AMENDMENT NUMBER 1 TO
                               SECURITY AGREEMENT


                  AMENDMENT NUMBER 1 TO SECURITY  AGREEMENT (this "Amend ment"),
dated as of July 14, 2000 by and among UNION ACCEPTANCE FUNDING CORPORATION,  an
Indiana  corporation,  as  seller  (in  such  capacity,  the  "Seller"),  UAFC-1
CORPORATION, a Delaware corporation, as debtor (in such capacity, the "Debtor"),
UNION ACCEPTANCE CORPORATION,  an Indiana corporation ("UAC"),  individually and
in its capacity as collection agent (in such capacity,  the "Collection Agent"),
ENTER PRISE FUNDING  CORPORATION,  a Delaware  corporation (the "Company"),  and
BANK OF AMERICA,  N.A.,  a national  banking  association  ("Bank of  America"),
individually  and as  collateral  agent and agent for the  Company  and the Bank
Investors,  and as  administrative  agent (in such  capacities,  the "Collateral
Agent", the "Agent" and the "Administrative Agent",  respectively) amending that
certain Security Agreement dated as of May 25, 2000 (the "Security Agreement").

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

                  NOW, THEREFORE, the parties hereby agree as follows:

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

          (a)  Section  1.1 of the  Security  Agreement  is  hereby  amended  by
deleting  the  definition  of "Net Yield" and  replacing  it with the  following
(solely for convenience changed language is italicized):

                  ""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 Avail able 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 Settle
                  ment Period net of the aggregate amount of recoveries received
                  during such Settlement Period, and the denominator of which is
                  (y) the average daily Net



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                  Investment for such Settlement  Period. The Net Yield shall be
                  expressed as a  percentage.  For purposes of  calculating  the
                  Noteholder's  Percentage,  the Net Yield will equal the Target
                  Net  Yield  for any  Settlement  Period  during  which the Net
                  Investment  equals  zero  on any  day  during  the  Settlement
                  Period."

         (b) Section 1.1 of the Security Agreement is hereby amended by deleting
the definition of "Prime Percentage" and replacing it with the following:

                  ""Prime  Percentage" shall mean a percentage (not greater than
                  100%)  equal to a  fraction  where  (a) the  numerator  is the
                  product  of (i)  the  Net  Receivables  Balance  of all  Prime
                  Receivables and (ii) 98.25% and (b) the denominator is the Net
                  Investment  minus the  amount  on  deposit  in the  Prefunding
                  Account."

                  SECTION 2. Limited  Scope.  This  amendment is specific to the
circumstanc es described above and does not imply any future amendment or waiver
of rights  allocated  to the  Debtor,  the  Collection  Agent,  the  Agent,  the
Administrative Agent or the Collateral Agent under the Security Agreement.

                  SECTION 3. Governing Law. THIS AMENDMENT  SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                  SECTION 4. Severability;  Counterparts.  This Amendment may be
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed shall be deemed to be an
original and all of which when taken together shall  constitute one and the same
instrument.   Any  provisions  of  this   Amendment   which  are  prohibited  or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.

                  SECTION 5.  Ratification.  Except as expressly affected by the
provisions  hereof, the Security Agreement as amended shall remain in full force
and  effect in accor  dance with its terms and  ratified  and  confirmed  by the
parties  hereto.  On and after the date hereof,  each  reference in the Security
Agreement  to "this  Agreement",  "hereunder",  "herein" or words of like import
shall  mean and be a  reference  to the  Security  Agreement  as amended by this
Amendment.

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IN WITNESS  WHEREOF,  the  parties  hereto  have  executed  and  delivered  this
Amendment Number 1 as of the date first written above.

                                             ENTERPRISE FUNDING CORPORATION,
                                               as Company

                                             By: /s/ Bernard J. Angelo
                                                 Name: Bernard J. Angelo
                                                 Title:



                                             UAFC-1 CORPORATION,
                                               as Debtor

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



                                             UNION ACCEPTANCE FUNDING
                                               CORPORATION, as Seller

                                             By: /s/ Rick A. Brown
                                                 Name: Rick A. Brown
                                                 Title:





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                         UNION ACCEPTANCE CORPORATION,
                           individually and as Collection Agent



                         By: /s/ Melanie S. Otto
                             Name: Melanie S. Otto
                             Title:



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



                         By:/s/ Michelle M. Heath
                             Name: Michelle M. Heath
                             Title:






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