STANDBY OR PERFORMANCE LETTER OF CREDIT
                                                       APPLICATION AND AGREEMENT


         This  Agreement   consists  of  three  parts.  The  first  part  is  an
Application  for a  Standby  or  Performance  Letter  of  Credit  in  which  the
Applicant(s)  sets  forth the terms of the  Letter of Credit  that it (they) has
(have)  asked us to issue.  The  second  part,  which will apply in the event we
issue the Letter of Credit,  sets forth the Terms and Conditions that govern the
relationship  between the Applicant(s) and us. Among other things, it covers the
obligation of the  Applicant(s)  to reimburse us, to provide  security for their
obligations,  and that upon the  occurrence of certain  events the  Applicant(s)
will deliver  additional  security for its (their)  obligations  and defines the
rights of, and remedies available to, us under various circumstances.  The third
part is an  Authorization of the Account Party, if the Account Party is not also
the Order  Party,  under  which  the  Account  Party  agrees to be bound by this
Agreement.

Part I:  Application for Standby or Performance Letter of Credit

TO:      THE CHASE MANHATTAN BANK
         Letter of Credit Division
         55 Water Street
         17th Floor
         New York, New York   10041
         ("Issuer")


The  undersigned  hereby  request(s) that you issue your  irrevocable  letter of
credit by:

|_| Airmail  |_| Teletransmission (Specify means___________) |X| Courier Service
                (If none specified, issuer may choose)

IN FAVOR OF:                 TO BE ADVISED THROUGH:            |_|  CHECK BOX IF
                                                               ALSO TO BE 
                                                               CONFIRMED BY
                                                               ADVISING BANK

National Union Fire Ins. Co. of Pittsburgh, PA
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99 John Street - 10th Floor
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New York, NY 10270
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         ("Beneficiary")

By order of  Rent a Wreck of America, Inc.
           ---------------------------------------------------------------------
                    ("Order Part")

Consolidated American Rental Insurance Co., Ltd.
         ("Account Party")

Up to an aggregate amount of     $800.00
                            ----------------------------------------------------
Available by (complete A or B, NOT both):

         A.  |_|  Drafts at sight on the Issuer payable at the Issuer's counters
                  accompanied by:




         B.  |_|  Tested Telex Demand to the Issuer stating:




         EXPIRATION DATE:

         Drafts and  documents  must be dated and  presented to, or Tested Telex
         Demand  received by, the Issuer not later than May 31, 1998,  provided,
         however,  that the Letter of Credit will  automatically  extend without
         any  amendment  for one year  from the  expiration  date or any  future
         expiration  date until May 31,  2002,  unless at least  sixty (60) days
         prior to such  expiration  date the Bank notifies the  Beneficiary  and
         Applicant  that the Letter of Credit  will not be renewed  for any such
         additional period.

|_|      Credit to contain  "Evergreen" clause with no less than 60 days' notice
         of non-renewal to the Beneficiary.

|_|      Partial drawings prohibited

         Unless otherwise stated herein, the negotiating/paying bank (if any) is
         authorized  to send all  documents  to you in one  airmail  or  courier
         service, if available.

|_|      Special Instructions:  Specify below.  If additional  space is  needed,
         include additional sheets.  These sheets  form an integral part of this
         Application.
<PAGE>
Part II:  Terms and Conditions.

In  consideration  of the issuance by the Bank of the Credit as requested in the
Application, the Applicant hereby agrees with the Bank as follows:

1. Definitions. The following terms shall have the meanings set forth below:

         (1) "Applicant"  means each party signing the  Application,  whether as
Order Party or as Account Party.

         (2) "Agreement" means the Application, the Terms and Conditions and the
Authorization.

         (3) "Application" means Part I of this Agreement and shall also include
all subsequent  written and oral requests by the Applicant for amendments to the
Credit.

         (4) "Bank" means the Issuer of the Credit as indicated in Part I.

         (5) "Credit"  means the letter of credit issued by the Bank by order of
the Applicant  pursuant to the  Application,  as such Credit may be amended from
time to time.

         (6) "Instrument" means any draft, receipt, acceptance, teletransmission
(including  but not  limited  to telex or cable)  or other  written  demand  for
payment under the Credit.

         (7) "Third  Party" means any person or entity other than the  Applicant
liable for the obligations of the Applicant under this Agreement.

         (8)  "Uniform  Customs  and  Practice"  means the  Uniform  Customs and
Practice for  Documentary  Credits  (1993  Revision),  International  Chamber of
Commerce  Publication No. 500, or any subsequent  revision thereof adhered to by
the Bank on the date the Credit is issued.

