but not more  frequently  than once per
calendar month, as such work or repair  progresses.  Each such certificate shall
describe the work or repair for which Lessee is requesting  payment and the cost
incurred  by Lessee in  connection  therewith  and  stating  that Lessee has not
theretofore received payment for such work and has sufficient funds remaining to
complete the work free of liens or claims.  Any proceeds  remaining after Lessee
has repaired the Aircraft  shall be delivered to Lessee No payment shall be made
to Lessee if there  exists any Event of Default  under this Lease.  If Lessee is
not required to restore after a casualty,  this Lease shall nevertheless  remain
in full force and effect,  with no abatement of Basic Rent or  Additional  Rent,
except that  Lessor  shall have the right to  terminate  this Lease by notice to
Lessee if Lessee  does not agree to  restore  within  sixty  (60) days after the
casualty,  or if Lessee agrees to restore but does not diligently  proceed to do
so.

4.10 Indemnification.
     ---------------

          (a) Lessee agrees to pay, and to protect,  defend,  indemnify and save
     harmless  Lessor,  Lender and their  agents  from and  against  any and all

<PAGE>

     actual  liabilities,   losses,  damages,  costs,  expenses  (including  all
     reasonable  attorneys'  fees and  expenses  of Lessor  but  excluding  lost
     profits and all other indirect or consequential damages), causes of action,
     suits,  claims,  demands or judgments of any nature  whatsoever (i) arising
     from any  injury  to,  or the death of,  any  person or damage to  property
     (including property of employees and invitees of Lessee) on the Aircraft or
     to the extent not  occasioned  by the actual  gross  negligence  or willful
     misconduct  of  Lessor,  (ii)  arising  from the use,  non-use,  condition,
     maintenance,  repair or occupation of the Aircraft or any part thereof,  to
     the  extent  not  occasioned  by the  actual  gross  negligence  or willful
     misconduct  of  Lessor,  (iii)  arising  from  violation  by  Lessee of any
     agreement or condition  of this Lease or any  sublease  (including  without
     limitation the failure to pay Impositions), or any contract or agreement to
     which Lessee is a party, or any restriction,  law,  ordinance or regulation
     affecting the Aircraft or any part thereof or the  ownership,  occupancy or
     use thereof, to the extent not occasioned by the actual gross negligence or
     willful  misconduct of Lessor; or (iv) arising out of any permitted contest
     referred  to in  Section  4.3  (collectively,  "Indemnified  Matters").  If
     Lessor,  Lender or any  agent of Lessor or Lender  shall be made a party to
     any  such  litigation  commenced  against  Lessee,  and if  Lessee,  at its
     expense,  shall fail to provide Lessor, Lender or their agents with counsel
     (upon Lessor's request) reasonably approved by Lessor, Lessee shall pay all
     costs and attorneys' fees and expenses  incurred or paid by Lessor,  Lender
     or their agents in connection with such  litigation.  Lessee's  obligations
     and  liabilities  under this Section 4.10 shall  survive the  expiration of
     this  Lease.  Lessee  waives all claims  against  Lessor  arising  from any
     liability  described in this Section 4.10 (a),  except to the extent caused
     by the actual gross negligence or willful  misconduct of Lessor. The waiver
     and indemnity  provisions  in this  paragraph are intended to exculpate and
     indemnify  Lessor (i) from and against the direct  consequences  of its own
     negligence  or fault when  Lessor is solely  negligent  or  contributorily,
     partially, jointly,  comparatively or concurrently negligent with Lessee or
     any  other  person  (but is not  grossly  negligent  and has not  committed
     willful misconduct) and (ii) from and against any liability of Lessor based
     on any applicable  doctrine of strict  liability  unless resulting from the
     gross negligence or willful misconduct of Lessor.

          (b) Should any claim be made against Lessor by a person not a party to
     this Lease with respect to any  Indemnified  Matter,  Lessor shall promptly
     give Lessee written notice of any such claim,  and Lessee shall  thereafter
     defend or settle any such claim, at its sole expense, on its own behalf and
     with counsel of its selection;  provided,  however,  that Lessee's  counsel
     shall be competent  counsel  experienced in the type of litigation or claim
     at issue  and  shall be  acceptable  to  Lessor,  acting  reasonably.  Upon
     Lessee's  assumption of the defense of any claim against Lessor pursuant to
     Lessee's  indemnity,  Lessor  shall  have the right to  participate  in the
     defense or settlement of the claim with counsel retained and paid by it and
     Lessee shall cause the  attorneys  retained by it to consult and  cooperate
     fully with counsel for Lessor. In such defense or settlement of any claims,
     Lessor  shall  provide  Lessee  with  originals  or copies of all  relevant
     documents  and shall  cooperate  with and assist  Lessee,  at no expense to
     Lessor. Notwithstanding any provision of this Section 4.10 to the contrary,
     Lessee shall not enter into any settlement or agreement in connection  with
     any Indemnified  Matters binding upon or adversely  affecting either Lessor
     or Lender,  or admit any liability or fact in  controversy  binding upon or
     adversely  affecting  either  Lessor or Lender,  without the prior  written
     consent  of Lessor or  Lender,  as the case may be,  in such  party's  sole
     discretion.
<PAGE>

          (c) Lessor agrees to pay, and to protect,  defend,  indemnify and save
     harmless  Lessee and its agents from and  against any and all  liabilities,
     losses, damages (actual and consequential),  costs, expenses (including all
     reasonable  attorneys'  fees and  expenses  of  Lessee),  causes of action,
     suits,  claims,  demands or judgments of any nature whatsoever arising from
     the actual gross  negligence or willful  misconduct of Lessor in connection
     with the Aircraft.

