The Bank of N.T. Butterfield & Son Ltd.                                   Page 1
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                     APPLICATION TO OPEN AN IRREVOCABLE STANDBY LETTER OF CREDIT
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Bank Reference Number:

Please open by ( ) airmail ( ) telex (X) SWIFT an irrevocable Credit as follows:
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Beneficiary's name and full address:   Applicant's name and full address:

The Chase Manhattan Bank               Consolidated American Rental Insurance
380 Madison Avenue                       Co., Ltd.
Ground Floor                           F.B. Perry Building    
New York, NY   10017                   40 Church Street       
U.S.A.                                 P.O. Box HM 1995       
                                       Hamilton HM HX, Bermuda
Attention:  Craig W. Clausen           J. Oliver Heyliger     
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Expiry Date:                           Amount (in figures and words):

         March 31st, 1998              US$250,000

                                       Two hundred and fifty thousand dollars
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Available by drafts at (X) sight, (X)____ days sight, ( )____ days from date of
_____________________ accompanied by:
( ) Any documents required (should clearly reflect beneficiary's right or reason
for drawing).


                See attached draft.








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Special Conditions (Specify):
<PAGE>
The Bank of N.T. Butterfield & Son Ltd.                                   Page 2
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                              SUPPLEMENTARY INFORMATION TO ACCOMPANY APPLICATION
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1.   The name and  telephone  number  of the  person in your  organization  most
     familiar with this application.

         J. Oliver Heyliger                  Tel:  (441) 295 1272
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2.   The effective date of the Letter of Credit: As soon as possible
                                                --------------------------------

3.   Brief  details of the  transaction  of which the Credit forms part (e.g. to
     secure reinsurance obligations to ceding insurer).

     LOC to be issued to Chase to back up their  securing of  Obligations  of an
     ---------------------------------------------------------------------------
     AIG Group ceding insurer.
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4.   Is the Credit required in connection with the usual business  operations of
     the Applicant? (e.g. insurance).

         Yes.
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5.   What is the name of the  Applicant's  parent  company  or the  names of any
     person or company holding 10% or more of any class of stock in the company?

         Rent-A-Wreck of America, Inc.
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<TABLE>
<CAPTION>
                                                                                            Yes      No

<S>                                                                                         <C>      <C>
6.   If  the  Applicant  is a  corporation,  have  you  attached  the  following
     documents? (please check)

a.   Certified copy Resolution of the Board of Directors under seal  authorizing
     named  directors/officers  or other  persons to negotiate the Credit(s) and
     execute the security document(s)                                                       (X)      ( )

b.   Fully  completed  Application  to open an  irrevocable  Standby  Letter  of
     Credit.                                                                                (X)      ( )

c.   Letter  of  Set-Off,   Collateral  Deposit  Agreement,  or  other  security
     document(s) signed by those authorized under (a) above.                                (X)      ( )

d.   Attorney's  opinion  that  these  arrangements  are  within  the powers and
     support  a  transaction  valid  pursuant  to the  business  objects  of the
     corporation. Alternatively, supply the Memorandum of Association.                      (X)      ( )

7.   Please check the following:

a.   Must the Credit be confirmed by another bank?                                          ( )      (X)

b.   Must the Credit be confirmed by a bank approved by the National Association
     of Insurance Commissioners (N.A.I.C.)?                                                 ( )      (X)

c.   Is an Evergreen Clause (Automatic Renewal Clause) requested?                           (X)      ( )

d.   Please check notice period for avoiding automatic renewal of the Credit.

         30 days (   )   60 days ( X )    90 days (   )
</TABLE>
<PAGE>
                                                                          Page 3
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<TABLE>
<CAPTION>
                                                                                            Yes      No
8. Is the Credit to be issued in conformity with:
<S>                                                                                         <C>      <C>
     a.   State of New York Department of Insurance Regulations on admissibility
          of Letters of Credit?                                                             ( )      (X)

     b.   State  of   California   Department   of  Insurance   Regulations   on
          admissibility of Letters of Credit?                                               ( )      (X)
</TABLE>
INSERT (please tick clause to be inserted):

( )    1. Applies where Letter of Credit is to be issued in conformity  with the
          State of New York Department of Insurance Regulations.