2. Reimbursement Obligation.

         A. Payment.  The Applicant will pay the Bank, on demand,  at the Bank's
principal  office,  in immediately  available  funds, the amount required to pay
each  Instrument  or other  amount  paid or to be paid  under  the  Credit  upon
documents presented in substantial compliance with the terms of the Credit. Such
payment shall be made with interest from the date of the Bank's  payment of such
Instrument or other amount paid by the Bank to the date of  reimbursement.  Such
payments  shall be made free and clear of and without  deduction for any present
or future taxes, levies, imposts,  deductions,  charges,  withholdings,  and all
liabilities with respect thereto. The Applicant's payment obligations under this
paragraph 2A are absolute,  unconditional and irrevocable and shall be performed
strictly  in  accordance  with the  terms of this  paragraph  under  any and all
circumstances  whatsoever  and  irrespective  of (i)  any  lack of  validity  or
enforceability of any Credit or this Agreement, or any term or provision therein
or herein or in any  Instrument or other  document  relating  hereto or thereto,
(ii) any  inaccuracy  or  misstatement  or omission in any  Instrument  or other
document presented under any Credit,  (iii) payment under any Credit,  letter of
indemnity  or release  order  against  presentation  of an  Instrument  or other
document  that does not  comply  in any  manner  with the terms of such  Credit,
letter of  indemnity or release  order,  (iv) the failure of any  Instrument  or
other document presented under a Credit to bear any reference to the appropriate
Credit,  or inadequate  reference in any  Instrument to the related  Credit,  or
failure of any document (other than documents expressly required to be presented
under such Credit) to accompany any Instrument at negotiation, or failure of any
person  to note the  amount  of any  Instrument  or draw  under a Credit  on the
reviser  of such  Credit,  or to  surrender  or take up a Credit  or to  forward
documents apart from  Instruments as required by the terms of a Credit,  (v) the
Bank of any of its affiliates being the beneficiary of the Credit, (vi) honor of
a presentation or other demand without regard to any nondocumentary condition(s)
in the Credit;  (vii) honor of a  presentation  or other demand up to the amount
available under the Credit against a draft or other documents  claiming amounts,
in excess of the amount  available;  (viii) the occurrence of any of the events,
circumstances  or conduct  set forth in  paragraph  7, or (ix) any other  event,
circumstance  or  conduct  whatsoever,  whether  or  not  similar  to any of the
foregoing,  that might,  but for the provisions of this paragraph,  constitute a
legal or  equitable  discharge  of, or  provide a right of setoff  against,  the
Applicant's  obligations hereunder;  provided, that nothing in this paragraph 2A
shall  excuse  the Bank from  liability  to the  Applicant  to the extent of any
direct damages  suffered by the Applicant (as opposed to special,  consequential
or punitive damages or claims therefor) caused by the Bank's failure to exercise
care (as defined in paragraph 7 when determining  whether  instruments and other
documents presented under a Credit comply with the terms thereof.

         B. Authorization to Charge Accounts. The Applicant expressly authorizes
the Bank (but the Bank shall not be  required),  without  demand for  payment or
notice to the Applicant,  which are hereby expressly  waived,  to charge,  debit
and/or set off against the demand deposit account referred to at the end of this
Agreement and any other accounts(s)  maintained by the Applicant with any office
of the  Bank or any  subsidiary  or any  affiliate  of the  Bank  (now or in the
future, whether general or special, time or demand, matured or unmatured) and to
apply  immediately,  any balance of deposits and any sums  credited by or due or
payable  from the Bank to the  Applicant  in such  account or  accounts,  to the
payment of any and all of Applicant's  obligations  and  liabilities to the Bank
hereunder,  including  without  limitation,  obligations and  liabilities  under
Paragraphs 2A and C and Paragraphs 3 and 8 hereunder,  all without  prejudice to
the rights of the Bank against the Applicant with respect to any and all amounts
which may be or remain unpaid.

         C.  Foreign  Currency  Obligations.  If the  Instrument  is in  foreign
currency,  the  Applicant's  payment shall be in United  States  currency at the
Bank's then current  selling rate for cable transfers to the place of payment of
the  Instrument  on the date of such payment or of the Bank's  settlement of its
obligation,  as the Bank may require.  If, for any cause, on the date of payment
or  settlement,  as the case may be,  there is no selling  rate or other rate of
exchange  generally  current  in New  York for  effecting  such  transfers,  the
Applicant  will pay the Bank on  demand an  amount  in  United  States  currency
equivalent to the Bank's actual cost of settlement of its obligation  however or
whenever the Bank shall make such  settlement,  with  interest  from the date of
settlement to the date of payment by the  Applicant.  The Applicant  will comply
with all governmental  exchange  regulations now or hereafter  applicable to the
Credit or  Instrument  or payments  related  thereto  and will pay the Bank,  on
demand,  in  United  States  currency,  such  amount  as the Bank may have  been
required to expend on account of such regulations.

3. Payment of Commissions,  Expenses,  Counsel Fees, Interest,  Additional Costs
and Facility Fees.

         A. Commissions, Etc. The Applicant will pay the Bank, on demand, at its
principal  office at 270 Park  Avenue,  New York,  New York  10017,  the  Bank's
commission  and all charges,  costs and expenses paid or incurred by the Bank in
connection  with the Credit,  including  fees and charges of counsel,  and costs
allocated  by the  Bank's  internal  legal  department  in  connection  with the
preparation,  performance  or  enforcement  of  this  Agreement  or the  Credit.
                                       2
<PAGE>
Commissions  payable  hereunder shall be at the rate customarily  charged by the
Bank at the time in like circumstances.

