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



                               SECURITY AGREEMENT

                                      among

                         ENTERPRISE FUNDING CORPORATION,

                                   as Company,

                      UNION ACCEPTANCE FUNDING CORPORATION,

                                    as Debtor

                          UNION ACCEPTANCE CORPORATION,

                      Individually and as Collection Agent

                           MBIA INSURANCE CORPORATION

                                   as Insurer

                                       and

                               NATIONSBANK, N.A.,

                      as Collateral Agent and Bank Investor


                         Dated as of September 18, 1998

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




<PAGE>

                                TABLE OF CONTENTS

                                                                           Page

                                    ARTICLE I
                                   DEFINITIONS

SECTION 1.1    Certain Defined Terms.........................................2
SECTION 1.2    Other Terms..................................................21
SECTION 1.3    Computation of Time Periods..................................22

                                   ARTICLE II
                   GRANT OF SECURITY INTEREST AND SETTLEMENTS

SECTION 2.1    Grant of Security Interest...................................22
SECTION 2.2    Carrying Costs, Fees and Other Costs and Expenses............23
SECTION 2.3    Allocations of Collections; Servicer Advances................23
SECTION 2.4    Liquidation Settlement Procedures............................26
SECTION 2.5    Fees.........................................................26
SECTION 2.6    Protection of Interest of the Collateral Agent...............26
SECTION 2.7    Payments on Receivables; Application of Payments.............28
SECTION 2.8    Payments and Computations, Etc...............................28
SECTION 2.9    Reports......................................................29
SECTION 2.10   Collection Account...........................................29
SECTION 2.11   Prefunding Account; Prefunding Interest Reserve Account; 
               Interest Reserve Deposits; Interest Reserve Advances; 
               Reimbursements...............................................31
SECTION 2.12   Prefunding Account and Prefunding Interest Reserve Account
               Withdrawals..................................................34
SECTION 2.13   Yield Supplement Account, Deposits; Withdrawals..............35
SECTION 2.14   Reserve Account; Withdrawals; Releases; Draws on Policy......37
SECTION 2.15   Optional Release.............................................39
SECTION 2.16   Hedging Amounts..............................................42

                            ARTICLE III
                  REPRESENTATIONS AND WARRANTIES

SECTION 3.1    Representations and Warranties of the Debtor.................44
SECTION 3.2    Representations and Warranties of the Collection Agent.......47
SECTION 3.3    Reaffirmation of Representations and Warranties..............49



                                           1

<PAGE>



                            ARTICLE IV
                       CONDITIONS PRECEDENT

SECTION 4.1    Conditions to Effectiveness..................................50

                             ARTICLE V
                             COVENANTS

SECTION 5.1    Affirmative Covenants of the Debtor and UAC..................52
SECTION 5.2    Negative Covenants of Debtor and UAC.........................56
SECTION 5.3    Hedging Arrangements.........................................58

                            ARTICLE VI
                  ADMINISTRATION AND COLLECTIONS

SECTION 6.1    Appointment of Collection Agent..............................58
SECTION 6.2    Duties of Collection Agent...................................59
SECTION 6.3    Collection Agent Defaults....................................61
SECTION 6.4    Rights After Designation of New Collection Agent.............61
SECTION 6.5    Responsibilities of the Debtor...............................62
[SECTION 6.6   Suspension of Previous Servicing Agreement...................63

                            ARTICLE VII
                        TERMINATION EVENTS

SECTION 7.1    Termination Events...........................................63
SECTION 7.2    Termination..................................................65
SECTION 7.3    Proceeds.....................................................66

                           ARTICLE VIII
                       THE COLLATERAL AGENT

SECTION 8.1    Duties of the Collateral Agent...............................67
SECTION 8.2    Compensation and Indemnification of Collateral Agent.........68
SECTION 8.3    Representations, Warranties and Covenants 
               of the Collateral Agent......................................69
SECTION 8.4    Liability of the Collateral Agent............................70
SECTION 8.5    Merger or Consolidation of, or Assumption of the 
               Obligations of, the Collateral Agent.........................72
SECTION 8.6    Limitation on Liability of the Collateral Agent and Others...73
SECTION 8.7    Indemnification of the Secured Parties.......................74


                                           2

<PAGE>




                            ARTICLE IX
                           MISCELLANEOUS

SECTION 9.1    Term of Agreement..............................................74
SECTION 9.2    Waivers; Amendments............................................74
SECTION 9.3    Notices........................................................75
SECTION 9.4    Governing Law; Submission to Jurisdiction; Integration.........78
SECTION 9.5    Severability; Counterparts.....................................79
SECTION 9.6    Successors and Assigns.........................................79
SECTION 9.7    Waiver of Confidentiality......................................79
SECTION 9.8    Confidentiality Agreement......................................79
SECTION 9.9    No Bankruptcy Petition Against the Company.....................80
SECTION 9.10   No Recourse Against Stockholders, Officers or Directors........80
SECTION 9.11   Further Assurances.............................................81
SECTION 9.12   Exercise of Rights by Insurer..................................81
SECTION 9.13   Characterization of the Transactions Contemplated by the 
               Agreement; Tax Treatment.......................................81



                                           3

<PAGE>



                             EXHIBITS

EXHIBIT A      Credit and Collection Policy

EXHIBIT B      List of Lock-Box Banks and Lock-Box Accounts

EXHIBIT C      Form of Policy

EXHIBIT D      Form of Settlement Statement

EXHIBIT E      Form of UAFC Withdrawal Notice

EXHIBIT F      List of Actions and Suits

EXHIBIT G      Schedule of Locations of Records

EXHIBIT H      List of Subsidiaries, Divisions and
               Tradenames

EXHIBIT I      Form of Opinion of Barnes & Thornburg

EXHIBIT J      Form of Opinon of Barnes & Thornburg



                                                  4

<PAGE>



                               SECURITY AGREEMENT


                  SECURITY AGREEMENT (this "Agreement"),  dated as of Septem ber
18,  1998,  by and  among  UNION  ACCEPTANCE  FUNDING  CORPORATION,  a  Delaware
corporation,  as debtor (in such  capacity,  the  "Debtor"),  UNION  ACCEP TANCE
CORPORATION, an Indiana corporation ("UAC"), individually and in its capacity as
collection agent (in such capacity, the "Collection Agent"), ENTER PRISE FUNDING
CORPORATION, a Delaware corporation (the "Company"), MBIA INSURANCE CORPORATION,
a  New  York  stock  insurance  company,  as  financial  guaranty  insurer  (the
"Insurer")   and   NATIONSBANK,    N.A.,   a   national   banking    association
("NationsBank"),  individually and as collateral agent for the Company, the Bank
Investors, and the Insurer (in such capacity, the "Collateral Agent").


                             PRELIMINARY STATEMENTS

                  WHEREAS,   subject  to  the  terms  and   conditions  of  this
Agreement,  the  Debtor  desires  to  grant a  security  interest  in and to the
Receivables  and related  property  including  the Debtor's  interest in certain
retail automotive installment sales contracts;

                  WHEREAS,  pursuant to the Insurance Agreement, the Insurer has
issued its Policy to provide  for the full and timely  payment of all amounts of
interest due on and principal of the Note;

                  WHEREAS,  pursuant to the Note Purchase Agreement,  the Debtor
has issued the Note to the  Company and will be  obligated  to the holder of the
Note to pay the  principal  of and interest on the Note in  accordance  with the
terms thereof;

                  WHEREAS,  the Debtor is  granting a security  interest  in the
Collateral to the Collateral  Agent, for the benefit of the Secured Parties,  to
secure the payment and performance of the Debtor of its  obligations  under this
Agreement, the Note, the Note Purchase Agreement and the Insurance Agreement;

                  NOW, THEREFORE, the parties hereto hereby agree as follows:



                                                  1

<PAGE>



                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.1 Certain  Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:

                  "Acceptable  Hedging   Arrangement"  shall  have  the  meaning
specified in the Insurance Agreement.

                  "Accrued  Interest  Component"  shall mean, for any Settlement
Period,  the Interest  Component of all Related  Commercial Paper outstanding at
any time  during such  Settlement  Period  which has accrued  from the first day
through  the last day of such  Settlement  Period,  whether or not such  Related
Commercial  Paper matures  during such  Settlement  Period.  For purposes of the
immediately preceding sentence, the portion of the Interest Component of Related
Commercial  Paper  accrued in a Settlement  Period in which  Related  Commercial
Paper has a stated  maturity date that succeeds the last day of such  Settlement
Period  shall be computed  based on the actual  number of days that such Related
Commercial Paper was out standing during such Settlement Period.

                  "Acquisition  Subsidiary"  shall mean PAC, or any wholly-owned
sub sidiary of UAC which has entered into (i) agreements with dealers in certain
states for the  origination  or purchase of  Receivables,  and (ii) an agreement
with UAC pursuant to which UAC acquires all Receivables  originated or purchased
by such Acquisition Subsidiary.

                  "Adjusted  LIBOR Rate" means,  with respect to any  Settlement
Period, a rate per annum equal to the sum (rounded upwards, if necessary, to the
next higher 1/100 of 1%) of (A) the rate obtained by dividing (i) the applicable
LIBOR Rate by (ii) a percentage equal to 100% minus the reserve  percentage used
for  determining  the maximum  reserve  requirement as specified in Regulation D
(including, without limitation, any marginal, emergency,  supplemental,  special
or other reserves) that is applicable to the Agent during such Settlement Period
in respect of eurocurrency or eurodollar funding, lending or liabilities (or, if
more than one  percentage  shall be so  applicable,  the daily  average  of such
percentage  for  those  days in such  Settlement  Period  during  which any such
percentage  shall be applicable)  plus (B) the then daily net annual  assessment
rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) as estimated by
the Agent for determining the current annual assessment payable


                                                  2

<PAGE>



by the  Agent  to the  Federal  Deposit  Insurance  Corporation  in  respect  of
eurocurrency or eurodollar funding, lending or liabilities.

                  "Administrative    Agent"   shall   mean    NationsBank,    as
administrative agent.

                  "Adverse Claim" shall mean a lien,  security interest,  charge
or encum  brance,  or other right or claim in, of or on any  Person's  assets or
properties in favor of any other Person.

                  "Affiliate" shall mean, with respect to any Person,  any other
Person di rectly or indirectly  controlling,  controlled  by, or under direct or
indirect common control with,  such Person.  A Person shall be deemed to control
another Person if the controlling Person possesses,  directly or indirectly, the
power to direct or cause the  direction  of the  management  or  policies of the
controlled  Person,  whether  through  ownership of voting stock, by contract or
otherwise.

                  "Agent" shall mean  NationsBank,  as agent for the Company and
the Bank Investors, and its successors and assigns.

                  "Aggregate  Unpaids"  shall mean, at any time, an amount equal
to the sum of (i) the aggregate  accrued and unpaid Carrying Costs at such time,
(ii) an  amount  equal to the  Company's  existing  obligations  which  comprise
Carrying Costs  thereafter,  (iii) the Net Investment at such time, and (iv) all
other  amounts  owed  (whether  due or  accrued)  hereunder  and under the other
Transaction Documents by the Debtor at such time.

                  "Arrangement  Fee" shall mean the fee payable by the Debtor to
the Administrative  Agent pursuant to Section 2.5 hereof, the terms of which are
set forth in the Fee Letter.

                  "Available  Funds" shall have the meaning specified in Section
2.3 hereof.

                  "Bank Investors" shall have the meaning  specified in the Note
Pur chase Agreement.

                  "Base Rate" shall mean,  a rate per annum equal to the greater
of (i) the prime rate of interest  announced by the Liquidity Provider from time
to  time,  chang  ing  when  and as said  prime  rate  changes  (such  rate  not
necessarily being the lowest or


                                                  3

<PAGE>



best rate  charged  by the  Liquidity  Provider)  and (ii) the rate equal to the
weighted  average of the rates on  overnight  Federal  funds  transactions  with
members of the Federal  Reserve  System  arranged by Federal funds  brokers,  as
published  for such day (or,  if such day is not a  Business  Day,  for the next
preceding  Business  Day) by the Federal  Reserve Bank of New York,  or, if such
rate is not so published  for any day that is a Business Day, the average of the
quotations  for  such day for  such  transac  tions  received  by the  Liquidity
Provider from three Federal funds brokers of recog nized standing selected by it
plus 2.0%.

                  "Business Day" shall mean any day excluding  Saturday,  Sunday
and any day on which banks in New York,  New York,  Charlotte,  North  Carolina,
Little Rock,  Arkansas,  Indianapolis,  Indiana, or Bonita Springs,  Florida are
authorized or required by law to close.

                  "Carrying Costs" shall mean for any Settlement  Period the sum
of:

                              (i) the sum of the dollar  amount of the Company's
                        obligations for such Settlement  Period determined on an
                        accrual  basis in  accordance  with  generally  accepted
                        accounting principles consistently applied

                  (a) to pay interest with respect to the  Transferred  Interest
pursuant to the provisions of the Liquidity Provider Agreement (such interest to
be calculated  based on the Adjusted  LIBOR Rate, if available,  otherwise to be
calculated  at the Base Rate),  outstanding  at any time during such  Settlement
Period  accrued  from  the day of the  acquisition  of the  related  Transferred
Interest  through  the last day of such  Settlement  Period  whether or not such
interest is payable during such Settlement Period;

                  (b) without duplication of the amounts described in clause (a)
above,  to pay interest,  calculated  at the Base Rate,  with respect to amounts
disbursed by the Credit Support Provider in respect of Defaulted  Receivables or
in respect of shortfalls  between the Assignment  Amount obtained by the Company
upon the  assignment of the  Transferred  Interest to the Bank Investors and the
Net Invest ment,  outstanding at any time during such Settlement  Period accrued
from the first day through the last day of such Settlement Period whether or not
such interest is payable during such Settlement Period;

                  (c)  to  pay  the  Accrued   Interest   Component  of  Related
Commercial Paper with respect to any Settlement Period (it being understood that
to the extent the Company has  obtained  funding  under the  Liquidity  Provider
Agreement


                                                  4

<PAGE>



or a Credit Support Agreement,  the Company will not obtain duplicative  funding
in the commercial paper markets);

                  (d) to pay the Dealer Fee;

                  (e) to pay any servicing  compensation  payable to a successor
Collection Agent appointed pursuant to Section 6.1 of this Agreement;

                  (f) to  reimburse  any  successor  Collection  Agent  for  any
Interest Reserve Advances made by such successor  Collection Agent and not previ
ously reimbursed;

                  (g) any past due amounts  not paid in clause (a),  (b) and (c)
with respect to prior Settlement Periods;

                  (h) to pay the costs of the Company  with respect to the Yield
Protection  Provision,  which amounts paid pursuant to this clause (h) shall not
exceed 1.00% per annum of the Net Investment; and

                              (ii) the Program Fee, the Administrative  Fee, and
                        Liquidity  Fee  accrued  from the first day  through the
                        last day of such Settle ment Period  whether or not such
                        amount is payable during such Settlement  Period the sum
                        of which amounts shall not exceed 0.17% per annum of the
                        Net  Investment  plus  0.11% per  annum of the  Facility
                        Limit.

                  During any  Settlement  Period during which the Bank Investors
have (x) advanced funds with respect to a Funding or (y) acquired an interest in
the Note, in lieu of the amounts  described in clauses  (i)(c) and (i)(d) above,
Carrying  Costs shall include  interest on the daily average Net  Investment for
the related  Settlement  Period at the Adjusted  LIBOR Rate,  or if such rate is
unavailable,  at the Base Rate, or if an Insurer Default and a Termination Event
shall have occurred and be continuing, at the Base Rate plus 2.00%.

                  "Closing Date" shall mean September 18, 1998.

                  "Collateral"  shall have the meaning  specified in Section 2.1
hereof;  provided,  that the term  "Collateral"  specifically  excludes Modified
Receivables.

                  "Collateral Agent" shall mean NationsBank, as collateral agent
for the Secured Parties, and its successors and assigns.


                                                  5

<PAGE>



                  "Collections" shall mean, with respect to any Receivable,  all
cash collections and other cash proceeds of such Receivable,  including, without
limitation,  all Finance  Charges,  if any, and any refunded portion of extended
warranty  protection  plan costs or of insurance  costs (for  example,  physical
damage,  credit life or disabil ity)  included in the original  amount  financed
under such  Receivable,  and cash pro ceeds of Related  Security with respect to
such  Receivable,  provided  that  amounts re ceived in respect of a  Receivable
which constitute, in accordance with the Credit and Collection Policy, a payment
of a late payment charge,  insufficient funds charge or a prepayment charge will
not be considered a Collection and shall be retained by the Collection Agent and
not deposited into the Collection Account.

                  "Collection Account" shall mean the account established by the
Collateral  Agent, for the benefit of the Secured  Parties,  pursuant to Section
2.10.

                  "Collection  Agent"  shall  mean at any time the  Person  then
authorized   pursuant  to  Section  6.1  to  service,   administer  and  collect
Receivables.

                  "Collection Agent Default" shall have the meaning specified in
Section 6.3.

                  "Commercial  Paper"  shall  mean the  promissory  notes of the
Company issued by the Company in the commercial paper market.

                  "Commitment  Termination  Date" shall mean September 17, 1999,
or such later date to which the Commitment  Termination  Date may be extended by
the Debtor, the Agent and the Bank Investors not later than 30 days prior to the
then current Commitment Termination Date.

                  "Company"  shall have the meaning  specified  in the  preamble
hereto.

                  "Contract"  shall  mean any and all retail  installment  sales
contracts or installment notes and security agreements relating to the sale of a
new or used auto  mobile,  light  duty truck or van and other  writings  related
thereto now existing and hereafter created or acquired by UAC (or in the case of
certain Receivables  existing on the Cut-Off Date, created or acquired by PAC or
UAC d/b/a PAC) and assigned from time to time to the Debtor pursuant to the Sale
and Purchase Agreement or the PFC Sale and Purchase Agreement, as applicable.

                  "Credit  and  Collection  Policy"  shall  mean the  Collection
Agent's  credit and  collection  policy or policies  and  practices  relating to
"prime" and "non-prime"


                                                  6

<PAGE>



automobile installment sales contracts, existing on the date hereof and referred
to in Exhibit A attached hereto, as amended,  supplemented or otherwise modified
and in effect from time to time in compliance with Section 5.2(d).

                  "Credit Support  Agreement"  shall mean the agreement  between
the Company and the Credit  Support  Provider  evidencing  the obligation of the
Credit  Support  Provider to provide credit support to the Company in connection
with the issuance by the Company of Commercial Paper.

                  "Credit Support Provider" shall mean the Person or Persons who
will provide  credit  support to the Company in connection  with the issuance by
the Company of Commercial Paper.

                  "Cut-Off Date" shall mean September 17, 1998.

                  "Dealer  Fee" shall mean the fee  payable by the Debtor to the
Collateral  Agent,  pursuant to Section  2.5 hereof,  the terms of which are set
forth in the Fee Letter.

                  "Debtor" shall mean Union Acceptance  Funding  Corporation,  a
Delaware corporation.

                  "Defaulted  Receivable" shall mean, for any Settlement Period,
a Receivable: (i) as to which any payment (in excess of $10.00), or part thereof
(in excess of $10.00), remains unpaid for 120 days or more as of the last day of
such  Settlement  Period;  (ii) which has been or should have been identified by
the Collec tion Agent as uncollectible in accordance with the Collection Agent's
customary  practices  on or before the last day of such  Settlement  Period;  or
(iii) as to which the related  Financed  Vehicle has been  repossessed  from the
Obligor.

                  "Delinquent  Receivable"  shall mean a  Receivable:  (i) as to
which any  payment,  or part  thereof  (provided  that such part is in excess of
$10.00),  remains  unpaid for more than  thirty  (30) days from the due date for
such payment and (ii) which is not a Defaulted Receivable.

                  "Determination   Date"  shall  mean,   with  respect  to  each
Remittance Date, the second Business Day preceding such Remittance Date.

                  "Duff  &  Phelps"  shall  mean  Duff &  Phelps  Credit  Rating
Company.



                                                  7

<PAGE>



                  "Eligible  Institution" shall mean the Collateral Agent or any
other  depository  institution  organized under the laws of the United States or
any one of the States thereof  including the District of Columbia,  the deposits
in which  are  insured  by the FDIC and  which  at all  times  has a  short-term
unsecured  debt rating of at least  "A-1+" and "P-1" from  Standard & Poor's and
Moody's,  respectively,  and of at least  "D-1+"  from  Duff &  Phelps,  if such
institution  is rated by Duff & Phelps,  and of at least  "F-1+" from Fitch,  if
such institution is rated by Fitch.

                  "Eligible  Investments" shall mean (a) negotiable  instruments
or  securities  represented  by  instruments  in  bearer  or  registered  or  in
book-entry  form which evidence (i) obligations  fully  guaranteed by the United
States of America;  (ii) time deposits in, or bankers acceptances issued by, any
depository  institution  or trust  company  incorporated  under  the laws of the
United States of America or any state thereof (or any domestic  branch or agency
of any foreign bank) and subject to  supervision  and  examination by Federal or
state banking or depository institution authorities;  provided, however, that at
the time of the  investment or  contractual  commitment to invest  therein,  the
certificates of deposit or short-term  deposits,  if any, or long-term unsecured
debt  obligations  (other  than any such  obligation  whose  rating  is based on
collateral  or on the credit of a Person  other than such  institution  or trust
company) of such  depository  institution  or trust  company shall have a credit
rating  from  Moody's  and  Standard  & Poor's  of at least  "P-1"  and  "A-1+",
respectively,  and from Duff & Phelps of at least "D-1+",  if such investment is
rated by Duff & Phelps, and from Fitch of at least "F-1+", if such investment is
rated by  Fitch,  in the  case of the  certificates  of  deposit  or  short-term
deposits,  or a  rating  not  lower  than  one of  the  two  highest  investment
categories  granted by Moody's and Standard & Poor's and Duff & Phelps,  if such
investment is rated by Duff & Phelps,  and Fitch, if such investment is rated by
Fitch;  (iii)  certificates of deposit having,  at the time of the investment or
contractual  commitment to invest therein,  a rating from Moody's and Standard &
Poor's of at least "P-1" and "A-1+", respectively,  and from Duff & Phelps of at
least "D-1+",  if such  certificates of deposit are rated by Duff & Phelps,  and
from Fitch of at least  "F-1",  if such  certificates  of  deposit  are rated by
Fitch; or (iv) investments in money market funds rated in the highest investment
category,  (b)  demand  deposits  in the  name  of the  Secured  Parties  or the
Collateral Agent on behalf of the Secured Parties in any depository  institution
or trust company  referred to in (a)(ii)  above,  (c)  commercial  paper (having
original or remaining maturities of no more than 30 days) having, at the time of
the investment or contractual commitment to invest therein, a credit rating from
Moody's and  Standard & Poor's of at least "P-1" and "A-1+",  respectively,  and
from Duff & Phelps of at least  "D-1+",  if such  commer  cial paper is rated by
Duff & Phelps,  and from Fitch of at least  "F-1",  if such commer cial paper is
rated by Fitch, (d) Eurodollar time deposits having a credit rating from


                                                  8

<PAGE>



Moody's and  Standard & Poor's of at least "P-1" and "A-1+",  respectively,  and
from  Duff & Phelps of at least  "D-1+",  if such  deposits  are rated by Duff &
Phelps,  and from Fitch of at least "F-1",  if such deposits are rated by Fitch,
and  (e)  repurchase  agreements  involving  any  of  the  Eligible  Investments
described in clauses (a)(i),  (a)(iii) and (d) hereof so long as the other party
to the repurchase  agreement has at the time of the investment therein, a rating
from Moody's and  Standard & Poor's of at least "P-1" and "A-1+",  respectively,
and from  Duff & Phelps  of at least  "D-1+",  if such  party is rated by Duff &
Phelps, and from Fitch of at least "F-1", if such party is rated by Fitch.

