Document:

THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER
THE  SECURITIES  ACT OF 1933 OR ANY STATE  SECURITIES  LAWS AND MAY NOT BE SOLD,
EXCHANGED,  HYPOTHECATED  OR  OTHERWISE  TRANSFERRED  IN ANY  MANNER  EXCEPT  IN
COMPLIANCE  WITH  SECTION 12 OF THE WARRANT  AGREEMENT  DATED AS OF FEBRUARY 12,
              1998, AS THE SAME MAY BE AMENDED FROM TIME TO TIME.

Warrant No. __

                WARRANT TO PURCHASE ______ SHARES OF COMMON STOCK

                              VOID AFTER 1:30 P.M.,
                    PHOENIX, ARIZONA TIME, ON APRIL 12, 2001
                       OR SUCH LATER DATE SET FORTH HEREIN

                            UGLY DUCKLING CORPORATION

         This certifies that, for value received,  _________________________ the
registered holder hereof or assigns (the "Holder"), is entitled to purchase from
UGLY DUCKLING CORPORATION,  a Delaware corporation (the "Company"),  at any time
after February 12, 1998, and before 1:30 p.m.,  Phoenix,  Arizona time, on April
12, 2001, at the purchase price per share of $10.81 (the "Warrant  Price"),  the
number of shares of Common Stock, par value $0.001 per share, of the Company set
forth above (the  "Shares").  The number of shares of Common  Stock  purchasable
upon exercise of the Warrant  evidenced  hereby and the Warrant Price is subject
to adjustment from time to time as set forth in the Warrant  Agreement  referred
to below.

         This Warrant may be redeemed,  at the option of the Company and as more
specifically  provided  in the  Warrant  Agreement,  at $.10 per share of Common
Stock  purchasable  upon  exercise  hereof,  at any time after the average Daily
Market  Price (as defined in Section 10 of the Warrant  Agreement)  per share of
the Common Stock for a period of at least twenty (20)  consecutive  trading days
ending not more than fifteen days prior to the date of the notice given pursuant
to Section 10(b) thereof has equaled or exceeded $16.00, and prior to expiration
of this Warrant.  The Holder's right to exercise this Warrant terminates at 1:30
p.m.  (Phoenix,  Arizona time) on the date fixed for redemption in the notice of
redemption delivered by the Company in accordance with the Warrant Agreement.

<PAGE>

                                        8

         The  Warrants  evidenced  hereby  may be  exercised  during  the period
referred  to  above,  in whole  or in  part,  by  presentation  of this  Warrant
certificate  with the Purchase Form attached hereto duly executed and guaranteed
and  simultaneous  payment  of the  Warrant  Price (as  defined  in the  Warrant
Agreement and subject to adjustment as provided therein) at the principal office
of the Company. Payment of such price may be made at the option of the Holder in
cash or by  certified  check  or bank  draft,  all as  provided  in the  Warrant
Agreement.

         The Warrants  evidenced  hereby are part of a duly authorized  issue of
Warrants and are issued under and in accordance with the Warrant Agreement dated
as of February 12, 1998, between the Company and the Lenders party thereto,  and
are subject to the terms and  provisions  contained in such  Warrant  Agreement,
which Warrant  Agreement is hereby  incorporated by reference  herein and made a
part  hereof  and is  hereby  referred  to  for a  description  of  the  rights,
limitations,  duties and indemnities thereunder of the Company and the Holder of
the  Warrants,  and to all of which the Holder of this  Warrant  certificate  by
acceptance hereof consents.  A copy of the Warrant Agreement may be obtained for
inspection by the Holder hereof upon written request to the Company.

         Upon any partial exercise of the Warrants evidenced hereby,  there will
be issued to the  Holder a new  Warrant  certificate  in  respect  of the Shares
evidenced hereby that have not been exercised.  This Warrant  certificate may be
exchanged at the office of the Company by surrender of this Warrant  certificate
properly  endorsed  either  separately or in combination  with one or more other
Warrants for one or more new Warrants to purchase the same  aggregate  number of
Shares as evidenced by the Warrant or Warrants  exchanged.  No fractional Shares
will be  issued  upon the  exercise  of rights to  purchase  hereunder,  but the
Company will pay the cash value of any fraction upon the exercise of one or more
Warrants, as provided in the Warrant Agreement.