Section 5.  Representations and Warranties

     5.1 Lessor's Representations and Warranties. Lessor represents and warrants
         ---------------------------------------
to Lessee as follows:

          (a) Organization and Standing. Lessor is a corporation duly organized,
          validly existing and in good standing under the laws of Arizona.

          (b) Power and  Authority.  Lessor is the owner of the Aircraft and has
          all  requisite  power and  authority  to execute  and to deliver  this
          Agreement and all documents  related any of them, and to carry out the
          transactions contemplated therein and hereby.

          (c) Due  Authorization;  Binding  Obligation.  This Agreement has been
          duly  authorized  by Lessor.  This  Agreement  is valid,  binding  and
          enforceable against Lessor in accordance with its terms.

          (d) No Conflict.  The execution of this Agreement and the consummation
          of the transactions  contemplated hereby or thereby will not result in
          a breach of the terms and  conditions  of, nor  constitute  a default,
          nor,  to the  best of  Lessor's  knowledge,  violate  any  agreements,
          covenants,  obligations  licenses or other instruments to which Lessor
          is a party or by which  Lessor  or any of its  assets  may be bound or
          affected,  or any law, regulation or court order applicable to Lessor,
          including,  without limitation,  any applicable  regulations governing
          sales of Aircraft.

          (e) Title to  Aircraft.  Lessor has good and  marketable  title to the
          Aircraft, free and clear of any and all adverse claims.

          (f) disclaimer of warranties. Lessor is leasing the Aircraft to Lessee
          "AS-IS".  Lessor has not made and does not make any express or implied
          representations  or  warranties   whatsoever  regarding  the  Aircraft
          including,  without limitation,  its  merchantability,  suitability or
          fitness for a particular  purpose.  EXCEPT AS EXPRESSLY STATED IN THIS
          LEASE, Lessor shall have no liability to Lessee or any third party for
          any direct, indirect,  incidental or consequential damages relating to

<PAGE>

          the CONDITION OR OPERATION OF THE  aircraft.  Lessee waives all rights
          and remedies  conferred upon a lessee by Article 2A (Sections 508-522)
          of the Uniform  Commercial  code.  Lessor is not  responsible  for any
          claims,   losses  or  injuries   relating   to  design,   manufacture,
          installation,  lease,  use  ownership  or  possession  of the Aircraft
          (collectively,  "Claims").  Lessee agrees to reimburse  Lessor for and
          defend  Lessor  against all Claims.  Lessee's  obligations  under this
          Section  shall  survive  the  termination  of the  Lease  for  acts or
          omissions which occurred during the Lease Term.

     5.2 Lessee's Representations and Warranties. Lessee represents and warrants
         ---------------------------------------
to Lessor as follows:

          (a) Organization and Standing. Lessee is a corporation duly organized,
          validly existing and in good standing under the laws of Delaware.

          (b) Power and Authority.  Lessee has all requisite power and authority
          to execute and to deliver this Agreement and all documents  related to
          it, and to carry out the transactions contemplated hereby.

          (c) Due  Authorization;  Binding  Obligation.  This Agreement has been
          duly  authorized  by Lessee  and is  valid,  binding  and  enforceable
          against Lessee in accordance with its terms.

          (d) No Conflict.  The  execution by Lessee of this  Agreement  and the
          consummation of the transactions  contemplated  hereby will not result
          in a breach of the terms and  conditions of, nor constitute a default,
          nor,  to the  best of  Lessee's  knowledge,  violate  any  agreements,
          covenants,  obligations  licenses or other instruments to which Lessee
          is a party or by which  Lessee  or any of its  assets  may be bound or
          affected, or any law, regulations or court order applicable to Lessee,
          including without limitation, any applicable regulations governing the
          registration of Aircraft.

          (e) Inspection. Lessee has inspected the Aircraft and conducted a test
          flight  of the  Aircraft  to  determine  that the  Aircraft  (i) has a
          current and valid Federal  Aviation  Administration  ("FAA")  Standard
          Airworthiness  Certificate;  (ii) is in airworthy  condition  with all
          systems  functioning  and in proper  working  order per  manufacturers
          maintenance program.  For purposes of this Agreement,  "proper working
          order"  shall  mean a  condition  which  (a) is  consistent  with  the
          maintenance manuals  limitations  applicable to the unit; (b) is good,
          but not  necessarily  perfect,  it being  understood  and agreed  that
          normal  wear and tear which  does not  materially  impair  performance
          shall be acceptable;  and (c) does not require a  modification  to the
          normal life limitation, overhaul or inspection interval; (iii) has its
          log books, maintenance and flight manuals in order; (iv) is current on
          its  maintenance in accordance  with the  Manufacturer's  Computerized
          Maintenance  Program  ("CAMP");  (v) does not have damage history,  or
          undisclosed   damage  or  known  corrosion;   and  (vi)  has  all  FAA
          airworthiness   directives  ("AD's")  and  mandatory  service  changes
          ("SB's") with effective dates on or prior to the Closing Date.