                  "Eligible Receivable" shall mean, at any time, any Receivable:

                                    (i)     (A) which shall have been either (x)
         originated  by or through a factory  authorized  dealer,  a  nationally
         recognized  rental car  outlet,  or a  nationally  recognized  used car
         superstore,  in each case  located in the United  States and which,  to
         gether with the Contract  related  thereto,  shall have been validly as
         signed by such dealer to an  Acquisition  Subsidiary or UAC or pursuant
         to the  terms of such  Contract,  for the  retail  sale of the  related
         Financed  Vehicle in the ordinary  course of its  business,  shall have
         been validly  assigned to UAC if such  Receivable  had been assigned by
         such a dealer to an Acquisition  Subsidiary  (other than PAC) or to PFC
         if such  Receivable  had been  assigned  by such a dealer to PAC or UAC
         d/b/a PAC,  shall have been fully and properly  executed by the parties
         thereto, and shall have been advanced directly to or for the benefit of
         the Obligor for the purchase of the related  Financed  Vehicle,  or (y)
         originated by an  Acquisition  Subsidiary or UAC for the retail sale of
         the related  Financed  Vehicle in the ordinary  course of its business,
         shall have been  validly  assigned to UAC if such  Receivable  had been
         originated by an Acquisition  Subsidiary  (other than PAC) or to PFC if
         such Receivable had been originated by PAC or UAC d/b/a PAC, shall have
         been fully and properly executed by the parties thereto, and shall have
         been  advanced  directly  to or for the  benefit of the Obligor for the
         purchase of the related Financed  Vehicle,  (B) shall have been sold by
         UAC or PFC to the Debtor  pursuant to the Sale and Purchase  Agree ment
         or the PFC Sale and Purchase Agreement, as applicable, and to which the
         Debtor has good title  thereto,  free and clear of all Adverse  Claims,
         and (C) the  Contract  related to which  shall  contain  customary  and
         enforceable provisions such that the rights and remedies of the


                                                  9

<PAGE>



            holder  thereof  shall be adequate for the  realization  against the
            collateral of the benefits of the security provided thereby;

                        (ii) the Obligor of which is recorded in the  Collection
                  Agent's records as having a United States billing address,  is
                  a natural  person,  and is not a government or a  governmental
                  subdivi sion or agency;

                        (iii) which is not a Defaulted Receivable at the time of
                  the initial creation of an interest of the Company therein;

                        (iv) which is not a Delinquent Receivable at the time of
                  the initial creation of an interest of the Company therein;

                        (v) which,  according to the Contract  related  thereto,
                  shall provide for level monthly  payments  (provided  that the
                  payment  in  the  first  or  last  month  in the  life  of the
                  Receivable may be minimally different from such level payment)
                  that fully  amortizes  the amount  financed  over the original
                  term;

                        (vi) the Contract related thereto shall pro vide for the
                  calculation of interest  payable  thereunder  under either the
                  "simple  interest"  or  "Rule  of  78's"  or the  "sum  of the
                  periodic time balances" method;

                        (vii) the Contract related to which provides for no more
                  than 84 monthly payments;

                        (viii) which is an  "eligible  asset" as defined in Rule
                  3a-7 under the Investment Company Act of 1940, as amended;

                        (ix) which is  "chattel  paper"  within  the  meaning of
                  Article 9 of the Relevant UCC, and which is secured by a first
                  priority perfected lien on the related Financed Vehicle,  free
                  and clear of any  Adverse  Claim or for  which  all  necessary
                  steps to result in such a first priority  perfected lien shall
                  have been taken;

                        (x)  which is  denominated  and  payable  only in United
                  States dollars in the United States;



                                                 10

<PAGE>



                        (xi) which arises under a Contract  that, to gether with
                  the Receivable  related  thereto,  is in full force and effect
                  and constitutes the legal, valid and binding obligation of the
                  related Obligor enforceable against such Obligor in accordance
                  with its terms and is not subject to any offset,  counterclaim
                  or other defense at such time;

                        (xii) which, together with the Contract related thereto,
                  does not contravene in any material respect any laws, rules or
                  regulations applicable thereto (including, without limitation,
                  laws,  rules  and  regulations  relating  to usury  laws,  the
                  Federal  Truth-in-  Lending Act, the Equal Credit  Opportunity
                  Act, the Fair Credit Re porting Act, the Fair Debt  Collection
                  Practices   Act,  the  Federal  Trade   Commission   Act,  the
                  Magnuson-Moss Warranty Act, Regulations B and Z of the Federal
                  Reserve  Board,  various  state  adaptations  of the  National
                  Consumer  Act and of the Uniform  Consumer  Credit  Code,  and
                  other consumer  credit laws and equal credit  opportunity  and
                  disclosure  laws)  and  with  respect  to which no part of the
                  Contract related thereto is in violation of any such law, rule
                  or regulation in any material respect;

                        (xiii) which (A) satisfies all applicable  require ments
                  of the Credit and  Collection  Policy and is identified on the
                  Collection  Agent's master servicing records as a "prime" loan
                  (by code  designation  as a "type  84" or "type 85" loan) or a
                  "non-prime"  loan (by code designation as a "type 54" or "type
                  55" loan),  (B) arises under a Contract which does not require
                  the Obligor  under such Contract to consent to the transfer of
                  the rights and duties of the Debtor under such  Contract,  and
                  which  does  not  contain  a  confidentiality  provision  that
                  purports  to  restrict  the ability of the Company to exercise
                  its  rights   under   this   Agreement,   including,   without
                  limitation, its right to review the Contract, (C) arises under
                  a  Contract  with  respect  to  which  UAC,  any   Acquisition
                  Subsidiary and the Debtor have each performed all  obligations
                  required to be performed by them  thereunder,  and delivery of
                  the Financed Vehicle to the related Obligor has occurred,  and
                  (D) complies with such other criteria and  requirements as the
                  Company may from time to time reasonably specify to the Debtor
                  following sixty (60) days' notice; and



                                                 11

<PAGE>



                        (xiv) the Obligor of which has been directed to make all
                  payments to a specified account of the Collection Agent.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of  1974,  as  amended  from  time  to  time,  and the  regulations  promulgated
thereunder.

                  "ERISA Affiliate"  means, with respect to any Person,  (i) any
corpora  tion  which is a member of the same  controlled  group of  corporations
(within  the  meaning of Section  414(b) of the Code (as in effect  from time to
time,  the  "Code")) as such  Person;  (ii) a trade or business  (whether or not
incorporated)  under common control (within the meaning of Section 414(c) of the
Code) with such Person;  or (iii) a member of the same affiliated  service group
(within  the  meaning  of  Section  414(n)  of the  Code)  as such  Person,  any
corporation  described in clause (i) above or any trade or business described in
clause (ii) above.

                  "Event of Bankruptcy",  with respect to any Person, shall mean
(i) that such Person shall  generally not pay its debts as such debts become due
or shall admit in writing its inability to pay its debts generally or shall make
a general  assignment for the benefit of creditors;  or any proceeding  shall be
instituted  by or against such Person  seeking to  adjudicate  it as bankrupt or
insolvent,  or seeking  liquidation,  winding up,  reorganization,  arrangement,
adjustment,  protection, relief or composi tion of it or its debts under any law
relating to bankruptcy,  insolvency or reorganiza tion or relief of debtors,  or
seeking  the entry of an order  for  relief or the  appointment  of a  receiver,
trustee or other similar official for it or any substantial part of its property
or (ii) if such Person is a  corporation,  such Person or any  Subsidiary  shall
take any  corporate  action to  authorize  any of the  actions  set forth in the
preceding clause (i).

                  "Excess Delinquent  Receivables Balance" shall mean an amount,
calculated on the day a Take-Out occurs and for each day until the next Take-Out
occurs,  equal to the  excess,  if any,  of (i) the  Outstanding  Balance of all
Delinquent  Receivables  at any time of  determination  over (ii) the product of
2.5% and the Net Receivables Balance (calculated without giving effect to clause
(iv) of the definition thereof) at any time of determination;  provided, that if
the Excess  Delinquent  Receiv ables Balance  shall,  at any time since the most
recent  Take-Out,  be  less  than  or  equal  to  zero,  the  Excess  Delinquent
Receivables  Balance  shall be deemed  to be zero from such time  until the next
Take-Out shall occur.

                  "Face Amount" shall mean (i) with respect to Commercial  Paper
issued on a  discount  basis,  the face  amount  stated  therein,  and (ii) with
respect to


                                                 12

<PAGE>



Commercial Paper which is interest-bearing, the principal amount of and interest
accrued and to accrue on such Commercial Paper to its stated maturity.

                  "Facility Limit" shall mean $450,000,000.

                  "Fee Letter"  shall mean the letter  agreement  dated the date
hereof between the Debtor and the Company, as amended,  modified or supplemented
from time to time.

                  "Finance Charges" shall mean, with respect to a Contract,  any
finance,  interest  or similar  charges  owing by an  Obligor or another  Person
pursuant to such Contract.

                  "Financed  Vehicle" shall mean,  with respect to a Receivable,
any  new or  used  automobile,  van  or  light-duty  truck,  together  with  all
accessories thereto, securing the related Obligor's indebtedness thereunder.

                  "Fitch" shall mean Fitch IBCA, Inc.

                  "Funding"  shall  have  the  meaning  specified  in  the  Note
Purchase Agreement.

                  "Funding  Date" shall have the meaning  specified  in the Note
Purchase Agreement.

                  "Hedge Proceeds  Account" shall have the meaning  specified in
Section 2.16(a).

                  "Hedging  Arrangement"  shall mean any  financial  arrangement
obtained by the  Collection  Agent  satisfying the  requirements  of Section 5.3
hereof  and other  wise in form and  substance  reasonably  satisfactory  to the
Company,  the Insurer,  and the Administrative  Agent, the benefits (but not the
obligations)  of which are, on and after the occurrence of a Termination  Event,
in favor of the Debtor.

                  "Initial Funding" shall have the meaning specified in the Note
Purchase Agreement.

                  "Insurance   Agreement"  shall  mean  that  certain  Insurance
Agreement,  dated as of September  18, 1998,  among the  Collection  Agent,  the
Debtor, the Collateral Agent and the Insurer.


                                                 13

<PAGE>



                  "Insurer"  shall mean MBIA Insurance  Corporation,  a New York
stock insurance company.

                  "Insurer  Default" shall mean, at any time, any failure by the
Insurer to make any payment when due under the Insurance  Agreement or under any
other insurance policy or financial guaranty insurance policy issued by it.

                  "Interest  Component"  shall mean,  with respect to Commercial
Paper  issued (i) on a discount  basis,  the  portion of the Face Amount of such
Commercial Paper  representing the discount incurred in respect thereof and (ii)
on an  interest-bearing  basis, the interest payable on such Commercial Paper at
its maturity provided, however, that if any component of such rate is a discount
rate in  calculating  the Interest  Component,  the rate used to calculate  such
component of such rate shall be a rate resulting from  converting  such discount
rate to an interest bearing equivalent rate per annum.

                  "Interest  Reserve  Advance"  shall mean,  with respect to any
Remit tance Date, the amount, if any (which shall not be less than zero),  equal
to (i) the product of (x) the daily  weighted  average  amount on deposit in the
Prefunding  Account  during the preceding  Settlement  Period,  (y) the Targeted
Interest  Rate for such  Settlement  Period  (on a per  annum  basis)  and (z) a
fraction the numerator of which is the number of days in such Settlement  Period
and the  denominator  of which is 360 minus  (ii) the amount  earned  during the
preceding Settlement Period on amounts on deposit in the Prefunding Account.

                  "Interest Reserve Deposit" shall have the meaning specified in
Section 2.11.

                  "Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body.

                  "LIBOR Rate" means, with respect to any Settlement Period, the
rate determined by NationsBank to be (i) the per annum rate for deposits in U.S.
Dollars for a term of one month which  appears on the Telerate  Page 3750 Screen
on the day that is two  London  Business  Days  prior to the  first  day of such
Settlement Period except, that if such first day of the Settlement Period is not
a Business  Day,  then the first  preceding  day that is a Business Day (rounded
upwards, if necessary,  to the near est 1/100,000 of 1%), (ii) if such rate does
not appear on the Telerate Page 3750 Screen,  the term "LIBOR Rate" with respect
to that Settlement Period shall be the


                                                 14

<PAGE>



arithmetic mean (rounded upwards, if necessary,  to the nearest 1/100,000 of 1%)
of the offered  quotations  obtained by NationsBank from four major banks in the
London  interbank  market selected by NationsBank  (the  "Reference  Banks") for
deposits in U.S.  Dollars to leading banks in the London  interbank market as of
approximately  11:00 a.m.  (London time) on the day that is two London  Business
Days prior to the first day of such Settlement Period,  unless such first day of
the Settlement  Period is not a Business Day, in which case, the first preceding
day that is a Business Day or (iii) if fewer than two  Reference  Banks  provide
NationsBank  with such  quotations,  the LIBOR  Rate shall be the rate per annum
which  NationsBank  determines to be the arithmetic  mean (rounded  upwards,  if
necessary,  to the  nearest  1/100,000  of 1%) of the offered  quotations  which
leading  banks in New York City selected by  NationsBank  are quoting in the New
York interbank market on such date for deposits in U.S. dollars to the Reference
Banks or; if fewer than two such quotations are avail able, to leading  European
and Canadian Banks.

                  "Lien"  shall  mean  any  mortgage,  deed  of  trust,  pledge,
hypothecation,  assignment, deposit arrangement, encumbrance, lien (statutory or
other),  preference,  priority  or  other  security  agreement  or  preferential
arrangement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement,  any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing  statement under the UCC (other than any such financing  statement
filed for informational  purposes only) or comparable law of any jurisdiction to
evidence any of the foregoing.

                  "Liquidity   Provider  Agreement"  shall  mean  the  agreement
between the Company and the Liquidity Provider  evidencing the obligation of the
Liquidity  Provider to provide  liquidity  support to the Company in  connection
with the issuance by the Company of Commercial Paper.

                  "Liquidity  Provider"  shall mean the  Person or  Persons  who
provide  liquidity support to the Company in connection with the issuance by the
Company of Commercial Paper.

                  "Lock-Box   Account"   shall  mean  an  account  or   accounts
maintained  by the  Collection  Agent  at a  Lock-Box  Bank for the  purpose  of
receiving Collections from Receivables.

                  "Lock-Box  Bank"  shall  mean  each of the  banks set forth in
Exhibit B hereto  and such banks as may be added  thereto  or deleted  therefrom
pursuant to Section 2.6.


                                                 15

<PAGE>



                  "London  Business  Day" shall mean any day which is a Business
Day and  also is a day on which  commercial  banks  are  open for  international
business (including dealings in U.S. Dollar deposits) in London.

                  "Majority  Investors" shall have the meaning  specified in the
Note Purchase Agreement.

                  "Minimum   Required  APR"  shall  mean,  as  of  any  date  of
determination, the greater of (i) the money market yield of the rate quoted on a
discount basis for commercial  paper having a thirty (30) day maturity,  as made
available and subse  quently  published by the Board of Governors of the Federal
Reserve System in H.15(519) under the heading  "Commercial Paper" plus 1.40% per
annum and (ii) the  current  yield to  maturity  of the United  States  Treasury
Security  having a  maturity  of two  years  (or if there is more  than one such
security, the average of the yields to maturity thereof) plus 1.63% per annum.

                  "Modified Receivable" means indebtedness owed to the Debtor by
an Obligor  (without giving effect to any transfer under this Agreement) under a
Contract  which has been  modified and is  classified as a type 44, 45, 74 or 75
receivable in the Debtor's  records,  whether  constituting an account,  chattel
paper,  instrument or general  intangible,  arising out of or in connection with
the sale of new or used automobiles,  vans or light-duty trucks or the rendering
of services by the originating dealer in connection therewith,  and includes the
right of payment of any  finance  charges and other  obligations  of the Obligor
with respect thereto.

                  "Moody's" shall mean Moody's Investors Service, Inc.

                  "NationsBank" shall have the meaning specified in the preamble
hereto.

                  "Negative  Carry" shall mean,  with respect to any  Prefunding
Date,  a  percentage  equal to (i) for the amount on  deposit in the  Prefunding
Account  by the  Company,  (a) the money  market  yield of the rate  quoted on a
discount basis for commercial  paper having a thirty (30) day maturity,  as made
available and subse  quently  published by the Board of Governors of the Federal
Reserve  System in  H.15(519)  under the heading  "Commercial  Paper",  plus (b)
1.40%,  minus (c) the Targeted  Interest Rate; (ii) for the amount on deposit in
the  Prefunding  Account funded by the Bank  Investors,  (a) the LIBOR Rate, (b)
plus 1.40%, minus (c) the Targeted Interest Rate.



                                                 16

<PAGE>



                  "Net Asset Test" shall have the meaning  specified in the Note
Purchase Agreement.

                  "Net Investment" shall mean the sum of (i) all amounts paid to
the Debtor for the Initial Funding plus (ii) the cumulative amount of Prefunding
Deposits minus (iii) the aggregate  amount released from the Prefunding  Account
and applied to reduce the Net  Investment  pursuant to Section 2.12,  minus (iv)
the aggregate  amount released from the Prefunding  Interest Reserve Account and
applied to reduce the Net Investment pursuant to Section 2.12, minus (v) the sum
of (a)  the  aggregate  amount  of  Receipts  of  Principal  on  deposit  in the
Collection Account, plus (b) the aggregate amount of Receipts of Principal which
have  been  received  by  the  Collection  Agent  on or  prior  to any  date  of
determination but have not yet been deposited in the Collection Account (if such
Receipts of Principal are not so deposited therein within 2 Business Days of the
receipt thereof by the Collection Agent the "Net Investment"  shall thereupon be
recalculated, effective as of the original date of determination, without giving
effect to such  Receipts of Principal)  plus (c) the aggregate  amount of Collec
tions received and applied by the Company to reduce such Net Investment pursuant
to  Section  2.3,  minus (vi) draws on the  Policy  distributed  and  applied in
reduction  of Net  Investment,  and minus  (vii) the  aggregate  amount of funds
received  and applied to reduce such Net  Investment  pursuant to Sections  2.7,
2.15 and 2.16;  provided that the Net Investment shall be restored in the amount
of any  Collections so received and applied if at any time the  distribution  of
such  Collections  is  rescinded  or must other wise be returned for any reason;
provided further,  that as to the Insurer,  draws made under the Policy will not
reduce the principal amount due under the Note.

                  "Net  Negative   Hedging   Amounts"  shall  mean,  as  of  any
Remittance Date, an amount equal to the amount by which (i) the aggregate amount
of losses incurred by the Collection  Agent on any Hedging  Arrangements  during
the related  Settlement Period and any prior Settlement Periods exceeds (ii) the
sum of (x) the aggregate amount of gains retained by the Collection Agent on any
Hedging  Arrange  ments  during  the  related  Settlement  Period  and any prior
Settlement Periods and (y) amounts  distributed to the Collection Agent pursuant
to Section 2.3(a)(xiii) on any prior Remittance Date.

                  "Net  Receivables  Balance" means at any time the  Outstanding
Balance of the Eligible  Receivables  at such time reduced by the sum of (i) the
amount by which the aggregate  Outstanding  Balance of Undocumented  Receivables
exceeds $15,000,000, plus (ii) the aggregate Outstanding Balance of all Eligible
Receivables which are Defaulted  Receivables,  plus (iii) the amount, if any, by
which the aggregate  outstanding  Balance of all Eligible  Receivables which are
type 54 or 55 loans (the


                                                 17

<PAGE>



"non-prime" loans) exceeds the product of (x) 5% and (y) the Outstanding Balance
of all  Eligible  Receivables,  plus  (iv)  the  Excess  Delinquent  Receivables
Balance.

                  "Net Yield" shall mean, as  calculated  on each  Determination
Date,  the product of (i) 12 and (ii) a fraction,  the numerator of which is (x)
the Available  Funds less the aggregate  amount of Carrying Costs accrued during
the related  Settlement  Period less the  aggregate  Outstanding  Balance of all
Receivables  which became Defaulted  Receivables  during the related  Settlement
Period net of the aggregate amount of recoveries received during such Settlement
Period, and the denominator of which is (y) the average daily Net Investment for
such Settlement Period. The Net Yield shall be expressed as a percentage.

                  "Note" shall have the meaning  specified in the Note  Purchase
Agree ment.

                  "Noteholder's  Percentage"  shall mean an amount equal to 100%
less the product of (i) 2, and (ii) the amount,  if any, by which the Target Net
Yield  exceeds  the Net  Yield as of the most  recent  Determination  Date.  The
Noteholder's Percentage shall initially equal 100%

                  "Note  Purchase   Agreement"  shall  mean  that  certain  Note
Purchase  Agreement,  dated as of  September  18,  1998,  among the Debtor,  the
Company, the Bank Investors and the Agent.

                  "Obligor"  shall  mean a  Person  obligated  to make  payments
pursuant to a Contract.

                  "Official   Body"  shall  mean  any  government  or  political
subdivision  or  any  agency,  authority,   bureau,  central  bank,  commission,
department or instrumental ity of either, or any court, tribunal,  grand jury or
arbitrator, in each case whether foreign or domestic.

                  "Other  Transferor"  shall have the meaning  specified  in the
Note Purchase Agreement.

                  "Outstanding  Balance" of a Receivable  at any time shall mean
the amount advanced under the related  Contract toward the purchase price of the
related  Financed  Vehicle and related  costs  minus all  Receipts of  Principal
received with respect to such Receivable.



                                                 18

<PAGE>



                  "PAC"  shall  mean  Performance  Acceptance  Corporation,   an
Indiana corporation, and its successors and assigns, including UAC and UAC d/b/a
PAC.

                  "Person" shall mean any  corporation,  natural  person,  firm,
joint venture,  partnership,  trust,  unincorporated  organization,  enterprise,
government or any department or agency of any government.

                  "PFC" shall mean Performance Funding  Corporation,  a Delaware
corporation, and its successors and assigns.

                  "PFC Sale and Purchase  Agreement" shall mean the Purchase and
Assignment  Agreement,  dated as of February  28,  1998,  among the  Debtor,  as
purchaser,  and PFC,  as seller,  as amended to the date  hereof and as amended,
modi fied or supplemented from time to time hereafter.

                  "Policy" shall mean that certain financial  guaranty insurance
policy, substantially in the form attached hereto as Exhibit C.

                  "Potential  Termination  Event"  shall mean an event which but
for the lapse of time or the  giving of  notice,  or both,  would  constitute  a
Termination Event.

                  "Prefunding Account" shall mean the account established by the
Collateral  Agent, for the benefit of the Secured  Parties,  pursuant to Section
2.11.

                  "Prefunding  Date"  shall  mean the 1st  calendar  day of each
month (or if such day is not a Business Day, the next  succeeding  Business Day)
and such other  dates which are agreed upon by the Debtor and the Agent at least
one Business Day in advance; provided, that there shall in no event be more than
one additional  Prefunding  Date in any period between any two Remittance  Dates
(without Agent  approval) and provided,  further,  that no Prefunding Date shall
occur on and after the Termination Date.

                  "Prefunding  Deposit" shall have the meaning  specified in the
Note Purchase Agreement.

                  "Prefunding  Interest  Reserve Account" shall mean the account
estab lished by the Collateral  Agent,  for the benefit of the Secured  Parties,
pursuant to Section 2.11.



                                                 19

<PAGE>



                  "Prefunding Period" shall mean, with respect to any Prefunding
Date, the period from such date to the succeeding Prefunding Date.

                  "Premium"  shall have the meaning  specified in the  Insurance
Agree ment.

                  "Proceeds"   shall  mean  "proceeds"  as  defined  in  Section
9-306(1) of the Relevant UCC.

                  "Receipts  of  Interest"   shall  mean  that  portion  of  the
Collections  with respect to the  Receivables  which are properly  designated as
Finance  Charges in accordance with the Credit and Collection  Policy,  together
with (i) any recoveries in respect of Defaulted Receivables and Related Security
with respect thereto,  and (ii) amounts  considered to be "Receipts of Interest"
pursuant to Sections 2.7, 2.10 and 2.15.

                  "Receipts of Principal" shall mean all Collections, other than
those designated as Receipts of Interest,  together with all amounts  considered
to be "Re ceipts of Principal" pursuant to Sections 2.7 and 2.15, provided, that
Collections  con  stituting a refund of all or any portion of extended  warranty
protection  plan costs or of  insurance  costs (for  example,  physical  damage,
credit life or  disability)  included in the original  amount  financed  under a
Receivable (other than a Defaulted  Receivable) shall be considered a Receipt of
Principal.

                  "Receivable"  shall mean indebtedness owed to the Debtor by an
Obligor  (without  giving  effect to any transfer  hereunder)  under a Contract,
whether   constituting  an  account,   chattel  paper,   instrument  or  general
intangible,  arising  out of or in  connection  with  the  sale  of new or  used
automobiles,  vans or  light-duty  trucks or the  rendering  of  services by the
originating dealer in connection  therewith,  and in cludes the right of payment
of any  Finance  Charges  and other  obligations  of the  Obligor  with  respect
thereto.  Notwithstanding the foregoing,  once the Collateral Agent has released
its security  interest in a  Receivable  and the related  Contract  pursu ant to
Section 2.7 or Section 2.15 hereof,  it shall no longer  constitute a Receivable
hereunder. The term "Receivable" specifically excludes Modified Receivables.

                  "Records" shall mean all Contracts and other documents, books,
records and other information (including, without limitation, computer programs,
tapes,  discs,  punch cards,  data processing  software and related property and
rights) maintained with respect to Receivables and the related Obligors.



                                                 20

<PAGE>



                  "Regulation  D"  shall  mean  Regulation  D of  the  Board  of
Governors  of  the  Federal  Reserve  System,   as  the  same  may  be  amended,
supplemented or otherwise modified and is effect from time to time.

                  "Related  Commercial Paper" shall mean Commercial Paper issued
by the Company the  proceeds of which were used to  acquire,  or  refinance  the
acquisition of, an interest in the Net Investment with respect to the Debtor.

                  "Related Security" shall mean with respect to any Receivable:

                                    (i)  all of  the  Debtor's  interest  in the
         Financed Vehicles (including  repossessed  vehicles) or in any document
         or writing evidencing any security interest in any Financed Vehicle and
         all of the  Debtor's  interest  in all  rights  to  payment  under  all
         insurance  contracts  with  respect to a Financed  Vehicle,  including,
         without  limitation,  any  monies  collected  from  whatever  source in
         connection  with any default of an Obligor  with  respect to a Financed
         Vehicle  and any  proceeds  from  claims or refunds of  premiums on any
         physical damage, lender's single interest,  credit life, disability and
         hospitaliza  tion  insurance  policies  covering  Financed  Vehicles or
         Obligors;

                                    (ii)  all of the  Debtor's  interest  in all
         other  security  interests or liens and property  subject  thereto from
         time to time,  if any,  purporting  to secure  payment of the  Contract
         related  thereto,  whether  pursuant  to such  Contract  or  otherwise,
         together  with  all  financing  statements  signed  by an  Obligor  and
         security agreements describing any collateral securing such Contract;

                                    (iii) all of the  Debtor's  interest  in all
         guaran ties, insurance and other agreements or arrangements of whatever
         character  from time to time  supporting  or  securing  payment of such
         Receivable,  whether  pursuant to the  Contract  related to such Receiv
         able or otherwise;

                                    (iv)  all of the  Debtor's  interest  in all
         rights to payment under all service  contracts and other  contracts and
         agree ments  associated  with such  Receivables and all of the Debtor's
         interest in all  recourse  rights  against the dealers  (excluding  any
         rights in any dealer reserve);



                                                 21

<PAGE>



                                    (v) all of the  Debtor's  interest in all Re
         cords,  documents  and  writings  evidencing  or related to such Receiv
         ables or the Contracts; and

                                    (vi) all Proceeds of the foregoing.