         The  Warrant  Price and the number of shares of Common  Stock  issuable
upon  exercise of this Warrant is subject to adjustment as provided in Section 8
of the Warrant  Agreement.  The Warrant  Agreement may be amended by the Company
and the holder or holders of a majority of the outstanding Warrants representing
a majority of the shares of Common Stock underlying such Warrants; provided that
without the consent of each holder of a Warrant certain specified changes cannot
be made to such holder's Warrants.

         Neither the  Warrants  nor the shares of Common  Stock  underlying  the
Warrants may be sold,  assigned,  or otherwise  transferred except in accordance
with the provisions of the Warrant Agreement.

         The Holder  hereof may be treated by the Company and all other  persons
dealing  with this  Warrant  certificate  as the  absolute  owner hereof for all
purposes and as the person entitled to exercise the rights  represented  hereby,
any notice to the contrary notwithstanding, and until any transfer is entered on
such  books,  the  Company  may  treat  the  Holder  hereof as the owner for all
purposes.  Notices  and  demands  to be  given to the  Company  must be given by
certified or registered mail at the addresses provided in the Warrant Agreement.

<PAGE>

         All terms  used in the  Warrant  Certificate  that are  defined  in the
Warrant  Agreement shall have the respective  meanings ascribed to such terms in
the Warrant Agreement.

Dated: June 5, 2000    UGLY DUCKLING CORPORATION

                       By:   /S/ DONALD L. ADDINK
                       --------------------------
                               Donald L. Addink
                               Senior Vice President and Treasurer

ATTEST:

Jon Ehlinger
Secretary

<PAGE>

                            UGLY DUCKLING CORPORATION
                                  PURCHASE FORM

                                Mailing Address:
                            UGLY DUCKLING CORPORATION
                            2525 East Camelback Road
                                    Suite 500
                             Phoenix, Arizona 85016

         The  undersigned  hereby  irrevocably  elects to exercise  the right of
purchase  represented  by the within  Warrant  certificate  for, and to purchase
thereunder,  _____________Shares  of Common  Stock  provided  for  therein,  and
requests that certificates for such Shares be issued in the name of:

(Please Print or Type Name, Address and Social Security Number)

and that such certificates be delivered to  ____________________________________
whose address is _______________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable hereunder,
that a new Warrant  certificate for the balance of the Shares  purchasable under
the within  Warrant  certificate  be registered  in the name of the  undersigned
Holder or his or her Assignee as below  indicated  and  delivered to the address
stated below.

                                                              Dated:
Name of Holder or Assignee:

(Please Print)

Address:

Signature:

Note: The above  signature must  correspond with the name as it appears upon the
face of the within Warrant  certificate in every particular,  without alteration
or enlargement or any change whatever, unless these Warrants have been assigned.

Signature Guaranteed:

<PAGE>

THE  SIGNATURE(S)  SHOULD BE  GUARANTEED  BY AN ELIGIBLE  GUARANTOR  INSTITUTION
(Banks,  Stock Brokers,  Savings and Loan  Association,  and Credit Unions) WITH
MEMBERSHIP IN AN APPROVED  SIGNATURE  GUARANTEE  MEDALLION  PROGRAM  PURSUANT TO
S.E.C. RULE 17Ad-15.

<PAGE>

                                   ASSIGNMENT

                 (To be signed only upon assignment of Warrants)

  FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

          (Name and Address of Assignee Must Be Printed or Typewritten)

______________ Warrants, hereby irrevocably constituting and appointing
_______  Attorney to transfer  said  Warrants on the books of the Company,  with
full power of substitution in the premises.

Dated:

                                            Signature of Registered Holder

                                    Note:   The  signature  on  this  assignment
                                            must  correspond with the name as it
                                            appears  upon the face of the within
                                            Warrant    certificate    in   every
                                            particular,  without  alteration  or
                                            enlargement or any change whatever.