          "Draft(s) drawn by a party  indicated as the domiciliary  conservator,
          liquidator  or statutory  successor of the  beneficiary  shall also be
          honoured  hereunder,  provided  said  draft(s)  is  accompanied  by  a
          certification signed by the domiciliary  conservator,  liquidator,  or
          statutory  successor of the beneficiary stating he is the successor by
          operation of law of the named beneficiary".

OR EITHER  (1) or (2) below  applies  where  Letter of Credit is to be issued in
conformity with the State of California Department of Insurance Regulations.

( )    1. "In the event of insolvency of the beneficiary, a drawing against this
       Letter of Credit shall be honoured upon  presentation  by the domiciliary
       conservator, liquidator or statutory successor of the beneficiary".

( )    2. "If a court of law  appoints  a  successor  in  interest  to the named
       beneficiary  then the named  beneficiary  includes  and is limited to the
       court   appointed    domiciliary    receiver   (including    conservator,
       rehabilitator or liquidator").

OR (3) below is the "compromise" wording agreed to by both the State of New York
       and State of California Department of Insurance Regulators.

( )    3. "The term "beneficiary"  includes any successor by operation of law of
       the named  beneficiary  including,  without  limitation,  any liquidator,
       rehabilitator,  receiver  or  conservator.  Drawings  by any  liquidator,
       rehabilitator,  receiver,  or conservator shall be for the benefit of all
       of the beneficiary's policyholders".

We  request  you to issue a letter of credit as shown on this  Application.  The
Reimbursement Agreement on page 4 is hereby accepted and made applicable to this
Application and the letter of credit.


Date:    20th June, 1997          Signature(s)  /s/ J. Oliver Heyliger
     ----------------------------             ----------------------------------
                                  (as per certified
                                  resolution)

                                              ----------------------------------

(The applicant's attention is drawn to the overleaf, (REIMBURSEMENT AGREEMENT))

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                                    FOR BANK USE ONLY

Credit Committee   ( )               Rate:___________________________________

Credit Department  ( )               Category:_______________________________

Other:_____________________________

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<PAGE>
The Bank of N.T. Butterfield & Son Ltd.                                   Page 4
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                                                         REIMBURSEMENT AGREEMENT
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To:  The Bank of N.T. Butterfield & Son Limited

In  consideration  of your  issuing  from  time to time your  letters  of credit
("Credits") at our request, we agree with you as follows:

1. We will pay you on demand in the  currency in which the Credits are  payable,
or in United States Dollars, at your option, in immediately available funds, all
moneys  paid by you  under  or  pursuant  to the  Credits,  together  with  your
customary  commissions  and charges.  We also authorize you to charge any of our
accounts  with you for all  moneys so paid or owed by us for  which  you  become
liable  under the Credits and we agree at least one business day before the same
is due to provide you with funds to meet all disbursements of any kind under the
Credits.  If a time draft is drawn under the  Credit,  you will notify us of the
amount and maturity date and we will make such payment,  sufficiently in advance
of such maturity,  to enable you to arrange for cover in same day funds to reach
the place where it is payable, no later than the date of its maturity.

2. If any sums payable hereunder are not paid when due, they shall bear interest
from the due date until paid in full at a rate per annum 2% per annum above your
interbank  offered  rate  determined  by  you  two  business  days  before  each
successive  period of three months  commencing  on the date such amounts  become
payable, but not in excess of the maximum rate permitted by applicable law.

3. If any amount  payable  hereunder  in a currency  other  than  United  States
dollars is not paid when due, such other  currency  amount may be converted,  at
your option,  into United States dollars at the rate of exchange most favourable
to you, measured by your offered rate of such foreign currency for United States
dollars,  prevailing on the due date,  and repayment  shall be hereafter made to
you in United States dollars.