<PAGE>

Section 6.  Default.
-------------------

     6.1.  Events of Default.  Any of the  following  occurrences  or acts shall
           -------------------
constitute an event of default  (herein called an "Event of Default") under this
Lease:

          (a) If Lessee,  at any time during the  continuance of this Lease (and
          regardless  of  the  pendency  of  any   bankruptcy,   reorganization,
          receivership,  insolvency or other  proceedings at law, in equity,  or
          before  any  administrative  tribunal,  which  have or might  have the
          effect of  preventing  Lessee  from  complying  with the terms of this
          Lease),  shall (i) fail to make any  payment  when due of Basic  Rent,
          Additional  Rent or other  sum  herein  required  to be paid by Lessee
          hereunder for ten (10) days after written notice of such failure; (ii)
          fail to use the Aircraft for the Permitted Use in accordance  with the
          terms and conditions of Section 1.3 of this Lease for thirty (30) days
          after  written  notice of such  failure;  or (iii)  fail to observe or
          perform any other provision  hereof for thirty (30) days after written
          notice of such failure to observe or perform; or

          (b) If any representation or warranty of Lessee hereunder or set forth
          in any  notice,  certificate,  demand,  request  or  other  instrument
          delivered  pursuant  to,  or  in  connection  with  this  Lease  or in
          connection  with the  acquisition  of the  Aircraft  by Lessor,  shall
          either prove to be false or misleading  in any material  respect as of
          the time  when the same  shall  have  been  made and  Lessor  actually
          suffers  damages as a proximate  cause  thereof  which are not paid by
          Lessee; or

          (c) If Lessee shall file a petition  commencing a voluntary case under
          the  Federal  Bankruptcy  Code or any  federal or state law (as now or
          hereafter in effect) relating bankruptcy, insolvency,  reorganization,
          winding-up  or adjustment of debts  (hereinafter  collectively  called
          "Bankruptcy  Law") or if Lessee shall: (i) apply for or consent to the
          appointment  of,  or  the  taking  of  possession  by,  any  receiver,
          custodian,  trustee,  United States  Trustee or  liquidator  (or other
          similar  official)  of the  Aircraft  or any  part  thereof  or of any
          substantial  portion of Lessee's  property;  or (ii) generally not pay
          its debts as they become due, or admit in writing its inability to pay
          its  debts  generally  as they  become  due;  or (iii)  make a general
          assignment for the benefit of its  creditors;  or (iv) file a petition
          commencing a voluntary  case under or seeking to take advantage of any
          Bankruptcy  Law; or (v) fail to controvert  in timely and  appropriate
          manner,  or in  writing  acquiesce  to,  any  petition  commencing  an
          involuntary  case against  Lessee or otherwise  filed  against  Lessee
          pursuant to any Bankruptcy Law; or (vi) take any action in furtherance
          of any of the foregoing; or

          (d) If an order for  relief  against  Lessee  shall be  entered in any
          involuntary  case under the  Federal  Bankruptcy  Code or any  similar
          order against Lessee shall be entered pursuant to any other Bankruptcy
          Law, or if a petition commencing an involuntary case against Lessee or
          proposing the  reorganization of Lessee under any Bankruptcy Law shall
          be filed and not be  discharged  or denied  within  ninety  (90)) days
          after such filing,  or if a  proceeding  or case shall be commenced in
          any court of  competent  jurisdiction  seeking:  (i) the  liquidation,
          reorganization,  dissolution,  winding-up  or  adjustment  of debts of
          Lessee;  or (ii) the  appointment of a receiver,  custodian,  trustee,
          United States Trustee or liquidator  (or any similar  official) of the

<PAGE>

          Aircraft  or any  part  thereof  or of  Lessee  or of any  substantial
          portion of Lessee's property;  (iii) the attachment of the Aircraft or
          any portion thereof,  or (iv) any similar relief as to Lessee pursuant
          to any Bankruptcy  Law, and any such proceeding or case shall continue
          undismissed for ninety (90) days after such relief is granted; or

          (e)  If the  Aircraft  shall  be  left  both  unattended  and  without
          maintenance  as  provided   herein,   for  a  period  of  thirty  (30)
          consecutive days or more.

     6.2 Lessor's Remedies.
         -----------------

          (a) In the event of an Event of Default and  Lessee's  failure to cure
          the Event of Default within the applicable  cure period,  Lessor shall
          have the right at its  election to give Lessee ten (10) days'  written
          notice of Lessor's  intention to terminate the term of this Lease on a
          date specified in such notice.  Thereupon,  the term of this Lease and
          the estate hereby  granted shall  terminate on such date as completely
          and with the same  effect as if such date were the date  fixed  herein
          for the expiration of the term of this Lease, and all rights of Lessee
          hereunder shall terminate,  but Lessee shall remain liable as provided
          herein.

          (b) In the event of an Event of Default and  Lessee's  failure to cure
          the Event of Default within the applicable  cure period,  Lessor shall
          have the immediate right,  whether or not the term of this Lease shall
          have been  terminated,  to (i) re-enter and  repossess the Aircraft or
          any part thereof by force, summary proceedings, ejection or otherwise,
          and (ii) remove all  persons and  property  therefrom,  Lessee  hereby
          expressly waiving any and all notices to quit, cure or vacate provided
          by current or any future law.  Lessor  shall be under no  liability by
          reason of any such re-entry, repossession or removal. No such re-entry
          or taking of  possession  of the Aircraft by Lessor shall be construed
          as an election on Lessor's  part to  terminate  the term of this Lease
          unless a written notice of such intention to be given to Lessee.

