Exhibit (a)(1)(i) - Form of Offer to Purchase

ERNEST C. GARCIA II

November 26, 2001

To the Holders of Common Stock of Ugly Duckling Corporation:

Enclosed for your review is an Offer to Purchase your shares of common
stock, $.001 par value per share ("Common Stock"), of Ugly Duckling Corporation
("Ugly Duckling"). Please read all of the enclosed material carefully before
deciding whether to tender your shares of Common Stock.

- I am the founder, Chairman of the Board of Directors and
majority stockholder of Ugly Duckling.

- I am offering to purchase your shares of Common Stock for
$2.51 net per share.

- Payment will be made promptly after the expiration of the
tender offer.

- The tender offer is being made to all stockholders.

- I am offering to purchase all of the outstanding shares of
Common Stock not already owned by me.

- The offer will expire at 5:00 p.m., Mountain Standard Time on
December 27, 2001, unless the tender offer is extended.

Questions and requests for assistance or for additional copies of the Offer to
Purchase or the Letter of Transmittal should be directed to:

MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms Call: (800) 654-2468
Stockholders Please Call: (800) 607-0088
E-mail: UGLY.INFO@morrowco.com

For additional information, you may contact a representative at Morrow & Co.,
Inc. at the telephone numbers set forth in Section 16 of the Offer to Purchase.

Again, please read the Offer to Purchase and Letter of Transmittal and
carefully consider the tender offer described.

Ernest C. Garcia II

OFFER TO PURCHASE
for Cash by Ernest C. Garcia II of
any and all of the outstanding shares of Common Stock of
Ugly Duckling Corporation at $2.51 net per share

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., MOUNTAIN STANDARD
TIME, ON THURSDAY, DECEMBER 27, 2001, UNLESS THE OFFER IS EXTENDED.

A summary of the principal terms of the offer appears on pages (i)
through (iv). You should read this entire document carefully before deciding
whether to tender your shares of Common Stock of Ugly Duckling.

If you tender all or any portion of your shares you should be aware of
the following factors:

- The purchase price is less than the book value of the shares.

- The purchase price is less than relatively recent trading prices
and historic trading prices, and may not reflect the Company's
going concern value.

- As a result of your tender you will have certain tax consequences.

- You will not receive any benefit associated with the ownership of
the Shares that you tender, including returns on your investment
or participation in the economic success of the Company, if any.

If you continue to hold all or any portion of your shares you should be aware of
the following factors:

- The market for the shares may disappear, which would prevent you
from being able to liquidate your investment or receive fair value
for your investment.

- The Company has not and may not make cash distributions to its
stockholders.

- The consummation of the Offer may result in increased voting
control by affiliates of the Company, including Mr. Garcia.

- The consummation of the Offer may result in decreased liquidity.

- Any shares outstanding after the Offer may not be marginable,
depending upon certain then existing factors.

In addition, following completion of the Offer and subject to timing
restrictions under federal law, Mr. Garcia may consider offering to purchase any
shares not purchased in the Offer, which purchases could be on the same terms or
on terms more or less favorable than the terms of the Offer. Mr. Garcia may also
consider an extraordinary corporate transaction, such as a merger or
reorganization involving the Company, that would result in Mr. Garcia holding
all of the

common stock of the Company. If Mr. Garcia acquires more than 90% of the
outstanding shares of common stock, he may acquire the remaining outstanding
shares unilaterally, and without the approval of the Company's board of
directors or remaining stockholders, through a "short form" merger. If Mr.
Garcia commences such a merger within six months of the completion of the Offer,
the consideration Mr. Garcia would offer would not be less than $2.51, the
amount offered in the Offer. See "SPECIAL FACTORS."

Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or any other documents relating to
this Offer may be directed to Morrow & Co., Inc., 445 Park Avenue, 5th Floor,
New York, NY 10022 or you may call (212) 754-8000 or toll free at (800)
607-0088.

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION OR
UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

THIS OFFER IS SUBJECT TO CERTAIN TERMS AND CONDITIONS. SEE "INTRODUCTION" AND
SECTIONS 1 AND 5.

The date of this Offer to Purchase is November 26, 2001.

SUMMARY TERM SHEET

(Section references are to the Offer to Purchase)

This Summary Term Sheet highlights certain information concerning this
tender offer. To understand the offer fully and for a more complete discussion
of the terms and conditions of the offer, you should read and carefully consider
the entire Offer to Purchase and the related form of Letter of Transmittal.

WHAT IS THE TENDER OFFER?

- Ernest C. Garcia II, the founder, Chairman of the Board of
Directors and majority stockholder in Ugly Duckling Corporation,
is offering to purchase all of the outstanding shares of Common
Stock of Ugly Duckling (excluding shares owned by Mr. Garcia) for
net cash at a price per share equal to $2.51 upon specified terms
and subject to conditions as set forth in the tender offer
documents.

WHAT IS MR. GARCIA OFFERING TO PAY ME?

- Mr. Garcia is offering $2.51, net to the seller, for each share of
Common Stock tendered pursuant to the tender offer.

WHY IS MR. GARCIA MAKING THIS TENDER OFFER?

- Mr. Garcia believes that the Common Stock is an attractive
investment opportunity. Mr. Garcia has previously disclosed that
he desires to obtain all of the outstanding Common Stock of Ugly
Duckling.

WHEN WILL THE TENDER OFFER EXPIRE, AND MAY THE OFFER BE EXTENDED?

- The tender offer will expire at 5:00 p.m. Mountain Standard Time,
on December 27, 2001, unless extended. Mr. Garcia may, in his sole
discretion, or as required by the rules of the SEC extend the
period of time the offer will be open by issuing a press release
or making some other public announcement by no later than the next
business day after the offer otherwise would have expired. See
Section 1 of the Offer to Purchase for details.

WILL THERE BE A SUBSEQUENT OFFERING PERIOD?

- Mr. Garcia may also elect to provide a "subsequent offering
period" of up to 20 business days. A subsequent offering period,
if one is provided, will be an additional opportunity for
stockholders to tender, but not withdraw, their shares and receive
the offer consideration for such shares promptly after they are
tendered. See Section 1 of the Offer to Purchase for details.

(i)

WHAT IS THE PRICE PER SHARE OF COMMON STOCK AS OF A RECENT DATE?

- As of November 14, 2001, the closing price per share of Common
Stock was $2.39. See Section 9 of the Offer to Purchase for
details. Please obtain a recent quotation for shares of Ugly
Duckling in deciding the tender your shares.

WILL THE PRICE PER SHARE BE HIGHER OR LOWER THAN THE PURCHASE PRICE ON THE
EFFECTIVE DATE?

- No one can accurately predict the price per share of Common Stock
at a future date.

HOW DO I TENDER MY SHARES?

- To tender your shares, you must do one of the following:

(a) If you are a record holder (i.e., a stock certificate has been
issued to you), you must complete and sign the enclosed Letter of
Transmittal and send it with your stock certificate(s) to
Computershare Trust Company, Inc., or follow the procedures
described in this Offer to Purchase for book-entry transfer under
the heading "The Offer - Procedures for Tendering Shares". These
materials must reach Computershare before the tender offer
expires. Detailed instructions are contained in the Letter of
Transmittal and in "The Offer - Procedures for Tendering Shares."

(b) If you are a record holder, but your stock certificate is not
available, or you cannot deliver it to Computershare before the
offer expires, you may be able to tender your shares using the
enclosed Notice of Guaranteed Delivery. Please call Morrow & Co.,
Inc. at the number set forth in Section 16 below for assistance.

(c) If you hold your shares through a broker, bank or other
nominee, you should contact your nominee and instruct them to
tender your shares. See "The Offer - Procedures for Tendering
Shares".

MAY I WITHDRAW MY SHARES AFTER I HAVE TENDERED THEM AND, IF SO, BY WHEN?

- Yes, you may withdraw your tendered shares at any time prior to
5:00 p.m., Mountain Standard Time, on December 27, 2001 (or if the
offer is extended, at any time prior to 5:00 p.m., Mountain
Standard Time, on the new expiration date). Withdrawn shares may
be re-tendered by following the tender procedures before the offer
expires (including any extension period). In addition, if shares
tendered have not by then been accepted for payment, you may
withdraw your tendered shares at any time after January 23, 2002.
See Section 3 of the Offer to Purchase for details.

HOW DO I WITHDRAW TENDERED SHARES?

- A written notice of withdrawal of tendered shares must be timely
received by Computershare Trust Company, Inc., which specifies the
name of the stockholder who tendered the shares, the number of
shares being withdrawn (which must be all of the shares tendered)
and, as regards share certificates which represent tendered shares
that

(ii)

have been delivered or otherwise identified to Computershare Trust
Company, Inc., the name of the registered owner of such shares if
different than the person who tendered the shares. See Section 3
of the Offer to Purchase for details.

MAY I PLACE ANY CONDITIONS ON MY TENDER OF SHARES?

- No.

DOES MR. GARCIA HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?

- Yes. To finance the purchase of any tendered shares, Mr. Garcia
anticipates that funds will be derived from loan proceeds he has
secured with Bank One Arizona, N.A. and available cash. See
Section 8 of the Offer to Purchase for details.

IF SHARES I TENDER ARE ACCEPTED BY MR. GARCIA, WHEN WILL PAYMENT BE MADE?

- It is contemplated, subject to change, that payment for tendered
shares, if accepted, will be made on or about January 4, 2002. See
Section 4 of the Offer to Purchase for details.

IS MY SALE OF SHARES IN THE TENDER OFFER A TAXABLE TRANSACTION?

- For most stockholders, yes. All U.S. stockholders (other than
tax-exempt stockholders) who sell shares in the tender offer are
expected to recognize gain or loss for U.S. federal income tax
purposes equal to the difference between the cash they receive for
the shares sold and their adjusted basis in the shares. The sale
date for tax purposes will be the date Mr. Garcia accepts shares
for purchase. It is strongly recommended that you consult your tax
advisor. See Section 11 of the Offer to Purchase for details.

IS THERE ANY REASON SHARES TENDERED WOULD NOT BE ACCEPTED?

- In addition to those circumstances described in Section 5 in which
Mr. Garcia is not required to accept tendered shares, Mr. Garcia
has reserved the right to reject any and all tenders determined by
Mr. Garcia not to be in appropriate form. Tenders will be rejected
if they do not include original signature(s) or the original of
any required signature guarantee(s).

HOW WILL TENDERED SHARES BE ACCEPTED FOR PAYMENT?

- Properly tendered shares will be accepted for payment by a
determination of Mr. Garcia followed by notice of acceptance to
Computershare Trust Company, Inc., which is thereafter to make
payment as directed by Mr. Garcia with funds to be deposited with
it by Mr. Garcia. See Sections 1 and 4 of the Offer to Purchase
for details.

WHAT ACTION NEED I TAKE IF I DECIDE NOT TO TENDER MY SHARES?

- None.

(iii)

WILL MANAGEMENT OF THE COMPANY PARTICIPATE IN THE TENDER OFFER?

- The directors and officers of the Company have indicated they will
tender their respective shares. See information contained in the
Offer to Purchase under the heading "INTRODUCTION" and Section 1.

HOW DO I OBTAIN INFORMATION?

- Requests for additional copies of the Offer to Purchase, the
Letter of Transmittal and all other tender offer documents should
be directed to Morrow & Co., Inc., at the telephone numbers set
forth in Section 16. In addition, questions and requests for
assistance may be directed to Steven Johnson by calling (602)
778-5000. If you do not own shares directly, you should obtain
this information and the documents from your broker, dealer,
commercial bank, trust company or other nominee, as appropriate.

HOW WAS THE PURCHASE PRICE DETERMINED?

- Mr. Garcia determined the offering price in his sole discretion.
In determining the offering price per share, Mr. Garcia
considered, among other things, the recent trading price on the
Nasdaq National Market. See the information contained in this
Offer to Purchase under the heading "Special Factors."

PLEASE READ THIS OFFER AND THE RELATED LETTER OF TRANSMITTAL BEFORE YOU MAKE ANY
DECISION WITH RESPECT TO THE OFFER.

IMPORTANT

IF YOU WISH TO TENDER ALL OR ANY PART OF YOUR SHARES, YOU SHOULD EITHER:

(1)(A) COMPLETE AND SIGN A LETTER OF TRANSMITTAL ACCORDING TO THE
INSTRUCTIONS IN THE ENCLOSED LETTER OF TRANSMITTAL AND MAIL OR DELIVER IT,
TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEE AND ANY OTHER REQUIRED DOCUMENTS,
TO COMPUTERSHARE TRUST COMPANY, INC., THE DEPOSITARY FOR THE TENDER OFFER
("COMPUTERSHARE"), AND MAIL OR DELIVER THE CERTIFICATES FOR YOUR SHARES TO
COMPUTERSHARE TOGETHER WITH ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF
TRANSMITTAL OR (B) TENDER THE SHARES ACCORDING TO THE PROCEDURE FOR BOOK-ENTRY
TRANSFER DESCRIBED IN SECTION 2 OF THE OFFER TO PURCHASE, OR

(2) REQUEST A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE TO TENDER YOUR SHARES FOR YOU.

IF YOUR SHARES ARE REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK,
TRUST COMPANY OR OTHER NOMINEE, YOU SHOULD CONTACT THAT PERSON IF YOU DESIRE TO
TENDER YOUR SHARES. IF YOU DESIRE TO TENDER YOUR SHARES AND

(iv)

(1) YOUR CERTIFICATES FOR THE SHARES ARE NOT IMMEDIATELY AVAILABLE OR
CANNOT BE DELIVERED TO COMPUTERSHARE, OR

(2) YOU CANNOT COMPLY WITH THE PROCEDURE FOR BOOK-ENTRY TRANSFER, OR

(3) YOUR OTHER REQUIRED DOCUMENTS CANNOT BE DELIVERED TO COMPUTERSHARE
BY THE EXPIRATION OF THE TENDER OFFER,

YOU MUST TENDER YOUR SHARES ACCORDING TO THE GUARANTEED DELIVERY PROCEDURE
DESCRIBED IN SECTION 2 OF THE OFFER TO PURCHASE.

QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO MORROW & CO., INC. (THE
"INFORMATION AGENT"), AT ITS ADDRESS AND TELEPHONE NUMBERS SET FORTH IN SECTION
16 OF THIS OFFER TO PURCHASE. REQUESTS FOR ADDITIONAL COPIES OF THIS DOCUMENT,
THE RELATED LETTER OF TRANSMITTAL OR THE NOTICE OF GUARANTEED DELIVERY MAY BE
DIRECTED TO THE INFORMATION AGENT.

IF YOU TENDER OR DO NOT TENDER ALL OR ANY PORTION OF YOUR SHARES, YOU ARE
SUBJECT TO CERTAIN RISKS. SEE "SPECIAL FACTORS" BEGINNING ON PAGE 2.