         B.  Interest.  The Applicant  agrees to pay interest on any amounts due
under  this  Agreement  which  are not  paid  when due at 3% plus  that  rate of
interest from time to time announced by the Bank at its principal office, as its
prime  commercial  lending  rate,  which rate shall not exceed the maximum  rate
permissible under applicable law.

         C. Additional Costs. The Applicant shall also pay to the Bank on demand
such  amounts as the Bank in its sole  discretion  determines  are  necessary to
compensate  it for any cost  attributable  to its  issuing  or having the Credit
outstanding. Such costs shall include any cost resulting from the application of
any law or regulation to the Bank  regarding  any reserve,  assessment,  capital
adequacy  or  similar   requirement   relating  to  letters  of  credit  or  the
reimbursement  agreements  with  respect  thereto or to similar  liabilities  or
assets of the Bank,  whether  existing  at the time of issuance of the Credit or
adopted  thereafter.  In the  case  of  sale  of a  participation  permitted  by
paragraph 15 hereof,  all amounts payable by the Applicant under this paragraph,
shall  be  determined  as if the  Bank  had not  sold  such  participation.  The
Applicant  acknowledges that there may be various methods of allocating costs to
the Credit and agrees that the Bank's allocation for purposes of determining the
costs referred to above  (including the cost of maintaining  capital required in
connection  with the Credit) shall be conclusive and binding upon the Applicant,
provided such allocation is made in good faith. The Applicant also agrees to pay
all withholding, stamp and other taxes or duties imposed by any taxing authority
on  payments  under the  Credit and this  Agreement  and to  indemnify  the Bank
against all liabilities, costs, claims, and expenses resulting from any omission
to pay or delay in paying any such duty or tax.

         D. Facility Fee. A non-refundable facility fee of 1% per annum, payable
in advance of the stated amount of the Credit.

4. Successors;  Bank's Honoring. The Bank may honor, as complying with the terms
of the Credit and of the  Application,  any drawing by, or  Instrument  or other
document  signed  or  issued  by,  a person  (or a  transferee  of such  person)
purporting to be an administrator,  executor,  trustee in bankruptcy,  debtor in
possession, assignee for the benefit of creditors,  liquidator,  receiver, other
legal  representative  or successor by operation of law of the party  authorized
under the Credit to draw  under the Credit or to sign or issue such  Instruments
or  other  documents;  provided,  that  any such  drawing,  Instrument  or other
document is otherwise in substantial compliance with the Credit.

5.  Amendment,   Change,   Modification,   No  Waiver.  No  amendment,   change,
modification  or waiver to which the Bank has consented  shall be deemed to mean
that the Bank will consent or has consented to any other or  subsequent  request
to amend,  change,  modify or waive a term of the Credit.  The Bank shall not be
deemed to have  amended,  changed or modified  any term hereof or to have waived
any of its rights  hereunder,  unless the Bank or its  unauthorized  agent shall
have consented to such  amendment,  change or  modification in writing or signed
such waiver.

6. U.C.P.; Agreements and Acknowledgments.

         A. The Uniform  Customs and Practice.  The Uniform Customs and Practice
shall be  binding  on the  Applicant  and the Bank  except  to the  extent it is
otherwise expressly agreed.

         B. Other Agreements and Acknowledgments.

            It is also agreed that:

            (1)   user(s) of the Credit shall not be deemed agents of the Bank;

            (2)   none  of  the  Bank,  its  affiliates,   subsidiaries  or  its
                  correspondents shall be responsible for, and the obligation of
                  the Applicant to pay the Bank under Section 2 hereof shall not
                  be affect by, (i) any act, error, neglect, default,  omission,
                  insolvency or failure in business of any of its correspondents
                  or (ii)  the  form,  validity,  accuracy,  sufficiency,  legal
                  effect or  genuineness  of any  instrument  or other  document
                  presented under the Credit;

            (3)   any  action,  inaction  or omission on the part of the Bank or
                  any of its affiliates,  subsidiaries or correspondents,  under
                  or in connection  with the Credit or the related  instruments,
                  documents or property, if in good faith, shall be binding upon
                  the  Applicant  and  shall  not  place  the  Bank or any  such
                  affiliate,  subsidiary or correspondent under any liability to
                  the Applicant or affect in any way whatsoever the  Applicant's
                  obligation  to pay the Bank  under  Section 2 hereof and in no
                  event  shall  the Bank or any such  affiliate,  subsidiary  or
                  correspondent  be  liable  for any  special  or  consequential
                  damages;

            (4)   the  Applicant  will  promptly  examine:  (i) the  copy of the
                  Credit (and of any amendments thereof) sent to it by the Bank;
                  and (ii) all  instruments  and documents  delivered to it from
                  time to time, and, in the event of any claim of  noncompliance
                  with  Applicant's  instructions  or  other  irregularity,  the
                  Applicant will immediately notify the Bank thereof in writing,
                  the  Applicant  being  conclusively  deemed to have waived any
                  such  claim  against  the  Bank  and  any of  its  affiliates,
                  subsidiaries  and  correspondents  unless  notice  is given as
                  aforesaid;