          (c) At any time or from  time to time  after the  repossession  of the
          Aircraft  or any part  thereof,  whether or not the term of this Lease
          shall  have  been  terminated,  Lessor  may  (but  shall  be  under no
          obligation  to) relet the Aircraft or any part thereof for the account
          of  Lessee,  in the name of Lessee or  Lessor  or  otherwise,  without
          notice to Lessee, for such term or terms (which may be greater or less
          than the period which would otherwise have  constituted the balance of
          the term of this Lease) and on such reasonable  conditions  (which may
          include  concessions  or free  rent) and for such  uses as Lessor  may
          reasonably  determine,  and Lessor may  collect  and receive any rents
          payable by reason of such  reletting.  Lessor shall not be responsible
          or liable for any failure to relet the Aircraft or any part thereof or
          for any failure to collect any rent due upon any such reletting.

          (d) No termination  of the term of this Lease,  by operation of law or
          otherwise,  and no  repossession  of the Aircraft or any part thereof,
          and no reletting of the Aircraft or any part  thereof,  shall  relieve
          Lessee of its  liabilities  and  obligations  hereunder,  all of which
          shall survive such expiration, termination, repossession or reletting.

          (e) In the event of any such termination or repossession,  Lessee will
          pay to Lessor the Basic Rent,  Additional Rent and other sums required

<PAGE>

          to be paid by Lessee to and including the date of such  termination or
          repossession  (together with interest at the Interest Rate on past due
          amounts);  and, thereafter,  Lessee shall, until the end of what would
          have been the term of this Lease in the absence of such termination or
          repossession,  and  whether or not the  Aircraft  or any part  thereof
          shall  have been  relet,  be liable  to Lessor  for,  and shall pay to
          Lessor, as liquidated and agreed current damages:  (i) the Basic Rent,
          Additional Rent and other sums which would be payable under this Lease
          by Lessee in the absence of such  termination  or  repossession,  less
          (ii) the net  proceeds,  if any,  of any  reletting  effected  for the
          account of Lessee,  after deducting from such proceeds all of Lessor's
          reasonable  out-of-pocket  expenses  incurred in connection  with such
          reletting  (including,  without  limitation,  all repossession  costs,
          brokerage  commissions,  legal expenses,  attorneys' fees,  employees'
          expenses, and expenses of preparation for such reletting). Lessee will
          pay such  current  damages  on the days on which the Basic  Rent would
          have been payable under this Lease in the absence of such  termination
          or repossession, and Lessor shall be entitled to recover the same from
          Lessee on each such day.

          (f) At any time after such  termination or  repossession  by reason of
          the  occurrence  of any Event of Default,  whether or not Lessor shall
          have  collected  any  current  damages,  Lessor  shall be  entitled to
          recover from Lessee,  and Lessee will pay to Lessor on demand,  as and
          for  liquidated  and agreed final damages for Lessee's  default and in
          lieu of all current  damages  beyond the date of such demand (it being
          agreed that it would be  impracticable  or extremely  difficult to fix
          the actual damages),  an amount equal to the present value of all rent
          payable  under the Lease  beyond the date of such demand over the then
          present value of the then fair market rental for the Aircraft,  at the
          date of such demand for what would be the unexpired term of the Lease,
          which   present  value  shall  in  each  case  be  determined  by  the
          application  of a discount  factor of ten percent (10%) per annum.  If
          any law,  shall be  construed  to limit the amount of such  liquidated
          final damages to less than the amount above agreed upon,  Lessor shall
          be entitled to the maximum amount allowable under such statute or rule
          of law.

          (g)  Notwithstanding  anything to the contrary  stated  herein,  if an
          Event of Default shall have happened and be continuing, whether or not
          Lessee shall have abandoned the Aircraft, Lessor may elect to continue
          this  Lease in effect  for so long as the  Lessor  does not  terminate
          Lessee's  right to  possession  of the Aircraft and Lessor may enforce
          all  of  its  rights  and  remedies   hereunder   including,   without
          limitation,  the right to recover all Basic Rent,  Additional Rent and
          other sums payable hereunder as the same become due.

     6.3.  Additional Rights of Lessor. No right or remedy herein conferred upon
or reserved to Lessor is intended to be  exclusive of any other right or remedy,
and each and every right and remedy shall be  cumulative  and in addition to any
other right or remedy given hereunder or now or hereafter  existing at law or in
equity  or by  statute.  The  failure  of  Lessor to insist at any time upon the
strict  performance  of any  covenant or  agreement  or to exercise  any option,
right,  power or remedy contained in this Lease shall not be construed as waiver
or a  relinquishment  thereof for the  future.  A receipt by Lessor of any Basic
Rent, any Additional  Rent or any other sum payable  hereunder with knowledge of
the breach of any  covenant or  agreement  contained  in this Lease shall not be
deemed a waiver of such breach, and no waiver by Lessor of any provision of this

<PAGE>

Lease shall be deemed to have been made unless  expressed  in writing and signed
by Lessor. In addition to other remedies provided in this Lease, Lessor shall be
entitled,  to the extent  permitted by applicable  law, to injunctive  relief in
case of the  violation,  or attempted  or  threatened  violation,  of any of the
covenants,  agreements,  conditions or provisions of this Lease,  or to a decree
compelling  performance  of any  of the  covenants,  agreements,  conditions  or
provisions of this Lease,  including  but not limited to the  provisions of this
Lease setting forth Lessee's operating covenant,  or to any other remedy allowed
to Lessor at law or in equity.