THE OFFER IS NOT CONDITIONED ON THE TENDER OF ANY MINIMUM NUMBER OF SHARES. THE
OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE ABSENCE OF CERTAIN CONDITIONS
DESCRIBED IN SECTION 5 OF THIS OFFER TO PURCHASE.

MR. GARCIA IS NOT MAKING ANY RECOMMENDATION TO YOU REGARDING WHETHER TO TENDER
OR REFRAIN FROM TENDERING YOUR SHARES. EACH OF YOU MUST MAKE YOUR OWN DECISION
REGARDING WHETHER TO TENDER SHARES, AND, IF SO, HOW MANY OF YOUR SHARES TO
TENDER.

MR. GARCIA HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON HIS
BEHALF REGARDING WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR SHARES
PURSUANT TO THE OFFER. MR. GARCIA HAS NOT AUTHORIZED ANY PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OTHER
THAN THOSE CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. ANY RECOMMENDATION
OR INFORMATION, IF GIVEN OR MADE, MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY MR. GARCIA.

(v)

Forward Looking Statements

This Offer to Purchase, including the Summary Term Sheet, includes
statements that constitute forward-looking statements within the meaning of the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Mr. Garcia claims the protection of the safe-harbor for any forward looking
statements. Forward-looking statements are often characterized by the words
"may," "anticipates," "believes," "estimates," "projects," "expects" or similar
expressions and do not reflect historical facts. Forward-looking statements in
this Offer to Purchase relate, among other matters, to anticipated financial
results and future financial condition. Forward looking statements include
risks, uncertainties and other factors which may cause actual results,
performance or achievements to be materially different from those expressed or
implied by such forward looking statements, some of which cannot be predicted or
quantified. Future events and actual results could differ materially from the
forward-looking statements.

When considering each forward-looking statement, you should keep in
mind the cautionary statements found in this Offer to Purchase and in the
Company's Securities and Exchange Commission filings. In addition, the foregoing
factors may affect generally the business, results of operations and financial
position of the Company. There may also be other factors that are currently not
identifiable or quantifiable, but may arise or become known in the future.
Forward looking statements speak only as of the dated the statement was made.
Mr. Garcia is not obligated to publicly update or revise any forward looking
statements, whether as a result of new information, future events, or for any
other reason.

(vi)

TABLE OF CONTENTS

PAGE

SUMMARY TERM SHEET .................................................................. i

INTRODUCTION ........................................................................ 1

SPECIAL FACTORS ..................................................................... 2

Section 1. Offer to Purchase and Purchase Price; Expiration Date;
Determination of Purchase Price .......................... 13

Section 2. Procedures for Tendering Shares .......................... 16

Section 3. Withdrawal Rights ........................................ 21

Section 4. Purchase of Shares; Payment of Purchase Price ............ 21

Section 5. Certain Conditions of the Offer .......................... 22

Section 6. Identity and Background of Offeror ....................... 24

Section 7. Effects of the Offer ..................................... 25

Section 8. Source and Amount of Funds ............................... 28

Section 9. Certain Information About the Company .................... 29

Section 10. Certain Transactions with Affiliates ..................... 30

Section 11. Certain Federal Income Tax Consequences .................. 34

Section 12. Transactions and Arrangements Concerning Shares .......... 35

Section 13. Extensions of Tender Period; Terminations; Amendments .... 37

Section 14. Fees and Expenses ........................................ 38

Section 15. Certain Legal Matters .................................... 38

Section 16. Address; Miscellaneous ................................... 40

INTRODUCTION

Ernest C. Garcia II hereby offers to purchase all of the outstanding
shares ("Shares") of Common Stock, $.001 par value per share ("Common Stock"),
of Ugly Duckling Corporation at a purchase price of $2.51 per Share of Common
Stock (the "Purchase Price") in cash, net to the seller without any interest,
upon the terms and subject to the conditions set forth in this "Offer to
Purchase" and in the related "Letter of Transmittal." Together the "Offer to
Purchase" and "Letter of Transmittal" constitute the "Offer." "Share" or
"Shares," refers to the shares of Common Stock of the Company.

The Offer is generally not conditioned on the tender of any minimum
number of Shares. The Offer, however, is conditioned upon, among other things,
the absence of certain adverse conditions described in Section 5, "Certain
Conditions of the Offer." The Shares are traded on the Nasdaq National Market
under the symbol "UGLY."

The per Share Purchase Price is less than the per Share book value of
the Common Stock. As of December 31, 2000 and December 31, 1999, the book value
of each Share was approximately $11.40 and $10.81, respectively. The per Share
Purchase Price is less than relatively recent trading prices and historic
trading prices, and may not reflect the Company's going concern value. Mr.
Garcia determined the Purchase Price in his sole discretion, based on recent
purchases of Shares on the open market and recent market prices of the Common
Stock. Mr. Garcia has not performed an analysis to determine the fair market
value or liquidation value of the Shares, or obtained an opinion from an
independent third party regarding the fairness of the Purchase Price.

Subject to the conditions set forth in the Offer, Mr. Garcia is
offering to purchase all the outstanding Shares which are tendered and received
by Mr. Garcia by, and not withdrawn prior to, 5:00 p.m., Mountain Standard Time,
on December 27, 2001, subject to any extension of the Offer by Mr. Garcia (the
"Expiration Date").

For any Shares that you tender but Mr. Garcia does not purchase due to
an improper tender, in his sole discretion, a book entry will be made on the
Company's books to reflect your ownership of the Shares not purchased by Mr.
Garcia. The certificates representing any unpurchased Shares will be returned to
you or the person you specify in your tendering documents.

If you are the record owner of your Shares and you tender your Shares
in the Offer, you will not have to pay brokerage fees or commissions. If you own
your Shares through a broker or other nominee, and your broker tenders your
Shares on your behalf, your broker or nominee may charge you a fee for doing so.
You should consult with your broker or nominee to determine whether any charges
will apply. We will pay all fees and expenses of Computershare Trust Company,
Inc. ("Computershare"), which is acting as the depository, and Morrow & Co.,
Inc. ("Information Agent"), which is acting as information agent, incurred in
connection with the Offer.

All of the Shares that Mr. Garcia purchases pursuant to the Offer will
be deemed to have been purchased as of the Expiration Date. If you accept the
offer and tender Shares, you will receive the net Purchase Price. You will not
be entitled to receive any cash dividends or other distributions declared and
payable after the Expiration Date on any Shares tendered and accepted by Mr.
Garcia.

The tender and acceptance of a Share will be treated as a sale of the
Share for federal and most state income tax purposes, which will result in your
recognizing gain or loss for income tax purposes. Mr. Garcia urges you to review
carefully all the information contained in or referred to in this Offer
including, without limitation, the information presented in Section 11, "Certain
Federal Income Tax Consequences."

As of November 14, 2001, Mr. Garcia owned 7,482,200 Shares (including
the right to acquire 40,000 Shares under presently exercisable stock options) of
the Company's 12,274,000 outstanding Shares of Common Stock. Mr. Garcia is
making this Offer to all holders of Common Stock. Management and directors of
the Company have indicated they will tender their Shares in the Offer. The
Company's recent public filings indicate that the directors and officers of the
Company (including Mr. Garcia) hold approximately 62% of the outstanding Shares.
Assuming the Offer is fully subscribed, Mr. Garcia will own, after the Offer,
all of the outstanding Shares, representing 100% of the Company's 12,274,000
outstanding Shares.

If after consummation, Mr. Garcia owns at least 90% of the shares then
outstanding, Mr. Garcia will be able to cause a merger to occur pursuant to the
"short-form" merger provisions of the Delaware General Corporation Law ("DGCL"),
without a vote of the Company's stockholders. However, if Mr. Garcia owns less
than 90% of the shares then outstanding after consummation of the Offer, a vote
of the Company's stockholders would be required under the DGCL to effect a
merger.

SPECIAL FACTORS

PURPOSES, ALTERNATIVES, REASONS AND EFFECTS

Background, Purposes and Reasons. Mr. Garcia has previously announced
his intention to take the Company private. Mr. Garcia has previously entered
into discussions with the Company to acquire all of the outstanding Shares of
Common Stock and proposed certain transactions in connection with such
intention. See Section 10 of this Offer to Purchase. The purpose of the Offer is
to allow Mr. Garcia to acquire all outstanding Shares of Common Stock. Mr.
Garcia is providing the stockholders an opportunity to liquidate their positions
through participation in the Offer. Stockholders who tender their Shares in the
Offer are, in effect, exchanging certainty and liquidity for the unknown returns
of continued ownership of their Shares. The continued ownership of Shares
entails the risk of loss of all or a portion of the current value of their
investment.

Mr. Garcia does not have any current plans or proposals that relate to
or would result in:

- a sale or transfer of a material amount of assets of the Company;

- any change in the management of the Company;

- any change in the indebtedness or capitalization of the Company;

- any other material change in the structure or business of the
Company; or

- any change in charter documents or other actions that may impede
the acquisition of control of the Company by any person.

Mr. Garcia, upon successful consummation of the Offer, has considered
and may enter into transactions or cause any one of the following to occur:

- an extraordinary corporate transaction, such as a merger or
reorganization, involving the Company that would result in Mr.
Garcia holding all of the Common Stock of the Company; or

- a change in the Board of Directors of the Company.

If you retain your Shares, you will be subject to increased risks
including but not limited to: (1) reduced liquidity, (2) risks of continued
ownership in the Company, and (3) increased voting control by Mr. Garcia, which
will increase the influence that Mr. Garcia has on matters voted on by
stockholders, including election of the Board of Directors and mergers or other
business combinations. Any Shares tendered in connection with this Offer will be
held by Mr. Garcia, but the Company may issue new Shares from time to time in
compliance with the federal and state securities laws or any exemptions
therefrom. If you tender all of your Shares, you will no longer hold an interest
in the Company and will no longer receive any benefit associated with the
ownership of the Shares that you tender, including returns on your investment or
participation in the economic success of the Company, if any.

Alternatives. In October 2000, Mr. Garcia made a proposal to the Board
of Directors of the Company to merge the Company with a to-be-formed entity
beneficially owned by Mr. Garcia. As part of the proposed merger, each
stockholder other than Mr. Garcia would have received $2.50 in cash and $6.00 in
subordinated debt. After discussions with the Board of Directors of the Company
and the Special Transaction Committee ("STC") formed by the Board of Directors
of the Company, Mr. Garcia withdrew the proposal as he did not believe that the
offer, as proposed, would have been approved at such time by the STC. In April
2001, Mr. Garcia made another proposal to the Board of Directors of the Company
to acquire the Company through a merger transaction. As part of the proposed
merger, each stockholder would have received $2.00 in cash and $5.00 in
subordinated debt. The STC and Mr. Garcia negotiated the terms of the merger for
several months. After the terrorist attacks of September 11, 2001, Mr. Garcia
withdrew his merger proposal citing the economic uncertainty that such events
created. A legal proceeding was commenced in connection with Mr. Garcia's
proposed merger transaction by certain stockholders. The general claim is a
breach of the duties of the directors of the Company. The claims arise out of
related party transactions with Mr. Garcia. The negotiations with the
complaining stockholder's counsel involved proposals for changes in the terms of
the merger consideration offered by Mr. Garcia. The negotiations involved
changes in

the terms of the bonds that would be issued to the stockholders in connection
with the merger. No agreement was ever reached with the counsel on such terms.

Effects. In addition to the effects of the Offer on stockholders who
tender their Shares and stockholders who do not tender their Shares as set forth
in Section 7 of this Offer to Purchase, the Offer will affect the Company and
its stockholders in other respects.

Upon completion of the Offer, Mr. Garcia may consider purchasing any
Shares not purchased in the Offer. Mr. Garcia may elect to provide a subsequent
offering period for the Shares. Any such purchases may be on the same terms as
the terms of this Offer or on terms which are more favorable or less favorable
to you than the terms of this Offer. Rule 13e-4 promulgated under the Exchange
Act prohibits Mr. Garcia from purchasing any Shares, other than pursuant to the
Offer, until at least 10 business days after the Expiration Date. Any possible
future purchases by Mr. Garcia will depend on many factors, including but not
limited to, the market price of Shares, tax considerations, the results of the
Offer, the Company's business and financial condition and general economic
market conditions.

After the consummation of the tender offer, the stockholders tendering
their Shares will not have the opportunity to participate in the Company's
earnings and growth, if any, and will not have any right to vote on corporate
matters. Conversely, after the consummation of the tender offer, the
stockholders tendering their Shares will not face the risk of losses generated
by the Company's operations or any decrease in the Company's value.

There can be no assurance that a significant trading market will exist
for the Shares following consummation of the Offer. The extent of the public
market for the Shares following consummation of the Offer will depend on the
number of holders that remain at such time, the interest in maintaining a market
in the Shares on the part of securities firms and other factors. An issue of
securities with a smaller float may trade at lower prices than would a
comparable issue of securities with a greater float. Accordingly, the market
price for Shares that are not tendered in the Offer may be adversely affected to
the extent that the amount of Shares purchased pursuant to the Offer reduces the
float. The reduced float also may have the effect of causing the trading prices
of the Shares that are not tendered or purchased to be more volatile.

The Shares are currently registered under the Exchange Act.
Registration of the Shares under the Exchange Act may be terminated upon
application of the Company to the SEC if the class of Shares is no longer held
by 300 or more holders of record.

If Mr. Garcia acquires all outstanding Shares of Common Stock, Mr.
Garcia would have a 100.0% interest in the net book value and net earnings of
the Company, or approximately $151,500,000 and $3,631,000 respectively, as of
and for the nine months ended September 30, 2001.

The exact capital appearance of the Company after completion of the
tender offer cannot be predicted due to uncertainty as to the identity and
number of stockholders who will participate in the tender offer, and the number
of Shares they will tender. Management and directors of the Company have
indicated they will tender their Shares in the Offer. The Company's recent
public filings indicate that the directors and officers of the Company
(including Mr. Garcia) hold

approximately 62% of the outstanding Shares. However, the following examples
illustrate possible scenarios stockholders should consider.

Possible Effect of the Tender Offer and Open Market Purchases on the
Market for Shares. Following the completion of the tender offer, the purchase of
Shares by Mr. Garcia pursuant to the tender offer or any subsequent open market
or privately negotiated purchases would reduce the number of Shares that might
otherwise trade publicly and may reduce the number of holders of Shares. This
could adversely affect the liquidity and market value of the remaining Shares
held by the public, if any.

After the tender offer is complete, Mr. Garcia may consider acquiring
any Shares not purchased pursuant to the Offer in the open market, privately
negotiated transactions, a merger or other similar business combination, or a
reverse stock split. Such open market or privately negotiated purchases would be
made at market prices or privately negotiated prices at the time of purchase,
which may be higher or lower than the tender offer price.