Signature Guaranteed:

THE  SIGNATURE(S)  SHOULD BE  GUARANTEED  BY AN ELIGIBLE  GUARANTOR  INSTITUTION
(Banks,  Stock Brokers,  Savings and Loan  Association,  and Credit Unions) WITH
MEMBERSHIP IN AN APPROVED  SIGNATURE  GUARANTEE  MEDALLION  PROGRAM  PURSUANT TO
S.E.C. RULE 17Ad-15.UGLY DUCKLING CORPORATION
                                       TO
                          HARRIS TRUST AND SAVINGS BANK
                                     Trustee

                          Second Supplemental Indenture
                         Dated as of April 15, 2000
                                       To
                                    Indenture
                          Dated as of October 15, 1998

                      11% Subordinated Debentures due 2007

         SECOND SUPPLEMENTAL INDENTURE, dated as of April 15, 2000, between
Ugly Duckling  Corporation,  a corporation duly organized and existing under the
laws of the State of Arizona (herein called the "Company"), having its principal
office at 2525 East Camelback  Road,  Suite 500,  Phoenix,  Arizona  85016,  and
Harris  Trust and Savings  Bank,  an Illinois  banking  corporation,  as Trustee
(herein called the "Trustee")  under the Indenture  dated as of October 15, 1998
between  the  Company  and the  Trustee  (as  amended  from  time to  time,  the
"Indenture").

<PAGE>

                             Recitals of the Company

         The Company has executed and  delivered the Indenture to the Trustee to
provide for the issuance from time to time of its unsecured debentures, notes or
other evidences of indebtedness (the "Securities"), said Securities to be issued
in one or more series as in the Indenture provided.

         Pursuant to the terms of the Indenture,  the Company desires to provide
for the  establishment  of a new series of its Securities to be known as its 11%
Subordinated Debentures due 2007 (herein called the "Debentures"),  the form and
substance of such Debentures and the terms, provisions and conditions thereof to
be set  forth  as  provided  in  the  Indenture  and  this  Second  Supplemental
Indenture.

         All things necessary to make this Second Supplemental Indenture a valid
agreement  of the  Company,  and to make the  Debentures,  when  executed by the
Company and authenticated and delivered by the Trustee, the valid obligations of
the Company, have been done.

         Now, Therefore, This Second Supplemental Indenture Witnesseth:

         For  and in  consideration  of the  premises  and the  purchase  of the
Debentures  by the Holders  thereof,  and for the purpose of setting  forth,  as
provided in the  Indenture,  the form and  substance of the  Debentures  and the
terms,  provisions and conditions  thereof, it is mutually agreed, for the equal
and proportionate benefit of all Holders of the Debentures, as follows:

ARTICLE One

                 General Terms and Conditions of the Debentures

Section  101.  There shall be and is hereby  authorized  a series of  Securities
designated  the "11%  Subordinated  Debentures  due 2007",  limited in aggregate
principal  amount  to  $27,500,000,  which  amount  shall be as set forth in any
written order of the Company for the  authentication and delivery of Debentures.
The Debentures  shall mature and the principal shall be due and payable together
with all accrued and unpaid  interest  thereon on April 15,  2007,  and shall be
issued in the form of registered  Debentures without coupons in denominations of
$1.00 and any integral multiple thereof.

Section 102. Except as provided in Section 103 herein,  the Debentures  shall be
issued in certificated form.  Principal and interest on the Debentures issued in
certificated  form will be  payable,  the  transfer of such  Debentures  will be
registrable and such Debentures will be exchangeable for the Debentures  bearing
identical terms and provisions at the Corporate Trust Office of the Trustee from
time to time, which is initially in Chicago, Illinois;  provided,  however, that
payment of interest  may be made at the option of the Company by check mailed to
the registered holder at such address as shall appear in the Security Register.

Section 103. Each Debenture will bear interest at the rate of 11% per annum from
the  original  date of  issuance  until the  principal  thereof  becomes due and
payable,  and on any overdue  principal,  payable  semiannually  on April 15 and

                                       2
<PAGE>

October 15 of each calendar year (each, an "Interest Payment Date"),  commencing
on  October  15,  2000,  to the  person  in whose  name  such  Debenture  or any
predecessor  Debenture is  registered,  at the close of business on each April 1
and October 1 next  preceding  such  Interest  Payment  Date.  Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the  registered  holders on such Regular Record Date, and may be paid
to  the  person  in  whose  name  the  Debenture  (or  one or  more  Predecessor
Securities)  is registered at the close of business on a Special  Record Date to
be fixed by the  Trustee  for the  payment of such  defaulted  interest,  notice
whereof shall be given to the registered holders of the Debentures not less than
10 days prior to such  Special  Record  Date,  or may be paid at any time in any
other lawful manner not  inconsistent  with the  requirements  of any securities
exchange on which the Debentures  may be listed,  and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.