     6.4 Waivers by Lessee.  To the extent  permitted by applicable  law, Lessee
hereby  waives  and  surrenders  for  itself  and all those  claiming  under it,
including  creditors of all kinds, (i) any right or privilege which it or any of
them may have under any present or future  construction,  statute or rule of law
to redeem  the  Aircraft  or to have a  continuance  of this  Lease for the term
hereby  demised  after  termination  of Lessee's  right of occupancy by order or
judgment  of any court or by any legal  process  or writ,  or under the terms of
this  Lease or  after  the  termination  of the  term of this  Lease  as  herein
provided,  and (ii) the benefits of any present or future constitution,  statute
or rule of law which exempts  property  from  liability for debt or for distress
for rent.

     6.5  Attorneys'  Fees.  In the event of an Event of  Default  and  Lessee's
failure to cure the Event of Default  within the applicable  cure period,  if an
action  shall be brought by Lessor  for the  enforcement  of any right set forth
herein in  connection  with,  and  subject  to, the  indemnification  provisions
contained herein, Lessee shall be liable for all of the reasonable out-of-pocket
expenses  incurred  by  Lessor  in  connection   therewith,   including  without
limitation,  attorneys'  fees.  However,  should Lessee prevail in an action for
violation of quiet enjoyment under this Lease, then and only in such event shall
Lessor be liable for  reasonable  out-of-pocket  expenses  incurred by Lessee in
connection therewith, including attorneys' fees.

Section 7.  Miscellaneous

     7.1 Notices, Demands and Other Instruments All notices, demands,  requests,
consents,  approvals  and other  instruments  required or  permitted to be given
pursuant  to the terms of this Lease  shall be in writing and shall be deemed to
have been  properly  given if (a) with respect to Lessee,  sent by registered or
certified  mail with a return receipt  requested,  postage  prepaid,  or sent by
facsimile, nationally recognized overnight express carrier or delivered by hand,
in each case  addressed to Lessee at its notice  address  first above set forth,
and (b) with respect to Lessor,  sent by  registered  or  certified  mail with a
return  receipt  request,  postage  prepaid,  or sent by  facsimile,  nationally
recognized  overnight  express  courier  or  delivered  by hand  in  each  case,
addressed  to the Lessor at its address  first above set forth along with a copy
to the Lender (if Lessee  shall have been given  Lender's  address).  Lessor and
Lessee shall each have the right from time to time to specify as its address for
purposes of this Lease any other  address in the United  States of America  upon
giving fifteen (15) days written notice thereof,  similarly  given, to the other
party.  Notices  shall be deemed  communicated  upon the earlier of receipt,  or
seventy-two  (72) hours from the time of mailing if mailed as  provided  in this
Section.

<PAGE>

7.2 Estoppel Certificates and Consents
    ----------------------------------

          (a) Lessee  will,  from time to time,  upon not less than  twenty (20)
          days  prior  written   request  by  Lessor  or  by  Lender,   execute,
          acknowledge and deliver a certificate certifying:  (i) that this Lease
          is unmodified  and in full effect (or setting forth any  modifications
          along with the statement that this Lease as modified is in full effect
          ); (ii) that the Basic Rent and Additional  Rent payable and the dates
          to which the  Basic  Rent,  Additional  Rent and  other  sums  payable
          hereunder have been paid;  (iii) that to the best knowledge of Lessee,
          Lessor is not in any default of the Lease;  (iv) the  commencement and
          expiration dates of the Lease; (v) the amount of any security or other
          deposits;  (vi) that either Lessee is in possession of the Aircraft or
          who is in  possession;  (vii) any  concessions  or other  rights  that
          Lessee (including first refusal,  option or other occupancy claims) or
          Lessor may have;  and (viii) such other  matters as may  reasonably be
          required by the requesting  party.  Any such certificate may be relied
          upon by any Lender,  prospective  purchaser,  or prospective Lender of
          the  Aircraft.  Lessee  further  agrees to reasonably  cooperate  with
          Lender and its affiliates in the  preparation of disclosure  documents
          which may be issued in connection with a secondary market  transaction
          involving a sale or securitization of its loan.

          (b) From time to time during the term of this Lease, Lessor expects to
          secure financing of its interest in the Aircraft by assigning Lessor's
          interest in this Lease and the sums payable hereunder. In the event of
          any such  assignment  to the Lender,  Lessee will,  upon not less than
          twenty (20) days prior written request by Lessor, execute, acknowledge
          and deliver to Lessor a consent clearly  indicating (i) that Lessee is
          to make Basic Rent payments or portions  thereof directly to Lender if
          required by Lender,  and (ii) consent to such assignment  addressed to
          such Lender in a form satisfactory to Lender; and Lessee will produce,
          at Lessee's  expense,  such certificates and other documents as may be
          reasonably  requested  by the Lender.  Lessee  acknowledges  that,  by
          execution  hereof,  it has  agreed to make  payments  of Basic Rent or
          portions  thereof  directly  to  Lender,  without  further  notice  or
          direction if required by Lender,  and Lessor consents to said payments
          by Lessee to Lessor.