            (5)   if the Credit states any condition (whether for information or
                  otherwise)  without specifying the document to be presented to
                  determine compliance therewith, the Bank may (but shall not be
                  obligated to) treat such condition as not stated and disregard
                  it for purposes of  determining  compliance  with the terms of
                  the Credit; and

            (6)   the Bank shall have no  obligation  to notify the Applicant of
                  discrepancies in any Instruments or other documents  presented
                  under the Credit and any such  notification  or request  for a
                  waiver of such discrepancies  shall not constitute a waiver of
                  such  discrepancies by the Bank nor any agreement to notify or
                  seek a waiver of any future discrepancies.

7. Instructions;  No Liability.  Instructions whether given orally (in person or
by telephone),  in writing (by teletransmission or other means) or by electronic
means may be honored by the Bank when  received  from  anyone  purporting  to be
authorized to give such  instructions  for the Applicant.  Each oral instruction
shall be confirmed in writing by the person  giving such  instruction,  or other
authorized  officer,   but  the  Bank's   responsibility  with  respect  to  any
instruction shall not be affected by its failure to receive,  or the content of,
such confirmation.  The Bank shall have no responsibility to notify Applicant of
any  discrepancies   between  Applicant's  oral  instructions  and  its  written
confirmation,  and in the event of any such  discrepancy,  the oral instructions
shall govern. The Bank shall be fully protected in, and shall incur no liability
to the Applicant for, acting upon any oral,  written or electronic  instructions
which  the Bank in good  faith  believes  to have been  given by any  authorized
person,  and in no event  shall  the Bank be liable  for  special,  indirect  or
consequential  damages.  The Bank may, at its option, use any means of verifying
any 
                                       3
<PAGE>
instructions  received by it. The Bank also may, at its option, refuse to act on
any instruction or any part thereof,  without incurring any  responsibility  for
any loss,  liability or expense arising out of such refusal.  The parties hereto
further agree that in the absence of gross  negligence or willful  misconduct on
the part of the Bank (as finally determined by arbitration pursuant to paragraph
14, the Bank shall be deemed to have  acted with care when  determining  whether
Instruments and other  documents  presented under a Credit comply with the terms
thereof.  Further,  neither the Bank nor any of its affiliates,  subsidiaries or
correspondents  shall be deemed to have acted with gross  negligence  or willful
misconduct or to have any liability or responsibility under any circumstances by
reason of or in connection with:

            (i)   any of the  circumstances  referred to in paragraph  2A. (i) -
                  (vii);

            (ii)  errors, omissions,  interruptions or delays in transmission or
                  in delivery of any message by mail, telex,  cable,  telegraph,
                  wireless or other teletransmission or computer transmission or
                  oral  instructions,  whether or not they may be in cipher; or,
                  in the case of a Computerized Request, any machine or computer
                  breakdown  or  malfunction,  interruption  or  malfunction  of
                  communication   facilities   or  for  any  other   similar  or
                  dissimilar cause beyond its reasonable control;

            (iii) any act, error,  neglect or default,  omission,  insolvency or
                  failure in business of any of its  correspondents or any Third
                  Party;

            (iv)  the form,  validity,  accuracy,  sufficiency,  legal effect or
                  genuineness  of any  Instrument  or other  document  presented
                  under a Credit;

            (v)   any error in interpretation of technical terms;

            (vi)  failure to notify  Applicant of  beneficiary's  request for an
                  amendment,   termination,   transfer  of  drawing   rights  or
                  assignment of proceeds, of a presentation, of a discrepancy in
                  documents,  of the  facilitation  of a cure or of  dishonor or
                  honor or any other action or inaction  toward the  beneficiary
                  of a nominated bank (except for failure to notify Applicant of
                  the disposition of the documents after honor);

            (vii) any  action,  inaction  or omission on the part of the Bank or
                  any  of  its  affiliates,   subsidiaries  or   correspondents,
                  required or permitted under the Uniform  Commercial  Code, the
                  Uniform Customs and Practice, the United Nations Convention on
                  Independent  Guarantees  and Standby  Letters of Credit or the
                  International  Standby  Practices  1997 as  chosen in or as in
                  effect where and when the Credit is issued;

            (viii)shipment(s)  under such Credit  exceeding the quantity  called
                  for under such Credit;

            (ix)  any drawing by, or Instrument or other  document  otherwise in
                  order signed or issued by, a person (or a  transferee  of such
                  person) purporting to be an administrator,  executor,  trustee
                  in bankruptcy, debtor in possession,  assignee for the benefit
                  of   creditors,    liquidator,   receiver   or   other   legal
                  representative  or  successor by operation of law of the party
                  authorized  under such Credit to draw or issue such Instrument
                  or other document;

            (x)   any consequence  arising from causes beyond the control of the
                  Bank; or

            (xi)  the Bank accepting  and/or making payment upon  Instruments or
                  other   documents   which  appear  on  their  face  to  be  in
                  substantial  compliance  with the  terms  of a Credit  without
                  undertaking  any  further  investigation,  regardless  of  any
                  notice or information to the contrary, or the Bank refusing to
                  accept and/or make payment upon such  Instruments or documents
                  if such Instruments or documents are not in strict  compliance
                  with the terms of such Credit.