Plans After the Tender Offer. Mr. Garcia founded the Company and has
always been a substantial stockholder of the Company. Mr. Garcia has also been
the Chairman of the Board for the last five years. As such, Mr. Garcia has had
significant involvement in the management and operation of the Company. The
increase in Mr. Garcia's beneficial ownership will not likely have any
substantial effect on the Company's business, operations or management. Mr.
Garcia intends to maintain and further develop current business operations
pending and following consummation of the tender offer. Current and future plans
may include strategic acquisitions that complement the Company's business. In
addition, Mr. Garcia may make future changes to the Company's current Board of
Directors to better complement the direction and focus of the Company. Mr.
Garcia does not have any plans to change the Company's current management in
this period. However, changes to management may occur as a result of the natural
evolution of the Company's business.

Possible Termination of Registration Under Exchange Act. If the
Company's stockholders number less than 500 after the completion of the Offer,
the Company may terminate the Exchange Act registration for the Shares. If the
Exchange Act registration for the Shares is terminated, the amount of
information publicly available to the remaining stockholders of the Company
would be significantly reduced, which could adversely affect the trading market
and market value for the remaining Shares. In addition, the obligation of Mr.
Garcia and other officers and directors of the Company, as applicable, to file
reports under Section 13 of the Exchange Act and the related rules, the insider
short-swing trading rules contained in Section 16 of the Exchange Act and the
related rules, the proxy solicitation rules contained in Section 14 of the
Exchange Act and the related rules and certain of the rules regulating tender
offers for Shares of the Company's stock contained in Section 14 of the Exchange
Act and related rules would no longer be applicable to the Company.

Possible Delisting. The Shares are currently listed for quotation on
the Nasdaq National Market. Following the closing of the tender offer, depending
upon the aggregate market value of the remaining Shares, the number of Shares
not purchased pursuant to the tender offer or any subsequent open market or
privately negotiated purchases, and whether Nasdaq's temporary suspension of
certain minimum listing requirements is made permanent, the Shares may no

longer meet the quantitative requirements for continued listing on the Nasdaq
National Market and may result in the Shares becoming eligible for
deregistration under the Exchange Act. Failure to meet quantitative minimums, in
addition to the Company's inability to meet other applicable minimum listing
requirements, will cause the Shares to no longer be eligible for quotation on
the Nasdaq National Market quotation system.

Possible Subsequent Transactions. As of November 14, 2001, Mr. Garcia
beneficially owns 7,482,200 Shares (including the right to acquire 40,000 Shares
under presently exercisable stock options), or 61.0%, of the issued and
outstanding Common Stock of the Company. As a majority stockholder of Common
Stock of the Company, Mr. Garcia is able to control the outcome of most
proposals brought to a stockholder vote. The remaining holders of Common Stock
of the Company are each minority holders and are not, as a collective group,
able to vote more Shares of Common Stock than Mr. Garcia beneficially owns. Mr.
Garcia is in a position to control the election of directors of the Company and
the approval of any merger, reorganization or other business combination
transaction submitted to a vote of the Company's stockholders. Mr. Garcia could
vote to approve such a transaction on terms that might be considered more
favorable to Mr. Garcia than to unaffiliated stockholders. The terms of any such
transaction could require stockholders other than Mr. Garcia to dispose of their
Shares of Common Stock for cash or other consideration even if the stockholders
would prefer to continue to hold their Shares of Common Stock for investment.
Any such transaction could also result in the Company's Common Stock no longer
being listed on the Nasdaq National Market, any other national securities
exchange or any inter-dealer quotation system, or being held of record by fewer
than 300 persons and, therefore, eligible for termination of registration
pursuant to Section 12(g)(4) of the Exchange Act. If Mr. Garcia acquires more
than 90% of the outstanding Shares of Common Stock, he may acquire the remaining
outstanding Shares through a merger. Section 253 of the DGCL provides that in
any case in which at least ninety percent (90%) of the outstanding shares of a
subsidiary corporation is owned by a parent corporation, the parent corporation
can effect a "short-form" merger with that subsidiary corporation without a vote
of the stockholders of that subsidiary corporation. Accordingly, if, as a result
of the offer or otherwise, Mr. Garcia acquires or controls the voting power of
at least ninety percent (90%) of the outstanding shares, Mr. Garcia may cause
such a merger to be effected after the acquisition without prior notice to, or
any action by, any other Company stockholder. If Mr. Garcia commences such a
merger within six months of the completion of this Offer, the consideration Mr.
Garcia would offer would not be less than $2.51, the amount offered in this
Offer. In connection with the consummation of any merger in which stockholders
would be required to receive cash for their shares, stockholders of record would
be entitled under Delaware law to seek a judicial appraisal of the "fair value"
of their shares, which amount would then be paid to them in cash in lieu of the
price paid in the merger. Such amount could be the same as or more or less than
the merger price. The steps that must be taken in connection with such a merger
to demand and perfect appraisal rights are set forth in Section 262 of the
Delaware General Corporation Law, a copy of which would be provided to
stockholders at such time, if any, that they are entitled to demand appraisal.
Appraisal rights are not available in connection with the Offer.

Appraisal Rights. Under Delaware law, holders of Shares do not have
appraisal rights in connection with the Offer. The following summarizes
provisions of Delaware law regarding appraisal rights that would be applicable
in the event of a short-form merger. This discussion is qualified in its
entirety by reference to Section 262 of the DGCL, which contains the Delaware

appraisal statute. A copy of this provision is attached to this document as
Appendix B. If you fail to take any action required by Delaware law, your rights
to an appraisal will be waived or terminated.

Notification of Merger's Effectiveness. Either before the
effective time of the merger or within ten days thereafter, the Company
will send notice of the effectiveness of the merger and the
availability of appraisal rights to each Stockholder (other than Mr.
Garcia or his affiliates).

Electing Appraisal Rights. To exercise appraisal rights, the
record holder of Common Stock must within 20 days after the date of
mailing of such notice deliver a written demand for appraisal to the
Company. This demand must reasonably inform the Company of the identity
of the holder of record and that the stockholder demands appraisal of
his, her or its shares of the Company's Common Stock.

A demand for appraisal must be delivered to: Corporate
Secretary, Ugly Duckling Corporation, 4020 East Indian School Road,
Phoenix, Arizona 85018.

Only Record Holders May Demand Appraisal Rights. Only a record
holder of Company Common Stock is entitled to demand appraisal rights.
The demand must be executed by or for the record holder, fully and
correctly, as the holder's name appears on the holder's stock
certificates.

- If Common Stock is owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, the demand should
be executed in that capacity.

- If Common Stock is owned of record by more than one person, as
in a joint tenancy or tenancy in common, the demand should be
executed by or for all owners.

- An authorized agent, including one of two or more joint
owners, may execute the demand for appraisal for a holder or
record. The agent must identify the owner or owners or record
and expressly disclose the fact that, in executing the demand,
the agent is acting as agent for the owner or owners of
record.

- A holder of record, such as a broker, who holds Common Stock
as nominee for beneficial owners, may exercise a holder's
right of appraisal with respect to Common Stock held for all
or less than all of such beneficial owners. In that case, the
written demand should set forth the number of shares of Common
Stock covered by the demand. If no number of shares of Common
Stock is expressly mentioned, the demand will be presumed to
cover all shares of Common Stock standing in the name of the
record holder.

Court Petition Must Be Filed. Within 120 days after the
effective time of the merger, the surviving corporation in the merger
or any stockholder, who has satisfied the foregoing conditions may file
a petition in the Delaware Court of Chancery demanding a determination
of the fair value of the Common Stock. Stockholders seeking to exercise
appraisal rights should initiate all necessary action to perfect its
rights within the time periods prescribed by Delaware law.

Appraisal Proceeding by Delaware Court. If a petition for an
appraisal is timely filed, after a hearing on the petition, the
Delaware Court of Chancery will determine which of the stockholders are
entitled to appraisal rights. The court will appraise the Common Stock
owned by the stockholders and determine its fair value. In determining
fair value, the court may consider a number of factors including market
values of the Company's stock, asset values and other generally
accepted valuation considerations, but will exclude any element of
value arising from the accomplishment and expectation of the merger.
The court will also determine the amount of interest, if any, to be
paid upon the value of the Common Stock to the stockholders entitled to
appraisal.

The value determined by the court for Common Stock could be
more than, less than, or the same as the merger consideration, but the
form of the consideration payable as a result of the appraisal
proceeding would be cash. The court may also order that all or a
portion of any stockholder's expenses incurred in connection with an
appraisal proceeding, including reasonable attorneys' fees and expenses
and reasonable fees and expenses of experts utilized in the appraisal
proceeding, be charged against the value of all common stock entitled
to appraisal.

Effect of Appraisal Demand on Voting and Rights to Dividends.
Any stockholder who has duly demanded an appraisal in compliance with
Delaware law will not, after the effective time of the merger, be
entitled to vote the shares subject to the demand for any purpose. The
shares subject to the demand will not be entitled to dividends or other
distributions, other than those payable or deemed to be payable to
stockholders of record as of a date prior to the effective time.

Loss, Waiver or Withdrawal of Appraisal Rights. Holders of
Common Stock of the Company lose the right to appraisal if no petition
for appraisal is filed within 120 days after the effective time of the
Merger. A stockholder will also lose the right to an appraisal by
delivering to the surviving corporation a written withdrawal of such
stockholder's demand for an appraisal. In addition, any attempt to
withdraw that is made more than 60 days after the effective time
requires the written approval of the surviving corporation. If
appraisal rights are not perfected or a demand for appraisal rights is
timely withdrawn, a stockholder will be entitled to receive the
consideration otherwise payable pursuant to the merger, without
interest.

Dismissal of Appraisal Proceeding. If an appraisal proceeding
is timely instituted, such proceeding may not be dismissed as to any
stockholder who has perfected a right of appraisal without the approval
of the court.

Interests of Certain Persons. In considering whether to tender your
Shares in the Offer, you should be aware of interests of certain persons as
disclosed in the Company's definitive proxy statement for its 2001 Annual
Meeting of Stockholders under the caption "Certain Relationships and Related
Transactions" and "Proposal To Be Voted On; Item No. 1 - Election of Directors."
which is incorporated herein by reference. See Section 16 under the heading
"Miscellaneous."

FAIRNESS OF THE TRANSACTION.

Mr. Garcia believes that the Offer is fair to the unaffiliated holders
of Common Stock of the Company. In determining the purchase price for the
Shares, Mr. Garcia considered the following factors:

- The recent market prices of the Common Stock as quoted on the
Nasdaq National Market.

- The recent purchase of 575,100 Shares of Common Stock at a
purchase price of $2.51 per Share by Mr. Garcia.

- The purchase of the Shares will eliminate the exposure of
stockholders tendering Shares to any potential future decline
in the price of the Shares. Since the stock market peak in
March 2000, all major stock indexes, including without
limitation, the Standard & Poors 500, the Dow Jones Industrial
Average and the Nasdaq National Market, have declined
precipitously. The Nasdaq National Market has declined over
60% in this period.

- The liquidity that would be realized by the stockholders
tendering their Shares from the all-cash tender offer.

- Liquidity of the Shares can be expected to suffer if the
Shares are ever delisted from the Nasdaq National Market. Mr.
Garcia thus believes that the resulting liquidity from the
tender offer will be beneficial to the tendering stockholders.

In addition to the foregoing, Mr. Garcia considered the following
factors in reaching the decision that the tender offer is fair to those
stockholders who choose not to tender their Shares:

- The stockholders who choose not to tender their Shares in the
tender offer will share the risks of the Company's future
financial performance with other non-selling stockholders, but
equally will share in the rewards.

- The Company may be taken private at a later date on terms more
or less favorable than the terms of this Offer.

Mr. Garcia also believes that the tender offer is procedurally fair to
the holders of Common Stock in light of the following factors:

- The tender offer provides stockholders a choice whether to
remain stockholders in the Company or tender their Shares at a
price that is higher than the market price

for the Shares as of November 14, 2001. Thus, stockholders who
continue to believe in the future growth prospects of the
Company despite the market risks have a choice to continue to
hold their Shares, subject to the possibility of a subsequent
transaction that would require stockholders other than Mr.
Garcia to surrender their Shares for cash or other
consideration.

- The tender offer provides the opportunity for those
stockholders holding Shares directly to sell their Shares
without incurring brokerage and other costs typically
associated with market sales.

- Mr. Garcia determined the Purchase Price in his sole
discretion, based on recent purchases of Shares on the open
market and recent market prices of the Common Stock.

Mr. Garcia also believes that the determination of the purchase price
was procedurally fair to the unaffiliated stockholders despite the fact that:

- Mr. Garcia has not retained and does not intend to retain any
unaffiliated representative to act solely on behalf of the
unaffiliated stockholders for purposes of negotiating the
terms of the Offer and/or preparing a report concerning the
fairness of the Offer.

- Mr. Garcia has not received any report, opinion or appraisal
from an outside party that is materially related to the Offer.

- Mr. Garcia has not had, nor was he required to have, the Offer
approved by a majority of the unaffiliated stockholders of the
Company.

- Mr. Garcia has not had, nor was he required to have, the Offer
approved by a majority of the Board of Directors of the
Company.

Mr. Garcia has elected not to retain an unaffiliated representative or
to obtain a report, opinion or appraisal. Mr. Garcia determined the Purchase
Price in the Offer based on current market prices and he believes the Purchase
Price would not have been materially different if such an individual had been
retained. Mr. Garcia did not view the absence of these procedural safeguards to
be material since each stockholder will have the ability to determine whether to
receive the offered consideration or remain a stockholder of the Company.

Based on the foregoing factors, Mr. Garcia believes that the entire
transaction, including the consideration to be paid to the unaffiliated
stockholders is fair to the unaffiliated stockholders of the Company. Although
Mr. Garcia believes that the Purchase Price is a fair price for the Shares, he
is not making a recommendation as to whether holders should tender their Shares.
Holders of Shares should determine whether to accept the Offer based upon their
own assessment of current market value of the Shares, liquidity needs and
investment objectives.

Mr. Garcia also considered the following factors, which he considered
to be negative from the perspective of holders of Shares in his consideration of
the fairness of the terms of the tender offer:

- Following the successful completion of the tender offer, the
stockholders who accept the tender offer will cease to
participate in the future earnings or growth of the Company,
if any, or benefit from increases, if any, in the value of the
Shares.

- As a result of the tender by the stockholders of their Shares,
the trading volume may decrease. Those stockholders who do not
tender their Shares may suffer reduced liquidity and decreased
market value, particularly if, at some later date, the Shares
are no longer quoted on the Nasdaq National Market, and the
Company seeks to terminate the registration of the Shares
under the Exchange Act, or either.