     7.3 Surrender Upon the  termination of this Lease,  Lessee shall  peaceably
surrender the Aircraft to Lessor in the same  condition in which it was received
from Lessor at the commencement of this Lease, except as repaired,  replaced and
altered as  permitted  or  required by this Lease and except for normal wear and
tear.  Upon  surrender,  the  Aircraft  shall  be in full  compliance  with  all
applicable  regulations  and  shall  have  a  current  and  valid  FAA  Standard
Airworthiness  Certificate.  Lessee shall  remove from the Aircraft  prior to or
within a reasonable time after such termination (not to exceed thirty (30) days)
all its personal  property that is capable of removal  without causing damage to
the Aircraft,  and, at Lessee's expense, shall at such times of removal,  repair
any damage  caused by such  removal.  Property  not so removed  shall become the
property of Lessor.  Lessor may thereafter cause such property to be removed and

<PAGE>

disposition of and the cost of repairing any damage caused by such removal shall
be borne by  Lessee.  Any  holding  over by  Lessee  of the  Aircraft  after the
expiration or earlier  termination  of the term of this Lease or any  extensions
thereof, with the consent of Lessor, shall operate and be construed as a tenancy
from month to month only,  at one hundred ten (110%) of the Basic Rent  reserved
herein  and upon the same  terms and  conditions  as  contained  in this  Lease.
Notwithstanding  the foregoing,  any holding over without Lessor's consent shall
entitle  Lessor,  in addition to collecting  Basic Rent at a rate of one hundred
ten percent (110%) thereof,  to exercise all rights and remedies provided by law
or in equity.

     7.4  Separability  Each and every covenant and agreement  contained in this
Lease is separate and independent, and the breach of any thereof by Lessor other
than the  covenant of quiet  enjoyment in Section  1.4,  shall not  discharge or
relieve Lessee from any obligation  hereunder.  If any term or provision of this
Lease or the application  thereof to any person or  circumstances or at any time
to any extent be invalid and unenforceable,  the remainder of this Lease, or the
application of such term or provision to persons or circumstances or at any time
other than those to which it is invalid or unenforceable,  shall not be affected
thereby,  and each term and  provision of this Lease shall be valid and shall be
enforced to the extent permitted by law.

     7.5  Merger,  Consolidation  or Sale of  Assets  It  shall  be a  condition
precedent to the merger of Lessee into another corporation, to the consolidation
of  Lessee  with  one or  more  other  corporations  and to the  sale  or  other
disposition  of all or  substantially  all the  assets  of Lessee to one or more
other  entities that the surviving  entity or transferee of assets,  as the case
may be,  shall  deliver to Lessor and to Lender an  acknowledged  instrument  in
recordable  form assuming all  obligations,  covenants and  responsibilities  of
Lessee hereunder and under any instrument  executed by Lessee  consenting to the
assignment  of Lessor's  interest  in this Lease to the Lender as  security  for
indebtedness.  Lessee covenants that it will not merge or consolidate or sell or
otherwise  dispose  of all or  substantially  all of its assets  unless  such an
instrument  shall have been so  delivered  and  unless the entity  with which it
intends to merge,  consolidate,  sell or otherwise  transfer its assets to has a
credit rating at least equal to Lessee's then current credit rating.

     7.6 Savings  Clause No provision  contained in this Lease which purports to
obligate  Lessee to pay any amount of  interest  or any fees,  costs or expenses
which  are in  excess of the  maximum  permitted  by  applicable  law,  shall be
effective  to the extent that it calls for payment of any interest or other sums
in excess of such maximum.

     7.7  Binding  Effect;   Limitation  of  Liability  All  of  the  covenants,
conditions  and  obligations  contained  in this Lease shall be binding upon and
inure to the  benefit of the  respective  successors  and  assigns of Lessor and
Lessee to the same  extent as if each  successor  and  assign  were in each case
named,  except that a successor  and assign of Lessor  shall only be bound as to
covenants,    conditions   and   obligations   arising   after   the   transfer.
Notwithstanding  anything to the  contrary  set forth in this  Lease,  if Lessor
shall  fail to  perform  any  covenant,  term or  condition  of this  Lease upon
Lessor's part to be performed,  and if as a consequence  of such default  Lessee
shall recover a judgment  against Lessor,  such judgment shall be satisfied only
out of the proceeds of sale  received  upon  execution of such judgment and levy
thereon  against the right,  title and interest of Lessor in the  Aircraft,  and
Lessor shall not be personally  liable  therefor,  provided Lessor then owns the
Aircraft and such  limitation  of  liability  shall not apply if Lessor does not
then own the Aircraft.
<PAGE>

     7.8 Governing Law This Lease shall be governed by and interpreted under the
laws of the State of Arizona,  but not including  such state's  conflict of laws
rules.  All  judicial  proceedings  shall be in the courts of  Maricopa  County,
Arizona and the parties  consent to the exclusive  jurisdiction  of said Courts.
The parties  waive trial by jury in all  judicial  proceedings  relating to this
Lease.

     7.9 Integration This Lease, the exhibits hereto, if any, hereof, constitute
the entire  agreement  between  the  parties  hereto  with regard to the subject
matter   hereof,   and  supersede  any  prior   understandings,   agreements  or
negotiations.  This  Lease may not be amended  or  modified  except by a writing
executed by Lessee and Lessor, with the consent of any Lender.