         The amount of  interest  payable for any period will be computed on the
basis of a 360-day year of twelve 30-day  months.  Interest will accrue from the
date of original  issuance to, but not including,  the relevant payment date. In
the event that any date on which  interest is payable on the Debentures is not a
Business Day, then payment of interest  payable on such date will be made on the
next  succeeding  day which is a Business Day (and without any interest or other
payment  in  respect  of any such  delay),  in each case with the same force and
effect as if made on such date.

Section 104.  The Debentures  shall be  defeasible  pursuant to Section 1302 and
              Section 1303 of the Indenture.

                                  ARTICLE Two

                          Redemption of the Debentures

Section 201. The Debentures will be redeemable at any time and from time to time
prior to maturity at the option of the Company,  as a whole or in part, upon not
less  than 30 nor more  than 60 days'  notice,  at the  principal  amount  to be
redeemed, together with accrued interest to the date fixed for redemption.

                                 ARTICLE Three

                              Additional Covenants

Section  301.  Definitions.  For  purposes  of this  Article  Three,  except  as
otherwise expressly provided or unless the context otherwise requires:

          "Consolidated  Net  Worth" as of any date of  determination  means the
consolidated   stockholders'   equity  of  the  Company  and  its   consolidated
Subsidiaries,   as  determined  in  accordance   with  GAAP,   plus  all  Junior
Subordinated Obligations of the Company and its consolidated Subsidiaries.

                                       3
<PAGE>

         "GAAP" means  generally  accepted  accounting  principles in the United
States of America as in effect from time to time.

         "Junior Subordinated  Obligation" means any indebtedness of the Company
or its  Subsidiaries  that by its terms is  expressly  subordinated  in right of
payment to the Debentures.

Section 302.  Minimum  Equity.  The Company shall, at all times while any of the
Debentures  remain  Outstanding,  maintain  Consolidated  Net  Worth of at least
$100,000,000.

                                  ARTICLE Four

                               Form of Debentures

Section 401. The Debentures and the Trustee's  certificate of  authentication to
be endorsed thereon are to be substantially in the following form:

                                                [INSERT OID LEGEND]

                            UGLY DUCKLING CORPORATION

No.                               $
   -----------------------

CUSIP NO.                         Date of Original Issuance: __________ __, 2000
         --------------------

     Ugly Duckling Corporation,  a corporation duly organized and existing under
the laws of Delaware  (herein  called the  "Company,"  which term  includes  any
successor  Person  under  the  Indenture  hereinafter  referred  to),  for value
received,  hereby promises to pay to ______________,  or registered assigns, the
principal  sum of  ___________  Dollars on April 15,  2007,  and to pay interest
thereon  from the  original  date of issuance  or from the most recent  Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on April 15 and October 15 in each year,  commencing  October 15,  2000,  at the
rate of 11% per annum,  until the principal hereof is paid or made available for
payment.  The interest so payable,  and punctually paid or duly provided for, on
any Interest  Payment Date will, as provided in such  Indenture,  be paid to the
Person in whose name this Security (or one or more  Predecessor  Securities)  is
registered  at the  close  of  business  on the  Regular  Record  Date  for such
interest,  which  shall be the April 1 or October 1  (whether  or not a Business
Day), as the case may be, next  preceding  such Interest  Payment Date. Any such
interest not so punctually  paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular  Record Date and may either be paid to the
Person in whose name this Security (or one or more  Predecessor  Securities)  is
registered at the close of business on a Special  Record Date for the payment of
such  Defaulted  Interest to be fixed by the Trustee,  notice  whereof  shall be
given to Holders  of  Securities  of this  series not less than 10 days prior to
such Special  Record Date, or be paid at any time in any other lawful manner not
inconsistent  with the  requirements  of any  securities  exchange  on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.