- The price of the Common Stock has fluctuated from a closing
high of $8.25 in March 2000 to $2.00 a share in October 2001.
Mr. Garcia does not believe that the earlier historical
figures are a realistic reflection of share values today.
Stockholders tendering Shares will not receive the value for
their Shares they would have received had they had sold at a
time when the Common Stock price was higher.

In determining that the tender offer is fair to the stockholders, Mr.
Garcia considered the above factors as a whole and did not assign specific or
relative weights to them.

In addition to those factors discussed above, Mr. Garcia considered a
number of additional valuation factors but ultimately concluded that those
valuation factors were not relevant to the nature of the tender offer.

The tender offer is not structured to require the approval of at least
a majority of unaffiliated stockholders nor the approval of the Board of
Directors of the Company.

Mr. Garcia is not aware of any firm offer made to purchase the Company
or a controlling interest in the Company's securities by an unaffiliated person
during the past two years.

REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.

No report, opinion or appraisal has been or will be obtained with
respect to the Offer.

CERTAIN OTHER TRANSACTIONS INVOLVING MR. GARCIA AND THE COMMON STOCK OF THE
COMPANY.

On January 11, 2001, the Company entered into a $35 million senior
secured loan facility. As a condition to renewing this facility, the lenders
required that Verde Investments, Inc. ("Verde"), an entity wholly owned by Mr.
Garcia, invest $7 million in the Company by way of a subordinated loan. The
Verde loan was placed in escrow as additional collateral for the $35 million
senior secured loan facility. Among other conditions, if the Company had at
least $7 million in pre-tax income during the first six months of 2001 and Mr.
Garcia (or an affiliate of his) guaranteed the payment of 33% of the senior
secured loan, the $7 million in escrow would be released in July of 2001. These
conditions were not satisfied. Accordingly, the loan proceeds

remain in escrow. The $7 million in escrow is subject to pro rata reductions
tied to reductions in the outstanding principal under the $35 million credit
facility. See "Section 10 - Certain Transactions with Affiliates" below for a
description of other transactions involving Mr. Garcia or one of his affiliates
and the Company or its Common Stock.

As consideration for the Verde loan, among other things, the Company
issued 1,500,000 warrants ("Warrants") to purchase Common Stock of the Company
to Verde. Accordingly, Mr. Garcia, through his beneficial ownership of Verde,
has the right to acquire Warrants to purchase 1,500,000 Shares of Common Stock
of the Company. The acquisition of the Common Stock through the exercise of the
Warrants may assist Mr. Garcia in acquiring a 90% interest in the outstanding
Shares of Common Stock.

If Mr. Garcia acquires all of the outstanding Shares subject to this
Offer he will own 100% of the outstanding Common Stock. If Mr. Garcia acquires
less than all of the outstanding Shares subject to this Offer, Mr. Garcia may,
as a result of the acquisition of the Shares of Common Stock of the Company
underlying the Warrants, once the Warrants are fully exercised, increase his
ownership interest of the Shares of Common Stock.

Information regarding the transaction contained under the heading
"Proposal To Be Voted On - Item No. 2 - Issuance of Warrants" as set forth in
the Company's definitive proxy statement for its 2001 Annual Meeting of
Stockholders is incorporated herein by reference.

A fairness opinion was obtained by the Company with respect to the
issuance of the Warrants to Verde. A copy of the fairness opinion is available
for inspection and copying at the principal executive offices of Mr. Garcia
during normal business hours by any holder of Common Stock of the Company or
their representative who has been so designated in writing.

THE OFFER

SECTION 1. OFFER TO PURCHASE AND PURCHASE PRICE; EXPIRATION DATE;
DETERMINATION OF PURCHASE PRICE.

Offer to Purchase and Purchase Price. Mr. Garcia will, upon the terms
and subject to the conditions of the Offer described below, purchase all of the
outstanding Shares that are properly tendered by, and not withdrawn prior to,
the Expiration Date at a price equal to $2.51 per Share, net to the seller
without any interest.

THIS OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.

Expiration Date. The term "Expiration Date" means 5:00 p.m., Mountain
Standard Time, on December 27, 2001, unless and until Mr. Garcia extends the
period of time for which the Offer is open, in which event "Expiration Date"
will mean the latest time and date at which the Offer, as extended by Mr.
Garcia, expires. Mr. Garcia may extend the Offer, in Mr. Garcia's sole
discretion, by issuing a press release or making some other public announcement
of the extension. For a description of how Mr. Garcia may extend or terminate
the Offer, see below and Section 13 of this Offer to Purchase.

Determination of Purchase Price. The Purchase Price represents the
price at which Mr. Garcia is willing to purchase Shares. The Purchase Price is
less than the book value of the Shares. Your approval is not required and was
not sought regarding the determination of the Purchase Price. No special
committee of the Company or of the stockholders has approved this Offer and no
special committee or independent person has been retained to act on behalf of
the Company, the stockholders or Mr. Garcia. Mr. Garcia has not obtained an
opinion from an independent third party regarding the fairness of the Purchase
Price. See the information contained in this Offer to Purchase under the heading
"Special Factors."

Mr. Garcia determined the Purchase Price in his sole discretion based on:

- The recent market prices of the Common Stock as quoted on the
Nasdaq National Market.

- The recent purchase of 575,100 Shares of Common Stock at a
purchase price of $2.51 per Share by Mr. Garcia.

- The liquidity that would be realized by the stockholders
tendering their Shares from the all-cash tender offer.

In determining the Purchase Price, Mr. Garcia did not estimate or
project the liquidation value per Share or consider the book value per Share and
did not appraise the value of the Company's assets. See the information
contained in this Offer to Purchase under the heading "Special Factors."

Subject to the applicable regulations of the SEC, Mr. Garcia also
reserves the right, in his sole discretion, at any time prior to the Expiration
Date, to: (a) terminate the Offer (whether or not any Shares have previously
been purchased) if any condition referred to in Section 5 of this Offer to
Purchase has not been satisfied or upon the occurrence of any event specified in
Section 5 of this Offer to Purchase; and (b) waive any condition or otherwise
amend the Offer in any respect, in each case, by giving oral or written notice
of the termination, waiver or amendment to Computershare and, other than in the
case of any waiver, by making a public announcement thereof. Mr. Garcia
acknowledges (a) that Rule 14e-l(c) under the Securities Act requires him to pay
the consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer and (b) that Mr. Garcia may not delay
purchase of, or payment for, any Shares upon the occurrence of any event
specified in Section 5 of this Offer to Purchase without extending the period of
time during which the Offer is open.

The rights Mr. Garcia reserves in the preceding paragraph are in
addition to his rights described in Section 5 of this Offer to Purchase. Any
extension, termination or amendment of the Offer will be followed as promptly as
practicable by a public announcement. An announcement in the case of an
extension will be made no later than 9:00 a.m., Eastern Standard Time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which he may choose to make any public announcement,
subject to applicable law (including Rules 13e-4(e), 14d-4(d) and 14d-6(c) under
the Exchange Act, which require that material changes be promptly disseminated
to holders of Shares), Mr. Garcia will have no obligation to publish, advertise
or otherwise communicate any such public announcement other than by issuing a
press release to the Dow Jones News Service.

If Mr. Garcia makes a material change in the terms of the Offer, or if
Mr. Garcia waives a material condition to the Offer, Mr. Garcia will extend the
Offer and disseminate additional tender offer materials to the extent required
by Rules 13e-3(e), 13e-4(e), 14d-4(d), 14d-6(c) and 14e-1 under the Exchange
Act. The minimum period during which a tender offer must remain open following
material changes in the terms of the offer, other than a change in price or a
change in percentage of securities sought, depends upon the facts and
circumstances, including the materiality of the changes. In the SEC's view, an
offer should remain open for a minimum of five business days from the date the
material change is first published, sent or given to stockholders, and, if
material changes are made with respect to information that approaches the
significance of price and the percentage of securities sought, a minimum of ten
business days may be required to allow for adequate dissemination and investor
response. With respect to a

change in price, a minimum ten-business-day period from the date of the change
is generally required to allow for adequate dissemination to stockholders.
Accordingly, if prior to the Expiration Date, Mr. Garcia decreases the number of
Shares being sought, or increases or decreases the consideration offered
pursuant to the Offer, and if the Offer is scheduled to expire at any time
earlier than the period ending on the tenth business day from the date that
notice of the increase or decrease is first published, sent or given to holders
of Shares, Mr. Garcia will extend the Offer at least until the expiration of
such period of ten business days.

Consummation of the Offer is conditioned upon satisfaction of the
conditions set forth in Section 5 of this Offer to Purchase. Mr. Garcia reserves
the right (but is not obligated), in accordance with applicable rules and
regulations of the SEC, to waive any or all of those conditions. If, by the
Expiration Date, any or all of those conditions have not been satisfied, Mr.
Garcia may elect to (a) extend the Offer and, subject to applicable withdrawal
rights, retain all tendered Shares until the expiration of the Offer, as
extended, subject to the terms of the Offer; or (b) terminate the Offer and not
accept for payment any Shares and return all tendered Shares to tendering
stockholders. In the event that Mr. Garcia waives any condition set forth in
Section 5 of this Offer to Purchase, the SEC may, if the waiver is deemed to
constitute a material change to the information previously provided to the
stockholders, require that the Offer remain open for an additional period of
time and/or that Mr. Garcia disseminate information concerning such waiver.

Mr. Garcia has obtained the Company's stockholder lists and security
position listings for the purpose of disseminating the Offer to the holders of
the Shares. This Offer to Purchase, the Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the security holder lists or,
if applicable, who are listed as participants in a clearing agency's security
position listing, for forwarding to beneficial owners of Shares.

UNDER NO CIRCUMSTANCES WILL MR. GARCIA PAY INTEREST ON THE PURCHASE
PRICE FOR ANY SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT.

Possible Subsequent Offering Period. Pursuant to Rule 14d-11 under the
Exchange Act, Mr. Garcia may, subject to certain conditions, elect to provide a
subsequent offering period of up to 20 business days in length following the
expiration of the offer on the Expiration Date and acceptance for payment of the
Shares tendered in the offer. A subsequent offering period would be an
additional period of time, following the expiration of the offer and the
purchase of Shares in the offer, during which stockholders may tender Shares not
tendered in the offer. A subsequent offering period, if one is provided, is not
an extension of the offer, which already will have been completed.

During a subsequent offering period, you will not have withdrawal
rights and Mr. Garcia will promptly purchase and pay for any Shares tendered at
the same price paid in the offer. Rule 14d-11 under the Exchange Act provides
that Mr. Garcia may provide a subsequent offering period so long as, among other
things:

(i) the initial 20-business day period of the offer has expired;

(ii) Mr. Garcia offers the same form and amount of consideration
for Shares in the subsequent offering period as in the initial
offer;

(iii) Mr. Garcia immediately accepts and promptly pays for all
Shares tendered during the offer prior to its expiration;

(iv) Mr. Garcia announces the results of the Offer, including the
approximate number and percentage of Shares deposited in the
Offer, no later than 9:00 a.m., Eastern Standard Time, on the
next business day after the expiration date and immediately
begins the subsequent offering period; and

(v) Mr. Garcia immediately accepts and promptly pays for Shares as
they are tendered during the subsequent offering period.

In the event Mr. Garcia elects to provide a subsequent offering period,
Mr. Garcia will provide an announcement to that effect by issuing a press
release to a national news service on the next business day after the previously
scheduled expiration date.

SECTION 2. PROCEDURES FOR TENDERING SHARES.

Proper Tender of Shares. For Shares to be tendered properly under the
tender offer, (1) the certificates for those Shares (or confirmation of receipt
of such Shares under the procedure for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of Transmittal
including any required signature guarantees, or an "agent's message" (as defined
below), and any other documents required by the Letter of Transmittal, must be
received before 5:00 p.m., Mountain Standard Time, on the Expiration Date by
Computershare at its address set forth in Section 16, or (2) the tendering
stockholder must comply with the guaranteed delivery procedure set forth below.

Stockholders who hold Shares through brokers or banks are urged to
consult the brokers or banks to determine whether transaction costs are
applicable if stockholders tender Shares through the brokers or banks and not
directly to Computershare.

Signature Guarantees and Method of Delivery. No signature guarantee is
required: (1) if the Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this Section 2 of the Offer to Purchase,
shall include any participant in The Depository Trust Company ("DTC"), whose
name appears on a security position listing as the owner of the Shares) tendered
therewith and such holder has not completed either the box captioned "Special
Delivery Instructions" or the box captioned "Special Payment Instructions" on
the Letter of Transmittal; or (2) if Shares are tendered for the account of a
bank, broker, dealer, credit union, savings association or other entity which is
a member in good standing of the Securities Transfer Agents Medallion Program or
a bank, broker, dealer, credit union, savings association or other entity which
is an "eligible guarantor institution," as such term is defined in Rule 17Ad-15
under the Exchange Act. See Instruction 3 of the Letter of Transmittal. If a
certificate for Shares is registered in the name of a person other than the
person executing a Letter of Transmittal, or if payment is to be made to a
person other than the registered holder,

then the certificate must be endorsed or accompanied by an appropriate stock
power, in either case signed exactly as the name of the registered holder
appears on the certificate, with the signature guaranteed by an eligible
guarantor institution.

Payment for Shares tendered and accepted for payment under the tender
offer will be made only after timely receipt by Computershare of certificates
for such Shares or a timely confirmation of the book-entry transfer of such
Shares into the account of Computershare at the DTC as described above, a
properly completed and duly executed Letter of Transmittal, or an agent's
message in the case of a book-entry transfer, and any other documents required
by the Letter of Transmittal.

THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR
SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE
ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED DELIVERED
ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A
BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

Book-Entry Delivery. Computershare will establish an account with
respect to the Shares for purposes of the tender offer at DTC within two
business days after the date of this document, and any financial institution
that is a participant in DTC's system may make book-entry delivery of the Shares
by causing DTC to transfer Shares into the account of Computershare in
accordance with DTC's procedures for transfer. Although delivery of Shares may
be effected through a book-entry transfer into the account of Computershare at
DTC, either (1) a properly completed and duly executed Letter of Transmittal
with any required signature guarantees, or an agent's message, and any other
required documents must, in any case, be transmitted to and received by
Computershare at its address set forth in Section 16 of this Offer to Purchase
before the Expiration Date, or (2) the guaranteed delivery procedure described
below must be followed. DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO COMPUTERSHARE.

The term "agent's message" means a message transmitted by DTC to, and
received by, Computershare, which states that DTC has received an express
acknowledgment from the participant in DTC tendering the Shares that the
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that Mr. Garcia may enforce that agreement against the
participant.