                  "Relevant UCC" shall mean the Uniform  Commercial Code as from
time to time in effect in all applicable jurisdictions.

                  "Remittance Date" shall mean, for each Settlement  Period, the
tenth (10th) day of the next succeeding  calendar  month;  provided that if such
day is not a Business Day, then the Remittance Date shall be the next succeeding
Business Day.

                  "Required  Reserve  Account Amount" shall mean, at any time of
determination,  an  amount  equal to the  product  of (a)  3.25% and (b) the Net
Invest ment divided by the Noteholder's Percentage.

                  "Required  Yield  Deposit  Amounts"  shall  have  the  meaning
specified in Section 2.13(a).

                  "Reserve  Account" shall have the meaning specified in Section
2.14 hereof.

                  "Reserve Account Advance" shall mean any advance made pursuant
to Section 2.3(c) from amounts on deposit in the Reserve Account.

                  "Reserve  Account  Guaranty"  shall mean the amount  available
pursuant  to any  guaranty  of the  amount  required  to be kept in the  Reserve
Account  pursuant to this  Agreement and the other  Transaction  Documents.  Any
Reserve  Account  Guaranty shall be rated at least  investment  grade by S&P and
Moody's.

                  "S&P"  shall  mean  Standard  &  Poor's  Ratings  Services,  a
Division of the McGraw Hill Companies.

                  "Sale and  Purchase  Agreement"  shall  mean,  as  applicable,
either or both of (i) the Amended and Restated Sale and Purchase Agreement dated
as of December 23, 1996,  between the Debtor, as purchaser,  and UAC, as seller,
and (ii) the  Amended  and  Restated  Sale and  Purchase  Agreement  dated as of
December  23,  1996,  between  PFC, as  purchaser,  and UAC, as seller,  each as
amended to the date hereof and as amended, modified or supplemented from time to
time hereafter.


                                                 22

<PAGE>



                  "Secured  Parties" shall mean the Company,  the Bank Investors
and the Insurer.

                  "Securities  Intermediary"  shall  mean  NationsBank,  and any
other entity acting in the capacity of a "securities intermediary" as defined in
Section 8- 102(14) of the UCC.

                  "Servicer Advance" shall have the meaning specified in Section
2.3(c).

                  "Servicing Fee" shall mean, for any Settlement Period, the fee
payable pursuant to Section 2.3 on the related Remittance Date by the Company to
the Col lection Agent, in an amount equal to 1.0% per annum on the amount of the
aggregate  Outstanding  Balance of the  Receivables  as of the first day of such
Settlement Period.

                  "Settlement  Period" shall mean any calendar  month,  provided
that the initial Settlement Period shall commence on the Cut-Off Date and end on
October 31, 1998.

                  "Settlement  Statement" shall mean a report,  in substantially
the form of  Exhibit D or in such  other  form as is  mutually  agreed to by the
Debtor and the Company,  furnished  by the  Collection  Agent to the  Collateral
Agent,  the  Agent,  Moody's,  S&P and the  Insurer on each  Determination  Date
pursuant to Section 2.9.

                  "Subsidiary" of a Person shall mean any corporation  more than
50% of the outstanding voting securities of which, and any partnership more than
50% of the  partnership  interests  of  which,  shall  at any  time be  owned or
controlled,   directly  or  indirectly,  by  such  Person  or  by  one  or  more
Subsidiaries  of such Person or any simi lar business  organization  which is so
owned or controlled.

                  "Take-Out" shall mean the release, pursuant to Section 2.15(a)
or 2.15(d),  by the Collateral  Agent of Receivables  and the Contracts  related
thereto.  In order to  qualify  as a  "Take-Out",  the  Outstanding  Balance  of
Receivables  immediately  after  the  Take-Out  shall be no more than 25% of the
highest  Outstanding  Balance of  Receivables in existence as of a date not more
than 31 days prior to the Take-Out.

                  "Targeted  Interest Rate" for any Settlement Period shall mean
2.5% or such lower rate set forth in a written notice by the Agent to the Debtor
and the Col lection  Agent,  such other rate to be effective  three (3) Business
Days after the date of such notice.



                                                 23

<PAGE>



                  "Target Net Yield" shall mean 5.0%

                  "Termination  Date"  shall  mean  the  earliest  of  (i)  that
Business Day  designated by the Debtor to the Agent as the  Termination  Date at
any time  following  60 days'  written  notice  to the  Agent,  (ii) the date of
termination  of the liquidity  commitment of the  Liquidity  Provider  under the
Liquidity Provider Agreement, (iii) the date of termination of the commitment of
the Credit Support Provider under the Credit Support Agreement,  (iv) the day on
which a Termination Event occurs pursu ant to Section 7.1, (v) two business days
prior to the Commitment  Termination  Date, or (vi)  September 17, 1999,  unless
extended  prior to such date  pursuant  to a Revolv  ing  Period  Extension  (as
defined in the Insurance Agreement).

                  "Termination  Event" shall mean an event  described in Section
7.1.

                  "Transaction  Documents"  shall mean this Agreement,  the Note
Purchase  Agreement,  the Note, the Sale and Purchase  Agreement,  the Insurance
Agreement,  the Policy,  the Fee Letter and all other agreements,  documents and
instruments delivered pursuant thereto or in connection therewith.

                  "Transferred   Interest"   shall   mean,   at  any   time   of
determination, an undivided interest in the Note.

                  "UAC"  shall mean  Union  Acceptance  Corporation,  an Indiana
corpo ration, and its successors and assigns.

                  "UARC" shall mean Union Acceptance Receivables Corporation,  a
Delaware corporation, and its successors and assigns.

                  "Undocumented  Receivable"  shall  mean any  Receivable  as to
which, at the time of the assignment of such Receivable and the Contract related
thereto to UAC or an Acquisition  Subsidiary by the dealer which originated such
Receivable or at the time of the  origination of such  Receivable by UAC or such
Acquisition  Subsid iary, the Collection  Agent shall not have received from the
dealer and the related Obligor all documentation  required to be received by the
Collection Agent pursuant to the Credit and Collection Policy.

                  "Withdrawal  Notice"  shall  have  the  meaning  specified  in
Section 2.12(a).



                                                 24

<PAGE>



                  "Yield  Protection  Provision"  shall mean the compensation of
the Company and the Bank  Investors by the Debtor of the  Company's and the Bank
Investors' costs due to increased taxes,  reserve and funding costs as described
in Section 4.2 of the Note Purchase Agreement.

                  "Yield Supplement  Account" shall mean the account established
by the  Collateral  Agent,  for the benefit of the Company,  pursuant to Section
2.13.

                  SECTION  1.2  Other  Terms.   Unless  the  context   otherwise
requires,  all capi talized terms used herein and not otherwise  defined  herein
shall have the meanings  specified  in the Note  Purchase  Agreement,  and shall
include in the singular number the plural and in the plural number the singular.
All  accounting  terms not  specifically  defined  herein  shall be construed in
accordance  with generally  accepted  accounting  principles.  All terms used in
Article 9 of the  Relevant  UCC in the State of New York,  and not  specifically
defined herein, are used herein as defined in such Article 9.

                  SECTION 1.3  Computation  of Time  Periods.  Unless  otherwise
stated  in this  Agreement,  in the  computation  of a  period  of  time  from a
specified date to a later  specified  date, the word "from" shall mean "from and
including" and the words "to" and "until" each shall mean "to but excluding."


                                   ARTICLE II

                   GRANT OF SECURITY INTEREST AND SETTLEMENTS

                  SECTION 2.1 Grant of Security  Interest.  As security  for the
prompt  and  complete  payment  of the  Note and the  performance  of all of the
Debtor's obliga tions under the Note, the Note Purchase Agreement, the Insurance
Agreement, this Agreement and the other Transaction Documents, the Debtor hereby
grants to the Collateral Agent, for the benefit of the Secured Parties,  without
recourse except as provided herein,  a security  interest in and continuing Lien
on all of the Debtor's property,  in existence on the Cut-Off Date or thereafter
acquired and wherever located, including,  without limitation, all of its right,
title and  interest  in, to and under all  accounts,  contract  rights,  general
intangibles,  chattel  paper,  instruments,  docu ments,  money,  cash,  deposit
accounts,  certificates  of  deposit,  goods,  letters  of  credit,  securities,
investment  property,  financial  assets or  security  entitlements  (all of the
foregoing, collectively, the "Collateral");  provided, that once the Company has
released  its  interest in a  Receivable  and the related  Contract  pursuant to
Section 2.7


                                                 25

<PAGE>



or 2.15 hereof,  such Receivable and related Contract shall no longer be part of
the Collateral.

                  In connection with such grant, the Debtor agrees to record and
file, at its own expense,  financing  statements  with respect to the Collateral
now existing and hereafter  created meeting the requirements of applicable state
law in such manner and in such  jurisdictions  as are  necessary  to perfect the
first priority security interest of the Collateral Agent in the Collateral,  and
to deliver a file-stamped copy of such financing statements or other evidence of
such filing  (which may, for purposes of this Section 2.1,  consist of telephone
confirmation of such filing) to the Collateral  Agent on or prior to the Closing
Date.  In  addition,  the Debtor and the  Collection  Agent agree to clearly and
unambiguously  mark their respective  general ledgers and all accounting records
and documents  and all computer  tapes and records to show that the Collat eral,
including that portion of the Collateral  consisting of the  Receivables and the
related Contracts, have been pledged to the Collateral Agent hereunder.

                  SECTION 2.2 Carrying Costs, Fees and Other Costs and Expenses.
Notwithstanding  the  limitation on recourse under Section 2.1, the Debtor shall
pay, as and when due in  accordance  with this  Agreement,  all fees  hereunder,
Carrying Costs, all amounts payable pursuant to Article VIII hereof, if any, all
fees  specified in the Fee Letter,  and the  Servicing  Fee. On each  Remittance
Date, the Debtor shall pay to the Company and the Bank Investors, as applicable,
an amount  equal to the  accrued  and  unpaid  Carrying  Costs  for the  related
Settlement  Period together with, in respect of the Company,  an amount equal to
the discount accrued on the Company's Commer cial Paper notes to the extent such
notes were issued in order to fund the Net Invest ment in an amount in excess of
the  amount of the  Initial  Funding  or in excess  of any  deposit  made by the
Company to the Prefunding  Account.  The Debtor shall pay to the Agent,  for the
account of the Company,  on each day on which  Commercial Paper is issued by the
Company,  the Dealer Fee.  Nothing in this Agreement  shall limit in any way the
obligations of the Debtor to pay the amounts set forth in this Section 2.2.

                  SECTION 2.3  Allocations of Collections; Reserve Account Ad
vances; Servicer Advances.

                  (a) On each  Determination  Date, the  Collection  Agent shall
allocate all  Collections  received  during the preceding  Settlement  Period as
Receipts of Interest or Receipts of Principal. On each Remittance Date, Receipts
of Interest plus all earnings during the related Settlement Period on amounts on
deposit in the Prefunding Account to the extent not required pursuant to Section
2.11 to be distrib uted to the Collection Agent in reimbursement  for previously
advanced Interest


                                                 26

<PAGE>



Reserve Advances plus all amounts  deposited in the Prefunding  Interest Reserve
Account  with  respect  to the  related  Settlement  Period  (together  with any
earnings  thereon  during such  Settlement  Period)  plus any  Interest  Reserve
Advance made by the Collection Agent on such Remittance Date pursuant to Section
2.11 plus any payments to the Debtor  under an  Acceptable  Hedging  Arrangement
plus all amounts to be applied pursuant to Section 2.14(c)(ii)(y) (the aggregate
of such amounts in re spect of any remittance date, the "Available Funds") shall
be applied, without duplica tion, by the Collection Agent as follows:

                                    (i) first,  (A) to pay any amounts due under
         an Acceptable Hedging  Arrangement,  and (B) to the Reserve Account, in
         the amount of Reserve  Account  Advances  related to such  Settle  ment
         Period;

                                    (ii) second,  to the extent of any remaining
         Available  Funds,  to the  retention  by the  Collection  Agent  of any
         Servicer Advances related to such Settlement Period;

                                    (iii) third, to pay to the Collateral  Agent
         all fees and expenses due pursuant to Section 8.2 hereof;

                                    (iv) fourth,  to the extent of any remaining
         Available  Funds, to the Agent,  for the account of the Company and the
         Bank  Investors,  as  applicable,  an amount  equal to all  accrued and
         unpaid Carrying Costs (exclusive of all amounts payable pursuant to the
         Yield  Protection  Provision) in respect of such Settlement  Period and
         with  respect  to any  previous  Settlement  Period to the  extent  not
         previously paid;

                                    (v) fifth,  to the  extent of any  remaining
         Available  Funds,  to the payment of the Agent,  for the account of the
         Company  and the  Bank  Investors,  as  applicable,  to be  applied  in
         reduction  of the  Net  Investment,  of the  amount  by  which  the Net
         Investment  less the  quotient  of (A) the  amount  on  deposit  in the
         Prefunding  Account  and (B) 100% less the  quotient of (x) the percent
         age used to determine the Required  Reserve  Account Amount and (y) the
         Noteholder's   Percentage  exceeds  the  product  of  the  Noteholder's
         Percentage and the Net Receivables Balance;



                                                 27

<PAGE>



                                    (vi) sixth,  to the extent of any  remaining
         Available  Funds,  to the Insurer,  the  aggregate  amount of any previ
         ously unreimbursed  draws on the Policy,  plus accrued interest thereon
         at the rate provided in the Insurance Agreement;

                                    (vii)   seventh,   to  the   extent  of  any
         remaining Available Funds, to the Insurer,  the Premium,  including any
         overdue  Premium,  accrued interest thereon plus any amounts owed under
         the Policy or the Insurance Agreement;

                                    (viii)   eighth,   to  the   extent  of  any
         remaining  Available  Funds,  to the  Reserve  Account,  to the  extent
         necessary to cause the amount on deposit  therein to equal the Required
         Reserve Account Amount;

                                    (ix) ninth,  to the extent of any  remaining
         Available Funds, to the Yield  Supplement  Account to the extent of any
         amounts previously  withdrawn  therefrom pursuant to Section 2.3(c) and
         not  previously  reimbursed  to  the  credit  of the  Yield  Supplement
         Account;  provided that there shall be no requirement to reimburse such
         account for amounts withdrawn therefrom related to any Receiv ables and
         the related  Contracts with respect to which the Collateral Agent shall
         have released its interest  therein  pursuant to Section 2.7 or Section
         2.15;

                                    (x) tenth,  to the  extent of any  remaining
         Available  Funds, to the payment of the Collection Agent (if the Collec
         tion Agent is UAC), of the Servicing Fee for such Settlement Period and
         any  unreimbursed  Interest  Reserve  Advances  made by the Collec tion
         Agent and not previously reimbursed;

                                    (xi)   eleventh,   to  the   extent  of  any
         remaining  Available  Funds,  on or after the  Termination  Date,  such
         remaining  Available Funds shall be paid to the Agent,  for the account
         of the Company and the Bank Investors,  as applicable,  in reduction of
         the Net Investment;

                                    (xii) twelfth,  to pay all amounts due under
         the Yield Protection Provision;



                                                 28

<PAGE>



                                    (xiii)  thirteenth,  to  the  extent  of any
         remaining  Available  Funds, to the Collection  Agent, in reimbursement
         for any Net Negative  Hedging Amounts  incurred by the Collection Agent
         and not previously reimbursed;

                                    (xiv)  fourteenth,  to  the  extent  of  any
         remain ing funds, to the Agent, for the account of the Persons entitled
         thereto,  an amount  equal to all  other  amounts  owed  under the Note
         Purchase Agreement; and

                                    (xv)  fifteenth,   any  remaining  Available
         Funds shall be paid to the Debtor.
                                       
                  (b) On any  Business Day on which  Commercial  Paper issued in
connection  herewith  matures,  the Collection  Agent may apply and remit to the
Agent, in reduction of the Net Investment, any Receipts of Principal received on
or prior to such day and not  previously  remitted to the Agent in any such case
in an amount not to exceed the principal  component of such maturing  Commercial
Paper.  On each Remittance  Date, the Collection  Agent shall apply and remit to
the Agent,  in  reduction  of the Net  Investment,  all  Receipts  of  Principal
received with respect to the prior Settlement Period and not previously remitted
to the Agent pursuant to the preceding sentence.

                  (c) In the event that, at any time,  the Company does not have
sufficient  funds at such time to pay  Carrying  Costs when due,  then,  in such
event, there shall be made a Reserve Account Advance equal to the amount of such
deficiency,  which amount shall be applied to pay such costs and expenses of the
Company;  provided,  that such Reserve Account Advance shall be made only to the
extent of funds then on deposit in the Reserve Account and shall not include any
amount  pursuant  to a Reserve  Account  Guaranty.  In the  event  that any such
Reserve  Account  Advance is not made by 11:00 a.m.  (New York City time) on the
day requested the Collection  Agent shall, at the request of the Agent,  advance
to the Company an amount equal to such deficiency (each, a "Servicer  Advance");
provided,  that the  Collection  Agent  shall not be  required  to make any such
Servicer  Advance to the extent that the Collection  Agent  reasonably  believes
that it will not be  reimbursed  for such Servicer  Advance  pursuant to Section
2.3(a)(ii)  on any  subsequent  Remit  tance  Date.  In the event  that any such
Servicer  Advance  is not made by 11:00  a.m.  (New York  City  time) on the day
requested,  there shall be withdrawn from the Yield Supplement Account an amount
equal to the amount of such  deficiency,  which  amount  shall be applied to pay
such costs and expenses of the Company.  In the event that any such payment from
the Yield Supplement Account is not made by 11:00 a.m.


                                                 29

<PAGE>



(New York City time) there  shall be made a Reserve  Account  Advance  and/or an
advance  pursuant to any Reserve  Account  Guaranty  equal to the amount of such
deficiency,  which amount shall be applied to pay such costs and expenses of the
Company.  In the event that any such  Reserve  Account  Advance  and/or  advance
pursuant to any  Reserve  Account  Guaranty is not made by 11:00 a.m.  (New York
City time) on the day requested by the Collection  Agent,  there shall be made a
draw under the Policy equal to the amount of such deficiency, which amount shall
be paid  directly  to the  Agent  and  shall be  applied  to pay such  costs and
expenses of the Company.

                  SECTION 2.4 Liquidation Settlement  Procedures.  Following any
date after the Termination Date on which all Aggregate Unpaids have been paid in
full, (i) the Collateral Agent shall be considered to have released its security
interest  in  and  continuing  Lien  on  the  Collateral,  including  all of the
Receivables  and Related  Security,  (ii) the Collection  Agent shall pay to the
Debtor any remaining Collections set aside and held by the Collection Agent, and
(iii) the  Collateral  Agent shall  execute  and  deliver to the Debtor,  at the
Debtor's  expense,  such  documents or instruments as are necessary to terminate
the Collateral Agent's security interest in the Collateral, including all of the
Receivables and Related Security and Collections with respect thereto.  Any such
documents  shall be prepared by or on behalf of the Debtor at the expense of the
Debtor.

                  SECTION 2.5 Fees.  Notwithstanding  any limitation on recourse
con tained in this  Agreement,  the Debtor  shall pay,  in the manner and at the
time specified in the Fee Letter, the fees specified in the Fee Letter.

                  SECTION 2.6  Protection of Interest of the  Collateral  Agent.
The Debtor  agrees  that from time to time,  at its  expense,  it will  promptly
execute and deliver all instruments and documents and take all actions as may be
necessary or as the Collateral Agent may reasonably  request in order to perfect
or protect  the  Collateral  or to enable the  Collateral  Agent to  exercise or
enforce any of its rights hereunder.  Without limiting the foregoing, the Debtor
will, upon the request of the Collateral  Agent, in order to accurately  reflect
the security  interest of the Collateral  Agent in the  Collateral,  execute and
file  such  financing  or  continuation  statements  or  amendments  thereto  or
assignments  thereof  (as  permitted  pursuant  to Section 9.6 hereof) as may be
requested by the Collateral  Agent and mark its master data pro cessing  records
(or to cause  such  records  to be marked)  so as to  indicate  the Collat  eral
Agent's  security  interest  in the  portion  of the  Collateral  consisting  of
Receivables,  the related  Contracts,  the Collections and the Related  Security
with respect thereto. The Debtor agrees that it shall take all actions necessary
to cause UAC to similarly


                                                 30

<PAGE>



mark its records to reflect the sale of the Receivables and the Contracts to the
Debtor and the Collateral  Agent's  security  interest in the  Receivables,  the
related  Contracts,  the  Collections  and the  Related  Security  with  respect
thereto.  The Debtor shall,  at its own expense,  upon request of the Collateral
Agent,  obtain such  additional  search  reports as the  Collateral  Agent shall
request.  To the fullest  extent  permitted by appli cable law,  the  Collateral
Agent  shall  be  permitted  to sign  and  file  continuation  state  ments  and
amendments  thereto and  assignments  thereof  without the Debtor's  signa ture.
Carbon,  photographic  or other  reproduction of this Agreement or any financing
statement shall be sufficient as a financing statement. The Debtor shall neither
change its name,  identity or corporate structure (within the meaning of Section
9-402(7) of the  Relevant UCC as in effect in the State of Florida) nor relocate
its chief executive  office or any office where Records are kept unless it shall
have:  (i) given the Collat eral Agent and the Insurer at least thirty (30) days
prior notice thereof and (ii) prepared at the Debtor's  expense and delivered to
the Collateral Agent all financing  statements,  instruments and other documents
necessary to preserve and protect the  Collateral or requested by the Collateral
Agent or the Insurer in connection  with such change or relocation.  Any filings
under the Relevant UCC or otherwise  that are occa sioned by such change in name
or location shall be made at the expense of the Debtor. On the Closing Date, the
Debtor  shall  deliver  to the  Collateral  Agent and the  Insurer a listing  by
account  number of the  Contracts as of the Cut-Off  Date,  which  listing shall
constitute Schedule A hereto and is hereby incorporated herein by reference.  On
the second  Business  Day after the end of each  Settlement  Period,  the Debtor
shall deliver to the  Collateral  Agent an updated  listing by account number of
the Contracts as of the last day of such Settlement Period (giving effect to any
releases  by the  Company  pursuant  to Section  2.7 or  Section  2.15) and such
updated  list  shall  thereupon  consti  tute  Schedule  A hereto  and is hereby
incorporated by reference herein.

                  (a) The Collection  Agent shall instruct all Obligors to cause
all  Collections  to be deposited  directly with a Lock-Box Bank. The Collection
Agent  shall not add any bank as a  Lock-Box  Bank to those  listed on Exhibit B
without the consent of the  Collateral  Agent and the  Insurer.  The  Collection
Agent shall not  terminate  any bank as a Lock-Box  Bank  unless the  Collateral
Agent and the Insurer  shall have  received  fifteen  (15) days' prior notice of
such   termination.   If  the  Debtor  or  the  Collection  Agent  receives  any
Collections,   the  Debtor  or  the  Collection  Agent,  as  applicable,   shall
immediately,  but in any event  within two (2) Business  Days of receipt,  remit
such Collections to a Lock-Box Account.



                                                 31

<PAGE>



                  SECTION 2.7  Payments on Receivables; Application of Payments.
If, on any day,

                  (a) the  Outstanding  Balance  of a  Receivable  is either (x)
reduced as a result of any  defective,  rejected or returned  goods or services,
any cash  discount,  credit,  rebate,  allowance or other dilution  factor,  any
billing  adjustment or other adjustment,  or (y) reduced or canceled as a result
of a setoff or offset in respect of any claim by any Person  (whether such claim
arises out of the same or a related transaction or an unrelated transaction); or

                  (b)  as to  any  Undocumented  Receivable,  all  documentation
required to be received after the origination of such Receivable pursuant to the
Credit  and  Collection  Policy  has  not  been  received  and  accepted  by the
Collection Agent within twenty (20) days following the date of the initial draft
drawn by the  originating  dealer on UAC in connection  with the  origination of
such Receivable; or

                  (c) any of the representations or warranties in Article III is
no longer true with respect to a Receivable;

then,  in any such  event,  the  Collateral  Agent shall  release  its  security
interest in and Lien on such Receivable and the related Contract;  provided that
if such release would result in the Net Asset Test not being satisfied,  then as
a  condition  precedent  to such  release  the  Debtor  shall  deposit  into the
Collection  Account  an amount  equal to the  amount  which,  if  applied to the
reduction of the Net Investment, would cause the Net Asset Test to be satisfied.
Such amount shall be applied as a Receipt of Principal  pursuant to Section 2.3.
All  collections of Finance  Charges  received with respect to any such released
Receivable  through  the  last  day of  the  Settlement  Period  in  which  such
Receivable  is  released  shall  continue  to  constitute  Receipts  of Interest
hereunder.