                                       4
<PAGE>

         Payment of the principal of (and premium, if any) and any such interest
on this Security will be made at the office or agency of the Company  maintained
for that  purpose in Chicago,  Illinois,  in such coin or currency of the United
States of  America as at the time of  payment  is legal  tender  for  payment of
public and private debts;  provided,  however, that at the option of the Company
payment of  interest  may be made by check  mailed to the  address of the Person
entitled thereto as such address shall appear in the Security Register.

         Reference is hereby made to the further provisions of this Security set
forth on the reverse  hereof,  which further  provisions  shall for all purposes
have the same effect as if set forth at this place.

         Unless the  certificate of  authentication  hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall  not be  entitled  to any  benefit  under  the  Indenture  or be  valid or
obligatory for any purpose.

         In Witness  Whereof,  the Company has caused this instrument to be duly
executed.

                                       UGLY DUCKLING CORPORATION

                                       By_______________________

Attest:

_______________________

                                       5
<PAGE>

         Form of Reverse of Security.

         This  Security is one of a duly  authorized  issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series  under an  Indenture,  dated as of October  15, 1998  (herein  called the
"Indenture",  which  term  shall  have  the  meaning  assigned  to  it  in  such
instrument),  between the Company and Harris Bank and Trust Company,  as Trustee
(herein  called the "Trustee",  which term includes any successor  trustee under
the Indenture), and reference is hereby made to the Indenture for a statement of
the respective rights,  limitations of rights,  duties and immunities thereunder
of the Company,  the Trustee and the Holders of the  Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.  This
Security  is  one of the  series  designated  on the  face  hereof,  limited  in
aggregate principal amount to $27,500,000.

         The  Securities of this series are subject to redemption  upon not less
than 30  days'  notice  by mail,  at any  time,  as a whole  or in part,  at the
election of the Company,  at a Redemption  Price equal to 100% of the  principal
amount,  together with accrued  interest to the  Redemption  Date,  but interest
installments  whose Stated  Maturity is on or prior to such Redemption Date will
be  payable  to the  Holders  of such  Securities,  or one or  more  Predecessor
Securities,  of record at the close of business  on the  relevant  Record  Dates
referred to on the face hereof for such interest  installments,  all as provided
in the  Indenture.  The Indenture  provides  that a notice of redemption  may be
given that is  conditional  upon the  receipt by the  Trustee on or prior to the
Redemption Date of amounts sufficient to pay principal of, and premium,  if any,
and interest on, the  Securities to be redeemed,  and that if such amounts shall
not have been so  received,  said notice  shall be of no force and  effect,  the
Securities  to be  redeemed  will not become due and  payable on the  Redemption
Date,  and the Company  will not be required to redeem such  Securities  on such
date.

         In the  event  of  redemption  of this  Security  in part  only,  a new
Security  or  Securities  of this  series and of like  tenor for the  unredeemed
portion  hereof  will be  issued  in the  name of the  Holder  hereof  upon  the
cancellation hereof.

         The Securities of this series are  subordinate in right of payment,  in
the manner and to the extent set forth in the Indenture, to the prior payment in
full of all Senior  Indebtedness of the Company. To the extent and in the manner
provided in the Indenture,  Senior  Indebtedness must be paid before any payment
may be made to any  Holder  of this  Security.  Any  Holder  by  accepting  this
Security  agrees to the  subordination  and  authorizes  the  Trustee to give it
effect.

         The Indenture  contains  provisions  for  defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and Events
of Default  with respect to this  Security,  in each case upon  compliance  with
certain conditions set forth in the Indenture.

         If an Event of Default with respect to  Securities of this series shall
occur and be  continuing,  the principal of the Securities of this series may be
declared  due and  payable in the manner  and with the  effect  provided  in the
Indenture.