Guaranteed Delivery. If you desire to tender Shares under the tender
offer and your share certificates are not immediately available or cannot be
delivered to Computershare before the Expiration Date, or the procedure for
book-entry transfer cannot be completed on a timely basis, or if time will not
permit all required documents to reach Computershare before the Expiration Date,
you may nevertheless tender your Shares if all of the following conditions are
satisfied:

(a) the tender is made by or through an eligible guarantor
institution;

(b) Computershare receives by hand, mail, overnight courier,
telegram or facsimile transmission, before the expiration date, a
properly completed and duly

executed Notice of Guaranteed Delivery in the form provided with this
document, including (where required) a signature guarantee by an
eligible guarantor institution in the form set forth in the Notice of
Guaranteed Delivery; and

(c) the certificates for all tendered Shares, in proper form
for transfer, or confirmation of book-entry transfer of your Shares
into the account of Computershare at DTC, together with a properly
completed and duly executed Letter of Transmittal and any required
signature guarantees, or an agent's message, or other documents
required by the Letter of Transmittal, are received by Computershare
within three Nasdaq National Market trading days after the expiration
date of the tender offer.

The notice of guaranteed delivery may be delivered by hand to the
Depositary or mail to the Depositary and must include a guarantee by an eligible
institution in the form set forth in such notice of guaranteed delivery.

Notwithstanding any other provision of this Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only after
timely receipt by the Depositary of (i) certificates for such Shares (or a
timely book-entry confirmation with respect thereto), (ii) a letter of
transmittal, properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an agent's message) and
(iii) any other required documents. Accordingly, you may be paid at different
times depending upon when certificates for Shares or book-entry confirmations
with respect to Shares are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL MR. GARCIA PAY INTEREST ON THE PURCHASE PRICE FOR THE
TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT.

Appointment. By executing a letter of transmittal as set forth above,
you irrevocably appoint Mr. Garcia's designees as your attorneys-in-fact and
proxies, in the manner set forth in the letter of transmittal, each with full
power of substitution, to the full extent of your rights with respect to the
Shares tendered by you and accepted for payment by Mr. Garcia and with respect
to any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after the date of this Offer to Purchase. All such
proxies will be considered coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, Mr. Garcia
accepts for payment Shares tendered by you as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by you
with respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent powers of attorney, proxies, consents or
revocations may be given (and, if given, will not be deemed effective). Mr.
Garcia's designees will thereby be empowered to exercise all voting and other
rights with respect to such Shares and other securities or rights in respect of
any annual, special or adjourned meeting of the Company's stockholders, actions
by written consent in lieu of any such meeting or otherwise, as they in their
sole discretion deem proper. Mr. Garcia reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon Mr. Garcia's
acceptance for payment of such Shares, Mr. Garcia must be able to exercise full
voting, consent and other rights with respect to such Shares and other
securities or rights, including voting at any meeting of stockholders.

Federal Backup Withholding Tax. Under the United States federal backup
withholding tax rules, 30.5% (which rate is scheduled for periodic reduction) of
the gross proceeds payable to a stockholder or other payee under the Offer must
be withheld and remitted to the United States Treasury, unless the stockholder
or other payee provides a taxpayer identification number (employer
identification number or social security number) to Computershare and certifies
under penalties of perjury that the provided number is correct or otherwise
establishes an exemption. If Computershare is not provided with the correct
taxpayer identification number or another adequate basis for exemption, the
holder may be subject to certain penalties imposed by the Internal Revenue
Service. Therefore, you should complete and sign the Substitute Form W-9
included as part of the Letter of Transmittal in order to provide the
information and certification necessary to avoid backup withholding, unless you
otherwise establish to the satisfaction of Computershare that you are subject to
backup withholding. For a discussion of United States federal income tax
consequences to tendering stockholders, see Section 11 of this Offer to
Purchase.

Return of Unpurchased Shares. If any tendered Shares are not purchased
under the tender offer or are properly withdrawn before the Expiration Date, or
if less than all Shares evidenced by your certificates are tendered, Mr. Garcia
will return certificates for unpurchased Shares as promptly as practicable after
the expiration or termination of the tender offer or the proper withdrawal of
the Shares, as applicable, or, in the case of Shares tendered by book-entry
transfer at DTC, the Shares will be credited to the appropriate account
maintained by the tendering stockholder at DTC, in each case without expense to
the stockholder.

Certificates for Shares, together with a properly completed and duly
executed Letter of Transmittal or an agent's message, and any other documents
required by the Letter of Transmittal, must be delivered to Computershare and
not to Mr. Garcia. Any documents delivered to Mr. Garcia will not be forwarded
to Computershare and therefore will not be deemed to be properly tendered.

Stock Options and Warrants. Mr. Garcia is not offering, as part of the
tender offer, to purchase any outstanding options or warrants and tenders of
warrants or options will not be accepted. Holders of outstanding options or
warrants who wish to participate in the tender offer must exercise their
warrants or options, as the case may be, and purchase Shares of Common Stock and
then tender the Shares pursuant to the tender offer, provided that the exercise
of those options or warrants and the tender of Shares is in accordance with the
terms of the applicable option or warrant documents. In no event are any options
or warrants to be delivered to Computershare in connection with a tender of
Shares hereunder. An exercise of an option or warrant cannot be revoked even if
Shares received upon the exercise and tendered in the tender offer are not
purchased in the tender offer for any reason.

Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted and the validity, form, eligibility (including time of receipt)
and acceptance for payment of any tender of Shares will be determined by Mr.
Garcia, in his sole discretion, and Mr. Garcia's determination will be final and
binding on all parties. Mr. Garcia reserves the absolute right to reject any or
all tenders of any Shares that Mr. Garcia determines are not in proper form or
the acceptance for payment of or payment for which Mr. Garcia determines may be
unlawful. Mr. Garcia also reserves the

absolute right to waive any of the conditions of the tender offer or any defect
or irregularity in any tender with respect to any particular Shares or any
particular stockholder and his interpretation of the terms of the tender offer
will be final and binding on all parties. No tender of Shares will be deemed to
have been property made until all defects or irregularities have been cured by
the tendering stockholder or waived by Mr. Garcia. Neither Mr. Garcia,
Computershare, the Information Agent, nor any other person will be under any
duty to give notification of any defects or irregularities in any tender or
incur any liability for failure to give any such notification.

Tendering Stockholder's Representation and Warranty, Acceptance
Constitutes an Agreement. A proper tender of Shares under any of the procedures
described above will constitute the tendering stockholder's acceptance of the
terms and conditions of the tender offer, as well as the tendering stockholder's
representation and warranty to Mr. Garcia that (1) the stockholder has a net
long position in the Shares or equivalent securities at least equal to the
Shares tendered within the meaning of Rule 14e-4 promulgated by the Commission
under the Exchange Act and (2) the tender of Shares complies with Rule 14e-4. It
is a violation of Rule 14e-4 for a person, directly or indirectly, to tender
Shares for that person's own account unless, at the time of tender and at the
end of the proration period or period during which Shares are accepted by lot
(including any extensions), the person so tendering (1) has a net long position
equal to or greater than the amount tendered in (x) the subject securities or
(y) securities immediately convertible into, or exchangeable or exercisable for,
the subject securities and (2) will deliver or cause to be delivered the Shares
in accordance with the terms of the tender offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. Mr. Garcia's acceptance for payment of Shares tendered under the
tender offer will constitute a binding agreement between the tendering
stockholder and Mr. Garcia upon the terms and conditions of the Offer.

Lost or Destroyed Certificates. Stockholders whose certificate for part
or all of their Shares have been lost, stolen, misplaced or destroyed may
contact Computershare at (303) 986-5400 for instructions as to obtaining a
replacement certificate. That certificate will then be required to be submitted
together with the Letter of Transmittal in order to receive payment for Shares
that are tendered and accepted for payment. A bond may be required to be posted
by the stockholder to secure against the risk that the certificates may be
subsequently recirculated. Stockholders are urged to contact Computershare at
(303) 986-5400 immediately in order to permit timely processing of this
documentation and to determine if the posting of a bond is required.

Shares, together with a properly completed and duly executed Letter of
Transmittal or an agent's message, and any other documents required by the
Letter of Transmittal, must be delivered to Computershare and not to Mr. Garcia.
Any documents delivered to Mr. Garcia will not be forwarded to Computershare and
therefore will not be deemed to be properly tendered.

Appraisal Rights. No appraisal rights, or any similar rights, are
available to stockholders who tender their Shares in the Offer. Appraisal rights
would be available, however, in

connection with a subsequent merger that required stockholders to accept cash
for their Shares. See "Special Factors - Possible Subsequent Transactions."

SECTION 3. WITHDRAWAL RIGHTS.

If you tender Shares in this Offer, you may withdraw your tender at any
time before the Expiration Date or the date Mr. Garcia accepts Shares, whichever
is later. For a withdrawal to be effective, it must be in writing and received
by Computershare via mail or facsimile at the address or facsimile number set
forth in the Section 16 of this Offer to Purchase on or before the Expiration
Date. Any notice of withdrawal must specify your name and the amount of Shares
that you are withdrawing.

For a withdrawal to be effective, a written or facsimile transmission
(confirmed by telephone) notice of withdrawal must be timely received by
Computershare at its address set forth on the back cover page of this document.
Any such notice of withdrawal must specify the name of the tendering
stockholder, the number of Shares to be withdrawn and the name of the registered
holder of such Shares. If the certificates for Shares to be withdrawn have been
delivered or otherwise identified to Computershare, then, before the release of
such certificates, the serial numbers shown on such certificates must be
submitted to Computershare and the signature(s) on the notice of withdrawal must
be guaranteed by an eligible guarantor institution, unless such Shares have been
tendered for the account of an eligible guarantor institution.

If Shares have been tendered under the procedure for book-entry
transfer set forth in Section 2 of this Offer to Purchase, any notice of
withdrawal also must specify the name and the number of the account at DTC to be
credited with the withdrawn Shares and must otherwise comply with DTC's
procedures. All questions as to the form and validity (including the time of
receipt) of any notice of withdrawal will be determined by Mr. Garcia, in his
sole discretion, whose determination will be final and binding. Neither Mr.
Garcia, Computershare, the Information Agent, nor any other person will be under
any duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.

Shares properly withdrawn will not thereafter be deemed to be tendered
for purposes of the Offer. However, withdrawn Shares may be retendered by
following the procedures set forth in Section 2 of this Offer to Purchase prior
to the Expiration Date. Tenders made pursuant to the Offer which are not
otherwise withdrawn in accordance with this Section 3 will be irrevocable.

If Mr. Garcia extends the tender offer, Mr. Garcia is delayed in this
purchase of Shares or if Mr. Garcia is unable to purchase Shares under the
tender offer for any reason, then, without prejudice to Mr. Garcia's rights
under the tender offer, Computershare may, subject to applicable law, retain
tendered Shares on Mr. Garcia's behalf, and such Shares may not be withdrawn
except to the extent tendering stockholders are entitled to withdrawal rights as
described in this Section 3 of the Offer to Purchase.

SECTION 4. PURCHASE OF SHARES; PAYMENT OF PURCHASE PRICE.

Under the terms and conditions of the tender offer, as promptly as
practicable following the Expiration Date, Mr. Garcia will accept for payment
and pay for, and thereby purchase,

Shares properly tendered and not properly withdrawn before the Expiration Date.
For purposes of the tender offer, Mr. Garcia will be deemed to have accepted for
payment and therefore purchased Shares that are properly tendered and not
properly withdrawn, only when, as and if Mr. Garcia gives oral or written notice
to Computershare of the acceptance of the Shares for payment under the tender
offer.

Under the terms and conditions of the Offer, as promptly as practicable
after the Expiration Date, Mr. Garcia will accept for payment and pay the
Purchase Price of $2.51 net per Share for all Shares of Common Stock that are
properly tendered and not properly withdrawn, or if less than all outstanding
Shares are properly tendered and not withdrawn, all Shares that are properly
tendered and not properly withdrawn.

Mr. Garcia will pay for Shares purchased under the tender offer by
depositing the aggregate Purchase Price for such Shares with Computershare,
which will act as agent for tendering stockholders for the purpose of receiving
payment from Mr. Garcia and transmitting payment to the tendering stockholders.

Certificates for any Shares tendered and not purchased will be returned
to the tendering stockholder or, in the case of Shares tendered by book-entry
transfer, will be credited to the account maintained with DTC by the participant
who delivered the Shares, at Mr. Garcia's expense as promptly as practicable
after the Expiration Date or termination of the tender offer without expense to
the tendering stockholders. Under no circumstances will Mr. Garcia pay interest
on the Purchase Price to be paid regardless of any delay in making such payment.
In addition, there are other conditions to Mr. Garcia's obligation to purchase
Shares under the tender offer. See Section 5 of the Offer to Purchase.

Mr. Garcia will pay all share transfer taxes, if any, payable on the
transfer to Mr. Garcia of Shares purchased under the tender offer. If, however,
payment of the Purchase Price is to be made to any person other than the
registered holder, or if tendered certificates are registered in the name of any
person other than the person signing the Letter of Transmittal, the amount of
all share transfer taxes, if any (whether imposed on the registered holder or
the other person), payable on account of the transfer to the person will be
deducted from the Purchase Price unless satisfactory evidence of the payment of
the share transfer taxes, or exemption therefrom, is submitted.

Any tendering stockholder or other payee who fails to complete fully,
sign and return to Computershare the substitute form W-9 included with the
Letter of Transmittal may be subject to federal backup withholding tax of 30.5%
(which rate is scheduled for periodic reduction) of the gross proceeds paid to
the stockholder or other payee under the tender offer. See Section 11 of the
Offer to Purchase.

SECTION 5. CERTAIN CONDITIONS OF THE OFFER.