8.  Indemnification.  The  Applicant  agrees to indemnify  and hold harmless the
Bank, each affiliate and subsidiary of the Bank, and the  correspondents  of any
of them,  against  any and all  claims,  losses,  liabilities,  damages,  costs,
penalties and fines,  including  reasonable  counsel fees and allocated costs of
internal  counsel,  howsoever  arising  from or in  connection  with the Credit,
including, without limitation, any such claim, liability, damage, cost liability
or fine arising out of any transfer, sale, delivery, surrender or endorsement of
any  document  at any  time(s)  held  by the  Bank or any of its  affiliates  or
subsidiaries, or held for the account of any of them by any correspondent of any
of them,  or arising out of any action,  suit or  proceeding  for  injunctive or
other judicial or  administrative  relief or any other judicial or  governmental
order  and  affecting,  directly  or  indirectly,  the  Bank or such  affiliate,
subsidiary or correspondent.

9. Licenses. The Applicant will procure promptly any necessary import, export or
other  licenses  in  connection  with  the  Credit  and  any  property   shipped
thereunder,   and  will  comply  with  all  foreign  and  domestic  governmental
regulations in regard to the shipment of such property or the financing  thereof
and will furnish the Bank on its demand, with evidence thereof.

10. Pledge and Assignment of Security.

         A. Pledge and Grant of Security Interests.  As security for the payment
or  performance  of  (i)  any  and  all of the  Applicant's  obligations  and/or
liabilities  to  the  Bank  under  this  Agreement   (including  the  contingent
obligation  under  paragraph 11 to pay or deliver to the Bank the maximum amount
available under the Credit whether or not a drawing, claim or demand for payment
has  been  made  under  the  Credit)  and  (ii)  all  other  obligations  and/or
liabilities  of the  Applicant to the Bank,  absolute or  contingent,  due or to
become  due, or which are now or may at any  time(s)  hereafter  be owing by the
Applicant to the Bank, the Applicant hereby:

         (1)  pledges  and/or  grants  to the Bank a  continuing  lien  upon and
         assignment of all right,  title and interest of the Applicant in and to
         the  balance of every  deposit  account,  now or at any time  hereafter
         existing, of the Applicant with any office of the Bank or any affiliate
         or subsidiary  thereof,  wherever located,  and any other claims of the
         Applicant against any office of the Bank or any affiliate or subsidiary
         thereof, and in and to all money, instruments,  securities,  documents,
         chattel paper,  demands,  precious  metals,  funds,  and all claims and
         demands and rights and interest therein of the Applicant, and in and to
         all  evidences  thereof,  which  have  been  or at any  time  shall  be
         delivered to or otherwise come into the possession,  custody or control
         of any office of the Bank or any  affiliate or subsidiary  thereof,  or
         into the  possession,  custody or control  of any  affiliate,  agent or
         correspondent  of any such entity for any  purpose,  whether or not for
         the  express  purpose of being used by any such  entity as  collateral,
         security  or for  safekeeping  and the  Bank  shall be  deemed  to have
         possession, custody or control of all such property actually in transit
         to, or set apart for, it or any of its affiliates or  subsidiaries  (or
         any of their agents, property actually in transit to, or set apart for,
         it or any of its  affiliates or  subsidiaries  (or any of their agents,
         correspondents  or others acting in their behalf),  it being understood
         that the receipt at any time by such  entities (or any of their agents,
         correspondents, or others acting in their behalf), of other security of
         whatever nature, 
                                       4
<PAGE>
         including  cash,  shall  not be  deemed a waiver  of any of the  Bank's
         rights or powers  hereunder.  The Applicant agrees that such affiliates
         or  subsidiaries  shall be  agent(s)  of the Bank  for the  purpose  of
         perfecting a security  interest in any such  deposit  accounts or other
         property; and

         (2) pledges  and/or  grants to the Bank a security  interest in any and
         all property the Applicant holds as security for the obligations of any
         party  related to the Credit,  and further,  subordinates  its right to
         payment from such  property  and the proceeds  thereof to the rights of
         the Bank,  until the Bank is paid in full, and agrees that it will hold
         in trust for and promptly deliver to the Bank any payment received from
         such property or proceeds.

         B.  Additional  Rights of the Bank.  The Bank is authorized to take any
action  necessary  to protect  its  rights in the  security  provided  hereunder
(whether  or not a drawing,  claim or demand for payment has been made under the
Credit)  including but not limited to segregating all or any part of the balance
of any deposit  account  referred to in paragraph  10(A) or other security to be
applied to the Applicant's obligations to the Bank as provided in paragraph 11.