         The Indenture permits, with certain exceptions as therein provided, the
amendment  thereof and the  modification  of the rights and  obligations  of the
Company  and the rights of the  Holders of the  Securities  of each series to be

                                       6
<PAGE>

affected under the Indenture at any time by the Company and the Trustee  without
the consent of any Holders in certain limited cases, and with the consent of the
Holders  of a  majority  in  principal  amount  of the  Securities  at the  time
Outstanding  of each series to be affected  subject to certain  exceptions.  The
Indenture  also  contains   provisions   permitting  the  Holders  of  specified
percentages  in principal  amount of the  Securities  of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance  by the Company with certain  provisions of the Indenture and certain
past defaults  under the Indenture and their  consequences.  Any such consent or
waiver shall be conclusive and binding upon the Holder of this Security and upon
all  future  Holders  of this  Security  and of any  Security  issued  upon  the
registration  of  transfer  hereof or in  exchange  herefor  or in lieu  hereof,
whether or not notation of such consent or waiver is made upon this Security.

         As provided  in and subject to the  provisions  of the  Indenture,  the
Holder of this  Security  shall not have the right to institute  any  proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder,  unless such Holder shall have previously given
the Trustee written notice of a continuing  Event of Default with respect to the
Securities of this series,  the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the  Trustee  to  institute  proceedings  in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have  received  from the Holders of a majority in principal  amount of
Securities of this series at the time Outstanding a direction  inconsistent with
such  request,  and shall have failed to institute any such  proceeding,  for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit  instituted  by the Holder of this  Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.

         No reference  herein to the Indenture and no provision of this Security
or of the Indenture  shall alter or impair the obligation of the Company,  which
is  absolute  and  unconditional,  to pay the  principal  of and any premium and
interest  on this  Security  at the  times,  place and rate,  and in the coin or
currency, herein prescribed.

         As provided in the Indenture and subject to certain limitations therein
set  forth,  the  transfer  of this  Security  is  registrable  in the  Security
Register,  upon surrender of this Security for  registration  of transfer at the
office or agency of the  Company  in any place  where the  principal  of and any
premium  and  interest  on this  Security  are  payable,  duly  endorsed  by, or
accompanied  by a written  instrument  of transfer in form  satisfactory  to the
Company and the Security  Registrar  duly  executed by the Holder  hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this  series and of like tenor,  of  authorized  denominations  and for the same
aggregate  principal  amount,  will be issued to the  designated  transferee  or
transferees.

         The  Securities  of this series are issuable  only in  registered  form
without coupons in denominations of $1.00 and any integral multiple thereof.  As
provided in the Indenture and subject to certain  limitations therein set forth,

                                       7
<PAGE>

Securities of this series are exchangeable for a like aggregate principal amount
of  Securities  of this  series  and of like  tenor  of a  different  authorized
denomination, as requested by the Holder surrendering the same.

         No service charge shall be made for any such  registration  of transfer
or exchange,  but the Company may require  payment of a sum  sufficient to cover
any tax or other governmental charge payable in connection therewith.

         Prior to due presentment of this Security for registration of transfer,
the  Company,  the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes,  whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

         All terms used in this  Security  which are  defined  in the  Indenture
shall have the meanings assigned to them in the Indenture.

                                  ARTICLE Five

                          Original Issue of Debentures

Section 501. Debentures in the aggregate  principal amount of $27,500,000,  may,
upon  execution  of this  Second  Supplemental  Indenture,  or from time to time
thereafter,  be  executed  by the  Company  and  delivered  to the  Trustee  for
authentication,  and the Trustee shall thereupon  authenticate  and deliver said
Debentures to or upon the written order of the Company,  signed by its Chairman,
its President,  or any Vice President and its Treasurer, an Assistant Treasurer,
its  Secretary  or an  Assistant  Secretary,  without any further  action by the
Company.

                                  ARTICLE Six

                         Application of Article Fourteen

Section 601. The Debentures will be subject to the  subordination  provisions of
Article  Fourteen of the Indenture.  The Debentures  will be pari passu with the
12% Subordinated Debentures due 2003 previously issued under the Indenture.  The
indebtedness under the Senior Secured Loan Agreement,  dated as of May 14, 1999,
as  amended  from time to time,  by and among the  Company,  the  Lenders  party
thereto, and the Trustee will be Designated Senior Indebtedness.

                                 ARTICLE Seven

                           Paying Agent and Registrar

Section 701. The Trustee will be the Paying Agent, transfer agent, and Registrar
for the Debentures.