                  SECTION 2.8 Payments and Computations,  Etc. All amounts to be
paid or deposited by the Debtor or the Collection  Agent hereunder shall be paid
or deposited in accordance  with the terms hereof no later than 12:00 noon. (New
York City  time) on the day when due in  immediately  available  funds;  if such
amounts are payable to the Company or the Bank Investors,  they shall be paid or
deposited  in the Agent's  account  indicated in Section  9.3,  until  otherwise
notified by the Agent,  the Company or any Bank  Investor;  if such  amounts are
payable to the Insurer, they shall be paid or deposited in the Insurer's account
indicated in Section 9.3, until  otherwise  notified by the Insurer.  The Debtor
shall,  to the extent  permitted by law, pay to the applicable  Secured  Parties
upon  demand,  interest  on all  amounts  not paid or deposit ed when due to the
Secured Parties hereunder at a rate equal to 2% per annum plus


                                                 32

<PAGE>



the Base Rate. All  computations of Carrying  Costs,  interest and all per annum
fees  hereunder  shall be made on the basis of a year of 360 days for the actual
number of days  elapsed.  Any  computations  of  amounts  payable  by the Debtor
hereunder to any of the Secured  Parties,  the Liquidity  Provider or the Credit
Support Provider shall be binding absent manifest error.

                  SECTION 2.9 Reports. On or before each Determination Date, the
Collection Agent shall prepare and forward to the Collateral  Agent, the Adminis
trative Agent,  Moody's,  S&P and the Insurer,  (i) a Settlement Statement as of
the end of the preceding  Settlement Period, (ii) if requested by the Collateral
Agent,  the  Administrative  Agent or the  Insurer,  a computer  tape listing by
Obligor all Receiv ables, together with an aging of such Receivables,  and (iii)
such other information as the Collateral Agent, the Administrative  Agent or the
Insurer may reasonably  request.  The Agent shall provide to the Debtor,  on the
day prior to each Determination Date, a monthly settlement  statement containing
information  relating  to the amount of each  obligation  of the  Company  which
comprises Carrying Costs for the most recent Collection Period and the amount of
interest earnings on all related accounts for such Collection Period.

                  SECTION 2.10 Collection Account. There shall be established on
the Closing Date and maintained,  for the benefit of the Secured  Parties,  with
the Collateral Agent, a segregated account (the "Collection Account"), bearing a
designa tion clearly  indicating that the funds  deposited  therein are held for
the benefit of the Secured Parties.  Subject to the terms hereof, the Collateral
Agent shall possess all right,  title and interest in and to all funds deposited
from time to time in the Collection Account.  The Collateral Agent will maintain
the Collection Account at an Eligible  Institution.  If the Eligible Institution
holding the Collection  Account shall cease to be an Eligible  Institution,  the
Collateral  Agent shall have the right to direct the transfer of the  Collection
Account to an Eligible Institution.  The Collection Agent shall remit daily from
the Lock-Box Account, within two (2) Business Days of receipt, to the Collection
Account  all  Collections  received  with  respect to any  Receivables.  On each
Remittance  Date,  all  interest  and  earnings  (net of losses  and  investment
expenses) on funds on deposit in the  Collection  Account shall be considered to
be Receipts of Interest and shall be distributed  hereunder as such. On the date
on which the Net  Investment  is zero and all amounts  payable  hereunder by the
Debtor have been paid in full, any funds  remaining on deposit in the Collection
Account shall be paid to the Debtor.

                  (a)  Funds  on  deposit  in the  Collection  Account  shall be
invested in Eligible  Investments by or at the written  direction of the Debtor,
provided


                                                 33

<PAGE>



that if a Termination Event shall have occurred,  such investments shall be made
as directed by the Collateral  Agent. Any such written  directions shall specify
the particular  investment to be made and shall certify that such  investment is
an Eligible Investment and is permitted to be made under this Agreement.

                  (b) The  Collateral  Agent agrees that it shall not accept for
credit to the Collection  Account any investment as to which it has knowledge of
any adverse claim thereto.  NationsBank  hereby agrees (and any other Securities
Interme diary holding the Collection  Account shall so agree) to comply with all
Entitlement Orders (as defined in Section 8-102 of the 1994 Official Text of the
Uniform Com mercial Code) received by it with respect to the Collection  Account
from the Collat eral Agent.

                  (c) Funds on deposit in the  Collection  Account  (other  than
investment  earnings)  shall be  invested  by the  Collateral  Agent in Eligible
Investments  that will  mature  so that  such  funds  will be  available  on the
Remittance  Date with respect to the  Settlement  Period during which such funds
were received.  No Eligible Investment may be liquidated or disposed of prior to
its maturity. All proceeds of any such Eligible Investment shall be deposited in
the Collection Account. Investments may be made in the Collection Account on any
date  (provided  such  investments  mature in accordance  herewith),  only after
giving  effect to deposits to and  withdraw als from the  Collection  Account on
such date.  Realized  losses,  if any,  on  amounts  invested  in such  Eligible
Investments shall be charged against  investment  earnings on amounts on deposit
in the Collection Account

                  (d) The Debtor shall provide the Collateral  Agent on the date
hereof  and  from  time to time an  incumbency  certificate  or the  substantial
equivalent  with  respect to each  officer of the Debtor that is  authorized  to
provide  instructions  relating to  investments  in Eligible  Investments in the
Collection Account.

                  (e) Eligible  Investments  shall be  maintained  by the Collat
eral Agent in the  Collection  Account  in such  manner as may be  necessary  to
maintain  the  first  priority  perfected  security  interest  in  favor  of the
Collateral Agent on behalf of the Secured Parties. NationsBank,  agrees (and any
other  Securities  Intermediary  holding the Collection  Account shall so agree)
that it shall not agree to comply with Entitlement Orders (as defined in Section
8-102 of the 1994  version  of the  Official  Text of  Article 8 of the  Uniform
Commercial  Code) with  respect  to the  Collection  Account  given to it by any
Person other than the Collateral Agent.



                                                 34

<PAGE>



                  SECTION 2.11 Prefunding  Account;  Prefunding Interest Reserve
Account; Interest Reserve Deposits; Interest Reserve Advances; Reimbursements.

                  (a)  There  shall  be  established  on the  Closing  Date  and
maintained,  for the benefit of the Secured Parties,  with the Collateral Agent,
two segregated accounts (the "Prefunding  Account" and the "Prefunding  Interest
Reserve Account"),  each bearing a designation clearly indicating that the funds
deposited  therein are held for the benefit of the Secured  Parties.  Subject to
the terms  hereof,  the  Collateral  Agent shall  possess  all right,  title and
interest  in and to all  funds  deposited  from  time to time in the  Prefunding
Account and the Prefunding  Interest Reserve Account.  The Collateral Agent will
maintain the Prefunding  Account and the Prefunding  Interest Reserve Account at
an Eligible  Institution.  If the Eligible  Institution  holding the  Prefunding
Account or the Prefunding Interest Reserve Account shall cease to be an Eligible
Institution, the Collateral Agent shall have the right to direct the transfer of
the Prefunding Account or the Prefunding Interest Reserve Account to an Eligible
Institution.

                  (1)  Funds  on  deposit  in the  Prefunding  Account  and  the
Prefunding Interest Reserve Account shall be invested by the Collateral Agent in
overnight  Eligible  Investments  by or at the written  direction of the Debtor,
provided that if a Termination Event shall have occurred, such investments shall
be made as directed by the Collateral  Agent. Any such written  directions shall
specify  the  particular  investment  to be made and  shall  certify  that  such
investment  is an Eligible  Investment  and is  permitted  to be made under this
Agreement.

                  (2) The  Collateral  Agent agrees that it shall not accept for
credit to the Prefunding Account and the Prefunding Interest Reserve Account any
investment  as  to  which  it  has  knowledge  of  any  adverse  claim  thereto.
NationsBank,  hereby agrees (and any other Securities  Intermediary  holding the
Prefunding Account or the Prefunding Interest Reserve Account shall so agree) to
comply  with all  Entitlement  Orders (as  defined in Section  8-102 of the 1994
Official Text of the Uniform Commercial Code) received by it with respect to the
Prefunding  Account  or  the  Prefunding   Interest  Reserve  Account  from  the
Collateral Agent.

                  (3)  Funds  on  deposit  in the  Prefunding  Account  and  the
Prefunding  Interest  Reserve Account shall be invested in Eligible  Investments
that will mature  overnight.  No such Eligible  Investment  may be liquidated or
disposed of prior to its maturity.  All proceeds of any such Eligible Investment
shall be deposited in the Prefunding Account or the Prefunding  Interest Reserve
Account,  as applicable.  Investments  may be made in either account on any date
(provided such investments


                                                 35

<PAGE>



mature in  accordance  herewith),  only after  giving  effect to deposits to and
withdraw als from such account on such date. Realized losses, if any, on amounts
invested in Eligible  Investments  in the  Prefunding  Account or the Prefunding
Interest Reserve Account shall be charged against investment earnings on amounts
on deposit in the Prefunding Account or the Prefunding Interest Reserve Account,
as applicable.

                  (4) The Debtor shall provide the Collateral  Agent on the date
hereof  and  from  time to time an  incumbency  certificate  or the  substantial
equivalent  with  respect to each  officer of the Debtor that is  authorized  to
provide  instructions  relating to  investments  in Eligible  Investments in the
Prefunding Account and the Prefunding Interest Reserve Account.

                  (5) Eligible Investments shall be maintained in the Prefunding
Account and the Prefunding  Interest  Reserve Account by the Collateral Agent in
such  manner  as may be  necessary  to  maintain  the first  priority  perfected
security  interest  in favor of the  Collateral  Agent on behalf of the  Secured
Parties. NationsBank,  agrees (and any other Securities Intermediary holding the
Prefunding  Account or the Prefunding  Interest  Reserve Account shall so agree)
that it shall not agree to comply with Entitlement Orders (as defined in Section
8-102 of the 1994  version  of the  Official  Text of  Article 8 of the  Uniform
Commercial  Code) with  respect  to the  Prefunding  Account  or the  Prefunding
Interest  Reserve  Account  given to it by any Person other than the  Collateral
Agent.

                  (b) On the Business Day preceding  each  Prefunding  Date, the
Debtor shall deposit in the Prefunding  Interest Reserve Account an amount equal
to the product of (i) the  Negative  Carry for such  Prefunding  Date,  (ii) the
principal component of the amount of Commercial Paper which would be required on
such date to fund the  Prefunding  Deposit,  or if such deposit is to be made by
the Bank Investors, the amount to be advanced by the Bank Investors, and (iii) a
fraction,  the numerator of which is the number of days from the Prefunding Date
through the end of the  Settlement  Period  during  which such  Prefunding  Date
occurs  and the denom  inator of which is 360 (such  amount  with  respect  to a
Prefunding Date, the "Interest Reserve Deposit").

                  (c) On  each  Remittance  Date,  the  Collection  Agent  shall
deposit  to the  Collection  Account  an amount  equal to the  Interest  Reserve
Advance,  if any, for such Remittance Date. In the event that, on any Remittance
Date,  the amount  earned  over the  preceding  Settlement  Period on amounts on
deposit in the Prefunding Account shall exceed an amount equal to the product of
(i) the daily  weighted  average  amount on  deposit in the  Prefunding  Account
during the preceding


                                                 36

<PAGE>



Settlement Period, (y) the Targeted Interest Rate (on a per annum basis) and (z)
a  fraction,  the  numerator  of  which  is the  number  of days in the  related
Settlement  Period and the  denominator  of which is 360, the  Collateral  Agent
shall release such excess amount from the Prefunding Interest Reserve Account to
the Collection Agent in reimbursement  for previously  advanced Interest Reserve
Advances or, to the extent no such  unreimbursed  advances exist, the Collection
Agent shall apply such excess  amount as part of Available  Funds under  Section
2.3(a).

                  SECTION  2.12  Prefunding  Account  and  Prefunding   Interest
Reserve Account Withdrawals.

                  (a) On any  Business  Day,  upon  receipt by the Agent and the
Collateral  Agent not later than 11:00 a.m. New York City time of written certif
ication in substantially the form of Exhibit E (a "Withdrawal  Notice") from the
Debtor setting forth,  among other things,  the amount  requested to be released
from the Prefunding  Account and certifying  that (i) after giving effect to the
amount to be funded with respect to such additional  Receivables,  the Net Asset
Test shall be satisfied, (ii) the amount on deposit in the Reserve Account shall
not be less than the Required Reserve Account Amount (calculated (x) immediately
prior to the related Prefunding Date and (y) as if such Prefunding Deposit shall
have  occurred),  (iii) the Debtor  shall have made any  deposit  into the Yield
Supplement  Account  required  pursuant to Section 2.13 in connection  with such
Receivables,  if any, and (iv) the Collection  Agent shall be in compliance with
the  requirements  of  Section  5.3 in re spect  of such  Prefunding  Date,  the
Collateral  Agent  shall  release  to the Debtor  the  amount  requested  by the
Collection Agent.

                  (b) On the last day of each Prefunding  Period, all amounts on
deposit in the Prefunding  Account  (exclusive of earnings thereon) shall be, at
the Debtor's option, either (i) released to the Agent to be applied in reduction
of the Net Investment, or (ii) retained in the Prefunding Account and applied to
reduce the amount of the Prefunding Deposit otherwise required to be made by the
Company or the Bank Investors, as applicable, on the succeeding Prefunding Date.
Notwithstand ing the foregoing however, on the first Remittance Date to occur on
or after the  Termination  Date,  all amounts on deposit,  exclusive of earnings
thereon,  in the  Prefunding  Account  shall be released  to the Agent,  for the
account of the Company and the Bank  Investors,  as  applicable,  and applied in
reduction of the Net Investment  and earnings  thereon shall be deposited in the
Collection Account for application as Available Funds.



                                                 37

<PAGE>



                  (c) On each  Remittance  Date  all  amounts  deposited  in the
Prefunding  Interest  Reserve  Account  with  respect to the related  Settlement
Period  (together with any earnings on the Prefunding  Interest  Reserve Account
during such Settlement Period) shall be deposited in the Collection Account.

                  SECTION 2.13  Yield Supplement Account, Deposits; Withdrawals.

                  (a) On the day of the  Initial  Funding  with  respect  to all
Receivables  recorded on the Collection  Agent's master servicing  records as of
such day and on any Business Day thereafter on which a Receivable is recorded on
the Collection Agent's master servicing  records,  the Debtor shall deposit into
the Yield Supplement  Account for each such Receivable with respect to which the
related Con tract provides for interest to accrue thereunder at a rate less than
the Minimum Re quired APR (determined as of the date of such  recordation on the
Collection  Agent's  master  servicing  records) an amount (each such amount,  a
"Required  Yield  Deposit  Amount")  equal to the  product  of (i) the number of
monthly  payments  originally  required  under such  Contract and (ii) an amount
equal to (x) the  scheduled  monthly  payment on such  Contract  which  would be
required to be made by the Obligor  there under if such  Contract had a rate per
annum equal to the Minimum Required APR minus (y) the scheduled  monthly payment
on such Contract which would be required to be made by the Obligor thereunder if
such Contract had a rate per annum equal to the rate set forth in such Contract.
Notwithstanding  the  foregoing,  no  Required  Yield  Deposit  Amount  need  be
deposited  to the  Yield  Supplement  Account  until  the  total  amount  of all
undeposited Required Yield Deposit Amounts equals or exceeds $1,000.

                  (b)  There  shall  be  established  on the  Closing  Date  and
maintained,  for the  benefit of the Company  and the Bank  Investors,  with the
Collat eral Agent,  a  segregated  account  (the  "Yield  Supplement  Account"),
bearing a desig nation clearly  indicating that the funds deposited  therein are
held for the benefit of the Secured  Parties.  Subject to the terms hereof,  the
Collateral Agent shall possess all right, title and interest in and to all funds
deposited  from time to time in the Yield  Supplement  Account.  The  Collateral
Agent will maintain the Yield Supplement Account at an Eligible Institution.  If
the Eligible  Institution holding the Yield Supplement Account shall cease to be
an Eligible Institution, the Collateral Agent shall have the right to direct the
transfer of the Yield Supplement Account to an Eligible Institution.

                  (1) Funds on deposit in the Yield Supplement  Account shall be
invested in overnight Eligible Investments by or at the written


                                                 38

<PAGE>



direction  of the  Debtor,  provided  that if a  Termination  Event  shall  have
occurred,  such investments  shall be made as directed by the Collateral  Agent.
Any such written  directions shall specify the particular  investment to be made
and  shall  certify  that  such  investment  is an  Eligible  Investment  and is
permitted to be made under this Agree ment.

                  (2) The  Collateral  Agent agrees that it shall not accept for
credit  to the  Yield  Supplement  Account  any  investment  as to  which it has
knowledge of any adverse claim thereto. NationsBank hereby agrees (and any other
Securities  Intermediary holding the Yield Supplement Account shall so agree) to
comply  with all  Entitlement  Orders (as  defined in Section  8-102 of the 1994
Official Text of the Uniform Commercial Code) received by it with respect to the
Yield Supplement Account from the Collateral Agent.

                  (3) No Eligible Investment in the Yield Supplement Account may
be  liquidated  or disposed of prior to its  maturity.  All proceeds of any such
Eligible  Investment  shall  be  deposited  in  the  Yield  Supplement  Account.
Investments  may be made in the Yield  Supplement  Account on any date (provided
such  investments  mature in accordance  herewith),  only after giving effect to
deposits to and withdrawals from such account on such date.  Realized losses, if
any, on amounts invested in such Eligible  Investments  shall be charged against
investment earnings on amounts on deposit in the Yield Supplement Account.

                  (4) The Debtor shall provide the Collateral  Agent on the date
hereof  and  from  time to time an  incumbency  certificate  or the  substantial
equivalent  with  respect to each  officer of the Debtor that is  authorized  to
provide  instructions  relating to  investments  in Eligible  Investments in the
Yield Supplement Account.

                  (5) Eligible Investments in the Yield Supplement Account shall
be  maintained  by the  Collateral  Agent in such manner as may be  necessary to
maintain the first priority perfected security interest in the Yield Supple ment
Account  in favor of the  Collateral  Agent on  behalf of the  Secured  Parties.
NationsBank  agrees  (and any other  Securities  Intermediary  holding the Yield
Supple  ment  Account  shall so agree)  that it shall  not agree to comply  with
Entitlement  Orders  (as  defined in  Section  8-102 of the 1994  version of the
Official Text of Article 8 of the Uniform  Commercial  Code) with respect to the
Yield  Supplement  Account  given to it by any Person other than the  Collateral
Agent.



                                                 39

<PAGE>



                  (c) In the event  that  Available  Funds  with  respect to any
Remittance  Date are  insufficient  to provide  for the  payment of the  amounts
described in Sections 2.3(a)(ii),  (iv) and (v), the Collateral Agent shall make
a withdrawal from the Yield Supplement  Account in the amount of such deficiency
and the proceeds from such withdrawal  shall be applied by the Collateral  Agent
to the required distribu tions and payments. Funds may also be released from the
Yield  Supplement  Account each month in accordance with Section 2.3(c).  On any
day on which the  Collateral  Agent,  pursuant to Section  2.7 or Section  2.15,
releases  to  the  Debtor  its  security  interest  in a  Contract  and  related
Receivable  with  respect  to which  the  Debtor  deposited  funds in the  Yield
Supplement  Account  pursuant  to Section  2.13(a),  the amount of such  deposit
(together  with any earnings  thereon) less any amounts  released from the Yield
Supplement  Account in accordance  with Section  2.3(c) shall be released to the
Debtor.  Upon the occurrence of a Termination  Event,  all amounts on deposit in
the Yield Supplement  Account shall be released to the Agent, for the account of
the Company and the Bank Investors,  as applicable,  and applied in reduction of
the Net Investment.

                  SECTION 2.14 Reserve Account; Withdrawals;  Releases; Draws on
Policy.

                  (a)  There  shall  be  established  on the  Closing  Date  and
maintained, for the benefit of the Secured Parties, with the Collateral Agent, a
segre gated  account (the  "Reserve  Account"),  bearing a  designation  clearly
indicating  that the funds  deposited  therein  are held for the  benefit of the
Secured Parties. Subject to the terms hereof, the Collateral Agent shall possess
all right, title and interest in and to all funds deposited from time to time in
the Reserve  Account.  The Collateral Agent will maintain the Reserve Account at
an Eligible Institution. If the Eligible Institution holding the Reserve Account
shall cease to be an Eligible  Institution,  the Collateral Agent shall have the
right to direct the transfer of the Reserve Account to an Eligible  Institution.
On each  Funding Date and each  Prefunding  Date,  the Debtor shall  deposit (or
cause to be withheld  from  proceeds  from the  issuance  of Related  Commercial
Paper)  to the  credit  of the  Reserve  Account  an  amount  equal to an amount
necessary to fund the Reserve  Account to the Required  Reserve  Account Amount.
The amount of any Reserve Account Guaranty shall be counted toward the amount of
funds available in the Reserve Account.

                  (1) Funds on deposit in the Reserve  Account shall be invested
in Eligible  Investments by or at the written direction of the Debtor,  provided
that if a Termination Event shall have occurred,  such investments shall be made
as directed by the Collateral Agent. Any such written directions shall specify


                                                 40

<PAGE>



the particular  investment to be made and shall certify that such  investment is
an Eligible Investment and is permitted to be made under this Agreement.

                  (2) The  Collateral  Agent agrees that it shall not accept for
credit to the Reserve Account any investment as to which it has knowledge of any
adverse  claim  thereto.  NationsBank  hereby  agrees (and any other  Securities
Intermediary  holding  the  Reserve  Account  shall so agree) to comply with all
Entitle ment Orders (as defined in Section  8-102 of the 1994  Official  Text of
the Uniform  Commercial Code) received by it with respect to the Reserve Account
from the Collateral Agent.

                  (3) No  Eligible  Investment  in the  Reserve  Account  may be
liquidated  or  disposed  of prior to its  maturity.  All  proceeds  of any such
Eligible  Investment shall be deposited in the Reserve Account.  Investments may
be made in the Reserve Account on any date (provided such investments  mature in
accordance  herewith),  only after giving effect to deposits to and  withdrawals
from such account on such date.  Realized losses, if any, on amounts invested in
such  Eligible  Investments  shall be charged  against  investment  earnings  on
amounts on deposit in the Reserve Account, as applicable.

                  (4) The Debtor shall provide the Collateral  Agent on the date
hereof  and  from  time to time an  incumbency  certificate  or the  substantial
equivalent  with  respect to each  officer of the Debtor that is  authorized  to
provide  instructions  relating to  investments  in Eligible  Investments in the
Reserve Account.

                  (5) Eligible Investments shall be maintained by the Collateral
Agent  in such  manner  as may be  necessary  to  maintain  the  first  priority
perfected  security  interest in favor of the Collateral  Agent on behalf of the
Secured  Parties.  NationsBank  agrees  (and any other  Securities  Intermediary
holding  the Reserve  Account  shall so agree) that it shall not agree to comply
with Entitlement  Orders (as defined in Section 8-102 of the 1994 version of the
Official Text of Article 8 of the Uniform  Commercial  Code) with respect to the
Reserve Account given to it by any Person other than the Collateral Agent.

                  (b) Funds on deposit in the Reserve  Account shall be invested
by the Collateral  Agent in Eligible  Investments  with maturities such that all
funds on deposit in the Reserve Account will be available on the next succeeding
Remittance Date following such  investment.  The Collateral Agent shall maintain
possession of the negotiable  instruments or securities,  if any, evidencing the
Eligible Investments from the time of purchase thereof until the time of sale or
maturity. Such


                                                 41

<PAGE>



investments  shall be held in the name of the Collateral  Agent, for the benefit
of the Secured Parties.

                  (c) In the event  that  Available  Funds  with  respect to any
Remittance  Date and any  withdrawals  from the  Yield  Supplement  Account  are
insufficient  to provide for the payment of the  amounts  described  in Sections
2.3(a)(ii),  (iv) and (v), the Collateral Agent shall make a withdrawal from the
Reserve  Account in the amount of such  deficiency  and the  proceeds  from such
withdrawal   shall  be  applied  by  the   Collateral   Agent  to  the  required
distributions and payments.  Funds may also be released from the Reserve Account
each  month in  accordance  with  Section  2.3(c).  To the extent  that  amounts
available in the Reserve  Account are  insufficient  to cover such costs and the
Debtor  fails to make a deposit  to the  Reserve  Account  in the amount of such
shortfall,  the Agent  shall  make a demand  for  payment  under  the  Policy in
accordance with its terms.

                  (i) In the event that on any Remittance Date or day on which a
Take-Out  occurs  after  giving  effect to clause  (c)(i)  above,  the amount on
deposit in the Reserve Account (calculated as of the related  Determination Date
or the date of the Take-Out, as applicable) exceeds the Required Reserve Account
Amount,  the  Collateral  Agent  shall (x) if no  Termination  Event  shall have
occurred,  release to the Debtor an amount  equal to the excess of the amount on
deposit in the Reserve Account over the Required  Reserve Account Amount and (y)
if a Termina tion Event shall have  occurred,  apply as part of Available  Funds
pursuant to Section  2.3 an amount  equal to the excess of the amount on deposit
in the Reserve Account over the Required Reserve Account Amount.

                  (ii) After the  occurrence  of the  Termination  Date upon the
earlier  of (i) the day on which  the Net  Investment  is zero  and the  Secured
Parties shall have received all Aggregate  Unpaids and (ii) the day on which the
aggregate  Outstanding  Balance of the Receivables shall be zero, the Collateral
Agent shall release to the Debtor all amounts on deposit in the Reserve Account.

                  SECTION 2.15 Optional Release.

                  (a) On any  Business  Day,  the Debtor shall have the right to
require the Collateral Agent to release its security interest in and its Lien on
the Con tracts and the related Receivables  (excluding any Contracts and related
Receivables  booked after the cut-off date applicable to the structured  finance
transaction estab lished by or on behalf of the Debtor or an affiliate, to which
the released Contracts and related Receivables will be subject) on the terms and
conditions set forth herein.