11. Events of Default; Obligations;  Remedies. Upon the occurrence of any of the
events described in this paragraph 11 (whether or not a drawing, claim or demand
for payment has been made under the  Credit) the  Applicant  agrees that (A) any
and all  obligations  and  liabilities of the Applicant to the Bank,  matured or
unmatured,  absolute or contingent,  whether now existing or hereafter  incurred
(including  the  obligations  hereunder),  shall  be due and  payable  forthwith
without  notice or demand and (B) the Bank may (i) charge,  debit and/or  setoff
against any account of the Applicant  maintained at any office of the Bank or at
any subsidiary or affiliate of the Bank (now or in the future,  whether  general
or  special,  time or  demand,  matured or  unmatured)  for the  maximum  amount
available  under  the  Credit  and also for any and all  other  obligations  and
liabilities  of the  Applicant  (and for those of each of its  subsidiaries  and
affiliates) to the Bank hereunder or otherwise,  matured or unmatured,  absolute
or contingent,  whether now existing or hereafter incurred, (ii) demand that the
Applicant, and the Applicant shall upon such demand, deliver, transfer or assign
to the Bank cash or other property of a value and character  satisfactory to the
Bank (together with executed  financing  statements in such form as the Bank may
reasonably  require) as security for all such obligations and liabilities and/or
(iii) liquidate any or all of the property pledged, assigned and/or in which the
Bank has been granted a security interest, and in each case, the Bank shall hold
such amounts,  proceeds and collateral as security for (or at the Bank's option,
make payment in satisfaction  of) the Applicant's  (and such  subsidiaries'  and
affiliates')  obligations  and  liabilities,  matured or unmatured,  absolute or
contingent,  whether now existing or hereafter incurred,  hereunder or otherwise
to the Bank;

         (1) if there shall occur any material  adverse  change in the condition
             (financial or otherwise),  business, operations or prospects of the
             Applicant or any Third Party;

         (2) if any statement made, or any  information or report  furnished to,
             the  Bank  in  connection   with  this   Agreement   contained  any
             misstatement of a material fact or omitted to state a material fact
             or any fact necessary to make any statement  contained  therein not
             materially misleading;

         (3) the death or dissolution of the Applicant or any Third Party;

         (4) if any  obligation  and/or  liability of the Applicant or any Third
             Party  shall not be paid or  performed  when due, or any default or
             event of default (as such is defined  under any  agreement  for the
             payment  of money  to which  the  Applicant  or a Third  Party is a
             party)  remains  uncured  after  the cure  period  provided  in the
             related agreement has elapsed; or

         (5) if the Applicant or a Third Party shall become  insolvent  (however
             such  insolvency  may be evidenced or defined) or generally  not be
             able to pay  its  debts  as  they  become  due,  or make a  general
             assignment  for the benefit of creditors,  or if the Applicant or a
             Third Party shall suspend the  transaction of its usual business or
             be expelled or suspended from any exchange, or if an application is
             made by any judgment creditor of the Applicant or a Third Party for
             an order  directing  the Bank to pay over money or to deliver other
             property,  or if a  petition  in  bankruptcy  shall  be filed by or
             against the Applicant or a Third Party,  or if a petition  shall be
             filed  by or  against  the  Applicant  or any  proceeding  shall be
             instituted  by or against  the  Applicant  or a Third Party for any
             relief under any bankruptcy or insolvency  laws or any law relating
             to  the   relief  of   debtors,   readjustment   or   indebtedness,
             reorganization,  composition or extensions,  or if any governmental
             authority,  or any  court  at  the  instance  of  any  governmental
             authority,  shall take  possession of any  substantial  part of the
             property of the Applicant or a Third Party or shall assume  control
             over the affairs or  operations  of the Applicant or a Third Party,
             or if a receiver or custodian  shall be appointed  of, or a writ or
             order of attachment or garnishment shall be issued or made against,
             any of the property or assets of the  Applicant or a Third Party or
             the  Applicant  or a Third  Party shall  represent  that any of the
             foregoing has occurred or will occur;

         (6) if  a  temporary  restraining  order,  injunction  (preliminary  or
             permanent) or any similar  order is issued in  connection  with the
             Credit or any instrument or document  relating  thereto which order
             may apply, directly or indirectly, to the Bank; or

         (7) the Bank shall in good faith deem itself insecure at any time.

         (8) failure to furnish to the Bank within the time periods specified or
             as otherwise required by the Bank;

             (i)  Borrower's  10K Report filed with the  Securities and Exchange
                  Commission ("SEC") within one hundred and twenty (120) days of
                  fiscal year end,

             (ii) Borrower's  10Q Report  filed  with the SEC within  sixty (60)
                  days of each quarter's end, and

             (iii)quarterly  schedules of all accounts  receivable  and accounts
                  payable  of the  Borrower  and its wholly  owned  subsidiaries
                  showing separately those which are more than thirty (30) days,
                  sixty (60) days and ninety (90) days old, by the 10th business
                  day of the quarter then ended;
                                       5
<PAGE>
         (9)      if the Consolidated Tangible Net Worth is less than $1,300,000
                  at any fiscal year end.