4. Should any of the following events of default occur, your commitment to issue
Credits shall immediately terminate,  and if at the time of any such event there
remains any portion of the Credits  undisbursed,  such undisbursed portion shall
become  immediately  due and payable,  without  demand or further  notice of any
kind,  all of which  we  hereby  expressly  waive,  and we shall  pay to you for
application  to drawings under such Credits the entire amount which has not been
drawn;  (i) we default in respect of any payment due you under this agreement or
any individual Letter of Credit agreement, (ii) we default in the payment of any
indebtedness  which we may have for the repayment of borrowed  moneys,  (iii) we
become  insolvent,  fail to pay our debts  generally as they become due, make an
assignment  for the  benefit  of  creditors,  file or suffer  the  filing of any
petition or action  under  bankruptcy  laws for the relief of, or  relating  to,
debtors, (iv) the voluntary of involuntary  appointment of a receiver,  trustee,
custodian or similar official to take possession of any of our property, (v) the
attachment  of any  material  involuntary  lien  or  charge  of any  kind to our
property,  (vi) any  representation  made in any  financial  statement or in any
other  statement of document  presented to you by us or on our behalf is, in any
material respect,  false or misleading when made, (vii) there shall occur in our
business, operations, property or financial or other condition a change that is,
in your judgement,  materially adverse to us, or (viii) should you deem yourself
insecure in respect of any of our  reimbursement  obligations.  Any amount which
has not been drawn  prior to the  expiry  date of the Credit to which it relates
shall be repaid to us.

5. Where we are a  corporation,  our  completion  of this  agreement  shall be a
representation and warranty to you that:

(i)      we  are  properly  incorporated  under  the  laws  of  our  country  of
         incorporation  and have under those laws and under our own constitution
         the powers to enter this  agreement in  pursuance  of a valid  business
         object;

(ii)     all  corporate  action  and all  approvals  from  any  government  tax,
         monetary or other  authorities  to authorize and enable us to make this
         agreement have been obtained and are in full force and effect;

(iii)    the making of this agreement  will not infringe any other  agreement to
         which we are a party; and

(iv)     we are not the  subject  of any  actual  pending  or  threatened  legal
         proceedings  which has or may have a material  effect on our  financial
         condition or this agreement.

         Each   application   for  a  Credit   hereunder   shall   constitute  a
certification by us that any  representation  or warranty made hereunder is true
as of the date of each such application.

6. The  authorization  in Paragraph 1 above to charge our  accounts  shall apply
notwithstanding  that all or part of the moneys held to our credit may have been
deposited  for a fixed period which may not have  expired.  We  acknowledge  and
agree that in the event of  appropriation  by you of any such deposit before its
maturity date, the amount applied  hereunder shall be net of the amount of early
withdrawal  penalty  (if any)  charged  by you in the  ordinary  course  of your
deposit business.

7. Where we have requested that any Credits issued hereunder contain a provision
whereby drawings by a person other than the named beneficiary against the Credit
shall be honoured  if such a person is a  domiciliary  conservator,  liquidator,
receiver,  rehabilitator  or statutory  successor,  then we confirm you may rely
without  independent  investigation or verification of any criteria furnished by
such drawer including,  without  limitation,  a statement from such drawer as to
his status as successor by operation of law to the named beneficiary.

8. If the  costs  to you or any  confirming  banks  of  issuing,  confirming  or
maintaining  the Credits  increase  because of any reserves,  special  deposits,
assessments  of  similar  requirements  imposed  on you,  we agree to pay you on
demand any  additional  amounts  sufficient to compensate  you or any confirming
banks for the increased cost, as determined by you.

9. Where we have requested it in the Credits  Article 17 of the Uniform  Customs
and Practice for Documentary  Credits (1993 Revision)  International  Chamber of
Commerce Publication No. 500 shall be amended so that notwithstanding the expiry
of a Credit occurring during an interruption of your business or the business of
any  confirming  bank,  you are  authorized to effect  payment if such Credit is
drawn against within thirty (30) days after the resumption of such business.  We
understand  that our  obligations  hereunder,  in that event,  shall likewise be
amended.