                                                 42

<PAGE>



It shall be a condition  precedent to any such release that (i) the Debtor shall
pay to the Company and the Bank Investors, as applicable, an amount equal to the
amount necessary to cause the Net Asset Test to be satisfied after giving effect
to the pro posed  release,  (ii) the  amount to be paid  pursuant  to clause (i)
above shall (x) not be greater than the  principal  component  of the  Company's
maturing  Commercial  Paper  which was  issued to fund such  portion  of the Net
Investment or the principal com ponent subject to the funding period utilized by
the Bank  Investors and the  Liquidity  Provider to fund such portion of the Net
Investment, as applicable and (y) be at least $5,000,000, (iii) the Debtor shall
deposit  to the  Collection  Account  an  amount  equal  to the  sum of (x)  all
unreimbursed  Servicer  Advances and (y) all interest costs  associated with the
Company's  Commercial  Paper  issued to fund its interest in the  Contracts  and
related  Receivables  proposed to be reassigned or all interest costs associated
with any  funding  periods  utilized  by the  Bank  Investors  or the  Liquidity
Provider  with  respect to their  respective  interests  in such  Contracts  and
related  Receivables,  as  applicable,  as well as all  Carrying  Costs  accrued
through the date of the  maturity of such  Commercial  Paper or funding  period,
(iv) the Debtor shall have given the Agent, the Collateral Agent and the Insurer
at least ten (10) days prior written notice of its intention to request  release
with respect to such Contracts and Receivables,  (v) after giving effect to such
release the amount on deposit in the Reserve  Account shall be at least equal to
the Required  Reserve Account Amount,  and (vi) all amounts due and owing to the
Insurer from the Debtor shall have been paid in full. It is the intention of the
parties that the Debtor  shall pay to the Agent,  for the benefit of the Company
and  the  Bank  Investors,  as  applicable,   and  the  Collection  Account,  as
applicable,  such amounts as are required under this Section on the closing date
of such structured finance transaction.

                  The amount  described  in clause (i) above upon receipt by the
Agent,  for the benefit of the Company and the Bank  Investors,  as  applicable,
shall be applied in reduction of the Net Investment.  From the amount  described
in clause (iii) above an amount equal to unreimbursed Servicer Advances shall be
distributed to the  Collection  Agent and the remainder of such amounts shall be
remitted to the Agent, for the benefit of the Company and the Bank Investors, as
applicable.

                  The Debtor shall also be  obligated  to pay to the  Collateral
Agent (i) an amount equal to $5,000 as an administrative  fee in connection with
any such  assign  ment and (ii) the  reasonable  legal fees and  expenses of the
Collateral  Agent and the Secured  Parties  arising in connection  with any such
assignment.

                  Upon the deposit to the Collection  Account and the payment by
the Debtor of the amounts described in this Section,  the Collateral Agent shall
execute


                                                 43

<PAGE>



and  deliver  to  the  Debtor,  at  the  Debtor's  expense,  such  documents  or
instruments  as are  necessary  to terminate  the  Collateral  Agent's  security
interest  in the  Receivables  and  the  Contracts  related  thereto.  Any  such
documents shall be prepared by or on behalf of the Debtor.

                  (b) In connection  with a Take-Out,  the Debtor shall have the
right,  from  time to time  thereafter  (but not more  frequently  than once per
calendar week), on the maturity date of any Commercial  Paper note issued by the
Company to fund the Net Investment or upon the termination of any funding period
utilized by the Liquidity  Provider or the Bank  Investors,  as  applicable,  to
require the  Collateral  Agent to release its  security  interest in and Lien on
specified  Contracts  and  the  related  Receivables,  provided  that  (x)  such
Contracts  and  related  Receivables  are to be  assigned or sold by the Debtor,
directly or indirectly,  to a structured  finance  vehicle  established by or on
behalf  of  the  Debtor  or  an  affiliate,   in   connection   with  an  asset-
securitization  or other  structured  financing having a prefunding (or similar)
feature, (y) the aggregate  Outstanding Balance of such Receivables shall be (i)
not greater than the principal  component of such maturing  Commercial  Paper or
the principal  component  subject to such funding period, as applicable and (ii)
at  least  $5,000,000  and (z) the  Debtor  shall  have  given  the  Agent,  the
Collateral Agent and the Insurer at least seven (7) days prior written notice of
its  intention  to  effect  a  release  with  respect  to  such   Contracts  and
Receivables.  Any such release shall be in consideration  for the deposit by the
Debtor  into the  Collection  Account  of an amount  equal to the sum of (i) the
Outstanding  Balance of such Receivables on the day of such assignment plus (ii)
all accrued and unpaid interest  thereon  (whether or not due thereunder) at the
rate set forth in the related  Contracts to such date of assignment.  The amount
described  in clause  (i)  above  shall be  allocated  and  applied  on such day
(whether or not a Remit tance Date) as described in Section  2.3(b) as a Receipt
of Principal,  and the amount described in clause (ii) above shall be applied on
such day  (whether  or not a Remit tance  Date) in the order of  priorities  set
forth in Section  2.3(a) as a Receipt  of  Interest  (in which case  "Settlement
Period" as used in said Section 2.3(a) shall be considered to be the period from
the last date of the previous Settlement Period to the date on which the amounts
required to be paid under this Section 2.15(b) are paid).  The Debtor shall also
be  obligated  to  pay  to the  Agent  (i)  an  amount  equal  to  $2,500  as an
administrative  fee  in  connection  with  any  such  assignment  and  (ii)  the
reasonable  legal fees and expenses of the Company,  the Collateral  Agent,  the
Bank Investors and the Administrative Agent incurred in connection with any such
release.  Upon the  deposit to the  Collection  Account  and the  payment by the
Debtor of the amounts  described in this  Section,  the  Collateral  Agent shall
execute and deliver to the Debtor,  at the Debtor's  expense,  such documents or
instruments as are necessary to terminate the


                                                 44

<PAGE>



Collateral  Agent's  interest  in the  Receivables  and  the  Contracts  related
thereto. Any such documents shall be prepared by or on behalf of the Debtor.

                  (c) On any  Business  Day,  the Debtor shall have the right to
require the Collateral Agent to release its security interest in and its Lien on
specified  Contracts and the related Receivables on the terms and conditions set
forth  herein.  It shall be a  condition  precedent  to any such  release  that,
immediately after such release,  (i) the Debtor shall pay to the Company and the
Bank Investors, as applicable,  an amount equal to the amount necessary to cause
the Net  Asset  Test to be  satisfied  calculated  after  giving  effect  to the
proposed  release,  (ii)  after  giving  effect to such  release,  the amount on
deposit in the Reserve  Account shall be at least equal to the Required  Reserve
Account  Amount,  and (iii) all amounts  due and owing to the  Insurer  from the
Debtor shall have been paid in full.

                  (d) On any  Business  Day,  the Debtor shall have the right to
require the Collateral Agent to release its security interest in and Lien on all
of the Contracts and the related  Receivables  on the terms and  conditions  set
forth herein.  It shall be condition  precedent to any such release that (i) the
Debtor  shall pay to the  Agent,  for the  benefit of the  Company  and the Bank
Investors,  as applicable,  an amount equal to the Net Investment at the time of
such  release,  (ii) the Debtor  shall pay to the Agent,  for the benefit of the
Company and the Bank Investors,  as applica ble, an amount equal to all interest
costs  associated  with the  Company's  Commercial  Paper issued to fund the Net
Investment  through the date of maturity or all interest costs  associated  with
all funding  periods  utilized by the Bank Investors for the Liquidity  Provider
with  respect  to  its  interest  in  the  Contracts,  related  Receivables  and
Transferred  Interest,  as  applicable,  as well as all Carrying  Costs  accrued
through the date of such release and all other costs which  constitute  Carrying
Costs which will accrue  after such date,  (iii) the Debtor shall have given the
Collateral Agent, the Administrative  Agent and the Insurer at least thirty (30)
days  prior  written  notice  of its  intention  to effect  such a  release  the
Contracts  and  Receivables,  and (iv) all  amounts due and owing to the Insurer
from the Debtor shall have been paid in full.

                  SECTION 2.16 Hedging Amounts.

                  (a)  There  shall  be  established  on the  Closing  Date  and
maintained, for the benefit of the Secured Parties, with the Collateral Agent, a
segre  gated  account  (the "Hedge  Proceeds  Account"),  bearing a  designation
clearly indicat ing that the funds deposited therein are held for the benefit of
the Secured  Parties.  Subject to the terms hereof,  the Collateral  Agent shall
possess all right, title and interest in and to all funds deposited from time to
time in the Hedge Proceeds


                                                 45

<PAGE>



Account.  The Collateral  Agent will maintain the Hedge  Proceeds  Account at an
Eligible  Institution.  If the Eligible  Institution  holding the Hedge Proceeds
Account shall cease to be an Eligible  Institution,  the Collateral  Agent shall
have the right to  direct  the  transfer  of the Hedge  Proceeds  Account  to an
Eligible  Institution.  Funds on deposit in the Hedge Proceeds  Account shall be
invested by the Collateral Agent in overnight Eligible Investments.

                                    (1) Funds on deposit  in the Hedge  Proceeds
         Account shall be invested in Eligible  Investments by or at the written
         direction of the Debtor,  provided  that if a  Termination  Event shall
         have  occurred,  such  investments  shall  be made as  directed  by the
         Collateral  Agent.  Any  such  written  directions  shall  specify  the
         particular investment to be made and shall certify that such investment
         is an  Eligible  Investment  and is  permitted  to be made  under  this
         Agreement.

                                    (2)  The  Collateral  Agent  agrees  that it
         shall  not  accept  for  credit  to  the  Hedge  Proceeds  Account  any
         investment as to which it has  knowledge of any adverse claim  thereto.
         NationsBank  hereby  agrees  (and  any  other  Securities  Intermediary
         holding the Hedge  Proceeds  Account shall so agree) to comply with all
         Entitlement  Orders (as defined in Section  8-102 of the 1994  Official
         Text of the Uniform Commercial Code) received by it with respect to the
         Hedge Proceeds Account from the Collateral Agent.

                                    (3) No Eligible Investment held in the Hedge
         Proceeds  Account  may  be  liquidated  or  disposed  of  prior  to its
         maturity.  All pro  ceeds  of any  such  Eligible  Investment  shall be
         deposited in the Hedge Proceeds Account. Investments may be made in the
         Hedge Proceeds Account on any date (provided such investments mature in
         accordance  herewith),  only after  giving  effect to  deposits  to and
         withdrawals from such account on such date. Realized losses, if any, on
         amounts invested in such Eligible  Investments shall be charged against
         investment  earnings  on  amounts  on  deposit  in the  Hedge  Proceeds
         Account.

                                    (4) The Debtor shall provide the  Collateral
         Agent  on  the  date  hereof  and  from  time  to  time  an  incumbency
         certificate or the substantial  equivalent with respect to each officer
         of the Debtor that is  authorized to provide  instructions  relating to
         investments in Eligible Investments in the Hedge Proceeds Account.

                                    (5) Eligible Investments shall be maintained
         in the Hedge Proceeds  Accounts by the Collateral  Agent in such manner
         as may be neces sary to maintain the first priority  perfected security
         interest in favor of the Collateral


                                                 46

<PAGE>



Agent on behalf  of the  Secured  Parties.  NationsBank,  agrees  (and any other
Securi ties  Intermediary  holding the Reserve  Account  shall so agree) that it
shall not agree to comply with  Entitlement  Orders (as defined in Section 8-102
of the 1994 version of the Official Text of Article 8 of the Uniform  Commercial
Code) with respect to the Hedge Proceeds Account given to it by any Person other
than the Collateral Agent.

                                    (b)  On  and  after  the  occurrence  of any
         Termination  Event  or in the  event  of the  receipt  of any  proceeds
         received by the Collection  Agent  pursuant to any Hedging  Arrangement
         and  immediately  thereafter  Hedging  Arrange  ments which satisfy the
         requirements of Section 5.3 are not in place, the Collection Agent, for
         the benefit of the  Debtor,  shall  remit to the  Collateral  Agent for
         deposit into the Hedge  Proceeds  Account any proceeds  received by the
         Collection Agent of any Hedging Arrangement. Such amounts shall be held
         by the  Collateral  Agent as security for the repayment to the Company,
         the  Bank  Investors  and  the  Insurer,  as  applicable,  of  the  Net
         Investment and the Aggregate Unpaids.  At any time after the deposit of
         such  amounts  to  the  credit  of  the  Hedge  Proceeds  Account,  the
         Collateral  Agent may apply such  amounts  either (i) to reduce the Net
         Investment,  (ii) to provide for the payment to the  Company,  the Bank
         Investors and the Insurer, as applicable,  of the Aggregate Unpaids, or
         (iii) to purchase an interest  rate hedge  acceptable  to the  Insurer.
         Upon  the  termination  of  this  Agreement,   provided  that  the  Net
         Investment  shall be zero and all other  Aggregate  Unpaids  shall have
         been paid in full,  the Collat eral Agent  shall  release to the Debtor
         any amounts remaining on deposit in the Hedge Proceeds Account.


                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 3.1  Representations and Warranties of the Debtor. The
Debtor  represents and warrants to the Collateral  Agent and the Secured Parties
that:

                                    (a)  Corporate   Existence  and  Power.  The
         Debtor is a corporation  duly organized,  validly  existing and in good
         standing under the laws of its  jurisdiction of  incorporation  and has
         all  corporate   power  and  all  material   govern  mental   licenses,
         authorizations,  consents  and  approvals  required  to  carry  on  its
         business in each jurisdiction in which its business is now conducted.

                                    (b)     Corporate      and      Governmental
         Authorization;  Contravention.  The execution, delivery and performance
         by the Debtor of this Agree  ment and the other  Transaction  Documents
         are within the Debtor's corporate powers,  have been duly authorized by
         all necessary corporate action,  require no action by or in respect of,
         or filing with, any  governmental  body,  agency or official (except as
         contemplated  by Section 2.6), and do not  contravene,  or constitute a
         default under,  any provision of applicable law or regulation or of the
         Certificate  of  Incorporation  or  Bylaws  of  the  Debtor  or of  any
         agreement,  judgment,  injunction,  order,  decree or other  instrument
         binding upon the Debtor or result in the creation or  imposition of any
         lien on assets of the Debtor (except as  contemplated  by Section 2.6),
         or require the  consent or approval  of, or the filing of any notice or
         other  documentation  with, any governmental  authority or other Person
         (except as contemplated by Section 2.6).

                                    (c) Binding  Effect.  Each of this Agreement
         and the other Transaction  Documents  constitutes the legal,  valid and
         binding obligation of the Debtor,  enforceable in accordance with their
         respective  terms,  subject  to  applicable   bankruptcy,   insolvency,
         moratorium or other similar laws affecting the rights of creditors.

                                    (d) Perfection.  Immediately  preceding each
         Funding, the Debtor shall be the owner of all of the Receivables,  free
         and clear of all liens, encumbrances,  security interests,  preferences
         or other security arrangement of any kind or nature whatsoever,  except
         as permitted by this Agreement and the other Transaction Documents.  On
         or prior to each Funding and each day on which a Receivable  is sold to
         the Debtor by UAC  pursuant to the Sale and  Purchase  Agree ment,  all
         financing  statements  and other  documents  required to be recorded or
         filed in order to perfect and protect (i) the Debtor's  interest in the
         Receivables,  the Contracts related thereto,  the Related Security with
         respect  thereto and all Proceeds  thereof against all creditors of and
         purchasers  from UAC, PFC or any Acquisition  Subsidiary,  and (ii) the
         Collateral  Agent's interest in the Collateral against all creditors of
         and purchasers from the Debtor,  and all filing fees and taxes, if any,
         payable in connection with such filings shall have been paid in full.

                                    (e) Accuracy of Information. All information
         heretofore  furnished by the Debtor (including without limitation,  the
         Settlement  Statements,  any reports delivered  pursuant to Section 2.9
         and UAC's financial  statements) to the Collateral  Agent,  the Secured
         Parties,  the  Administrative  Agent or any of the other  Persons party
         hereto for  purposes of or in  connection  with this  Agreement  or any
         transaction  contemplated hereby is, and all such information hereafter
         furnished  by the Debtor to any such Person will be, true and  accurate
         in every material  respect,  on the date such  information is stated or
         certified.



                                                 47

<PAGE>



                                    (f) Tax Status.  All tax  returns  (federal,
         state and local)  required to be filed with  respect to the Debtor have
         been filed (which  filings may be made by an Affiliate of the Debtor on
         a  consolidated  basis covering the Debtor and other Persons) and there
         has been paid or adequate  provision made for the payment of all taxes,
         assessments and other governmental charges in respect of the Debtor (or
         in the event consolidated  returns have been filed, with respect to the
         Persons subject to such returns).

                                    (g)  Action,  Suits.  Except as set forth in
         Exhibit F, there are no actions,  suits or proceedings  pending,  or to
         the knowledge of the Debtor threatened, against or affecting the Debtor
         or any Affiliate of the Debtor or their  respective  properties,  in or
         before any court,  arbitrator or other body,  which may have a material
         adverse  effect on the  Debtor's  ability  to perform  its  obligations
         hereunder or under the Sale and Purchase Agreement.

                                    (h) Use of  Proceeds.  The  proceeds  of any
         Funding will be used by the Debtor to (a) acquire the Receivables,  the
         Contracts related thereto and the Related Security with respect thereto
         from UAC pursuant to the Sale and Pur chase Agreement,  (b) to pay down
         debt in connection  with the purchase of the  Receivables and Contracts
         pursuant  to  the  Sale  and  Purchase   Agreement,   or  (c)  to  make
         distributions constituting a return of capital.

                                    (i) Place of  Business.  The chief  place of
         business  and chief  executive  office of the Debtor are located at the
         address of the Debtor  indicated  in Section 9.3 hereof and the offices
         where the Debtor keeps all its Records,  are located at the address(es)
         described on Exhibit G or such other locations  notified to the Company
         in  accordance  with  Section  2.6 in  jurisdictions  where all  action
         required by Section 2.6 has been taken and completed.

                                    (j) Good  Title.  Upon each  Funding  and on
         each day on which a  Receivable  and  related  Contract  is sold to the
         Debtor  by UAC  pursuant  to  the  Sale  and  Purchase  Agreement,  the
         Collateral  Agent shall  acquire a valid and perfected  first  priority
         security  interest in each Receivable and related  Contract that exists
         on the date of such  Funding and sale and in the Related  Security  and
         Collections with respect thereto free and clear of any Adverse Claim.

                                    (k) Tradenames,  Etc. As of the date hereof:
         (i) the  Debtor  has only the  subsidiaries  and  divisions  listed  on
         Exhibit H hereto;  and (ii) the  Debtor  has,  within the last five (5)
         years,  operated  only  under the  tradenames  identified  in Exhibit H
         hereto,  and, within the last five (5) years, has not changed its name,
         merged


                                                 48

<PAGE>



with or into or consolidated  with any other  corporation or been the subject of
any  proceeding  under  Title 11,  United  States Code  (Bankruptcy),  except as
disclosed in Exhibit H hereto.

                                    (l) Nature of  Receivables.  Each Receivable
         represented by the Debtor as an Eligible Receivable hereunder or in any
         report,  document or instru ment  delivered  hereunder or in connection
         with the other Transaction  Documents is an Eligible  Receivable at the
         time of such representation.

                  (m)  Coverage;  Amount of  Receivables.  The Net Asset Test is
currently satisfied. As of September 17, 1998, the aggregate Outstanding Balance
of the Receivables in existence was $86,193,823.44 and the aggregate Outstanding
Balance of all Eligible Receivables was $85,808,215.61.

                  (n)  No  Termination  Event.  No  event  has  occurred  and is
continuing and no condition  exists which  constitutes a Termination  Event or a
Poten tial Termination Event.

                  (o)  Not  an  Investment  Company.  The  Debtor  is not an "in
vestment  company" within the meaning of the Investment  Company Act of 1940, as
amended, or is exempt from all provisions of such Act.

                  (p)  ERISA.  The  Debtor  is in  compliance  in  all  material
respects with ERISA and no lien in favor of the Pension Benefit Guaranty Corpora
tion on any of the Receivables shall exist.

                  (q)  Lock-Box  Accounts.  The names and  addresses  of all the
Lock-Box Banks,  together with the account  numbers of the Lock-Box  Accounts at
such Lock-Box  Banks,  are specified in Exhibit B hereto (or at such other Lock-
Box Banks and/or with such other Lock-Box  Accounts as have been notified to the
Administrative  Agent).  All Obligors have been  instructed to make payment to a
Lock-Box  Account.  (r)  Insurance  Policies.  At the  time of the  sale of each
Receivable  and related  Contract by UAC to the Debtor  pursuant to the Sale and
Purchase Agreement,  each Financed Vehicle is required to be covered by physical
damage and liability  insurance  obtained by the related Obligor at least in the
amount required by the related Contract, and each such required insurance policy
is  required  to name UAC as loss payee and is  required to be in full force and
effect.

                  (s) Year 2000  Compliance.  The  Debtor  (i) has  initiated  a
review and  assessment  of all areas  within  its and each of its  Subsidiaries'
business and


                                                 49

<PAGE>



operations  (including those affected by suppliers,  vendors and customers) that
could be adversely  affected by the "Year 2000 Problem"  (that is, the risk that
computer  applications  used  by the  Debtor  or any  of  its  Subsidiaries  (or
suppliers,  vendors  and  customers)  may be unable  to  recognize  and  perform
properly date-sensitive  functions involving certain dates prior to and any date
after  December  31,  1999),  (ii) is in the  process of  developing  a plan and
timeline for addressing the Year 2000 Problem on a timely basis,  and (iii) will
implement that plan in accordance with that  timetable.  Based on the foregoing,
the Debtor  believes  that all  computer  applications  (including  those of its
suppliers,  vendors  and  customers)  that  are  material  to  its or any of its
Subsidiaries'  business and operations are reasonably expected on a timely basis
to be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 Compliant"),  except to the extent
that a failure  to do so could not be  reasonably  expected  to have a  material
adverse  effect  on the  Debtor  or on the  transaction  documented  under  this
Agreement, or to result in a Termination Event.

                  The Debtor (i) has  completed a review and  assessment  of all
computer  applications  (including,  but not limited to those of its  suppliers,
vendors,  customers,  and any third  party  servicers),  which are related to or
involved  in  the  origination,  collection,  management  or  servicing  of  the
Receivables  (the  "Receivables  Systems") and (ii) has  identified  any of such
Receivables  Systems which are "mission  critical"  operations (i.e. those which
jeopardize the viability of the Debtor's  business if not Year 2000  Compliant).
The  Debtor  will  implement  a plan  to  ensure  that  all  "mission  critical"
operations of the  Receivables  Systems are Year 2000  Compliant or will be Year
2000 Compliant on or before June 30, 1999, and thereafter.

                  The  costs  of  all  assessment,   remediation,   testing  and
integration  related to the Debtor's plan for becoming Year 2000  Compliant will
not have a material  adverse effect on the financial  condition or operations of
the Debtor.

                  Any document,  instrument,  certificate or notice delivered to
the  Company  by the  Debtor  hereunder  shall be  deemed a  representation  and
warranty by the Debtor.

                  SECTION 3.2  Representations  and Warranties of the Collection
Agent.  The Collection Agent represents and warrants to the Collateral Agent and
the Secured Parties that:

                  (a) Corporate  Existence and Power.  The Collection Agent is a
corporation   duly  organized  and  validly  existing  under  the  laws  of  its
jurisdiction


                                                 50

<PAGE>



of  incorporation  and has all  corporate  power and all  material  governmental
licenses,  authorizations,  consents  and  approvals  required  to  carry on its
business in each jurisdiction in which its business is now conducted.

                                    (b)     Corporate      and      Governmental
         Authorization;  Contravention.  The execution, delivery and performance
         by the  Collection  Agent of this  Agreement and the other  Transaction
         Documents are within the Collection Agent's corporate powers, have been
         duly authorized by all necessary corporate action, require no action by
         or in respect of, or filing  with,  any  governmental  body,  agency or
         official   (except  as   contemplated  by  Section  2.6),  and  do  not
         contravene,  or constitute a default under, any provision of applicable
         law or regulation or of the Certificate of  Incorporation  or Bylaws of
         the Collection Agent or of any agreement,  judgment, injunction, order,
         decree or other instrument  binding upon the Collection Agent or result
         in the creation or imposition  of any lien on assets of the  Collection
         Agent or any of its  Subsidiaries  (except as  contemplated  by Section
         2.6),  or  require  the  consent or  approval  of, or the filing of any
         notice or other documentation with, any governmental authority or other
         Person (except as contemplated by Section 2.6).

                                    (c)   Binding    Effect.    This   Agreement
         constitutes the legal,  valid and binding  obligation of the Collection
         Agent,  enforceable in accordance with its terms, subject to applicable
         bankruptcy,  insolvency, moratorium or other similar laws affecting the
         rights of creditors.

                                    (d) Accuracy of Information. All information
         heretofore  furnished by the Collection Agent to the Collateral  Agent,
         the Secured Parties or the  Administrative  Agent for purposes of or in
         connection with this Agreement or any transaction  contemplated  hereby
         is, and all such  information  hereafter  furnished  by the  Collection
         Agent  to  the   Collateral   Agent,   the   Secured   Parties  or  the
         Administrative  Agent  will be,  true and  accurate  in every  material
         respect, on the date such informa tion is stated or certified.

                                    (e) Credit and Collection Policy. Since June
         30,  1998,  (except for any  changes as received by the  Administrative
         Agent in  writing),  there have been no material  changes in the Credit
         and Collection Policy;  since such date, no material adverse change has
         occurred in the overall rate of collection of the Receiv ables.