Notwithstanding any other provision of this Offer to Purchase, Mr.
Garcia will not be required to purchase or pay for any Shares tendered and may
terminate the Offer as provided in Section 13 of this Offer to Purchase or may
postpone the purchase of, or payment for, Shares tendered if any of the
following events occur prior to the Expiration Date:

(a) there shall have been instituted or threatened or shall be pending any
action or proceeding before or by any court or governmental, regulatory or
administrative agency or instrumentality, or by any other person, which: (i)
challenges the making of the Offer or the acquisition by Mr. Garcia of Shares
pursuant to the Offer or otherwise directly or indirectly relates to the Offer;
or (ii) in Mr. Garcia's reasonable judgment (determined within five business
days prior to the Expiration Date), could materially affect the business,
condition (financial or other), income, operations or prospects of the Company,
taken as a whole, or otherwise materially impair in any way the contemplated
future conduct of the business of the Company or Mr. Garcia, or materially
impair the Offer's contemplated benefits to the Company or Mr. Garcia;

(b) there shall have been any action threatened or taken, or approval withheld,
or any statute, rule or regulation proposed, sought, promulgated, enacted,
entered, amended, enforced or deemed to be applicable to the Offer or Mr.
Garcia, by any government or governmental, regulatory or administrative
authority or agency or tribunal, domestic or foreign, which, in our reasonable
judgment, would or might directly or indirectly:

(i) delay or restrict the ability of Mr. Garcia, or render Mr.
Garcia unable, to accept for payment or pay for some or all of the
Shares;

(ii) materially affect the business, condition (financial or
other), income, operations, or prospects of the Company, taken as a
whole, or otherwise materially impair in any way the contemplated
future conduct of the business of the Company or Mr. Garcia

(i) the declaration of any banking moratorium or suspension of
payment in respect of banks in the United States;

(ii) any general suspension of trading in, or limitation on
prices for, securities on any United States national securities
exchange or in the over-the-counter market;

(iii) the commencement of war, armed hostilities or any other
national or international crises, including terrorist acts, directly or
indirectly involving the United States;

(iv) any limitation, whether or not mandatory, by any
governmental, regulatory or administrative agency or authority on, or
any event which, in our reasonable judgment, might affect, the
extension of credit by banks or other lending institutions in the
United States;

(v) (A) any significant change, in Mr. Garcia's reasonable
judgment, in the general level of market prices of equity securities or
securities convertible into or exchangeable for equity securities in
the United States or abroad, or (B) any change in the general
political, market, economic, or financial conditions in the United
States or abroad that (1) could have a material adverse effect on the
business condition (financial or other), income, operations or
prospects of the Company, or (2) in Mr. Garcia's reasonable judgment,
makes it inadvisable to proceed with the Offer; or

(vi) in the case of the foregoing existing at the time of the
commencement of the Offer, in Mr. Garcia's reasonable judgment, a
material acceleration or worsening thereof;

(d) any change shall occur or be threatened in the business, condition
(financial or otherwise), or operations of the Company or Mr. Garcia, that, in
Mr. Garcia's reasonable judgment, is or may be material to the Company;

(e) a tender or exchange offer for any or all of the Shares of the Company, or
any merger, business combination or other similar transaction with or involving
the Company, shall have been proposed, announced or made by any person; or

(f) (i) any entity, "group" (as that term is used in Section 13(d)(3) of the
Exchange Act) or person (other than entities, groups or persons, if any, who
have filed with the Commission on or before November 19, 2001 a Schedule 13G or
a Schedule 13D with respect to any of the Shares) shall have acquired or
proposed to acquire beneficial ownership of more than 5% of the outstanding
Shares; or

(ii) such entity, group, or person that has publicly disclosed
any such beneficial ownership of more than 5% of the Shares prior to
such date shall have acquired, or proposed to acquire, beneficial
ownership of additional Shares constituting more than 1% of the
outstanding Shares or shall have been granted any option or right to
acquire beneficial ownership of more than 1% of the outstanding Shares;
or

(iii) any person or group shall have filed a Notification and
Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 or made a public announcement reflecting an intent to acquire the
Company or its assets;

which, in Mr. Garcia's reasonable judgment, in any such case and regardless of
the circumstances (including any action by Mr. Garcia) giving rise to such
event, makes it inadvisable to proceed with the Offer or with such purchase or
payment. The conditions described above are for Mr. Garcia's sole benefit and
may be asserted by Mr. Garcia on his behalf regardless of the circumstances
giving rise to any such condition (including any action or inaction by Mr.
Garcia) or may be waived by Mr. Garcia in whole or in part. Mr. Garcia's failure
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right, and each such right shall be deemed an ongoing right which
may be asserted at any time before the Expiration Date. Any determination by Mr.
Garcia concerning the events described in this Section 5 shall be final and
binding on all parties. As of the date hereof, Mr. Garcia believes that neither
paragraph (a) nor paragraph (b) of this Section 5 will prohibit the consummation
of the Offer.

SECTION 6. IDENTITY AND BACKGROUND OF OFFEROR.

Name and Address. This Offer to Purchase is being delivered by Ernest
C. Garcia II, a citizen of the United States of America. Mr. Garcia's business
address is 2575 E. Camelback Road, Suite 700, Phoenix, Arizona 85016. Mr.
Garcia's business telephone number is (602) 778-5000. Mr. Garcia currently
beneficially owns approximately 61.0% of the issued and outstanding Common Stock
of the Company and is Chairman of the Board of Directors of the

Company. In light of Mr. Garcia's current ownership of Common Stock of the
Company and his position as Chairman of the Company's Board of Directors, Mr.
Garcia may be deemed to be an "affiliate" of the Company, as such term is
defined in Rule 13e-3(a)(1) under the Exchange Act.

Business and Background. The principal business address of the Company
is 4020 East Indian School Road, Phoenix, Arizona 85018. During the past five
years, Mr. Garcia has served as the Chairman of the Board of Directors of the
Company. In addition, from 1992 to July 1999, Mr. Garcia served as Chief
Executive Officer of the Company. Also, during the past five years, Mr. Garcia
has served as the sole director and President of Verde, which is wholly owned by
Mr. Garcia and his wife. Verde is an Arizona corporation engaged in commercial
real estate investments. Since November 1998, Mr. Garcia has served as the
Managing Director of Verde Reinsurance Company, Ltd. ("Verde Reinsurance") a
Nevis Island corporation and U.S. taxpayer wholly owned by Mr. Garcia and his
wife, which is engaged in property and casualty reinsurance. During the past
year, Mr. Garcia has served as the sole director and President of Cygnet Capital
Corporation ("Cygnet"), an Arizona corporation wholly owned by Mr. Garcia and
his wife, which is engaged in commercial lending. The principal business address
of Verde, Verde Reinsurance and Cygnet is 2575 E. Camelback Road, Suite 700,
Phoenix, Arizona 85016. Mr. Garcia has not during the last five years been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). In addition, during the last five years, Mr. Garcia has not been
a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction which has or would make him subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violations with
respect to such laws. Mr. Garcia is a citizen of the United States.

SECTION 7. EFFECTS OF THE OFFER.

In addition to the effects of the Offer on stockholders who tender
their Shares and stockholders who do not tender their Shares as set forth in the
"Special Factors" of this Offer to Purchase, the Offer will affect the Company
in other respects.

Upon completion of the Offer, Mr. Garcia may consider purchasing any
Shares not purchased in the Offer. Any such purchases may be on the same terms
as the terms of this Offer or on terms which are more favorable or less
favorable to you than the terms of this Offer. Rule 13e-4 promulgated under the
Exchange Act prohibits Mr. Garcia from purchasing any Shares, other than
pursuant to the Offer, until at least 10 business days after the Expiration
Date. Any possible future purchases by Mr. Garcia will depend on many factors,
including but not limited to, the market price of Shares, tax considerations,
the results of the Offer, the Company's business and financial condition and
general economic market conditions.

If Mr. Garcia acquires more than 90% of the outstanding Shares of
Common Stock, he may acquire the remaining outstanding Shares through a merger.
If Mr. Garcia commences such a transaction within six months of the completion
of this Offer, the consideration Mr. Garcia would offer would not be less than
$2.51, the amount offered in this Offer.

After the consummation of the tender offer, the stockholders tendering
their Shares will not have the opportunity to participate in the Company's
earnings and growth, if any, and will

not have any right to vote on corporate matters. Conversely, after the
consummation of the tender offer, the stockholders tendering their Shares will
not face the risk of losses generated by the Company's operations or any
decrease in the Company's value.

There can be no assurance that a significant trading market will exist
for the Shares following consummation of the Offer. The extent of the public
market for the Shares following a consummation of the Offer will depend on the
number of holders that remain at such time, the interest in maintaining a market
in the Shares on the part of securities firms and other factors. An issue of
security with a smaller float may trade at lower prices than would a comparable
issue of securities with a greater float. Accordingly, the market price for
Shares that are not tendered in the Offer may be adversely affected to the
extent that the amount of Shares purchased pursuant to the Offer reduces the
float. The reduced float also may have the effect of causing the trading prices
of the Shares that are not tendered or purchased to be more volatile.

Stockholders should consider the following before making any decision
regarding the tender of their Shares.

If you are contemplating tendering all or any portion of your Shares,
you should consider the following factors before making a final decision:

- The Purchase Price is less than the book value of the Shares. As
of December 31, 2000 and December 31, 1999, the book value of each
Share was approximately $11.40 and $10.81, respectively. The
Purchase Price is less than relatively recent trading prices and
historic trading prices, and may not reflect the Company's going
concern value.

- The Purchase Price per Share in this Offer was determined by Mr.
Garcia, in Mr. Garcia's sole discretion, based on recent purchases
of Shares in open market transactions and recent market prices of
the Common Stock. The purchase price per Share in any open market
transactions and the Purchase Price in this Offer may not reflect
the value of the Shares. If you were to hold your Shares until
termination or liquidation of the Company, you might receive
greater or lesser value than the Purchase Price for your Shares.

- Certain tax consequences will result. If you sell Shares in this
Offer, you generally will recognize a gain or loss on the sale of
your Shares for federal and most state income tax purposes. The
amount of gain or loss realized will be, in general, the excess of
the amount you realize from selling your Shares minus the adjusted
tax basis in the Shares you sell. The amount that you realize from
the sale of your Shares will be the Purchase Price. When you sell
Shares which you have held for more than twelve months, the sale
will typically result in long-term capital gain or loss. Due to
the complexity of tax issues, you are advised to consult your tax
advisors with respect to your individual tax situation before
selling your Shares in the Offer. See Section 11 of this Offer to
Purchase.

- You will not receive any benefit associated with the ownership
of the Shares that you tender, including returns on your
investment or participation in the economic success of the
Company, if any.

- Mr. Garcia makes no recommendation regarding whether you
should tender or retain your Shares. You should make your own
decisions regarding whether to tender your Shares based upon
your own individual situation.

If you are contemplating not tendering all or any portion of your
Shares, you should consider the following before making a final determination:

- The market for the Shares may disappear, which may prevent you
from being able to liquidate your investment or receive fair
value. Although the Shares are transferable and have been
traded on the Nasdaq National Market, a liquid market may not
exist after the Expiration Date.

- If the Company were to be liquidated, dissolved or merged out
of existence, the proceeds that you would receive may be
greater or less than the Purchase Price.

- In addition, following completion of the Offer and subject to
timing restrictions under federal law, Mr. Garcia may consider
offering to purchase any shares not purchased in the Offer,
which purchases could be on the same terms or on terms more or
less favorable than the terms of the Offer. Mr. Garcia may
also consider an extraordinary corporate transaction, such as
a merger or reorganization involving the Company, that would
result in Mr. Garcia holding all of the common stock of the
Company. If Mr. Garcia acquires more than 90% of the
outstanding shares of common stock, he may acquire the
remaining outstanding shares unilaterally, and without the
approval of the Company's board of directors or remaining
stockholders, through a "short form" merger. If Mr. Garcia
commences such a merger within six months of the completion of
the offer, the consideration Mr. Garcia would offer would not
be less than $2.51, the amount offered in the offer. See
"SPECIAL FACTORS."

- The Company has not made any distributions in the past. There
can be no assurance that the Company will ever make
distributions.

- There can be no assurance that the Company will be able to
fund its future needs or contingencies, which may have a
material adverse effect on the Company's business or financial
condition.

- Any remaining Shares may not be marginable, determining on
certain then existing factors.

- The percentage of Shares held by Mr. Garcia will increase. As
of November 14, 2001, Mr. Garcia owned 7,482,200 Shares
(including the right to acquire 40,000 Shares under presently
exercisable stock options) or 61.0% of the outstanding Common
Stock of the Company. Mr. Garcia has been advised that the
management

and other directors of the Company intend to tender Shares
pursuant to the Offer. The Company's recent pubic filings
indicate that the directors and officers of the Company
(including Mr. Garcia) hold approximately 62% of the
outstanding Shares. Assuming Mr. Garcia acquires all of the
outstanding Shares of Common Stock, Mr. Garcia will own, after
the Offer, a total of 12,274,000 Shares, representing all of
the Company's outstanding Common Stock, an increase of 39.2%
of the outstanding Common Stock. Thus, Mr. Garcia will have a
significantly greater, if not absolute, influence on certain
matters voted on by stockholders, including the election of
directors of the Company and the approval of any merger,
reorganization or other business combination transaction
submitted to a vote of the Company's stockholders.

- If after consummation, Mr. Garcia owns at least 90% of the
shares then outstanding, Mr. Garcia will be able to cause a
merger to occur pursuant to the "short-form" merger provisions
of the DGCL, without a vote of the Company's stockholders.
However, if Mr. Garcia owns less than 90% of the shares then
outstanding after consummation of the Offer, a vote of the
Company's stockholders would be required under the DGCL to
effect a merger.

- Mr. Garcia is not aware of any plan to liquidate the Company.
Mr. Garcia is not aware of any and does not have any plan to
sell the Company's assets and to distribute the proceeds to
the stockholders. Mr. Garcia does not contemplate making
distributions to the stockholders. Therefore, stockholders who
do not tender their Shares may not be able to realize any
return on or any distribution relating to their investment in
the Company in the foreseeable future.

For a discussion of the risks associated with the Company, refer to the
"Risk Factors" set forth in the Company's Proxy Statement for its 2001 Annual
meeting of Stockholders filed with the SEC on October 26, 2001.

SECTION 8. SOURCE AND AMOUNT OF FUNDS.

The total anticipated amount of funds required to complete this Offer
(assuming all outstanding Shares are acquired) is approximately $12,230,000,
which includes approximately $12,160,000 to purchase all outstanding Shares plus
approximately $70,000 for expenses related to administering the Offer. Mr.
Garcia expects to fund these payments with the proceeds of a loan from Bank One
Arizona, N.A., described below, or Mr. Garcia's available cash.

On October 9, 2001, Mr. Garcia and Verde obtained a $10 million financing
commitment from Bank One Arizona, N.A. The loan proceeds may be used to acquire
Common Stock of the Company. The loan consists of a $2 million line of credit
and an $8 million term loan facility. The line of credit facility is available
for a period of two years. The interest rate is Libor plus 1.50%. All amounts
drawn under the line of credit facility plus accrued interest must be repaid
within two years.

The term loan is for a term of five years. The term loan will be advanced
over a one-year period. The term loan accrues interest at a variable rate of
prime plus 1.0% and requires monthly

payments of principal and interest sufficient to fully amortize the loan during
the five year term. The line of credit and term loan will be secured by all of
the Shares of Common Stock of the Company held, or hereafter acquired, by Mr.
Garcia and/or Verde, certain real estate owned by Verde and certain other
marketable secures owned by Verde. A copy of the loan agreement is incorporated
herein by reference.

Mr. Garcia and Verde currently plan to repay the loan amounts from
current operating income of Verde.

The following is an estimate of various expenses associated with the
Offer:

Filing $ 10,000
Accounting $ -0-
Legal $ 40,000
Printing $ 20,000

The Company is not responsible for payment of the expenses listed above.

SECTION 9. CERTAIN INFORMATION ABOUT THE COMPANY.

