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Ugly Duckling Confirms Receipt of Offer to Purchase

5 October 2000

Ugly Duckling Confirms Receipt of Offer to Purchase Company From Chairman/Largest Shareholder

    PHOENIX--Oct. 5, 2000--Ugly Duckling Corporation confirmed that its Chairman and largest shareholder, Ernest C. Garcia II, has made an offer to the Board of Directors to purchase all of the outstanding shares of common stock of the company not already owned by Garcia.
    Garcia currently owns approximately 36.5% of the company's outstanding shares of common stock.
    Under the terms of the offer, the holders of the outstanding shares of common stock would receive $8.50 per share, $2.50 in cash and $6.00 in subordinated indebtedness of the acquiring company. Greg Sullivan, Chief Executive Officer and President of the company, has an arrangement with Garcia under which he would purchase or receive an option to purchase a 20% interest in the acquiring company.
    The Board of Directors has established a special transaction committee of the board, composed of disinterested directors, to evaluate and make a recommendation to the full board on the proposal.