                                    (f)  Collections  and Servicing.  Since June
         30, 1998,  there has been no material  adverse change in the ability of
         UAC,  as  Collection  Agent  hereunder,  to  service  and  collect  the
         Receivables.


                                                 51

<PAGE>




                                    (g) Year  2000  Compliance.  The  Collection
         Agent (i) has initiated a review and assessment of all areas within its
         and each of its Subsidiaries'  business and operations (including those
         affected by suppliers,  vendors and custom ers) that could be adversely
         affected by the "Year 2000  Problem"  (that is, the risk that  computer
         applications  used by the Collection  Agent or any of its  Subsidiaries
         (or  suppliers,  vendors and  customers) may be unable to recognize and
         perform properly date-sensitive functions involving certain dates prior
         to and any date after  December  31,  1999),  (ii) is in the process of
         developing a plan and timeline for  addressing the Year 2000 Problem on
         a timely basis,  and (iii) will implement that plan in accordance  with
         that timetable.  Based on the foregoing,  the Collateral Agent believes
         that all  computer  applications  (including  those  of its  suppliers,
         vendors  and  customers)  that  are  material  to  its  or  any  of its
         Subsidiaries'  business and  operations  are  reasonably  expected on a
         timely basis to be able to perform  properly  date-sensitive  functions
         for all dates before and after  January 1, 2000 (that is, be "Year 2000
         Compliant"),  except to the extent that a failure to do so could not be
         reasonably expected to have a material adverse effect on the Collateral
         Agent or on the  transaction  documented  under this  Agreement,  or to
         result in a Termination Event.

                  The Collateral Agent (i) has completed a review and assessment
of all  computer  applications  (including,  but not  limited  to  those  of its
suppliers, vendors, customers, and any third party servicers), which are related
to or involved in the  origination,  collection,  management or servicing of the
Receivables  (the  "Receivables  Systems") and (ii) has  identified  any of such
Receivables  Systems which are "mission  critical"  operations (i.e. those which
jeopardize  the viability of the  Collection  Agent's  business if not Year 2000
Compliant).  The  Collection  Agent  will  implement  a plan to ensure  that all
"mission critical" operations of the Receivables Systems are Year 2000 Compliant
or will be Year 2000 Compliant on or before June 30, 1999, and thereaf ter.

                  The  costs  of  all  assessment,   remediation,   testing  and
integration  related  to the  Collection  Agent's  plan for  becoming  Year 2000
Compliant will not have a material adverse effect on the financial  condition or
operations of the Collec tion Agent.

                  Any document,  instrument,  certificate or notice delivered by
the Collection  Agent to the Collateral  Agent,  the Secured  Parties  hereunder
shall be deemed a representation and warranty by the Collection Agent.



                                                 52

<PAGE>



                  SECTION 3.3 Reaffirmation of  Representations  and Warranties.
On each Determination Date,  Remittance Date and day on which a Funding is made,
each of the Debtor and the Collection  Agent,  shall be deemed to have certified
that all of its respective  representations and warranties described in Sections
3.1 and 3.2 are  correct on and as of such day as though  made on and as of such
day.


                                                 53

<PAGE>



                                   ARTICLE IV

                              CONDITIONS PRECEDENT

                  SECTION 4.1 Conditions to Effectiveness.  This Agreement shall
become effective on the first day on which all of the following  conditions have
been satisfied:

                                    (a) A  Certificate  of the  Secretary of the
         Debtor  certifying  (i) the names and  signatures  of the  officers and
         other agents authorized on its behalf to execute this Agreement and the
         other Transaction  Documents and any other documents to be delivered by
         it hereunder or thereunder (on which  Certificate the Collateral  Agent
         and the Secured  Parties may  conclusively  rely until such time as the
         Collateral  Agent and the Secured Parties shall receive from the Debtor
         a revised  Certificate meeting the requirements of this clause (a)(i)),
         (ii) a copy of the Debtor's Certificate of Incorporation, as amended to
         the date hereof,  certified  by the  Secretary of State of the State of
         Delaware,  (iii) a copy of the Debtor's By-laws, as amended to the date
         hereof,  (iv) a copy of  resolutions of the Debtor's Board of Directors
         approv ing the transactions  contemplated  hereby and (v) a certificate
         of the  Secretary  of State of the  State of  Delaware  certifying  the
         Debtor's good standing.

                                    (b) A  Certificate  of the  Secretary of the
         Collection  Agent  certifying  (i)  the  names  and  signatures  of the
         officers  authorized  on its behalf to execute this  Agreement  and any
         other  documents to be delivered by it hereunder (on which  Certificate
         the  Collateral  Agent and the Secured  Parties may  conclusively  rely
         until  such time as the  Collateral  Agent and  Secured  Parties  shall
         receive from the  Collection  Agent a revised  Certificate  meeting the
         requirements  of this  clause  (a)(i)),  (ii) a copy of the  Collection
         Agent's  Articles  of  Incorporation,  as amended  to the date  hereof,
         certified by the  Secretary  of State of the State of Indiana,  (iii) a
         copy of the Collection Agent's By-laws,  as amended to the date hereof,
         (iv) a copy of resolutions of the Collection Agent's Board of Directors
         approving the transactions contemplated hereby and (v) a certificate of
         the  Secretary  of  State  of  the  State  of  Indiana  certifying  the
         Collection Agent's existence.

                                    (c)  Copies of proper  financing  statements
         (Form  UCC-1),  naming  UAC as the  debtor  in favor of the  Debtor  as
         secured party and the Collateral  Agent, for the benefit of the Secured
         Parties,  as assignee of the secured party or other similar instruments
         or documents as may be  necessary or in the  reasonable  opinion of the
         Collateral  Agent  desirable  under the  Relevant  UCC to  perfect  the
         Debtor's


                                                 54

<PAGE>



security interest in the Receivables, Related Security and Collections, free and
clear of any Adverse Claim.

                                    (d)  Copies of proper  financing  statements
         (Form UCC-1),  dated a date  reasonably near to the date of the Initial
         Funding  naming  the  Debtor as the  debtor in favor of the  Collateral
         Agent,  for the  benefit  of the  Secured  Parties,  or  other  similar
         instruments  or  documents  as may be  necessary  or in the  reasonable
         opinion of the  Collateral  Agent  desirable  under the Relevant UCC to
         perfect the Collateral  Agent's  security  interest in the  Collateral,
         including all Receivables,  Related Security and Collections,  free and
         clear of any Adverse Claim.

                                    (e)  Copies of proper  financing  statements
         (Form UCC-3), if any, necessary under the Relevant UCC to terminate all
         security  interests  and other rights of any person in the  Collateral,
         including the Receivables, Related Security and Collections, previously
         granted by the Debtor.

                                    (f)   Certified   copies  of   request   for
         information  or  copies  (Form  UCC-11)  (or a  similar  search  report
         certified by parties  acceptable to the Collateral  Agent) dated a date
         reasonably  near the date of the Initial  Funding listing all effective
         financing  statements which name the Debtor (under its present name and
         any previous  name) as debtor and which are filed in  jurisdictions  in
         which the filings were made  pursuant to item (e) above  together  with
         copies of such  financing  state  ments  (none of which shall cover any
         Receivables or Contracts).

                                    (g) Opinions of Barnes & Thornburg,  special
         counsel to the Debtor and the  Collection  Agent,  covering the matters
         set forth in (i) Exhibit I hereto, and (ii) Exhibit J hereto.

                                    (h) An opinion of Barrett & McNagny, special
         counsel  to the  Debtor  and the  Collection  Agent,  covering  matters
         relating to Florida law.

                                    (i) A list setting forth all Receivables and
         the  Outstanding  Balances  thereon as of the close of  business on the
         Cut-Off Date and such other infor mation as the Collateral Agent or any
         of the Secured Parties may reasonably request.

                                    (j) An executed copy of the Fee Letter.

                                    (k) The Note,  duly  executed  by the Debtor
         and appropri ately completed.



                                                 55

<PAGE>



                  (l) A Termination and Release Agreement, dated as of September
18, 1998,  among the Company,  the Debtor and UAC,  terminating the Transfer and
Administration  Agreement,  dated as of June 27,  1995 (as  amended  to the date
hereof), among the Company, the Debtor and UAC.

                                    (m) A  Termination  and  Release  Agreement,
         dated as of September 18, 1998,  among the Company,  the Debtor and UAC
         terminating  the Transfer  and  Administration  Agreement,  dated as of
         August 24, 1995 (as amended to the date hereof), among the Company, PFC
         and UAC.

                                    (n) The  Arrangement  Fee in accordance with
         Section 2.5.

                                    (o) Such other  documents as the  Collateral
         Agent or the Secured Parties shall reasonably request.


                                    ARTICLE V

                                    COVENANTS

                  SECTION 5.1  Affirmative  Covenants  of the Debtor and UAC. At
all times from the date hereof to the later to occur of (i) the Termination Date
or (ii) the date on which the Net Investment is zero, unless the Secured Parties
shall otherwise consent in writing:

                                    (a) Financial Reporting.  The Debtor and UAC
         each  will  maintain,  for  itself  and each  Subsidiary,  a system  of
         accounting  established  and  administered in accordance with generally
         accepted accounting  principles,  and UAC (or, in the case of the first
         sentence of clauses  (iii),  (iv),  and clause  (ix),  the Debtor) will
         furnish  to the  Administrative  Agent,  the  Collateral  Agent and the
         Insurer:

                         
             
                                    (i) Annual  Reporting.  Within  ninety  (90)
                  days  after the  close of each of its  fiscal  years,  audited
                  financial  state ments,  prepared in accordance with generally
                  accepted  accounting  principles on a  consolidated  basis for
                  itself and its  Subsidiaries,  includ ing balance sheets as of
                  the end of such  period,  related  statements  of  operations,
                  shareholder's  equity and cash flows,  accompanied by an audit
                  report  of  a  nationally   recognized   firm  of  independent
                  certified   public   accountants   (or  such   other  firm  of
                  independent  certified  public  accountants  acceptable to the
                  Administrative Agent, the Collateral


                                                 56

<PAGE>



                  Agent,  and the Insurer)  which report shall be unqualified as
                  to going  concern and scope of audit and shall state that such
                  consolidated financial statements present fairly the financial
                  position of UAC and its  Subsidiaries  at the dates  indicated
                  and the  results of their  operations  and their cash flow for
                  the periods  indicated is in conformity with GAAP and that the
                  examination   had  been  made  in  accordance  with  generally
                  accepted auditing standards.

                                    (ii) Quarterly Reporting.  Within forty-five
                  (45) days after the close of the first three quarterly periods
                  of each of its fiscal years, for itself and its  Subsidiaries,
                  consolidated  unaudited balance sheets as at the close of each
                  such  period  and   consolidated   re  lated   statements   of
                  operations, shareholder's equity and cash flows for the period
                  from  the  beginning  of such  fiscal  year to the end of such
                  quarter, all certified by its chief financial officer.

                                    (iii) Compliance  Certificate.  Concurrently
                  with the delivery by UAC of the financial  statements required
                  hereun der, a compliance  certificate  signed by its treasurer
                  or  vice  president  stating  that  no  Termination  Event  or
                  Potential  Termination  Event ex ists,  or if any  Termination
                  Event or  Potential  Termination  Event  exists,  stating  the
                  nature and status thereof. On and after the date of any change
                  in ownership of UAC  contemplated by Section 5.2(i),  together
                  with  the  financial   statements   hereunder,   a  compliance
                  certificate  signed  by the  chief  financial  officer  of UAC
                  showing the computation of, and showing  compliance with, each
                  of the quarterly  financial  tests or conditions  set forth in
                  Section 5.2(i).

                                    (iv) Notice of  Termination  Events or Poten
                  tial Termination  Events. As soon as possible and in any event
                  within two (2) days after the  occurrence of each  Termination
                  Event or each Potential  Termination Event, a statement of the
                  treasurer  or  vice  president  of the  Debtor  setting  forth
                  details of such  Termination  Event or  Potential  Termination
                  Event and the  action  which the Debtor pro poses to take with
                  respect thereto.

                                    (v) Change in Credit and  Collection  Policy
                  and Debt  Ratings.  Within  ten (10)  days  after the date any
                  material  change in or amendment to the Credit and  Collection
                  Policy is made, a


                                                 57

<PAGE>



                  copy of the  Credit  and  Collection  Policy  then  in  effect
                  indicating such change or amendment.

                                    (vi)  Credit  and  Collection  Policy.  Upon
                  request  by the  Collateral  Agent  or any  Secured  Party,  a
                  complete  copy of the Credit  and  Collection  Policy  then in
                  effect.

                                    (vii) Blue Book. Within forty-five (45) days
                  after the close of the quarterly  period of each of its fiscal
                  years, a copy of the UAC Quarterly  Statistical Update (a/k/a/
                  UAC's "blue book").

                                    (viii) Green Book.  Within  forty-five  (45)
                  days  after the close of the  quarterly  period of each of its
                  fiscal years, a copy of the Union Acceptance  Corporation Tier
                  II Quarterly  Statistical Update (a/k/a UAC's "green book") or
                  the equivalent information in some other written form.

                                    (ix)  ERISA.  Promptly  after the  filing or
                  receiving  thereof,  copies of all reports  and  notices  with
                  respect to any  Reportable  Event (as defined in Article IV of
                  ERISA)  which the Debtor,  UAC or any ERISA  Affiliate  of the
                  Debtor or UAC files  under  ERISA  with the  Internal  Revenue
                  Service,  the Pension Benefit Guaranty Corporation or the U.S.
                  Department  of Labor or which  the  Debtor,  UAC or any  ERISA
                  Affiliates  of the Debtor or UAC  receives  from the  Internal
                  Revenue Service,  the Pension Benefit Guaranty  Corporation or
                  the U.S. Department of Labor.

                                    (x) Other  Information.  Such other  informa
                  tion    (including    non-financial    information)   as   the
                  Administrative  Agent,  the  Collateral  Agent or any  Secured
                  Party may from time to time rea sonably request.

                
              
                  (b)  Conduct of  Business.  The  Debtor  will and UAC will (x)
carry on and  conduct  its  business  in  substantially  the same  manner and in
substan tially the same or related fields of enterprise (including,  in the case
of UAC,  consumer  finance  activities) as it is presently  conducted and do all
things  necessary  to remain duly  incorporated,  validly  existing  and in good
standing as a domestic  corporation in its jurisdiction of incorporation and (y)
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.



                                                 58

<PAGE>



             
                  (c) Compliance  with Laws. The Debtor will and UAC will comply
in all material respects with all laws, rules, regulations,  orders, writs, judg
ments, injunctions, decrees or awards to which it may be subject.

                  (d) Furnishing of Information  and Inspection of Records.  The
Debtor will furnish to the Collateral Agent and the Secured Parties from time to
time such information with respect to the Receivables as the Collateral Agent or
any  Secured  Party  may  reasonably  request,  including,  without  limitation,
listings  identi  fying  the  Obligor  and  the  Outstanding  Balance  for  each
Receivable. Upon at least two (2) Business Days prior notice, the Debtor and UAC
will during regular  business  hours permit the Collateral  Agent or any Secured
Party,  or their agents or representa  tives,  (i) to examine and make copies of
and abstracts  from all Records and (ii) to visit the offices and  properties of
the Debtor and UAC for the purpose of  examining  such  Records,  and to discuss
matters relating to Receivables or the Debtor's or UAC's  performance  hereunder
or under the Sale and Purchase Agreement with any of the officers,  employees or
independent  public  accountants  of the Debtor or UAC having  knowledge of such
matters.

                  (e) Keeping of Records  and Books of  Account.  The Debtor and
UAC (consistent  with its role as Collection  Agent) will maintain and implement
administrative  and operating  procedures  (including,  without  limitation,  an
ability  to  recreate  records  evidencing  Receivables  in  the  event  of  the
destruction  of the originals  thereof),  and keep and maintain,  all documents,
books,  records and other information  reasonably necessary or advisable for the
collection of all Receivables (in cluding, without limitation,  records adequate
to permit the daily identification of each new Receivable and all Collections of
and adjustments to each existing  Receivable).  The Debtor and UAC will give the
Collateral Agent, the Insurer,  Moody's and S&P notice of any material change in
the  administrative  and  operating  procedures  referred  to  in  the  previous
sentence.

                  (f) Performance and Compliance with Receivables and Contracts.
The Debtor and UAC will at their  expense  timely and fully  perform  and comply
with all  material  provisions,  covenants  and other  promises  required  to be
observed by it under the Contracts related to the Receivables.

                  (g) Credit and  Collection  Policies.  UAC will  comply in all
material  respects  with the  Credit  and  Collection  Policy  in regard to each
Receivable and the related Contract.



                                                 59

<PAGE>



                  (h)  Collections.  The  Debtor  and  UAC  shall  instruct  all
Obligors  to cause  all  Collections  to be  deposited  directly  to a  Lock-Box
Account.

                  (i)  Collections  Received.  The  Debtor and UAC shall hold in
trust,  and  deposit,  immediately,  but in any  event  not  later  than two (2)
Business  Days of its receipt  thereof,  to a Lock-Box  Account all  Collections
received from time to time by them.

                  (j)  Separate  Business.  The Debtor shall at all times (a) to
the extent the Debtor's office is located in the offices of UAC or any Affiliate
of UAC,  pay fair  market rent for its  executive  office  space  located in the
offices  of UAC or any  Affiliate  of UAC,  (b)  maintain  the  Debtor's  books,
financial  statements,  accounting  records and other  corporate  documents  and
records  separate from those of UAC or any other  entity,  (c) not commingle the
Debtor's assets with those of UAC or any other entity (it being  understood that
certain  Collections  on  Receivables  owned by the  Debtor  may be  temporarily
commingled  with  collections  on other  receivables  serviced by UAC);  (d) act
solely in its corporate name and through its own authorized officers and agents,
(e) make  investments  directly or by brokers  engaged and paid by the Debtor or
its agents  (provided  that if any such Agent is an  Affiliate  of the Debtor it
shall be  compensated  at a fair market rate for its  services),  (f) separately
manage the Debtor's  liabilities  from those of UAC or any Affiliates of UAC and
pay its own liabil ities,  including all administrative  expenses,  from its own
separate  assets,  and (g) pay from the  Debtor's  assets  all  obligations  and
indebtedness  of any kind incurred by the Debtor.  The Debtor shall abide by all
corporate  formalities,  including the mainte nance of current minute books, and
the Debtor shall cause its  financial  statements  to be prepared in  accordance
with  generally  accepted  accounting  principles in a manner that indicates the
separate  existence  of the Debtor and its  assets and  liabilities.  The Debtor
shall (i) pay all its liabilities, (ii) not assume the liabilities of UAC or any
Affil  iate of UAC,  and  (iii)  not  guarantee  the  liabilities  of UAC or any
Affiliate  of UAC. The  officers  and  directors of the Debtor (as  appropriate)
shall make  decisions  with respect to the business and daily  operations of the
Debtor independent of and not dictated by any controlling entity.

                  (k) Corporate  Documents.  The Debtor shall only amend, alter,
change or repeal Articles III, IV, V, VI, and XI of its Certificate of Incorpora
tion as in  effect on the date  hereof  with the prior  written  consent  of the
Administra tive Agent.

                  (l) Year  2000  Compliance.  Each of the  Debtor  and UAC will
promptly notify the Administrative Agent and the Insurer in the event the Debtor


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<PAGE>



or UAC discovers or determines that any computer application (including those of
its suppliers, vendors and customers) (i) that is necessary for the origination,
collection,  management,  or servicing of the Receivables  will not be Year 2000
Compliant  on or before June 30,  1999 and  thereafter,  (ii) that is  otherwise
material to its or any of its Subsidiaries'  business and operations will not be
Year 2000 Compliant on a timely basis, except to the extent that, in the case of
(ii) above, such failure could not reasonably be expected (x) to have a material
adverse effect on the Debtor or UAC or on the transaction  documented under this
Agreement, or (y) to result in a Termination Event, or (iii) notwithstanding the
foregoing,  that is necessary for "mission critical" operations will not be Year
2000 Compliant on or before June 30, 1999.

                  Further,   each   of  the   Debtor   and  UAC   will   deliver
simultaneously  with any quarterly or annual financial  statements or reports to
be delivered  under the Agreement,  a letter,  report,  certificate or statement
signed by the appropriate officer that no material event, problems or conditions
have occurred which in the opinion of management would (i) prevent or materially
delay the Debtor's or UAC's plan to become Year 2000  Compliant or (ii) cause or
be likely to cause the Debtor's or UAC's  representations  and  warranties  with
respect to being or becoming Year 2000 Compli ant to no longer be true.

                  SECTION 5.2 Negative  Covenants of Debtor and UAC.  During the
term of this Agreement,  unless the Secured  Parties shall otherwise  consent in
writing:

                  (a) No Sales, Liens, Etc. Except as otherwise provided herein,
neither the Debtor nor UAC will sell, assign (by operation of law or other wise)
or otherwise dispose of, or create or suffer to exist any Adverse Claim upon (or
the filing of any  financing  statement)  or with respect to, any  Receivable or
related Contract, or upon or with respect to any account which concentrates in a
Lock-Box Bank to which any Collections of any Receivable are sent, or assign any
right to re ceive income in respect thereof.

                  (b) No  Extension  or  Amendment  of  Receivables.  Except  as
otherwise  permitted  in Section  6.2,  neither the Debtor nor UAC will  extend,
amend or otherwise modify the terms of any Receivable, or amend, modify or waive
any term or condition of any Contract related thereto.

                  (c) No Amendment of Sale and  Purchase  Agreement.  The Debtor
shall not amend or otherwise modify the Sale and Purchase Agreement with out the
prior written consent of the Secured Parties.



                                                 61

<PAGE>



                  (d) No Change in  Business  or Credit and  Collection  Policy.
Neither  the Debtor  nor UAC shall,  without  the prior  written  consent of the
Agent,  make any change in the  character  of its  business or in the Credit and
Collection   Policy,   which  change  would,  in  either  case  (i)  impair  the
collectibility  of any Receiv able or (ii) change the write-off policy in effect
as of the Closing Date, with respect to the Receivables and the Contracts.

                  (e) Sale of Assets, Etc. Neither the Debtor nor UAC will sell,
lease or transfer all or  substantially  all of its assets to any other  person,
provided, however, that no such sale shall be deemed to occur solely as a result
of a  Take-Out  or  solely  as a result  of the sale of  Contracts  and  related
Receivables  which are  released to the Debtor  pursuant to Section  2.15(c) and
2.15(d).

                  (f) Change in Payment  Instructions  to Obligors.  Neither the
Debtor  nor UAC nor the  Collection  Agent will add or  terminate  any bank as a
Lock-Box  Bank or any account as a Lock-Box  Account to or from those  listed in
Exhibit B hereto or make any change in its  instructions  to Obligors  regarding
pay ments to be made to any Lock-Box  Account,  unless (i) such instructions are
to deposit  such  payments  to  another  existing  Lock-Box  Account or (ii) the
Collateral Agent and the Administrative Agent shall have received written notice
of such addi tion, termination or change at least 30 days prior thereto.

                  (g) Change of Name,  Etc. The Debtor will not change its name,
identity or structure  or its chief  executive  office,  unless at least 30 days
prior to the  effective  date of any such  change  the  Debtor  delivers  to the
Collateral Agent UCC financing  statements,  executed by the Debtor necessary to
reflect such change and to continue the  perfection  of the  Collateral  Agent's
security interest in the Receivables.

                  (h) No  Mergers,  Etc.  Neither  the  Debtor  nor UAC will (i)
consolidate  or merge  with or into any other  Person,  or (ii)  sell,  lease or
transfer all or substantially all of its assets to any other person,  unless the
Debtor or UAC, respec tively, is the surviving entity.

                  (i) Sale  Treatment.  Neither the Debtor nor UAC will  account
for  (including  for  accounting  and tax  purposes),  or otherwise  treat,  the
transactions contemplated by the Sale and Purchase Agreement in any manner other
than as a sale of Receivables by UAC to the Debtor.

                  (j) Other Debt. Except as provided for herein, the Debtor will
not create, incur, assume or suffer to exist any indebtedness whether current or


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<PAGE>



funded,  or any  other  liability  other  than (i)  indebtedness  of the  Debtor
representing fees,  expenses and indemnities arising hereunder or under the Sale
and Purchase  Agreement for the purchase price of the Receivables under the Sale
and Purchase  Agreement,  and (ii) other  indebtedness  incurred in the ordinary
course  of  its  business  in  an  amount  not  to  exceed  $9,500  (except  for
indebtedness  incurred in connection  with the  repurchase of  Receivables  from
UARC) at any time outstanding.

                  SECTION 5.3 Hedging  Arrangements.  The Collection Agent shall
(i) at or prior to the time of any Funding, provide to the Administrative Agent,
the Collateral Agent and the Insurer an officer's  certificate  stating that the
Collection Agent has Hedging  Arrangements in place satisfying the conditions of
this Section 5.3 as set forth below and after  January 1, 1999,  qualifies as an
Acceptable Hedging Arrangement (as defined in the Insurance Agreement), and (ii)
in connection  with any  Settlement  Statement  provided  hereunder,  provide an
executed copy of all existing Hedging  Arrangements,  which Hedging Arrangements
shall be satisfactory to the Administrative  Agent, the Collateral Agent and the
Insurer,  and  with  respect  to which at any time  after  the  occurrence  of a
Termination  Event  the  Debtor  shall be the bene  ficiary,  in  respect  of an
aggregate  notional  amount at least equal to the Net Invest ment.  The form and
structure and  counterparty to each Hedging  Arrangement  shall be acceptable to
the  Administrative  Agent,  the Collateral Agent and the Insurer and must be in
full force and effect at all times  during which the Net  Investment  is greater
than zero (however such required amount may be reduced for the period of time be
tween  the  pricing  and  the  funding  of  a  structured   financing  utilizing
receivables  released to the Debtor  pursuant to Section  2.15 by the  aggregate
Outstanding Balance of such Receivables).