The principal offices of the Company are located at 4020 East Indian
School Road, Phoenix, Arizona 85018. The Company's telephone number is (602)
852-6600.

Based on the Company's latest filing with the SEC on Form 10-Q for the
quarter ended September 30, 2001, the Company had 12,274,000 Shares of Common
Stock, $.001 par value per share, issued and outstanding.

The Common Stock is traded on the Nasdaq National Market under the symbol
"UGLY". The high and low closing sales prices of the Common Stock, as reported
by Nasdaq, for each quarter during the last two years are as follows:

COMMON STOCK PRICE

MARKET PRICE
------------
HIGH LOW
---- ---

FISCAL YEAR 1999:
Fourth Quarter............................ $ 8.88 $ 6.81
FISCAL YEAR 2000:
First Quarter............................. $ 8.50 $ 6.69
Second Quarter............................ $ 8.13 $ 6.84
Third Quarter............................. $ 7.50 $ 5.81
Fourth Quarter............................ $ 5.88 $ 3.94
FISCAL YEAR 2001:
First Quarter............................. $ 4.81 $ 3.38
Second Quarter............................ $ 4.90 $ 3.19
Third Quarter............................. $ 4.50 $ 2.70

The Company has not paid any dividends in respect of its Common Stock
during the last two years.

The Company's financial information is incorporated herein by reference
from the Company's Annual Report on Form 10-K for the year ended December 31,
2000, which was filed with the Commission on April 17, 2001, and the Company's
most recent Quarterly Report on Form 10-Q for the period ended September 30,
2001, which was filed with the Commission on November 14, 2001, both reports
being filed under Commission No. 000-20841.

According to the Company, the ratio of earnings to fixed charges as of
December 31, 1999, and December 31, 2000, was 3.14 and 2.89, respectively. The
ratio of earnings to fixed charges as of June 30, 2000, and June 30, 2001, was
5.02 and 2.16, respectively. According to the Company, the book value per share
of the Common Stock as of September 30, 2001, was $12.35.

For more summary financial information about the Company, see Appendix
A of this Offer to Purchase. Mr. Garcia does not believe that the financial
statements of Mr. Garcia are material because the Offer (1) is for cash, (2)
is not subject to any financing condition, and (3) is for all of the
outstanding Shares of the Common Stock of the Company not owned by Mr. Garcia.

SECTION 10. CERTAIN TRANSACTIONS WITH AFFILIATES.

Transactions. In December 1999, Cygnet Capital Corporation, an entity
formed by Mr. Garcia, purchased from the Company, Cygnet Dealer Finance, Inc.
and its subsidiaries for an amount equal to the net book value of Cygnet Dealer
Finance, Inc., approximately $38 million. The purchase price was paid through
the assumption by Cygnet Capital Corporation of $8 million of outstanding debt
owed by the Company to Verde, a $12 million, ten-year promissory note from
Cygnet Capital Corporation to the Company that is guaranteed by Verde, and the
remainder in cash.

The Company also received warrants to acquire up to 50% of Cygnet Capital
Corporation for $1.00, exercisable beginning two years from close through five
years after the note is paid in full. The warrants would be forfeited in the
event that the $12 million note is repaid in full within one year. The
percentage of Cygnet Capital Corporation purchasable under the warrants would be
reduced to 25% if the note were reduced to $4 million within two years and to
10% if the warrants were paid in full within two years. As of the date hereof,
the full $12 million note is still outstanding.

Significant Corporate Events.

(A) In December 1999, Verde purchased from an unrelated third party, 17
properties leased to and occupied by the Company for approximately $24.6
million. Verde holds these properties and continues to lease the
properties to the Company. The leases contain annual increases in monthly
rent in accordance with increases in the Consumer Price Index. In November
2000, Verde purchased a certain property located in Phoenix, Arizona for
approximately $2.25 million, and simultaneously leased the property to the
Company pursuant, to among other terms, the following: 20 year term which
expires

December 31, 2020; rent payable monthly with 5% annual rent adjustments;
triple net lease; and four five-year options to renew. The Company
renovated the property and now occupies the property as the Company's
headquarters. The total amount paid to Verde under these leases in 2000
was $3,271,089. Although the Company originally had the right to
repurchase these properties from Verde at its cost, the Company
relinquished this right as part of the consideration for the $7 million
loan described below.

(B) In April 2000, Mr. Garcia and Verde Reinsurance participated in an
exchange offer conducted by the Company wherein Mr. Garcia and his
affiliates exchanged approximately 300,000 Shares of Common Stock of the
Company for approximately $3.3 million of 11% subordinated debt issued by
the Company due April 2007.

(C) In October 2000, Mr. Garcia made a proposal to the Board of Directors
of the Company to merge the Company with a to-be-formed entity
beneficially owned by Mr. Garcia. As part of the proposed merger, each
stockholder other than Mr. Garcia would have received $2.50 in cash and
$6.00 in subordinated debt. The proposal also included an option for
Gregory B. Sullivan to acquire a 20% equity interest in the to-be-formed
entity.

(D) As described above, in January 2001, Verde made a $7 million loan to
the Company pursuant to, among other terms, the following: a loan maturity
of December 31, 2003; interest at LIBOR plus 600 basis points; issuance of
1,500,000 warrants subject to certain conditions and a vesting schedule;
secured by a second lien position on the Company's residual interests in
our securitizations; grant of options to purchase certain of the Company's
real estate; and the release of the Company's options to buy real estate
leased to the Company by Verde.

(E) In April 2001, Mr. Garcia made a proposal to the Board of Directors of
the Company to merge the Company with a to-be-formed entity beneficially
owned by Mr. Garcia. As part of the proposed merger, each stockholder
would have received $2.00 and $5.00 in subordinated debt. The subordinated
debt was proposed to have a 10 year term, interest payable at 10% and
interest only payments semi-annually until maturity. The proposal also
included an option for Gregory B. Sullivan to acquire a 20% equity
interest in the to-be-formed entity.

Negotiations or Contacts.

(1) With respect to the transaction discussed in (A) above, an
unaffiliated third party contacted Mr. Garcia regarding the sale of
certain properties. Mr. Garcia informed the Company regarding the
opportunity to purchase such properties. The Board of Directors of the
Company decided not to purchase the properties for various reasons,
including the lack of available funds. Mr. Garcia then had discussions
with the Company regarding the purchase of the properties by an entity
he beneficially owned. Mr. Garcia received the approval of the Board
of Directors of the Company to purchase the properties, subject to the
condition that Mr. Garcia give the Company the option to purchase such
properties at the purchase price that Mr. Garcia paid. Mr. Garcia
abstained from the vote by the Board of Directors of the Company
regarding the approval of this transaction.

(2) With respect to the transaction discussed in (B) above, the Company
offered the stockholders of the Company subordinated debt in exchange for
a certain number of Shares of Common Stock. Mr. Garcia made a commitment
to the Company to exchange a minimum number of his Shares for the
subordinated debt issued by the Company. Mr. Garcia and Verde Reinsurance
participated in the exchange offer by completing certain materials that
were delivered to them in connection with the exchange offer and
surrendering their respective certificates.

(3) With respect to the proposed transaction discussed in (C) above, Mr.
Garcia approached the officers and directors of the Company regarding the
possibility of a merger with a to-be-formed entity owned by Mr. Garcia. On
October 3, 2000, Mr. Garcia made a proposal to the Board of Directors of
the Company to acquire all of the outstanding Shares of Common Stock not
already beneficially owned by him. After discussions with the Board of
Directors of the Company and the Special Transaction Committee of the
Board of Directors, Mr. Garcia withdrew the proposal as he did not believe
that the offer, as proposed, would have been approved at such time by the
Special Transaction Committee of the Board of Directors of the Company.

(4) With respect to the transaction discussed in (D) above, the Company's
lender conditioned the $35 million loan on Mr. Garcia, or an entity owned
by him, providing a $7 million loan to the Company. The lender required
the Company to keep the $7 million loan in escrow, pending compliance with
certain Company performance objectives and amortization of the loan, and
required Mr. Garcia to guaranty 33% of the loan if the $7 million loan
were released from escrow. On January 8, 2001, a special transaction
committee of the Board of Directors of the Company met to approve the $35
million loan and the $7 million loan. At the meeting, Mr. Garcia and the
special committee negotiated and agreed that the Warrants would not be
issued without a fairness opinion and that if a fairness opinion could not
be obtained that Mr. Garcia and the committee would negotiate in good
faith revisions to the terms of the $7 million loan and/or warrants to the
extent required to obtain the fairness opinion. See "Special Factors" in
this Offer to Purchase. The committee then recommended approval to the
Board and the Board then approved of the $35 million loan and the $7
million loan.

(5) With respect to the proposed transaction discussed in (E) above, Mr.
Garcia approached the officers and directors of the Company regarding the
possibility of a modified acquisition proposal of the Company by Mr.
Garcia, or an entity beneficially owned by Mr. Garcia. Mr. Garcia
submitted a written merger proposal to the Board of Directors of the
Company on or about April 16, 2001. Thereafter, the Board of Directors of
the Company appointed a Special Transaction Committee (the "STC")
comprised of independent members of the board to consider and evaluate the
proposal. The STC retained an investment banker and its own counsel. The
STC made attempts to receive alternative offers and did not receive any
serious offers. During the negotiations, the STC and Mr. Garcia negotiated
various terms of the offer including the purchase price per share. As a
result of the negotiations, Mr. Garcia proposed an increased merger
consideration of $7.50 per share, comprised of $2.00 cash and $5.50 in
principal amount of subordinated debentures maturing in 10 years. The
proposed modification also provided for Mr. Sullivan to acquire a 10%
ownership interest in Mr. Garcia's to-be-formed entity before the
effective time of the merger (rather than an option to acquire a 20%
interest after the merger),

such that, after giving effect to the merger, Mr. Garcia and Mr. Sullivan
would be the only stockholders of Ugly Duckling. In addition, the terms of
the notes were modified to provide for a sinking fund provision. A legal
proceeding was commenced in connection with Mr. Garcia's proposed merger
transaction by certain stockholders. The general claim is a breach of the
duties of the directors of the Company. The claims arise out of related
party transactions with Mr. Garcia. The negotiations with the complaining
stockholder's counsel involved proposals for changes in the terms of the
merger consideration offered by Mr. Garcia. The negotiations involved
changes in the terms of the bonds that would be issued to the stockholders
in connection with the merger. No agreement was ever reached with the
counsel on such terms. After the terrorist attacks occurring on September
11, 2001, Mr. Garcia withdrew his merger proposal citing such events and
the resulting uncertainty of the economy.

Agreements Involving the Subject Company's Securities.

Mr. Garcia, or an entity beneficially owned by him, has entered into
the following agreements that involve the Company's securities. These
agreements are incorporated by reference herein.

(1) Stock Purchase Agreement, dated January 9, 2001, by and among
Harris Associates, L.P., Ernest C. Garcia, II and Cygnet Capital
Corporation.

(2) Stock Purchase Agreement, dated January 9, 2001, by and among
Harris Associates, L.P., Ernest C. Garcia, II and Cygnet Capital
Corporation.

(3) Loan Agreement, dated January 11, 2001, by and between Ugly
Duckling Corporation and Verde Investments, Inc.

(4) Form of Warrant Agreement, dated July 25, 2001, by and between
Ugly Duckling Corporation and Verde Investments, Inc.

(5) Stock Pledge Agreement, dated November 28, 2000, by and among
Ernest C. Garcia, II, Joanne E. Garcia, Arbco Associates, L.P.
and Kayne Anderson Capital Income Partners, L.P.

(6) Non-Qualified Stock Option Agreement, dated March 2, 1999,
between Ernest C. Garcia, II and Ugly Duckling Corporation.

(7) Letter Agreement, dated March 15, 2001, by and among Cygnet
Capital Corporation, Arbco Associates, L.P. and Kayne Anderson
Non-Traditional Investments, L.P.

(8) Stock Pledge Agreement, dated March 15, 2001, by and among Ernest
C. Garcia, II, Elizabeth Joanne Garcia, Arbco Associates, L.P.
and Kayne Anderson Non-Traditional Investments, L.P.

(9) Business Loan Agreement, dated October 9, 2001, by and among
Ernest C. Garcia II, Elizabeth Joanne Garcia, Verde Investments,
Inc. and Bank One, Arizona, N.A.

SECTION 11. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.

Certain Federal Income Tax Consequences of the Offer. The following is a
summary of certain United States federal income tax consequences of the Offer to
holders whose Shares are purchased pursuant to the Offer. The summary is based
on the provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
applicable current United States Treasury Regulations issued thereunder,
judicial authority and administrative rulings and practice, all of which are
subject to change, possibly with retroactive effect, at any time and, therefore,
the following statements and conclusions could be altered or modified. The
discussion does not address holders of Shares in whose hands Shares are not
capital assets, holders who hold Shares as part of a hedging, "straddle,"
conversion or other integrated transaction, holders who received Shares upon
conversion of securities or exercise of warrants or other rights to acquire
Shares or pursuant to the exercise of employee stock options or otherwise as
compensation, holders of restricted Shares received as compensation, or holders
of Shares who are in special tax situations (such as insurance companies,
tax-exempt organizations, financial institutions, United States expatriates or
non-U.S. persons). Furthermore, the discussion does not address any aspect of
state, local or foreign taxation or estate and gift taxation.

The United States federal income tax consequences set forth below are
included for general informational purposes only and are based upon current law.
The following summary does not purport to consider all aspects of United States
federal income taxation that might be relevant to stockholders of the Company.
Because individual circumstances may differ, each holder of Shares should
consult such holder's own tax advisor to determine the applicability of the
rules discussed below to such holder and the particular tax effects of the
Offer, including the application and effect of state, local and other tax laws.
The following summary assumes that (i) the Company is not a "collapsible
corporation" within the meaning of Section 341(b)(1) of the Code, and (ii) the
Shares do not constitute "qualified small business stock" within the meaning of
Section 1202(c) of the Code.

The receipt of cash for Shares pursuant to the Offer will be a taxable
transaction for United States federal income tax purposes. As a taxable
transaction, for United States federal income tax purposes, a holder of Shares
generally will recognize gain or loss equal to the difference between the amount
of cash received therefor and the holder's adjusted tax basis in the Shares sold
pursuant to the Offer. Gain or loss generally is determined separately for each
block of Shares (i.e., Shares acquired at the same cost in a single transaction)
sold pursuant to the Offer. If the Shares exchanged constitute capital assets in
the hands of the holder, gain or loss will be capital gain or loss. In general,
capital gains recognized by an individual will be subject to a maximum United
States federal income tax rate of 20% if the holding period for the Shares
exceeds one year. If the holding period for the Shares is one year or less,
capital gains recognized by an individual will be treated as short term capital
gains, and will be subject to tax at ordinary income tax rates. Certain
limitations apply to the use of capital losses to offset other items of income
or gain.

