AMENDMENT NUMBER 2 TO
                               SECURITY AGREEMENT


         AMENDMENT NUMBER 2 TO SECURITY AGREEMENT (this  "Amendment"),  dated as
of September  30, 2000 by and among UNION  ACCEPTANCE  FUNDING  CORPORATION,  an
Indiana  corporation,  as  seller  (in  such  capacity,  the  "Seller"),  UAFC-1
CORPORATION, a Delaware corporation, as debtor (in such capacity, the "Debtor"),
UNION ACCEPTANCE CORPORATION,  an Indiana corporation ("UAC"),  individually and
in its capacity as collection agent (in such capacity,  the "Collection Agent"),
ENTERPRISE  FUNDING  CORPORATION,  a Delaware  corporation (the "Company"),  and
BANK OF AMERICA,  N.A.,  a national  banking  association  ("Bank of  America"),
individually  and as  collateral  agent and agent for the  Company  and the Bank
Investors,  and as  administrative  agent (in such  capacities,  the "Collateral
Agent", the "Agent" and the "Administrative Agent",  respectively) amending that
certain Security Agreement dated as of May 25, 2000 (the "Security Agreement").

         WHEREAS,  the parties hereto mutually desire to make certain amendments
to the Security Agreement as hereinafter set forth.

         NOW, THEREFORE, the parties hereby agree as follows:

         SECTION 1.  Defined  Terms.  As used in this  Amendment,  and except as
otherwise  provided  in this  Section 1,  capitalized  terms shall have the same
meanings as signed thereto in the Security Agreement.

         Exhibit C of the  Security  Agreement  is hereby  amended  by  deleting
subsection  (a) and  replacing  it with the  following  (solely for  convenience
changed language is italicized):

         "(a)     permit its  Tangible  Net Worth to be less than,  at any time,
                  the  sum of (x)  $86,000,000,  plus  (y) one  hundred  percent
                  (100%)  of the net  proceeds  of any  equity  offering  by the
                  Collection  Agent  (whether  public or private)  which  occurs
                  subsequent to the Closing Date,  plus (z) eighty percent (80%)
                  of Net Income for the period  from April 1, 2000  through  the
                  date  of   determination;   provided   that  for  purposes  of
                  calculating the Collection  Agent's  Tangible Net Worth, in no
                  event  shall the  Collection  Agent's  Net Income be less than
                  zero."



<PAGE>



         SECTION 2.  Representations and Warranties.  Each of the Debtor and the
Collection   Agent,   represent   and  warrant   that  all  of  its   respective
representations and warranties described in Sections 3.1 and 3.2 of the Security
Agreement are true and correct as of the date hereof as if such  representations
and warranties were recited herein in their entirety.

         SECTION 3. Payment of Expenses. The Debtor agrees to pay any reasonable
attorney's  fees  and  expenses  of  the  Agent,   the  Collateral   Agent,  the
Administrative  Agent  and the  Company  in  connection  with  the  preparation,
execution and delivery of this Amendment.

         SECTION  4.  Limited   Scope.   This   amendment  is  specific  to  the
circumstances  described above and does not imply any future amendment or waiver
of rights  allocated  to the  Debtor,  the  Collection  Agent,  the  Agent,  the
Administrative Agent or the Collateral Agent under the Security Agreement.

         SECTION 5.  Governing  Law.  THIS  AMENDMENT  SHALL BE  GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         SECTION 6. Severability;  Counterparts.  This Amendment may be executed
in any  number of  counterparts  and by  different  parties  hereto in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of  which  when  taken  together  shall  constitute  one  and  the  same
instrument.   Any  provisions  of  this   Amendment   which  are  prohibited  or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.

         SECTION 7. Ratification. Except as expressly affected by the provisions
hereof,  the Security Agreement as amended shall remain in full force and effect
in accordance  with its terms and ratified and confirmed by the parties  hereto.
On and after the date hereof,  each reference in the Security Agreement to "this
Agreement",  "hereunder",  "herein" or words of like import  shall mean and be a
reference to the Security Agreement as amended by this Amendment.


                                        2


<PAGE>


IN WITNESS  WHEREOF,  the  parties  hereto  have  executed  and  delivered  this
Amendment Number 2 as of the date first written above.

                           ENTERPRISE FUNDING CORPORATION,
                             as Company


                           By: /s/ Kevin P. Burns
                               ----------------------------
                               Name:    Kevin P. Burns
                               Title:   Vice President



                           UAFC-1 CORPORATION,
                             as Debtor


                           By: /s/ Leeanne W. Graziani
                               ----------------------------
                               Name:    Leeanne W. Graziani
                               Title:   President



                           UNION ACCEPTANCE FUNDING
                             CORPORATION, as Seller


                           By: /s/ John Stainbrook
                               ----------------------------
                               Name:    John Stainbrook
                               Title:   President




                           UNION ACCEPTANCE CORPORATION,
                             individually and as Collection Agent



                           By: /s/ Melanie S. Otto
                               ----------------------------
                               Name:    Melanie S. Otto
                               Title:   Vice President of Finance



                           BANK OF AMERICA, N.A.,
                            individually and as Collateral Agent, Administrative
                           Agent, Agent and Bank Investor



                           By: /s/ Michelle M. Heath
                               ----------------------------
                               Name:    Michelle M. Heath
                               Title:   Managing Director