     7.10 Subordination to Lessor Financing

          (a) (i) Subject to the  provisions of Section  (a)(ii)  below,  Lessee
          agrees that this Lease  shall at all times be subject and  subordinate
          to the lien of any Mortgage,  and Lessee agrees, upon demand,  without
          cost, to execute  instruments as may be reasonably required to further
          effectuate or confirm such subordination.

          (ii) Lessee's  agreement to subordinate  set forth in Section  (a)(ii)
          above is conditioned  upon the Lender agreeing that:  Lessee's tenancy
          and  Lessee's   rights  under  this  Lease  shall  not  be  disturbed,
          terminated or otherwise  adversely  affected,  nor shall this Lease be
          affected,  by any default  under any  Mortgage,  and in the event of a
          foreclosure  or other  enforcement  of any  Mortgage,  or sale in lieu
          thereof,  the  purchaser  at such  foreclosure  sale shall be bound to
          Lessee for the Term of this  Lease,  the  rights of Lessee  under this
          Lease shall  expressly  survive,  and this Lease shall in all respects
          continue  in full force and effect so long as no Event of Default  has
          occurred and is  continuing;  provided,  however,  that such purchaser
          shall not:

               (A)be liable for any prior act or omission of Lessor;

               (B)be  subject to any  defense,  counterclaim,  set-off or offset
               which Lessee may then have against Lessor;

               (C)be  bound by any  payment of rent that Lessee may have made to
               Lessor  more than  thirty (30) days before the date such rent was
               first due and payable under this Lease with respect to any period
               after the date of attornment  other than,  and only to the extent
               that, this Lease expressly required such a prepayment;

               (D)be bound by any obligation to make any payment to Lessee which
               was required to be made prior to the time such  successor  Lessor
               succeeded to Lessor's interest;

               (E)be  bound by any  obligation  to  perform  any work or to make
               improvements to the Aircraft; or
<PAGE>

          (b) Notwithstanding the provisions of this Section,  the holder of any
          Mortgage to which this Lease is subject and subordinate shall have the
          right, at its sole option, at any time, to subordinate and subject the
          Mortgage, in whole or in part, to this Lease by recording a unilateral
          declaration to such effect.

          (c) At any time prior to the expiration of the Term, Lessee agrees, at
          the  election  and upon demand of any owner of the  Aircraft,  or of a
          Lender who has  granted  non-disturbance  to Lessee  pursuant  to this
          Section,  to attorn,  from time to time,  to any such owner or lender,
          upon the terms and conditions of this Lease,  for the remainder of the
          Term. The provisions of this Section shall inure to the benefit of any
          such owner or Lender, shall apply notwithstanding that, as a matter of
          law, this Lease may terminate  upon the  foreclosure  of the Mortgage,
          shall  be  self-operative   upon  any  such  demand,  and  no  further
          instrument shall be required to give effect to said provisions.

          (d) Each of Lessee, Lessor and Lender, however, upon written demand of
          the other, hereby agrees to execute, from time to time, instruments in
          confirmation of the foregoing  provisions of this Section, in the form
          customarily  used by such  Lender to the  extent  consistent  with the
          requirements  of  such  Sections,  acknowledging  such  subordination,
          non-disturbance  and  attornment  as are provided in such Sections and
          setting forth the terms and conditions of its tenancy.

     IN WITNESS WHEREOF,  the undersigned have entered into this Agreement as of
the date first indicated above.

LESSOR:                                                   LESSEE:

Verde Investments, Inc.,                    Ugly Duckling Corporation,
an Arizona corporation                      a Delaware corporation

By:      ___________________________        By:      ___________________________
Name:    ___________________________        Name:    ___________________________
Its:     ___________________________        Its:     ___________________________

<PAGE>

<TABLE>
<CAPTION>

                                    EXHIBIT A
                                 SPECIFICATIONS

1980 Hawker 700 A                                               SERIAL NO. 280
------------------------------------------------------------------------------
<S>                        <C>                       <C>
TOTAL TIME AIRFRAME:       6992 SNEW                 48 Month Inspection Completed By Duncan
                           4621 CSN                  3/96*
                                                     Part 135 Ready*

ENGINES:        Garrett TFE 731-3R-1H                          --100% MSP Gold--
-------
                Left Eng. 6969.3 SNEW 4580 CSN
                Right Eng. 6938.0 SNEW 4655 CSN
</TABLE>

APU:     Garrett GTCP-36-100   2376 SNEW
---
<TABLE>

AVIONICS:                                                      Dual Collins VHF-20B Comms
--------
<S>                                                            <C>
Dual Collins FD-109 Flight Directors                           Dual Collins ADF-60 ADF
Primus 300SL Color Radar with Data Nav                         Dual Collins VIR-30 Navs
Baker Audio                                                    Dual Collins DME-40 DME
Fairchild GA-100CVR                                            Dual Collins TDR-90 Transponders
Collins 618T-3 HF Comms                                        Collins ALT-55B Radar Altimeter
Collins ALI-80A Encoder                                        Dual Collins ADC-80A Altitude Alert
King KLN-90B GPS (IFR Appr. Certified)                         Dual Collins 331A-9G HIS
Wulfsberg Flitefone VI                                         Collins PRE-80A Altitude Alert
Allied GNS-XLS-FMS (Appr. Certified)                           Collins Backup Vertical Gyro
J.E.T. Standby Horizon                                         TCAS - I
Vandling NDB-2 Database                                        Dual Davtron 811-B Digital Clocks
Dual Sperry C-14 Compass Systems                               Teledyne Angle of Attack
Collins APS-80 Autopilot W/Alt. Pre-select

ADDITIONAL EQUIPMENT:                                          5" Monitor
Intelliflight Airshow System                                   14" Monitor
DVD/CD Changer                                                 Stereo & Airshow Remote Control
Wireless Headsets
</TABLE>

NOTES:  No  damage  history.  Aircraft  is  currently  operated  under  Part 135
commercial certificate. 12/24 month complied with 7/9/98. Major X-rays performed
3/96.