                  ("Consolidated  Tangible Net Worth" is defined, at any date as
                  (1) the  aggregate  amount at which all assets of the Borrower
                  and its subsidiaries would be shown on a balance sheet at such
                  date after  deducting  capitalized  research  and  development
                  costs,   capitalized  interest,  debt  discount  and  expense,
                  goodwill,   patents,   trademarks,   copyrights,   franchises,
                  licenses and such other assets as are properly  classified  as
                  "intangible  assets",  less (2) the  aggregate  amount  of all
                  indebtedness,  liabilities  (including  tax and  other  proper
                  accruals)  and reserves of the Borrower and its  subsidiaries,
                  excluding approved subordinated debt).

         (10)     if the ratio of Consolidated Total Unsubordinated  Liabilities
                  to Consolidated  Tangible Net Worth plus approved Subordinated
                  Debt exceeds 1:1 at any fiscal year end.

                  ("Consolidated Total Unsubordinated Liabilities" is defined as
                  all  items  which,  in  accordance  with  generally   accepted
                  accounting  principles  applied on a consistent  basis,  would
                  properly  be  included  on the  liability  side of the balance
                  sheet (other than approved  subordinated  debt, capital stock,
                  capital surplus and retained earning), as of the date on which
                  the amount of Consolidated Total Unsubordinated Liabilities is
                  to  be  determined,  of  the  Borrower  and  its  Subsidiaries
                  computed and combined in accordance  with  generally  accepted
                  accounting principles applied on a consistent basis.)

         (11)     if the ratio of  consolidated  net cash flow (earnings  before
                  interest expense, taxes,  depreciation,  amortization) to debt
                  service coverage (all payments of principal, interest on loans
                  and capital lease  payments,  dividends on preferred stock and
                  dividends on common  stock  exceeding  debt service  coverage)
                  falls below 2.25:1 for any fiscal year end.

12.  Continuing  Rights and  Obligations.  The Bank's rights and liens hereunder
shall continue  unimpaired,  and the Applicant shall be and remain  obligated in
accordance  with the terms and provisions  hereof,  notwithstanding  the release
and/or  substitution of any property which may be held as security  hereunder at
any time,  or of any  rights or  interest  therein  or the  release of any Third
Party.  The Applicant  waives any defense  whatsoever  which might  constitute a
defense  available  to,  or  discharge  of, a surety or a  guarantor.  No delay,
extension of time, renewal, compromise or other indulgence which may occur or be
granted by the Bank shall impair the Bank's rights or liens hereunder.

13.  Partnership  Applicants;  Multiple  Applicants,  Etc. If the Applicant is a
partnership,  its  obligation  hereunder  shall  continue  in force,  and apply,
notwithstanding  any  change  in the  membership  of such  partnership,  however
arising,  or the release of any partner from liability.  If more than one entity
and/or person signs this Agreement  whether as Order Party or Account Party, (i)
each of them shall be jointly and severally  liable  hereunder and all the terms
and provisions regarding liabilities,  obligations and property of such entities
and/or persons shall apply to any  liabilities,  obligations and property of any
and all of them and (ii) each of them hereby agrees that,  without  notice to or
further consent by the other, the liability of any Applicant  hereunder may from
time to time, in whole or in part, be renewed, extended,  modified,  released or
reduced by the Bank without  affecting or releasing in any way the  liability of
the other Applicant.

14.  Arbitration;  Jurisdiction  and Venue;  Service of Process;  appointment of
Agent; Waiver;  Action. (a) Any dispute,  controversy or claim arising out of or
in  relation to (i) this  Agreement  or any  Application  or Credit or letter of
indemnity  issued  hereunder  or  (ii)  the  breach,  dishonor,  termination  or
invalidity  thereof,  shall be submitted to and finally  settled by  arbitration
administered by the International Center for Letter of Credit Arbitration,  Inc.
(the "Center") under its Rules of Arbitration (1996) and any subsequent revision
thereof  adhered to by the Bank (the "Rules").  The Applicant and the Bank shall
each appoint one  arbitrator  from the Center's List of Accredited  Arbitrators,
and  said  arbitrators  shall  appoint  the  presiding   arbitrator.   All  such
arbitrations  shall  be held  in the  City  and  State  of New  York,  shall  be
conducted, recorded and documented in the English language, and shall be subject
to and governed by the laws of the State of New York.  No  arbitration  or other
proceeding  in respect of any matter  arising  under or in  connection  with the
Credits,  the  Applications  or this  Agreement  may be brought by the Applicant
against the Bank unless commenced,  in compliance with the Rules, within one (1)
year after (i) the expiration date of the applicable  Credit or (ii) the alleged
breach shall have purportedly occurred, whichever is earlier.