10. We agree that you and your  correspondents  are obliged  only to verify that
the drafts and any documents  purport to comply with the terms and conditions of
the Credits on their face, and that neither you nor your  correspondents will be
liable for any loss,  damage or delay,  however caused,  except to the extent of
any direct, as opposed to  consequential,  damages suffered by us which we prove
were caused by you or your correspondents' willful misconduct or negligence, nor
will you or your correspondents be in any way responsible for performance by any
beneficiary of its obligations to us.

11. We agree to pay your out-of-pocket costs and expenses,  including reasonable
attorney's fees for independent and in-house counsel, paid or incurred by you in
the  performance of your  obligations or enforcement of your rights and remedies
hereunder,  such  costs  and  expenses  to  become  part  of  the  reimbursement
obligations set out in paragraph 1 above.

12. We or a third  party will obtain  insurance  on all goods  described  in the
Credits.  The insurance will cover fire and other usual risks and any additional
risks you may request. We authorize you to receive the proceeds of the insurance
and apply it against any of our obligations to you under the Credit.

13. The Credits shall be subject to, and performance by you, your correspondents
and the  beneficiaries  of the Credits shall be governed by, the Uniform Customs
and Practice for Documentary  Credits (1993 Revision)  International  Chamber of
Commerce Publication No. 500 or by subsequent Uniform Customs and Practice fixed
by  subsequent  Congresses  of the  International  Chamber of  Commerce,  unless
otherwise indicated to the contrary.

14. The  obligations  herein  shall bind our heirs,  executors,  administrators,
successors and assigns.
<PAGE>
LETTER OF SET-OFF OVER CREDIT BALANCES

To:      THE BANK OF N.T. BUTTERFIELD & SON LTD.,
         THE BANK OF BUTTERFIELD EXECUTOR & TRUSTEE COMPANY LTD.,
         BUTTERFIELD MORTGAGE & FINANCE LTD.

         (Delete and initial where necessary)

In consideration  of the Bank (which  expression shall include all or any of the
above named companies where applicable) giving time credit banking facilities or
other accommodation to

CONSOLIDATED AMERICAN RENTAL INSURANCE CO., LTD.                   
                                                                    (the Debtor)
the Debtor  agrees that the Bank's  right of set-off  shall  extend to include a
continuing  right at any time without prior notice or demand to appropriate from
all moneys from time to time held to the credit of the Debtor by the Bank on any
Current  Deposit  or other  Account  or  Accounts  which the  Debtor  may now or
hereafter  have with the Bank  towards  payment  to the Bank of all  present  or
future  actual or  contingent  liabilities  of the Debtor  (whether as principal
agent trustee or  guarantor)  to the Bank whether on account of moneys  advanced
bills of exchange  promissory notes guarantees  indemnities  interest commission
banking  charges  securities  trades and whether  incurred  solely  severally or
jointly and all legal fees  commissions  or other  expenses (on a full indemnity
basis) howsoever incurred by the Bank in connection therewith. Such amounts will
include all costs, charges and expenses on a full indemnity basis which the Bank
may incur in enforcing or obtaining payment of the sums of money due to the Bank
under  the  offer  agreement,   set-off   agreement,   and  any  other  security
documentation  held by the Bank. The Debtor  irrevocably  agrees and confirms as
follows:

1.       This authorization shall apply  notwithstanding that all or part of the
         moneys held to the credit of the Debtor may have been  deposited  for a
         fixed period which may not have expired.  The Debtor  acknowledges  and
         agrees  that in the  event  of  appropriation  by the  Bank of any such
         deposit before its maturity date the amount applied  hereunder shall be
         net of the amount of early  withdrawal  penalty (if any) charged by the
         Bank in the ordinary course of its deposit business.

2.       A  certificate  by an officer of the Bank as to the amount for the time
         being due from the Debtor to the Bank shall be conclusive  evidence for
         all purposes against the Debtor. If any sums appropriated hereunder are
         not in the currency of the sums owed by the Debtor to the Bank the Bank
         shall  convert  such  sums  into  the  currency  of the  debt at a rate
         conclusively  determined  by the Bank acting in the ordinary  course of
         its foreign exchange business.