                                       8
<PAGE>

                                 ARTICLE Eight

       Interest and Original Issue Discount Reporting, Backup Withholding

Section 801. On or before  January 31 following  each calendar year with respect
to which  there are  Outstanding  Debentures  or such other due date  prescribed
therefor, as advised to the Trustee by the Company, the Trustee will prepare and
mail to each Holder of  Outstanding  Debentures at any time during the preceding
calendar  year  Forms  1099-INT  and  1099-OID  or such other  forms  prescribed
therefor  by the  Internal  Revenue  Service,  as advised to the  Trustee by the
Company, containing such information as instructed by the Company, including the
information contained in Section 1009 of the Indenture, together with any letter
prepared by the Company explaining tax issues relating thereto to the extent not
otherwise  prohibited by law.  Further,  on or before February 28 following each
calendar  year with respect to which there are  Outstanding  Debentures  or such
other due date  prescribed  therefor,  as advised to the Trustee by the Company,
the Trustee will prepare and file with the Internal Revenue Service or any other
relevant taxing authority, as advised to the Trustee by the Company, by magnetic
tape or other  required  transmission  source,  as advised to the Trustee by the
Company, containing the aforementioned information furnished by the Company.

Section  802.  During  each  calendar  year  with  respect  to which  there  are
Outstanding   Debentures,   the  Trustee  will  satisfy  all  applicable  backup
withholding  rules in connection  with payments made or deemed made with respect
to the Debentures including, without limitation,  payments of interest, accruals
of original issue discount,  and payments  associated with redemptions and other
dispositions of Debentures.

                                  ARTICLE Nine

                                Sundry Provisions

Section 901. Except as otherwise  expressly provided in this Second Supplemental
Indenture  or in the form of  Debentures  or otherwise  clearly  required by the
context  hereof or thereof,  all terms used herein or in said form of Debentures
that are defined in the Indenture shall have the several  meanings  respectively
assigned to them thereby.

Section 902. The Indenture,  as previously  supplemented  and as supplemented by
this Second Supplemental  Indenture,  is in all respects ratified and confirmed,
and this Second Supplemental  Indenture shall be deemed part of the Indenture in
the manner and to the extent herein and therein provided.

         This instrument may be executed in any number of counterparts,  each of
which so executed shall be deemed to be an original,  but all such  counterparts
shall together constitute but one and the same instrument.

                                       9
<PAGE>

         In  Witness  Whereof,  the  parties  hereto  have  caused  this  Second
Supplemental  Indenture  to be duly  executed  all as of the day and year  first
above written.

                                       UGLY DUCKLING CORPORATION

                                       By: /S/ JON D. EHLINGER
                                       -----------------------
                                            SECRETARY

Attest: /S/ ANDREA M. RUSHTON
-----------------------------

                                       HARRIS TRUST AND SAVINGS BANK, As Trustee

                                       By: /S/ MEGAN F. CARMODY
                                       ------------------------
                                        Megan F. Carmody
                                        Assistant Vice President

Attest: /S/ T. MUZQUIZ
        --------------
            T. Muzquiz

<PAGE>

State of Arizona                    )
                                    ) ss:
County of Maricopa                  )

   On the 18th day of April, 2000, before me personally came Jon D. Ehlinger, to
me known,  who being by me duly  sworn,  did depose  and say that  she/he is the
VP/Secretary of Ugly Duckling Corporation,  one of the corporations described in
and which executed the foregoing instrument; and that she/he signed her/his name
thereto by the authority of the Board of Directors of said Corporation.

                                                          Andrea M. Gabriel
                                                          -----------------
                                                          Notary Public

Official Seal

State of Illinois                   )
                                    )ss:
County of Cook                      )

     On the 19th day of April, 2000, before me personally came Megan F. Carmody,
to me known,  who being by me duly sworn,  did depose and say that she/he is the
Assistant  Vice  President  of  Harris  Trust  and  Savings  Bank,  one  of  the
corporations  described in and which  executed the  foregoing  instrument;  that
she/he  knows  the  seal of said  corporation;  that the  seal  affixed  to said
instrument is such  corporate  seal;  that it was so affixed by authority of the
Board of  Directors of said  corporation;  and that she/he  signed  her/his name
thereto by like authority.

                                                          J. Muzquiz
                                                          ----------
                                                          Notary Public

Official Seal

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