Interior:  Beautiful eight place leather interior,  new in 2000. Three place aft
divan with additional storage underneath. Complete aft lav with hot/cold running
water.  Excellent  audio-video system with CD changer and DVD player integrated.
Audio-visual and Airshow completely controllable by remote control.  Interior is
fire-blocked for Part 135 operations.

EXTERIOR:  Paint in excellent condition. White with green stripes.

                 All airframe and engine times and cycles to be
                      re-verified upon Delivery of Aircraft
                   Specification subject to verification upon
                                   inspection.THIRD AMENDMENT TO LOAN AGREEMENT

     This Third Amendment to Loan Agreement (this "Third  Amendment") is entered
into as of this 30th day of June, 2002 by and between UGLY DUCKLING CORPORATION,
a Delaware corporation  ("Company") and CYGNET CAPITAL  CORPORATION,  an Arizona
corporation ("Lender").

                                    Recitals.

A.   Lender  holds and owns that certain loan payable by Company in the original
     principal  amount  of  $15,000,000.00  (the  "Loan")  evidenced  by a  Loan
     Agreement  dated  February 12, 1998 (the "Loan  Agreement")  and  documents
     executed   pursuant  to  the  Loan   Agreement,   as   thereafter   amended
     (collectively, the "Loan Documents").

B.   The  Company  and  Lender  desire  to  amend  the Loan  Agreement  and Loan
     Documents on the terms and conditions set forth in this Third Amendment.

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

1    Defined Terms.  Unless otherwise  specified  herein,  all capitalized terms
     used in this  Third  Amendment  shall have the same  meaning  given to such
     terms in the Loan Agreement and Loan Documents, as applicable.

2.   Amendment to Section 1.01.  Effective as of the date hereof, the definition
     of  "Maturity  Date" in the Loan  Agreement  is amended in its  entirety to
     provide as follows:

     "Maturity Date" means February 12, 2005.

3.   Amendment  to  Section 2 of the Loan  Agreement.  Effective  as of the date
     hereof,  a new Section 2.09 shall be added to the Loan  Agreement and shall
     provide as follows:

          "2.09 Principal Payments By Company. Without demand by Lender, Company
     shall pay to Lender each calendar quarter a principal  payment equal to the
     retained earning of the Company for the calendar quarter as reported in the
     Form 10-Q filed by the  Company  (the  "Earnings  Payment").  The  Earnings
     Payment shall be paid on or before the date the Company publicly  announces
     its  earnings  for a  quarter.  No  Earnings  Payment  shall  be due if the
     Earnings  Payment  shall  constitute  a  default  under,  or  is  otherwise
     prohibited  by, any  agreement  with any other  voluntary  creditor  of the
     Company ("Other Creditors"). The Earnings payment for any quarter shall not
     exceed  $1,000,000.00  unless all Other  Creditors  consent to an  Earnings
     Payment for a quarter in excess of $1,000,000.00."
<PAGE>

4.   Warrants.  Lender acknowledges the termination of the Warrant Agreement and
     all  references to the Warrant and Warrant  Agreement in the Loan Agreement
     and Loan Documents are hereby deleted in their entirety.

5.   Incorporation  of Amendment.  The parties  acknowledge  and agree that this
     Third Amendment is incorporated into and made a part of, as applicable, the
     Loan  Agreement,  the terms and provisions of which are hereby affirmed and
     ratified and remain in full force and effect,  except as amended hereby. To
     the extent that any term or provision of this Third  Amendment is or may be
     deemed  inconsistent  with any term or provision of the Loan Agreement,  as
     applicable, the terms and provisions of this Third Amendment shall control.
     Each reference to the Loan  Agreement,  shall be a reference to the Loan as
     amended by this Third Amendment. This Third Amendment,  taken together with
     the provisions of the Loan  Agreement,  which are all affirmed and ratified
     by the Company,  contains the entire agreement among the parties  regarding
     the  transactions  described  herein and supersedes  all prior  agreements,
     written or oral, with respect thereto.

6.   Assignments, Participation, etc. Lender acknowledges that it is currently a
     Lender  under the Loan  Agreement,  that it has  authority  to execute  and
     deliver this Third Amendment and that it has not assigned any of its rights
     under the Loan Agreement, except to another Lender which is a party to this
     Third Amendment.

7.   Execution  in  Counterparts.  This Third  Amendment  may be executed in any
     number  of  counterparts  and  by  different  parties  hereto  in  separate
     counterparts,  each of which when so executed and delivered shall be deemed
     to be an original and all of which taken together shall  constitute one and
     the same instrument.

Company:                            UGLY DUCKLING CORPORATION,
                                    a Delaware corporation

                                    By:      __________________________________
                                    Name:    __________________________________
                                    Its:     __________________________________

Lender:                             Cygnet Capital Corporation,
                                    an Arizona corporation

                                    By:      __________________________________
                                    Name:    __________________________________
                                    Its:     __________________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}]]