                                   ARTICLE VI

                         ADMINISTRATION AND COLLECTIONS

                  SECTION 6.1  Appointment of Collection  Agent.  The servicing,
administering  and  collection  of the  Receivables  shall be  conducted by such
Person (the  "Collection  Agent") so designated  from time to time in accordance
with this Section  6.1.  Until the  Collateral  Agent gives notice to UAC of the
designation of a new Collection  Agent, UAC is hereby  designated as, and hereby
agrees to perform the duties and obligations  of, the Collection  Agent pursuant
to the terms  hereof.  The  Collateral  Agent,  upon the written  request of the
Insurer shall, or may, with the consent of the Insurer, upon the occurrence of a
Collection Agent Default or any other Termination Event, designate as Collection
Agent any Person (including itself)


                                                 63

<PAGE>



acceptable to the Insurer to succeed UAC or any successor  Collection  Agent, on
the  condition  in each case that any such Person so  designated  shall agree to
perform the duties and obligations of the Collection Agent pursuant to the terms
hereof,  but in any  event  the  Company  shall  notify  Moody's  and S&P of any
Collection  Agent  Default.  The Company may notify any Obligor of its  security
interest in the Contracts and the related Receivables.

                  SECTION 6.2 Duties of Collection Agent.

                  (a) The  Collection  Agent shall take or cause to be taken all
such action as may be necessary or  advisable  to collect each  Receivable  from
time to time, all in accordance with  applicable  laws,  rules and  regulations,
with  reasonable  care and  diligence,  and in  accordance  with the  Credit and
Collection Policy.  Each of the Debtor, the Company,  each Bank Investor and the
Insurer  hereby  appoints as its Agent the Collection  Agent,  from time to time
designated  pursuant  to Section  6.1,  to  enforce  its  respective  rights and
interests in and under the Receivables,  the Related Security and the Contracts.
The Collection Agent shall remit daily, within two (2) Business Days of receipt,
to  the  Collection  Account  all  Collections  received  with  respect  to  any
Receivables.  The Collection  Agent shall  segregate and deposit to the Agent's,
the Company's, the Bank Investor's or the Insurer's account, as applicable, such
Person's allocable share of Collections of Receivables when required pursuant to
Article II hereof.  So long as no  Termination  Event shall have occurred and be
con tinuing,  the Collection  Agent may,  unless  otherwise  required by law, in
accordance  with the Credit  and  Collection  Policy,  extend  the  maturity  of
Receivables as the Collection  Agent may determine to be appropriate to maximize
Collections  thereof.  The Debtor shall hold in trust for the Secured Parties in
accordance with their security interest, all Records which evidence or relate to
Receivables or Related Security.  In the event that a successor Collection Agent
is  appointed  by the  Company,  upon the  direction  or with the consent of the
Insurer,  the Debtor shall deliver to the  Collection  Agent and the  Collection
Agent shall hold in trust for the Debtor and the Secured  Parties in  accordance
with  their  respective  interests,  all  Records  which  evidence  or relate to
Receivables  or  Related  Security.  Notwithstanding  anything  to the  contrary
contained  herein,  the  Collateral  Agent shall have the absolute and unlimited
right to direct the Collection Agent (whether the Collection Agent is the Debtor
or any other  Person)  to  commence  or  settle  any  legal  action  to  enforce
collection  of any Receiv able or to  foreclose  upon or  repossess  any Related
Security.

                  (b) The Collection  Agent shall,  as soon as  practicable  fol
lowing  receipt  thereof,  turn  over  to  the  Debtor  any  collections  of any
indebtedness  of any Obligor which is not a Receivable.  If UAC or any affiliate
thereof is not the Col lection Agent, the Collection  Agent, by giving three (3)
Business Days' prior written notice to the Collateral  Agent,  the Agent and the
Insurer,  may revise the percentage  used to calculate the Servicing Fee so long
as the revised  percentage  will not result in a Servicing Fee that exceeds 110%
of the  reasonable  and  appropriate  out-of-pocket  costs and  expenses of such
Collection Agent incurred in connection with the perfor mance of its obligations
hereunder as documented to the reasonable  satisfaction of the Collateral Agent,
the Agent and the Insurer. The Collection Agent, if other than the Debtor, shall
as soon as  practicable  upon  demand,  deliver to the Debtor all Records in its
possession which evidence or relate to indebtedness of an Obligor which is not a
Receivable.

                  (c) On or before ninety (90) days after the end of each fiscal
year of the  Collection  Agent,  beginning  with the fiscal year ending June 30,
1999, the Collection Agent shall cause a firm of independent  public accountants
(who may also render other  services to the  Collection  Agent or the Debtor) to
furnish a report on applying agreed upon  procedures to the Collateral  Agent to
the  effect  that  they  have (i)  compared  the  information  contained  in the
Settlement  Statements and Withdrawal Notices delivered during such fiscal year,
based on a sample size provided by the Agent, with the information  contained in
the Contracts and the Collection  Agent's records and computer  systems for such
period,  (ii)  verified  the  Net  Receiv  ables  Balance  as of the end of each
Settlement  Period during such fiscal year,  and (iii) verified that a sample of
Receivables  treated by the  Collection  Agent as Eligible  Receivables  in fact
satisfied the requirements of the definition  thereof contained herein, and (iv)
conducted a 'negative  confirmation' of a sample of the Receivables and verified
that the Collection  Agent's  records and computer system used in servic ing the
Receivables   contained  correct  information  with  regard  to  due  dates  and
outstanding balances,  except, in each case for (a) such exceptions as such firm
shall believe to be immaterial (which exceptions need not be enumerated) and (b)
such other exceptions as shall be set forth in such report.

                  (d) Notwithstanding anything to the contrary contained in this
Article VI, the Collection Agent, if not the Debtor, shall have no obligation to
collect,  enforce or take any other  action  described  in this  Article VI with
respect to any Receivable  that is not included in the Collateral  other than to
deliver to the Debtor the  Collections  and  documents  with respect to any such
Receivable as de scribed in Section 6.2(b).

                  (e) In the event that a Take-Out  does not occur at least once
in any period of sixteen (16) consecutive  calendar weeks, the Collateral Agent,
the  Company or the  Insurer  shall  have the right to conduct  (or to cause its
accoun  tants or other  third  parties to  conduct)  an audit of the  Collection
Agent's records  (including all Records and Contracts) and servicing,  reporting
and collection proce dures.

                  SECTION 6.3 Collection  Agent Defaults.  The occurrence of any
one or more of the following events shall constitute a Collection Agent Default:

                  (a) any representation,  warranty,  certification or statement
made by the Collection Agent  (including UAC, if it is the Collection  Agent) in
this Agreement or in any other document delivered pursuant hereto shall prove to
have been incorrect in any material respect when made or deemed made; or

                  (b) the Collection  Agent shall default in the  performance of
any payment, covenant or undertaking hereunder; or

                  (c) any Event of  Bankruptcy  shall occur with  respect to the
Collection Agent or any Subsidiary of Collection Agent.

                  SECTION 6.4 Rights After  Designation of New Collection Agent.
At any time  following the  designation  of a Collection  Agent (other than UAC)
pursuant to Section 6.1:

                                    (i) The Agent or the Insurer may direct that
                  payment of all amounts  payable  under any  Receivable be made
                  directly  to  the  Collateral   Agent  and  the  Insurer,   as
                  applicable, or their respec tive designees.

                                    (ii) The Debtor shall, at the Agent's or the
                  Insurer's request and at the Debtor's expense,  give notice of
                  the Collat eral Agent's  interest in the  Receivables  to each
                  Obligor  and direct  that  payments  be made  directly  to the
                  Collateral Agent or its designee.

                                    (iii) The Debtor  shall,  at the  Agent's or
                  the Insurer's  request,  (A) assemble all of the Records,  and
                  shall make the same available to the Collateral  Agent and the
                  Insurer at a place se lected by the  Collateral  Agent and the
                  Insurer or their respective  designees,  and (B) segregate all
                  cash, checks and other instruments received by it from time to
                  time  constituting  Collections  of  Receivables  in a  manner
                  acceptable to the Collateral  Agent and the Insurer and shall,
                  promptly upon receipt,  remit all such cash, checks and instru
                  ments,  duly  endorsed or with duly  executed  instruments  of
                  transfer, to the Collateral Agent or its designee.

                                    (iv)  The  Debtor  hereby   authorizes   the
                  Collateral  Agent  to take any and all  steps in the  Debtor's
                  name and on behalf of the Debtor  necessary or  desirable,  in
                  the  determination  of the  Collateral  Agent,  to collect all
                  amounts  due  under  any  and all  Receiv  ables  and  Related
                  Security with respect thereto, including,  without limitation,
                  endorsing  the Debtor's  name on checks and other instru ments
                  representing  Collections  and enforcing such  Receivables and
                  the related Contracts.

                  SECTION 6.5 Responsibilities of the Debtor. Anything herein to
the  contrary  notwithstanding,   the  Debtor  shall  (i)  perform  all  of  its
obligations under the Contracts related to the Receivables to the same extent as
if  interests  in such  Receiv  ables  had not been  pledged  hereunder  and the
exercise by the Collateral  Agent of its rights  hereunder shall not relieve the
Debtor from such obligations and (ii) pay when due any taxes,  including without
limitation, any sales taxes payable in connection with the Receivables and their
creation and  satisfaction.  Neither the Collateral  Agent nor any Secured Party
shall have any obligation or liability with respect to any Receivable or related
Contracts, nor shall any of them be obligated to perform any of the obliga tions
of the Debtor thereunder.


                                   ARTICLE VII

                               TERMINATION EVENTS

                  SECTION 7.1 Termination  Events.  The occurrence of any one or
more of the following events shall constitute a Termination Event:

                                    (a)    any     representation,     warranty,
                  certification  or statement  made by the Debtor or UAC in this
                  Agreement,  the Sale and  Purchase  Agreement  or in any other
                  Transaction Document shall prove to have been incorrect in any
                  material respect when made or deemed made;

                                    (b) the  Debtor or UAC shall  default in the
                  performance of (i) any payment  obligation  hereunder or under
                  the Sale and Purchase  Agreement or (ii) any other covenant or
                  undertaking hereunder or under the Sale and Purchase


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                  Agreement  which in the case of this clause (ii) shall  remain
                  unremedied for five (5) days; or

                                    (c) any Event of Bankruptcy shall occur with
                  respect  to  the  Debtor  or  the  Collection   Agent  or  any
                  Subsidiary of either of them; or

                                    (d) a Collection  Agent  Default  shall have
                  occurred or for any reason UAC is not the Collection Agent; or

                                    (e) the  Collection  Agent shall at any time
                  not be in compliance with the requirements of Section 5.3; or

                                    (f)  the  Collateral  Agent  shall,  for any
                  reason,  fail to have a valid  and  perfected  first  priority
                  security  interest in the Receivables and Related Security and
                  Collections  with  respect  thereto,  free  and  clear  of any
                  Adverse Claim; or

                                    (g) either of the  Debtor or the  Collection
                  Agent  shall  con  solidate  or merge  with or into any  other
                  Person whereby it is not the surviving entity; or

                                    (h) there shall have  occurred  any material
                  adverse  change  in  the  operations  of  the  Debtor  or  the
                  Collection  Agent since the Closing  Date,  or any other event
                  shall have occurred which  materially  affects the Debtor's or
                  the   Collection   Agent's   ability  to  either  collect  the
                  Receivables or to perform under this  Agreement,  the Sale and
                  Purchase Agreement or any other Transaction Document; or

                                    (i) the  Liquidity  Provider  or the  Credit
                  Support  Provider  shall  have given  notice  that an event of
                  default has occurred and is  continuing  under its  agreements
                  with the Company; or

                                    (j)  the  Commercial  Paper  issued  by  the
                  Company  shall not be rated at least "A-2" by S&P and at least
                  "P-2" by Moody's; or

                                    (k) (i) the Net Investment  minus amounts on
                  deposit in the Prefunding Account shall at any time exceed the
                  Net  Receivables  Balance,  or (ii) the Net Asset  Test is not
                  satisfied; or

                                    (l) a Take-Out shall not occur at least once
                  in any period of six consecutive calendar months; or



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                                    (m) the Net  Yield  as of any  Determination
                  Date is less than 2.00%;

                                    (n) a draw is made  under  the  Policy or an
                  Insurer Default has occurred and is continuing;

                                    (o) the Insurer shall have given notice that
                  an event of default has occurred and is  continuing  under the
                  Insurance Agreement;

                                    (p)  the  term of the  Policy  is not of the
                  term  required  by the  Company  (which term shall be at least
                  equal to the term of the  latest  maturing  Receivable  in the
                  facility plus 90 days); and

                                    (q) the sum of the (i)  amount on deposit in
                  the Reserve Account and (ii) the amount available  pursuant to
                  any Reserve Account Guaranty is less than the Required Reserve
                  Account Amount for two (2) consecutive Business Days.

                  SECTION  7.2  Termination.   If  a  Termination  Event  occurs
hereunder and is continuing,  the Collateral  Agent, at the written direction of
the Insurer shall, or the Collateral Agent may, with the consent of the Insurer,
in either case by notice to the Debtor,  (i) if UAC is the  Collection  Agent at
the time, terminate UAC as Collec tion Agent hereunder, or (ii) declare any date
as the date upon which the Note shall  become due and payable,  and,  subject to
the  limitations  on recourse set forth in Section 2.1 hereof and Section 6.8 of
the Note Purchase  Agreement,  the Collateral Agent shall have all of the rights
and  remedies  provided to a secured  creditor or a purchaser  of chattel  paper
under the Relevant UCC by applicable law in respect thereto (including,  but not
limited to, initiating  foreclosure and/or liquidation proceed ings with respect
to all of the  Receivables and Contracts or any portion  thereof).  In addition,
the Agent shall have the right to  designate  the Base Rate plus,  if an Insurer
Default shall have occurred,  2%, to be applicable to the Net Investment (except
in the case of a Termination Event described under clauses (i) and (j) above, in
which case the Adjusted  LIBOR Rate or the Base Rate,  as  applicable,  shall be
applicable),  and the Company shall have the right to cease  issuing  Commercial
Paper  in  order to  maintain  the Net  Investment  and may  assign  to the Bank
Investors all of its right, title and interest hereunder.

                  No waiver of any  Termination  Event or Potential  Termination
Event shall be effective without the prior written consent of the Insurer.



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<PAGE>



                  If the Note is  declared  due and payable in  accordance  with
this Section 7.2, the Collateral  Agent shall,  at the direction of the Insurer,
and may, with the consent of the Insurer, do any one or more of the following:

                                    (i) take all  necessary  action to foreclose
         upon the Collateral;

                                    (ii)   retain in satisfaction of any amounts
         owing  from the  Debtor  all  amounts  otherwise  payable to the Debtor
         pursuant to this  Agreement to the extent  necessary to pay in full all
         amounts  (including  principal  and interest) (i) due and payable under
         the Note,  (ii) due and payable by the Debtor  under the Note  Purchase
         Agreement,  and (iii) all amounts  due and payable by the Debtor  under
         the Insurance Agreement;

                                    (iii) subject to the limitations on recourse
         set forth in Section 2.1 hereof and  Section  6.8 of the Note  Purchase
         Agreement,  pursue  any  available  remedy by  proceeding  at law or in
         equity including  complete or partial  foreclosure of the lien upon the
         Collateral and sale of the Collateral or any portion  thereof or rights
         or interest therein as may appear necessary or desirable (i) to collect
         amounts owed  pursuant to the Note and any other  payments then due and
         thereafter  to  become  due  under  the  Note or (ii)  to  enforce  the
         performance  and observance of any obligation,  covenant,  agreement or
         provision  contained  in this  Agreement to be observed or performed by
         the Debtor; or

                                    (iv) subject to the  limitations on recourse
         set forth in Section 2.1 hereof and  Section  6.8 of the Note  Purchase
         Agreement,  exercise any remedies of a secured party under the Uni form
         Commercial  Code and take any other  appropriate  action to protect and
         enforce the rights and  remedies of the  Collateral  Agent on behalf of
         the Secured Parties

                  The Debtor and the Collection Agent agree that they shall take
all actions  (including  reliening of the  certificates  of title or other title
documents in the name of the Collateral  Agent on behalf of the Secured Parties)
and execute all  documents as may be  necessary  or requested by the  Collateral
Agent to perfect its interest in the Collateral,  including, without limitation,
to perfect the Collateral  Agent's security  interest in the Financed  Vehicles.
The Debtor and UAC hereby grant


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<PAGE>



to the Collateral  Agent, on behalf of the Secured Parties,  a power of attorney
to act in their  place  and stead to take all  actions  as may be  necessary  to
perfect the Collateral Agent's security interest in the Financed Vehicles.  Each
of UAC and the Debtor acknowledge that such power of attorney is irrevocable and
is coupled with an interest.  In connection  with any sale of the Receivables by
the  Collateral  Agent after the occurrence of a Termination  Event,  the Debtor
shall have, for a period of five (5) Business Days after notice of such proposed
sale from or on behalf  of the  Secured  Parties,  the right to  repurchase  the
Receivables and related Contracts for a price, payable in immediately  available
funds, in an amount equal to the Aggregate Unpaids.

                  SECTION 7.3 Proceeds.  The proceeds from the sale, disposition
or liquidation of the Receivables pursuant to Section 7.2 above shall be treated
as  Collections  on the  Receivables  and shall be  allocated  and  deposited in
accordance with the provisions governing allocations set forth herein.




                                  ARTICLE VIII

                              THE COLLATERAL AGENT

                  SECTION  8.1  Duties  of the  Collateral  Agent.  The  Secured
Parties hereby  appoint  NationsBank to act solely on their behalf as Collateral
Agent  hereun  der,  and  NationsBank  hereby  accepts  such  appointment.   The
Collateral  Agent, both prior to the occurrence of a Termination Event hereunder
and after a Termination  Event shall have been cured or waived,  shall undertake
to perform  such  duties and only such duties as are  specifically  set forth in
this Agreement.  The Collateral Agent shall at all times after the occurrence of
a  Termination  Event  which has not been cured or waived  exercise  such of the
rights and powers vested in it pursuant to this Agreement  using the same degree
of care and skill as a prudent  person  would  exercise or use in the conduct of
his or her own affairs.

                  All  Collections  received  by the  Collateral  Agent from the
Collection  Agent or otherwise  will,  pending  remittance  to the Secured Party
entitled  thereto,  be held in trust by the Collateral  Agent for the benefit of
the  Secured  Parties and to gether with all other  payment  obligations  of the
Debtor  hereunder  owing to the Secured  Parties shall be payable to the Secured
Parties in accordance with the provi sions of Article II hereof.



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                  The Collateral  Agent shall only resign if it shall (i) become
incapable of acting as  Collateral  Agent in  accordance  with the terms of this
Agreement, (ii) be adjudicated insolvent or bankrupt or otherwise become subject
to any bankruptcy,  insolvency,  reorganization or liquidation proceeding, (iii)
be no longer  qualified as the  Collateral  Agent as such term is defined in the
agreement  governing  its  responsibility  as  Collateral  Agent or otherwise be
subject  to   replacement   pursuant  to  or  such   agreement   governing   its
responsibility  as  Collateral  Agent  or  (iv)  materially  breach  any  of the
provisions of this Agreement or provided,  further, that, without the consent of
the Agent and the  Insurer,  such  resignation  shall not be  effective  until a
successor  Collateral  Agent  acceptable  to the  Insurer  shall  have  accepted
appointment as Collat eral Agent  hereunder and shall have agreed to be bound by
the terms of this Agree ment.

                  Except as otherwise  provided  herein,  the  Collateral  Agent
shall not resign from the  obligations  and duties  hereby  imposed on it except
upon  determina  tion that (i) the  performance  of its duties  hereunder  is no
longer  permissible  under applicable law and (ii) there is no reasonable action
which the  Collateral  Agent  could take to make the  performance  of its duties
hereunder  permissible under applicable law. Any such  determination  permitting
the  resignation  of the  Collateral  Agent shall be  evidenced as to clause (i)
above by an opinion of counsel to such effect  delivered to the Collateral Agent
and the Secured Parties. Notwithstanding the foregoing, the Collateral Agent may
resign  if,  after  demand  therefor,   it  does  not  receive  payment  of  any
compensation due from the Debtor pursuant to the letter  agreement  described in
Section 8.2. No resignation of the Collateral Agent shall become effective until
a suc cessor  Collateral  Agent  approved  by the Agent and the  Insurer and the
successor   Collateral  Agent  shall  have  assumed  the   responsibilities  and
obligations of the Collat eral Agent hereunder.

                  This Agreement  shall be  administered  in the Corporate Trust
Office of the Collateral  Agent.  The Collateral  Agent shall maintain  fidelity
bond coverage  insuring  against losses  through  wrongdoing of its officers and
employees who are involved in the  administration  of Collections  covering such
actions and in such amounts as the Collateral Agent believes to be reasonable in
light of industry stan dards from time to time.

                  SECTION 8.2  Compensation  and  Indemnification  of Collateral
Agent.  The Collateral  Agent shall be compensated for its activities  hereunder
and reimbursed for reasonable  out-of-pocket  expenses (including (i) securities
transaction  charges  not  waived  due to the  Collateral  Agent's  receipt of a
payment  from  a  financial   institution   with  respect  to  certain  Eligible
Investments, as specified by the Debtor and


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<PAGE>



(ii) the  compensation  and  expenses of its  counsel and agents)  pursuant to a
separate letter agreement between the Collateral Agent and the Debtor.  All such
amounts  shall be payable  from funds  available  therefor  in  accordance  with
Section  2.3(a)(iii)  hereof with any increase in such amounts to be approved by
the Insurer. Subject to the terms of such letter agreement, the Collateral Agent
shall be required to pay the ex penses  incurred  by it in  connection  with its
activities hereunder from its own account.  Notwithstanding any other provisions
in this Agreement, the Collateral Agent shall not be liable for any liabilities,
costs or expenses of the Debtor  arising  under any tax law,  including  without
limitation  any Federal,  state or local income or franchise  taxes or any other
tax imposed on or measured by income (or any interest or penalties  with respect
thereto or from a failure to comply therewith).

               
                  (a) The Debtor  shall  indemnify  the  Collateral  Agent,  its
officers, directors,  employees and agents for, and hold it harmless against any
loss, liability or expense incurred without willful misconduct, gross negligence
or  bad  faith  on its  part,  arising  out of or in  connection  with  (i)  the
acceptance or administration of this Agreement, including the costs and expenses
of  defending  itself  against any claim or  liability  in  connection  with the
exercise or  performance of any of its powers or duties under this Agreement and
(ii) the  negligence,  willful  misconduct  or bad  faith of the  Debtor  in the
performance  of its  duties  hereunder.  All such  amounts  shall be  payable in
accordance with Section  2.3(a)(iii)  hereof. The provisions of this Section 8.2
shall survive the termination of this Agreement.

                  SECTION 8.3  Representations,  Warranties and Covenants of the
Collateral   Agent.   The   Collateral   Agent  agrees  to  make  the  following
representations,  warranties and covenants,  and further agrees that the Secured
Parties shall be deemed to have relied upon such representations, warranties and
covenants in accepting their interest in the Receivables.

                  (a) Organization and Good Standing.  The Collateral Agent is a
national  banking  association  duly  organized,  validly  existing  and in good
standing under the laws of the United States of America,  and has full corporate
power,  authority and legal right to own its properties and conduct its business
as such properties are presently owned and such business is presently conducted,
and to execute, deliver and perform its obligations under this Agreement.

                  (b)  Due   Authorization.   The   execution,   delivery,   and
performance of this Agreement and any other Transactions  Documents to which the
Collateral Agent is a party have been duly authorized by the Collateral Agent by
all necessary corporate action on the part of the Collateral Agent.


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                  (c)  Binding   Obligation.   This   Agreement  and  the  other
Transaction  Documents to which the Collateral Agent is a party each constitutes
a legal,  valid and binding  obligation of the Collateral Agent,  enforceable in
accordance with their respective terms,  except as enforceability may be limited
by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium  or  other
similar  laws  now or  hereinafter  in  effect,  affecting  the  enforcement  of
creditors' rights in general and except as such enforceability may be limited by
general  principles of equity  (whether  considered in a proceeding at law or in
equity).

                  (d) No Conflict.  The execution and delivery by the Collateral
Agent of this  Agreement  and the  other  Transaction  Documents  to  which  the
Collateral   Agent  is  a  party,   and  the  performance  of  the  transactions
contemplated  by this  Agreement  and the other  Transaction  Documents  and the
fulfillment of the terms hereof and thereof  applicable to the Collateral Agent,
will not conflict  with,  violate,  result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under,  any Requirement of Law applicable to the Collateral Agent or any
indenture,  contract, agreement,  mortgage, deed of trust or other instrument to
which the Collateral Agent is a party or by which it is bound.

                  SECTION 8.4 Liability of the Collateral Agent.

                  (a) The  Collateral  Agent shall be liable in accordance  here
with  only to the  extent  of the  obligations  specifically  undertaken  by the
Collateral  Agent in such capacity herein.  No implied  covenants or obligations
shall be read into this  Agreement  against  the  Collateral  Agent and,  in the
absence of bad faith on the part of the Collateral  Agent,  the Collateral Agent
may conclusively  rely on the truth of the statements and the correctness of the
opinions  expressed in any certificates or opinions  furnished to the Collateral
Agent and conforming to the requirements of this Agreement.