3.       The Debtor will not create nor agree to create nor allow to arise or be
         subsisting any security  interest  whatsoever in any moneys held to the
         credit of the Debtor by the Bank  other  than with the  Bank's  express
         prior written consent.
<PAGE>
4.       This  authorization  shall be continuing  and shall remain in force and
         shall  not  be  determined  affected  or  prejudiced  by the  death  or
         disability of the Debtor or by the Bank holding taking or releasing any
         other  or  further   security  or  by  the  Bank  renewing  varying  or
         determining any  accommodation  given to the Debtor or granting time or
         indulgence to or compounding with the Debtor or any other person.

5.       Where the Debtor is a corporation  its execution of this  authorization
         shall be a representation and warranty to the Bank that the Debtor

(i)      is properly incorporated under the laws of its country of incorporation
         and has under those laws and under its own  constitution  the powers to
         enter this agreement in pursuance of a valid business object;

(ii)     all corporate action and all approvals from any government tax monetary
         or other  authorities  to authorize  and enable the Debtor to make this
         agreement have been obtained and are in full force and effect;

(iii)    the making of this agreement  will not infringe any other  agreement to
         which the Debtor is a party; and

(iv)     the Debtor is not the subject of any actual pending or threatened legal
         proceedings  which has or may have a material  affect on its  financial
         condition or this agreement.

6.       Where there is more than one person  comprised in the term "the Debtor"
         references to the Debtor shall where the context  admits take effect as
         references  to such  persons  or any of them and where the  Debtor is a
         firm shall include the person or persons from time to time constituting
         the firm whether or not under the same style or firm name and generally
         where the context so admits the singular will include the plural.

7.       Where this  authorisation is signed by more than one person  (otherwise
         than as agent for a named  principal) the agreements on the part of the
         Debtor herein  contained shall be binding on them jointly and severally
         and  references  to the Debtor shall take effect as  references  to the
         Debtor or any of them.

8.       The  construction  validity and  performance of this agreement shall be
         governed by Bermuda law.
<PAGE>
<TABLE>
<S>            <C>                                                <C>
               DATED this 20th day of June                        One thousand nine hundred and ninety-seven.


Limited        SIGNED BY
Company        
(do not        /s/ J. OLIVER HEYLIGER
use seal)      ------------------------------------------------
               (Print Name)         
                                                                  /s/ J. Oliver Heyliger
               ------------------------------------------------   ------------------------------------------------
               (Print Name)                                       (Signature

               Directors/Director and Secretary of
                         --------

               CONSOLIDATED AMERICAN RENTAL
               ------------------------------------------------
               INSURANCE CO., LTD
               ------------------------------------------------   ------------------------------------------------
               acting for an on behald of the Company by virtue   Signature
               of a Resolution of the Directors passed on

               ------------------------------------------------

Individual(s)  SIGNED by the above-named

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


               ------------------------------------------------   ------------------------------------------------
               (Signature)                                        (Signature)


               in the presence of:                                in the presence of:

               /s/ Sharon E. Swan                                 /s/ P.M. Pereech
               ------------------------------------------------   ------------------------------------------------
               (Signature of Witness)                             (Signature of Witness)

               SHARON E. SWAN                                     PAUL M. PEREECH
               ------------------------------------------------   ------------------------------------------------
               (Print Name)                                       (Print Name)

               c/o Willis Carroon Management Co.                  c/o Willis Carroon Mgmt. (Bda)
               (Bda) Ltd., Church St., Hamilton                   Church Street, Hamilton
               ------------------------------------------------   ------------------------------------------------
               (Address)                                          (Address)


               Administrative Assistant                           CONTROLLER
               ------------------------------------------------   ------------------------------------------------
               (Occupation)                                       (Occupation)

                                                                                            ----------------------
                                                                                                     Stamp




                                                                                            ----------------------
</TABLE>
<PAGE>
The Bank of N.T. Butterfield & Son Ltd.
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CREDIT DEPARTMENT                                              LETTER OF SET-OFF
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Account_________________________________________________________________________


Date________________________________ 19________

CONSOLIDATED AMERICAN RENTAL INSURANCE CO., LTD.
________________________________________________________________________________

To:
     THE BANK OF N.T. BUTTERFIELD & SON LTD.