         (b) The  Applicant  hereby  irrevocably  consents  for  itself  and its
Property,   with  respect  to  any  legal  proceeding  for  the  recognition  or
enforcement of any award, to the  nonexclusive  jurisdiction of (i) any court of
record  located  in the City and  State of New York and (ii) the  United  States
District Court for the Eastern or Southern District of the State of New York and
agrees that (1) each such court  shall be a proper  forum for any such action or
suit and (2) a final judgment in any such action or suit shall be conclusive and
may be enforced in other  jurisdictions  by suit on the judgment or in any other
manner  provided  in law.  Service of process in any such  action or suit may be
made upon the Applicant by mailing a copy of the summons to the Applicant either
at the address set forth below or at the Applicant's  last address  appearing in
the Bank's records.  In addition,  if the Applicant is organized or incorporated
in a jurisdiction outside the United States of America, the Applicant designates
the Consul General or equivalent official of the country of incorporation of the
Applicant as the true and lawful agent and attorney-in-fact of the Applicant for
receipt of  summons,  writs and  notices in  connection  with any such action or
suit.

         (c) The Applicant hereby waives:

         (i) the right to interpose any claim,  setoff, or counterclaim,  or any
nature or  description  whatsoever  and any  defense  based upon the  statute of
limitations, laches, waiver, estoppel or setoff, howsoever described;

         (ii) any immunity it or its  Property  may now or  hereafter  have from
suit,  jurisdiction,  attachment  (whether  prior  to  judgment  or  in  aid  of
execution), execution or other legal process;

         (iii)  any  claim  against  the Bank for  consequential,  punitive,  or
special damages; and

         (iv) notice of acceptance of this Agreement.

15.  Assignment  and  Applicable  Law. This Agreement may not be assigned by the
Applicant  without the prior written consent of the Bank. The Bank may assign or
sell  participations  in all or any  part of the  Credit  or this  Agreement  to
another entity and the Bank may disseminate credit  information  relating to the
Applicant in connection with any proposed participation.  This Agreement and all
rights,  obligations and liabilities arising hereunder shall be binding upon and
inure  to the  benefit  of the  Bank  and the  Applicant  and  their  respective
successors  and  permitted  assigns and shall be governed  by, and  construed in
accordance  with, the internal laws of the  jurisdiction  in which the branch of
the Bank to which this Agreement is addressed is located,  without  reference to
that jurisdiction's principles of 
                                       6
<PAGE>
conflicts of law, and to the extent that there is any conflict between such laws
and the Uniform  Customs and Practice,  the Uniform  Customs and Practice  shall
control.

                                    Demand Deposit A/C #________________________

                                    THE TERMS  AND  CONDITIONS  SET FORTH  ABOVE
                                    HAVE BEEN READ AND ARE HEREBY  ACCEPTED  AND
                                    MADE  APPLICABLE  TO THIS  AGREEMENT AND THE
                                    CREDIT.

WE WARRANT THAT NO SHIPMENT OR PAYMENT
TO BE MADE IN CONNECTION WITH THIS
AGREEMENT IS IN VIOLATION OF UNITED            Rent-A-Wreck of America, Inc.  
STATES TRADE, CURRENCY CONTROL OR OTHER        (Order Party)                  
REGULATIONS. WE FURTHER WARRANT THAT THE                                      
AGREEMENT BELOW HAS BEEN DULY AND                                             
VALIDLY EXECUTED BY OR ON BEHALF OF THE        11460 Conridge Drive, #120     
ACCOUNT PARTY.                                 Owings Mills, Maryland   21117 
                                               (Address)                      
                                                                              
                                               /s/Kenneth L. Blum, Jr. President
                                               ---------------------------------
                                               (Authorized Signature)   (Title)

                                                  3 Jun. 1997
                                               ---------------------------------
                                               (Date)
                                       7
<PAGE>

--------------------------------------------------------------------------------
(The  following  is to be  executed  if the Order  Party is not also the Account
Party)


Part III.

                 AUTHORIZATION AND AGREEMENT OF ADDITIONAL PARTY
                             NAMED AS ACCOUNT PARTY


To:      ISSUER

We join in the  request to you to issue the Credit,  naming us as Account  Party
and, in consideration thereof, we irrevocably agree (i) that the above Applicant
(the Order Party) has sole right to give  instructions  and make agreements with
respect to the  Application,  the Credit and the disposition of documents and we
have no right or claim  against  you or your  correspondent  in  respect  of any
matter arising in connection with any of the foregoing,  and (ii) to be bound by
all the terms of this  Agreement.  The Order  Party is  authorized  to assign or
transfer to you all or any part of any security  held by the Order Party for our
obligations  arising in  connection  with this  transaction  and,  upon any such
assignment or transfer, you will be vested with all powers and rights in respect
of the security  transferred  or assigned to you and you may enforce your rights
under this Agreement  against us or our property in accordance with the terms of
this Agreement.


                                        ------------------------------
                                                    (Name)

                                        ------------------------------
                                                   (Address)

                                        ------------------------------
                                        (Authorized Signature)  Title)

                                        ------------------------------
                                                    (Date)


--------------------------------------------------------------------------------
FOR BANK USE ONLY

L.C.#                               Collateral Type #

Comp. Cus. #                        Comm.

L.C.O.#                             Approval

                                       8