Backup Withholding. Payments in connection with the Offer may be subject
to "backup withholding" at a 30.5% rate if payments are received in 2001 or a
30% rate if payments are received in 2002. Back-up withholding generally applies
if a holder (i) fails to furnish its social security number or other taxpayer
identification number ("TIN"), (ii) furnishes an incorrect TIN,

(iii) fails properly to include a reportable interest or dividend payment on its
United States federal income tax return or (iv) under certain circumstances,
fails to provide a certified statement, signed under penalties of perjury, that
the TIN provided is its correct number and that the holder is not subject to
backup withholding. Backup withholding is not an additional tax but merely an
advance payment, which may be refunded to the extent it results in an
overpayment of tax. Certain persons generally are entitled to exemption from
backup withholding, including corporations, financial institutions and certain
foreign holders if such foreign holders submit a statement, signed under
penalties of perjury, attesting to their exempt status. Certain penalties apply
for failure to furnish correct information and for failure to include reportable
payments in income. Each holder should consult such holder's own tax advisor as
to its qualification for exemption from backup withholding and the procedure for
obtaining such exemption. All holders surrendering Shares pursuant to the Offer
should complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to Mr. Garcia and
Computershare). Foreign holders should complete and sign the main signature form
and a statement, signed under penalties of perjury, attesting to that holder's
exempt status (such forms can be obtained from Computershare), in order to avoid
backup withholding.

EACH HOLDER SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR REGARDING THE SPECIFIC
TAX CONSEQUENCES OF THE OFFER TO THEM, INCLUDING THE EFFECTS OF APPLICABLE
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.

SECTION 12. TRANSACTIONS AND ARRANGEMENTS CONCERNING SHARES.

Neither Mr. Garcia, nor any entity beneficially owned by Mr. Garcia,
has made any underwritten public offering of the Common Stock for cash during
the past three years.

During the last two years, Mr. Garcia, or an entity beneficially owned by
Mr. Garcia, has made the following purchases of Shares of the Company's Common
Stock:

ERNEST C. GARCIA II:

Purchase Number of Shares Purchase Price
Date Purchased Per Share
--------- ---------------- ----------------

11/1/01 360,000 $ 2.51
11/8/01 215,100 $ 2.51

VERDE INVESTMENTS, INC.:

Purchase Number of Shares Purchase Price
Date Purchased Per Share
--------- ---------------- ----------------

11/13/00 360,000 $ 5.50
11/14/00 58,000 $ 5.50
11/14/00 85,500 $ 5.38

VERDE REINSURANCE CO. LTD.:

Purchase Number of Shares Purchase Price
Date Purchased Per Share
--------- ---------------- ----------------

11/15/00 18,800 $ 5.50

CYGNET CAPITAL CORPORATION:

Purchase Number of Shares Purchase Price
Date Purchased Per Share
--------- ---------------- ----------------

2/28/01 344,800 $ 3.375
3/5/01 1,500,000 $ 4.174697

The average purchase price for all of the foregoing transactions effected
during the quarter ended December 31, 2000 was $5.48. The average purchase price
for all of the foregoing transactions effected during the quarter ended March
31, 2001 is $4.03. The average purchase price for all of the foregoing
transactions effected to date during the quarter ending December 31, 2001 is
$2.51.

In May 2001, Cygnet Capital Corporation, Verde Reinsurance Co. Ltd. and
Verde transferred all of the Shares of Common Stock respectively held by each
entity to Mr. Garcia. As of November 14, 2001, Mr. Garcia beneficially owns
an aggregate of 7,482,100 Shares of Common Stock of the Company, which
includes 40,000 Shares that Mr. Garcia has the right to acquire under
presently exercisable stock options.

Mr. Garcia has not effected any transactions in the Shares during the
sixty business days prior to the date hereof except as follows:

- On November 1, 2001, Mr. Garcia acquired 360,000 Shares of Common
Stock at $2.51 per Share in an open market transaction.

- On November 8, 2001, Mr. Garcia acquired 215,100 Shares of Common
Stock at $2.51 per Share in an open market transaction.

The following table sets forth the holdings of Common Stock of the
Company, as of November 14, 2001, of Mr. Garcia:

Name Number of Shares Percentage of Outstanding
---- ---------------- -------------------------

Ernest C. Garcia II 8,982,2004 (5)(6) 65.2%

SECTION 13. EXTENSIONS OF TENDER PERIOD; TERMINATIONS; AMENDMENTS.

Mr. Garcia has the right, in his sole discretion, at any time and from
time to time on or before the Expiration Date, to extend the period of time
during which the Offer is open by giving Computershare oral or written notice of
the extension and making a public announcement of such extension. If there is
any extension or amendment, all Shares previously tendered and not purchased or
withdrawn will remain subject to the Offer and may be purchased by Mr. Garcia,
except to the extent that such Shares may be withdrawn as set forth in Section 3
of this Offer to Purchase.

If Mr. Garcia decides, in his sole discretion, to decrease the amount of
Shares being sought and, at the time that the notice of such decrease is first
published, sent or given to holders of Shares, the Offer is scheduled to expire
within ten business days of the notice the Offer will be extended, so that it is
open for at least ten business days from the date of the notice.

Mr. Garcia has the right, in his sole discretion: (i) to postpone the
Offer and not to purchase or pay for any Shares not previously purchased or paid
for upon the occurrence of any of the conditions specified in Section 5 of this
Offer to Purchase by giving you written notice of the termination and making a
public announcement of the termination; or (ii) at any time and from time to
time before the Expiration Date, to amend the Offer in any respect by giving
Computershare oral or written notice of the amendment, termination or
postponement and making a public announcement of such termination or
postponement. Mr. Garcia's reservation of the right to delay payment for Shares
which Mr. Garcia accepted for payment is limited by Rule 13e-4(f)(5) under the
Exchange Act, which requires that Mr. Garcia must pay the consideration offered
or return the Shares tendered promptly after termination or withdrawal of a
tender offer.

All extensions, delays in payment or amendments will be followed by public
announcements, which in the case of an extension will be issued no later than
9:00 a.m. Eastern Standard Time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which Mr. Garcia may
choose to make any public announcement, except as provided by applicable law,
including Rule 13e-4(e)(2) under the Exchange Act, Mr. Garcia has no obligation
to publish, advertise or otherwise communicate any public announcement, other
than by issuing a release to the Dow Jones News Service. For purposes of the
Offer, a "business day" means any day other than a Saturday, Sunday or federal
holiday and consists of the time period from 12:01 a.m. through 12:00 Midnight,
Mountain Standard Time.

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(5) Includes 40,000 shares that Mr. Garcia has the right to acquire under
presently exercisable stock top options.

(6) Includes 1,500,000 shares underlying Warrants that Mr. Garcia has a right to
receive pending approval of the stockholders of the Company.

SECTION 14. FEES AND EXPENSES.

Except as described below, Mr. Garcia will not pay any fees or commissions
to any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer (other than Computershare or the Information Agent). Mr. Garcia,
upon request, will reimburse brokers, dealers, commercial banks and trust
companies for customary handling and mailing expenses incurred in forwarding the
Offer to their customers.

Mr. Garcia has retained Computershare to act as the depositary in
connection with the tender offer. In addition, Mr. Garcia retained Morrow & Co.,
Inc. to act as Information Agent in connection with the tender offer. The
Information Agent may contact holders of the Shares by mail, telephone,
telegraph and in person and may request brokers, dealers, commercial banks,
trust companies and other nominee stockholders to forward materials relating to
the tender offer to beneficial owners. The Information Agent and Computershare
each will receive reasonable and customary compensation for its services, will
be reimbursed by Mr. Garcia for specified reasonable out-of-pocket expenses and
will be indemnified against certain liabilities in connection with the tender
offer, including certain liabilities under the federal securities laws.

Stockholders holding Shares through brokers or banks are urged to consult
the brokers or banks to determine whether transaction costs are applicable if
stockholders tender Shares through such brokers or banks and not directly to
Computershare.

No broker, dealer, commercial bank or trust company has been authorized to
act as Mr. Garcia's agent, or the agent of Computershare or the Information
Agent, for purposes of the tender offer. Mr. Garcia will pay or cause to be paid
all share transfer taxes, if any, on our purchase of Shares except as otherwise
provided in this Offer to Purchase.

SECTION 15. CERTAIN LEGAL MATTERS.

General. Except as set forth in this Section 15, Mr. Garcia is not aware
of any approval or other action by any federal, state or foreign governmental,
administrative or regulatory agency, that would be required or desirable for our
acquisition or ownership of Shares as contemplated herein. Should any such
approval or other action be required or desirable, Mr. Garcia currently
contemplates that such approval or other action will be sought. While Mr. Garcia
does not presently intend to delay the acceptance for payment of or payment for
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the business of the Company or Mr. Garcia, or that
certain parts of the business of the Company or Mr. Garcia might not have to be
disposed of or other substantial conditions complied with if such approvals were
not obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, Mr. Garcia could decline to accept for
payment or pay for any Shares tendered pursuant to the offer. See Section 5 of
this Offer to Purchase.

Mr. Garcia has not attempted to comply with any state takeover statute or
regulation in connection with the Offer. Mr. Garcia reserves the right to
challenge the validity or applicability of any state law allegedly applicable to
the Offer and nothing in this Offer to Purchase nor any action taken in
connection herewith is intended as a waiver of that right. In the event that any
state takeover statute is found applicable to the Offer, Mr. Garcia might be
unable to accept for payment or pay for Shares tendered pursuant to the Offer or
be delayed in continuing or consummating the Offer. In such case, Mr. Garcia may
not be obligated to accept for payment or pay for any Shares tendered. See
Section 5.

At any time before or after Mr. Garcia's acquisition of Shares pursuant to
the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or
seeking the divestiture of Shares acquired by Mr. Garcia or the divestiture of
substantial assets of the Company or any of its subsidiaries or Mr. Garcia or
his affiliates. Private parties may also bring legal action under the antitrust
laws under certain circumstances. There can be no assurance that a challenge to
the Offer on antitrust grounds will not be made or, if such a challenge is made,
of the result thereof.

Shareholder Actions. On March 20, 2001, a shareholder derivative complaint was
filed, purportedly on behalf of the Company, in the Court of Chancery for the
State of Delaware in New Castle County, captioned Berger v. Garcia, et al., No.
18746NC. The complaint alleges that the Company's current directors breached
fiduciary duties owed to us in connection with certain transactions between the
Company and Mr. Garcia and various entities controlled by Mr. Garcia. The
complaint was amended on April 17, 2001 to add a second cause of action, on
behalf of all persons who own Common Stock and their successors in interest. The
amended complaint alleges that the Company's current directors breached
fiduciary duties in connection with the proposed acquisition by Mr. Garcia of
all of the outstanding Common Stock not owned by him. The original cause of
action seeks to void all transactions deemed to have been approved in breach of
fiduciary duty and recovery by the Company of alleged compensatory damages
sustained as a result of the transactions. The second cause of action seeks to
enjoin the Company from proceeding with certain transactions with Mr. Garcia,
or, in the alternative, award compensatory damages to the class.

Following Mr. Garcia's offer in April 2001 to purchase all of the
outstanding Common Stock not beneficially owned by him, five additional and
separate purported shareholder class action complaints were filed between
April 17 and April 25, 2001 in the Court of Chancery for the State of
Delaware in New Castle County. They are captioned Turberg v. Ugly Duckling
Corp., et al., No. 18828NC, Brecher v. Ugly Duckling Corp., et al., No.
18829NC, Suprina v. Ugly Duckling Corporation, et al., No. 18830NC, Benton v.
Ugly Duckling Corp., et al., No. 18838NC, and Don Hankey Living Trust v. Ugly
Duckling Corporation, et al., No. 18843NC. Each complaint alleges that the
Company, and the Company's directors, breached fiduciary duties in connection
with the transactions entered into, or proposed by Mr. Garcia relating to his
acquisition of all of the outstanding Common Stock not beneficially owned by
him. The complaints seek to recover compensatory damages caused by the
proposed transaction by Mr. Garcia and the alleged breach of fiduciary
duties. All of these cases were consolidated in June 2001. On November 16,
2001, the consolidated complaint was amended to address the intended

Offer, and includes the Offer as another transaction under the previously
specified causes of action.

SECTION 16. ADDRESS; MISCELLANEOUS.

Address. All executed copies of the Letter of Transmittal, Substitute Form
W-9 and related materials for the Shares being tendered must be sent via mail or
overnight courier service to the address set forth below. Manually signed
facsimile copies of the Letter of Transmittal will not be accepted. The Letter
of Transmittal, Substitute Form W-9 and related materials for the Shares being
tendered should be sent or delivered by you or your broker, dealer, commercial
bank, trust company or other nominee as follows:

By Mail, Hand Delivery or Overnight Mail/Express:

Computershare Trust Company, Inc.
12039 West Alameda Parkway, Suite Z-2
Lakewood, CO 80228
For Information Call: (303) 984-4043

Questions and requests for assistance may be directed to the Information
Agent at its telephone numbers and location listed below. Additional copies of
this offer to purchase, the letter of transmittal, the notice of guaranteed
delivery or any other tender offer materials may be obtained from the
Information Agent. You may also contact your broker, dealer, bank, trust company
or other nominee for assistance concerning the offer.

The information agent for the offer is:

Miscellaneous. The Offer is not being made to, nor will tenders be
accepted from, stockholders residing in any jurisdiction in which the Offer or
its acceptance would not comply with the securities or Blue Sky laws of such
jurisdiction. Mr. Garcia is not aware of any jurisdiction in which the Offer or
tenders pursuant to the Offer would not be in compliance with the laws of that
jurisdiction. Mr. Garcia reserve's the right to exclude stockholders in any
jurisdiction in which it is asserted that the Offer cannot lawfully be made. Mr.
Garcia believes such exclusion is permissible under applicable laws and
regulations, provided that Mr. Garcia makes a good faith effort to comply with
any state law deemed applicable to the Offer.

Mr. Garcia has filed a Tender Offer Statement under sections 14(d)(1) and
13(e)(1) of the Exchange Act on Schedule TO with the Securities and Exchange
Commission which includes information relating to the Offer summarized herein.
Copies of these statements may be obtained from Mr. Garcia by contacting
Computershare or the Information Agent at their respective addresses and phone
numbers set forth in this Section 16 of this Offer to Purchase.

You may read and copy reports, statements or other information that Mr.
Garcia files at the SEC's public reference rooms which are located at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W. Washington D.C. 20549, and at the SEC's
regional office located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials are also available from the
Public Reference Section of the SEC at 450 Fifth Street N.W., Washington D.C.
20549 at prescribed rates. Copies of such materials may also be accessed through
the SEC's Internet site at www.sec.gov.

Ernest C. Garcia II

November 26, 2001