                  (b) The  Collateral  Agent shall not be liable for an error of
judgment made in good faith by a Trust  Officer,  unless it shall be proved that
the  Collateral  Agent shall have been negligent in  ascertaining  the pertinent
facts.

                  (c) The  Collateral  Agent shall not be liable with respect to
any action  taken,  suffered or omitted to be taken in good faith in  accordance
with this  Agreement  or at the  direction  of a Secured  Party  relating to the
exercise of any power conferred upon the Collateral Agent under this Agreement.


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                  (d) The Collateral  Agent shall not be charged with knowl edge
of any  Termination  Event  unless a Trust  Officer  assigned to the  Collateral
Agent's  Corporate  Trust Office obtains  actual  knowledge of such event or the
Collat eral Agent  receives  written  notice of such event from the Debtor,  the
Company, any Bank Investor, the Insurer or the Agent, as the case may be.

                  (e) Without  limiting the  generality of this Section 8.4, the
Collateral  Agent  shall  have no duty (i) to see to any  recording,  filing  or
depositing of this Agreement or any other Transaction  Document or any financing
statement  or  continuation  statement  evidencing  a security  interest  in the
Receivables or the Financed  Vehicles,  or to see to the maintenance of any such
recording or filing or depositing or to any recording,  refiling or redepositing
of any  thereof,  (ii)  to see to any  insurance  of the  Financed  Vehicles  or
Obligors  or to  effect  or  maintain  any such  insurance,  (iii) to see to the
payment or discharge of any tax,  assessment or other governmental charge or any
Lien or  encumbrance  of any kind  owing with  respect  to,  assessed  or levied
against, any part of the Receivables,  (iv) to confirm or verify the contents of
any reports or certificates of the Collection  Agent or the Debtor  delivered to
the Collateral Agent pursuant to this Agreement believed by the Collateral Agent
to be  genuine  and to have been  signed or  presented  by the  proper  party or
parties or (v) to inspect  the  Financed  Vehicles at any time or  ascertain  or
inquire  as to the  performance  or  observance  of any of the  Debtor's  or the
Collection  Agent's repre sentations,  warranties or covenants or the Collection
Agent's duties and  obligations  as Collection  Agent and as custodian of books,
records, files and computer records relating to the Receivables.

                  (f) The  Collateral  Agent  shall not be required to expend or
risk its own funds or otherwise incur financial  liability in the performance of
any of its duties hereunder,  or in the exercise of any of its rights or powers,
if there shall be  reasonable  ground for  believing  that the repayment of such
funds  or  adequate  indemnity  against  such  risk or  liability  shall  not be
reasonably assured to it, and none of the provisions contained in this Agreement
shall in any event require the  Collateral  Agent to perform,  or be responsible
for the manner of performance of, any of the obligations of the Collection Agent
under this Agreement.

                  (g) The  Collateral  Agent may rely and shall be  protected in
acting or refraining from acting upon any resolution, officer's certificate, any
Settle  ment  Statement,  certificate  of  auditors,  or any other  certificate,
statement,   instrument,  opinion,  report,  notice,  request,  consent,  order,
appraisal, bond or other paper or


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<PAGE>



document  reasonably believed by it to be genuine and to have been signed or pre
sented by the proper party or parties.

                  (h) The  Collateral  Agent may  consult  with  counsel and any
opinion of such counsel shall be full and complete  authorization and protection
in respect of any action taken or suffered or omitted by it under this Agreement
in good faith and in accordance with such opinion of counsel.

                  (i) The  Collateral  Agent  shall be under  no  obligation  to
exercise  any of the  rights or  powers  vested  in it by this  Agreement  or to
institute,  conduct or defend any litigation under this Agreement or in relation
to this Agree ment, at the request,  order or direction of the Agent pursuant to
the  provisions  of this  Agreement,  unless the Agent shall have offered to the
Collateral Agent reasonable  security or indemnity  against the costs,  expenses
and liabilities  that may be incurred therein or thereby;  nothing  contained in
this Agreement,  however, shall relieve the Collateral Agent of its obligations,
upon the  occurrence of a  Termination  Event (that shall not have been cured or
waived),  to  exercise  such  of the  rights  and  powers  vested  in it by this
Agreement,  and to use the same degree of care and skill in their  exercise as a
prudent person would exercise or use under the  circumstances  in the conduct of
his or her own affairs.

                  (j) The  Collateral  Agent  shall not be liable for any action
taken,  suffered  or  omitted  by it in  good  faith  and  believed  by it to be
authorized  or within the  discretion or rights or powers  conferred  upon it by
this Agreement.

                  (k) Prior to the occurrence of a Termination  Event and before
the Collateral Agent has received notice of such Termination Event and after the
waiver of any  Termination  Event that may have occurred,  the Collateral  Agent
shall not be bound to make any investigation into the facts of matters stated in
any resolution,  certificate,  statement,  instrument,  opinion, report, notice,
request,  consent,  order,  approval,  bond or other paper or  document,  unless
requested in writing so to do by a Secured Party; provided, however, that if the
payment within a reasonable time to the Collateral Agent of the costs,  expenses
or liabilities  likely to be incurred by it in the making of such  investigation
shall be, in the opinion of the Collateral Agent, not reasonably  assured by the
Debtor, the Collateral Agent may require reasonable indemnity against such cost,
expense or liability as a condition to so proceeding.  The reasonable expense of
every such examination shall be paid by the Debtor or, if paid by the Collateral
Agent, shall be reimbursed by the Debtor upon demand.



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<PAGE>



                  (l) The  Collateral  Agent may  execute  any of the  trusts or
powers  hereunder or perform any duties under this Agreement  either directly or
by or through agents or attorneys or a custodian. The Collateral Agent shall not
be respon sible for any  misconduct or negligence of any such Agent or custodian
appointed with due care by it hereunder.

                  SECTION 8.5 Merger or  Consolidation  of, or Assumption of the
Obligations of, the Collateral Agent. The Collateral Agent shall not consolidate
with or merge into any other  corporation  or convey or transfer its  properties
and assets substantially as an entirety to any Person, unless:

                  (i) the  corporation  formed  by such  consoli  dation or into
which the Collateral  Agent is merged or the Person which acquires by conveyance
or transfer the properties and assets of the Collateral  Agent  substantially as
an entirety shall be a corporation  organized and existing under the laws of the
United  States of America or any State or the  District of Columbia  and, if the
Collateral  Agent is not the surviving  entity,  shall expressly  assume,  by an
agreement supplemental hereto,  executed and delivered to the Secured Parties in
form satisfactory to the Secured Parties,  the performance of every covenant and
obligation of the Collateral Agent hereunder; and

                  (ii) the Collateral Agent has delivered to the Secured Parties
an  officer's  certificate  and an  opinion of counsel  each  stating  that such
consolidation,  merger,  conveyance or transfer and such supplemental  agreement
comply with this Section 8.5 and that all conditions  precedent  herein provided
for relating to such transaction have been complied with.

                  SECTION 8.6  Limitation on Liability of the  Collateral  Agent
and Others. The directors, officers, employees or agents of the Collateral Agent
shall not be under any  liability to the Agent,  any Secured  Party or any other
Person  hereunder  or pursuant to any  document  delivered  hereunder,  it being
expressly understood that all such liability is expressly waived and released as
a condition  of, and as consider  ation for, the  execution  of this  Agreement;
provided,  however,  that  this  provision  shall  not  protect  the  directors,
officers,  employees  and agents of the  Collateral  Agent against any liability
which would otherwise be imposed by reason of willful misfea sance, bad faith or
gross  negligence  in the  performance  of  duties  or by  reason  of reck  less
disregard of  obligations  and duties  hereunder.  Except as provided in Section
8.4, the Collateral  Agent shall not be under any liability to any Secured Party
or any other


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<PAGE>



Person for any action taken or for  refraining  from the taking of any action in
its capacity as Collateral Agent pursuant to this Agreement whether arising from
express or implied duties under this  Agreement;  provided,  however,  that this
provision  shall not protect the  Collateral  Agent against any liability  which
would otherwise be imposed by reason of willful misfeasance,  bad faith or gross
negligence  in the perfor mance of duties or by reason of reckless  disregard of
obligations  and duties hereun der. The Collateral  Agent may rely in good faith
on any document of any kind prima facie  properly  executed and submitted by any
Person respecting any matters arising hereunder.  The Collateral Agent shall not
be under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its duties to administer the Collections and the Collection
Account in accordance  with this Agreement  which in its reasonable  opinion may
involve it in any expense or liability.
                  SECTION  8.7  Indemnification  of  the  Secured  Parties.  The
Collateral  Agent shall  indemnify  and hold  harmless the Agent and the Secured
Parties from and against any loss, liability, expense, damage or injury suffered
or sustained by reason of willful misfeasance, bad faith, or gross negligence in
the  performance of the duties of the Collateral  Agent or by reason of reckless
disregard of  obligations  and duties of the  Collateral  Agent  hereunder or by
reason of the acts,  omissions or alleged  acts or  omissions of the  Collateral
Agent pursuant to this  Agreement.  The  provisions of this indemnity  shall run
directly to and be  enforceable  by an injured party subject to the  limitations
hereof.


                                   ARTICLE IX

                                  MISCELLANEOUS

                  SECTION 9.1 Term of Agreement.  This Agreement shall terminate
following the Termination Date when the Net Investment has been reduced to zero,
all  accrued  Carrying  Costs  have been  paid in full and all  other  Aggregate
Unpaids  have been paid in full;  provided,  however,  that (i) the  rights  and
remedies of the  Collateral  Agent and the Secured  Parties  with respect to any
representation  and  warranty  made or  deemed  to be made by the  Debtor or UAC
pursuant to this Agree ment, (ii) the  indemnification and payment provisions of
Article  VIII,  and  (iii) the  agreement  set forth in  Section  9.9,  shall be
continuing and shall survive any termina tion of this Agreement.



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<PAGE>



                  SECTION 9.2  Waivers;  Amendments.  (a) No failure or delay on
the part of the Collateral Agent or any of the Secured Parties in exercising any
power,  right or remedy under this Agreement  shall operate as a waiver thereof,
nor shall any  single or partial  exercise  of any such  power,  right or remedy
preclude any other further  exercise thereof or the exercise of any other power,
right or remedy. The rights and remedies herein provided shall be cumulative and
nonexclusive of any rights or remedies provided by law.

                  (b) Any  provision of this  Agreement may be amended or waived
if, but only if, such  amendment is in writing and is signed by the Debtor,  the
Collection Agent, the Insurer and the Majority  Investors (and, if Article VI or
the  rights or duties of the  Collateral  Agent  are  affected  thereby,  by the
Collateral  Agent);  provided,  that no such  amendment or waiver shall,  unless
signed by each  Bank  Investor  directly  affected  thereby,  (i)  increase  the
Commitment  of a Bank  Investor,  (ii)  reduce  the  Net  Investment  or rate of
interest to accrue thereon or any fees or other amounts payable hereunder, (iii)
postpone any date fixed for the payment of any scheduled distribution in respect
of the Net  Investment  or interest  with  respect  thereto or any fees or other
amounts payable hereunder or for termination of any Commitment,  (iv) change the
percentage of the  Commitments or the number of Bank  Investors,  which shall be
required  for the Bank  Investors  or any of them to take any action  under this
Section  or any other  provision  of this  Agreement,  (v)  extend or permit the
extension of the Commitment  Termination Date, (vi) reduce or impair Collections
or the payment of fees  payable  hereunder  to the Bank  Investors  or delay the
scheduled dates for payment of such amounts, (vii) increase the Servicing Fee to
a percentage greater than 1.0% per annum of the aggregate Outstanding Balance of
the  Receivables as of the first day of the related  Settlement  Period,  (viii)
modify any  provisions  of this  Agreement  or the Sale and  Purchase  Agreement
relating to the timing of  payments  required to be made by the Issuer or UAC or
the  application  of the  proceeds  of such  payments,  or (ix)  provide for the
appointment  of any  Person  (other  than the Agent) as a  successor  Collection
Agent.  In the event the  Collateral  Agent  requests  the Com  pany's or a Bank
Investor's consent pursuant to the foregoing provisions and the Collateral Agent
does not receive a consent  (either  positive or  negative)  from the Company or
such Bank Investor  within 10 Business Days of the Company's or Bank  Investor's
receipt  of such  request,  then the  Company  or such  Bank  Investor  (and its
percentage  interest  hereunder) shall be disregarded in determining whether the
Collateral Agent shall have obtained sufficient consent hereunder.



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<PAGE>



                  SECTION 9.3 Notices.  Except as provided below,  all communica
tions and notices  provided for hereunder  shall be in writing  (including  bank
wire, telex,  telecopy or electronic facsimile  transmission or similar writing)
and shall be given to the other  party at its  address  or  telecopy  number set
forth  below or at such  other  address  or  telecopy  number as such  party may
hereafter  specify for the purposes of notice to such party. Each such notice or
other  communication  shall be  effective  (i) if given by  telecopy,  when such
telecopy is  transmitted  to the telecopy  number  specified in this Section and
confirmation  is received,  (ii) if given by mail 3 Business Days following such
posting, or (iii) if given by any other shall mean, when received at the address
specified  in this  Section.  Notice to Moody's and S&P will be provided for all
waivers, consents, approvals, amendments and extensions with respect to or under
the Transaction Documents. Each of the Debtor and the Collection Agent agrees to
deliver  promptly  to the  Collateral  Agent,  for  distribution  to each of the
Secured Parties,  a written  confirmation of each telephonic notice signed by an
authorized  officer of Debtor or the Collection  Agent, as applicable.  However,
the ab sence of such confirmation  shall not affect the validity of such notice.
If the written  confirmation  differs in any  material  respect  from the action
taken by the Company,  the records of the Company shall govern  absent  manifest
error.

         If to the Company:

         ENTERPRISE FUNDING CORPORATION
         c/o Merrill Lynch Money Markets Inc.
         World Financial Center--South Tower
         225 Liberty Street
         New York, New York  10218
         Telephone:  (212) 236-7200
         Telecopy:   (212) 236-7584
         Payment Information:
         Bankers Trust Company
         ABA# 021001033
         Account# 01419647
         Reference Enterprise Funding - UAC

         (with a copy to the Administrative Agent)

         If to the Debtor:

         UNION ACCEPTANCE FUNDING CORPORATION
         9240 Bonita Beach Road, Suite 1109-C


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<PAGE>



         Bonita Springs, Florida 34135-4250
         Attn: Leeanne W. Graziani, Vice President
         Telephone:  (941) 948-1852
         Telecopy:   (941) 948-1855
         Payment Information:
         Union Federal Savings Bank
         of Indianapolis
         ABA #: 2740-7048-4
         Account #: 590070304
         Reference: Nations Line

         If to UAC:

         UNION ACCEPTANCE CORPORATION
         250 North Shadeland Avenue
         Indianapolis, Indiana  46219
         Attn: Ashley Vukovits, Finance Officer
         Telephone:  (317) 231-2717
         Telecopy:   (317) 231-7926

         If to the Collateral Agent:

         NATIONSBANK, N.A.
         NationsBank Corporate Center--10th Floor
         Charlotte, North Carolina  28255
         Attention:  Michelle M. Heath--
              Investment Banking
         Telephone:  (704) 386-7922
         Telecopy:   (704) 388-9169

         If to the Administrative Agent:

         NATIONSBANK, N.A.
         NationsBank Corporate Center--10th Floor
         Charlotte, North Carolina  28255
         Attention:  Michelle M. Heath--
              Investment Banking
         Telephone:  (704) 386-7922
         Telecopy:   (704) 388-9169



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<PAGE>



         If the to Insurer:

         MBIA INSURANCE CORPORATION
         113 King Street
         Armonk, New York  10504
         Attn:  Insured Portfolio Management - SF
         Telephone:  (914) 273-4949
         Telecopy:  (914) 765-3163
         Payment Information: MBIA Insurance Corporation
         ABA #: 021-000-021
         Account #: 910-2-721728
         Reference: UAFC Enterprise Auto WH


         If the to Agent:

         NATIONSBANK, N.A.
         NationsBank Corporate Center
         100 North Tryon Street
         Charlotte, North Carolina 28255
         NC1-007-10-07
         Telephone:  (704) 386-7922
         Telecopy:  (704) 388-9169
         Payment Information: NationsBank, N.A.
         ABA #: 053000196
         Account #: 1093601650000
         Reference: UAC

         If to S&P:

         STANDARD & POOR'S RATINGS SERVICES
         25 Broadway
         New York, New York 10004-1064
         Attention:  Michael Bilello
         Telephone: (212) 208-5531
         Telecopy: (212) 208-0030

         If to Moody's:

         MOODY'S INVESTORS SERVICE


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<PAGE>



         99 Church Street, 4th Floor
         New York, New York 10007
         Attention:  Marc Cohen
         Telephone: (212) 553-4898
         Telecopy: (212) 553-3856


                  SECTION  9.4  Governing  Law;   Submission  to   Jurisdiction;
Integration.

                  (a) This  Agreement  shall be  governed  by and  construed  in
accordance with the laws of the State of New York.  Each of the Debtor,  UAC and
the Collection  Agent hereby  submits to the  nonexclusive  jurisdiction  of the
United States  District  Court for the Southern  District of New York and of any
New York State court  sitting in The City of New York for  purposes of all legal
proceedings  arising out of or relating to this  agreement  or the  transactions
contemplated  hereby.  Each of the Debtor,  UAC and the Collection  Agent hereby
irrevocably  waives,  to the  fullest  extent  it  may  effectively  do so,  any
objection  which it may now or hereafter  have to the laying of the venue of any
such  proceeding  brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an  inconvenient  forum.  Nothing in
this  Section  9.4 shall  affect the right of the Company to bring any action or
proceeding  against the Debtor,  UAC or the Collection Agent or their respective
properties in the courts of other jurisdictions.

                  (b) This Agreement contains the final and complete integration
of all prior  expressions  by the  parties  hereto  with  respect to the subject
matter  hereof and shall  constitute  the entire  Agreement  between the parties
hereto with respect to the subject matter hereof  superseding  all prior oral or
written understandings.

                  SECTION 9.5 Severability;  Counterparts. This Agreement 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
Agreement.   Any   provisions  of  this   Agreement   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 unen forceable such provision in any
other jurisdiction.



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<PAGE>



                  SECTION 9.6 Successors and Assigns.

                  (a) This Agreement  shall be binding on the parties hereto and
their respective  successors and assigns;  provided,  however,  that neither the
Debtor,  UAC nor the  Collection  Agent may assign any of its rights or delegate
any of its duties hereunder  without the prior written consent of the Collateral
Agent and the  Insurer.  No  provision  of this  Agreement  shall in any  manner
restrict  the  ability of the  Collateral  Agent to assign,  participate,  grant
security interests in, or otherwise transfer any portion of the Collateral.

                  (b) Each of the Debtor and UAC hereby  agrees and con sents to
the assignment by the Company from time to time of all or any part of its rights
under, interest in and title to this Agreement and the Note to any Liquidity Pro
vider.

                  SECTION 9.7 Waiver of Confidentiality.  Each of the Debtor and
UAC hereby consents to the disclosure of any non-public information with respect
to it received by the Company or the Administrative Agent to any of the Company,
any nationally  recognized rating agency rating the Company's  commercial paper,
the  Administrative  Agent,  the Insurer,  the Liquidity  Provider or the Credit
Support Provider in relation to this Agreement.

                  SECTION 9.8 Confidentiality  Agreement. Each of the Debtor and
UAC hereby  agrees that it will not disclose  the contents of this  Agreement or
any other proprietary or confidential information of any of the Secured Parties,
the Collateral Agent, the  Administrative  Agent, the Liquidity  Provider or the
Credit  Support  Provider  to any  other  Person  except  (i) its  auditors  and
attorneys,  employees or financial advisors (other than any commercial bank) and
any  nationally  recognized  rating agency,  provided such auditors,  attorneys,
employees,  financial  advisors or rating  agencies  are  informed of the highly
confidential  nature  of  such  information  or (ii) as  otherwise  required  by
applicable  law,  under the  Securities  Exchange  Act of 1934,  as amended,  in
connection  with an offering of securities  issued by the Debtor or an Affiliate
thereof, or order of a court of competent jurisdiction (provided,  however, that
no such  disclosure  shall occur without the prior review by the  Administrative
Agent of the material to be disclosed).



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<PAGE>



                  SECTION 9.9 No Bankruptcy  Petition Against the Company.  Each
of the Debtor,  UAC, the Insurer and the Collection  Agent hereby  covenants and
agrees  that,  prior to the date which is one year and one day after the payment
in full of all outstanding Commercial Paper or other indebtedness of the Company
(or, if the Net  Investment  (or any  portion  thereof)  has been  assigned to a
Conduit  Assignee,  one  year  and  one day  after  the  payment  in full of all
Commercial  Paper  issued  by such  Conduit  Assignee),  it will  not  institute
against,  or join any other  Person in  instituting  against,  the  Company  any
bankruptcy,  reorganization,  arrangement, insolvency or liquidation proceedings
or other similar  proceeding under the laws of the United States or any state of
the United States.

                  SECTION  9.10 No Recourse  Against  Stockholders,  Officers or
Directors. Notwithstanding anything to the contrary contained in this Agreement,
the  obligations of the Company under this  Agreement and all other  Transaction
Docu ments are solely the  corporate  obligations  of the  Company  and shall be
payable  solely from the assets of the Company in excess of funds  necessary  to
pay matured and maturing  Commercial  Paper.  No recourse under any  obligation,
covenant or agree ment of the Company  contained in this Agreement  shall be had
against  Merrill  Lynch Money Markets Inc. (or any  affiliate  thereof),  or any
stockholder,  officer or director of the Company, as such, by the enforcement of
any assessment or by any legal or equitable proceeding, by virtue of any statute
or otherwise;  it being  expressly  agreed and understood that this Agreement is
solely a corporate  obligation  of the Company,  and that no personal  liability
whatsoever  shall attach to or be incurred by Merrill  Lynch Money  Markets Inc.
(or any affiliate  thereof),  or the stockholders,  officers or directors of the
Company,  as such, or any of them, under or by reason of any of the obligations,
covenants or agreements of the Company  contained in this Agreement,  or implied
therefrom,  and that any and all personal  liability for breaches by the Company
of any of such obligations,  covenants or agreements, either at common law or at
equity,  or by statute or constitution,  of Merrill Lynch Money Markets Inc. (or
any affiliate  thereof) and every such  stockholder,  officer or director of the
Company is hereby expressly waived as a condition of and  consideration  for the
execution of this Agreement.

                  SECTION 9.11 Further Assurances.  The Debtor agrees to do such
further acts and things and to execute and deliver to the Secured  Parties,  the
Adminis  trative  Agent or the  Collateral  Agent such  additional  assignments,
agreements,  powers and  instruments as are required by the Collateral  Agent or
the Insurer to carry into effect the  purposes  of this  Agreement  or to better
assure and confirm unto the Collateral  Agent or the Insurer its rights,  powers
and remedies hereunder.



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<PAGE>



                  SECTION 9.12 Exercise of Rights by Insurer. All rights granted
to the Insurer pursuant to this Agreement shall terminate during the pendency of
a payment  default by the Insurer  under the Policy or during the  pendency of a
Surety  Insolvency  (as defined in the  Insurance  Agreement as in effect on the
date hereof) and during such time the  Insurer's  rights may be exercised by the
Collateral Agent or Company,  provided,  however,  the Insurer's rights shall be
reinstated in full, immedi ately upon the cure of such default.

                  SECTION 9.13 Characterization of the Transactions Contemplated
by the Agreement;  Tax  Treatment.  The parties hereto agree that this Agreement
shall  constitute a security  agreement under  applicable law. The Debtor hereby
assigns to the Collateral Agent, for the benefit of the Secured Parties,  all of
its  rights to pay ment (i) under the Sale and  Purchase  Agreement  and the PFC
Sale and Purchase  Agreement with respect to the Receivables and with respect to
any  obligations  there under of UAC or PFC, as applicable,  with respect to the
Receivables  and (ii) under or in connection with any Hedging  Arrangement.  The
Collateral Agent agrees that upon any release of a Receivable or Contract to the
Debtor,  the  Collateral  Agent shall be deemed to have  released  its  security
interest  therein and  reassigned  to the Debtor all of the  Collateral  Agent's
rights  under  the  Sale and  Purchase  Agreement  or the PFC Sale and  Purchase
Agreement,  as  applicable,  with respect to such  Receivable or Con tract.  The
Debtor agrees that neither it nor the  Collection  Agent shall give any con sent
or waiver  required or permitted  to be given under the Sale and Purchase  Agree
ment with respect to the Receivables or the Contracts  without the prior consent
of either the Collateral Agent, the Administrative Agent or the Insurer.

                  (a) Each of the  parties  hereto  agrees to treat the  transac
tions  contemplated  by this  Agreement  as a financing  for federal  income tax
purposes  and  further  agree to file on a timely  basis all  federal  and other
income tax returns consistent with such treatment.


                                                 83

<PAGE>



         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Security Agreement as of the date first written above.


                                          ENTERPRISE FUNDING CORPORATION,
                                              as Company


                                          By: _______________________________
                                   Name:
                                  Title:


                                          UNION ACCEPTANCE FUNDING
                                            CORPORATION, as Debtor


                                          By: _______________________________
                                   Name:
                                  Title:


                                          UNION ACCEPTANCE CORPORATION,
                                            individually and as Collection Agent


                                          By: _______________________________
                                   Name:
                                  Title:


                                          MBIA INSURANCE CORPORATION,
                                as Insurer

                                          By: _______________________________
                                   Name:
                                  Title:



                                                 84