AMENDMENT NUMBER 2 TO
                               SECURITY AGREEMENT

                  AMENDMENT NUMBER 2 TO SECURITY  AGREEMENT (this  "Amendment"),
dated as of September 9, 1999 by and among UNION ACCEPTANCE FUNDING CORPORATION,
a  Delaware  corporation,  as debtor (in such  capacity,  the  "Debtor"),  UNION
ACCEPTANCE CORPORATION, an Indiana corporation ("UAC"),  individually and in its
capacity  as  collection  agent  (in such  capacity,  the  "Collection  Agent"),
ENTERPRISE FUNDING  CORPORATION,  a Delaware  corporation (the "Company"),  MBIA
INSURANCE CORPORATION, a New York stock insurance company, as financial guaranty
insurer  (the  "Insurer")  and  BANK  OF  AMERICA,   N.A.,  a  national  banking
association   (formerly  known  as  NationsBank,   N.A.)  ("Bank  of  America"),
individually  and as collateral agent for the Company,  the Bank Investors,  and
the Insurer (in such capacity,  the  "Collateral  Agent")  amending that certain
Security  Agreement  dated as of  September  18,  1998,  as amended by Amendment
Number 1 thereto,  dated as of May 25, 1999 (such  agreement as so amended,  the
"Security Agreement").

                  WHEREAS,  the consent of the Insurer to this  Amendment  shall
constitute a Revolving Period Extension (as defined in the Insurance 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 assigned thereto in the Security Agreement.

         (a) Section 1.1 of the Security Agreement is hereby amended by deleting
the  definition  of  "Commitment  Termination  Date" and  replacing  it with the
following:

              ""Commitment  Termination  Date" shall mean  September 7, 2000, 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."

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

                  ""Facility Limit" shall mean $500,000,000."

         (c) Section 1.1 of the Security Agreement is hereby amended by deleting
the  reference  to  "September  17,  1999" in clause (vi) of the  definition  of
"Termination Date" and replacing such reference with "September 7, 2000".

         (d) Section 1.1 of the Security Agreement is hereby amended by deleting
the definition of "Insurer Default" and replacing it with the following:

              ""Insurer  Default"  shall mean,  at any time,  any failure by the
              Insurer to make any payment when due under the Insurance Agreement
              or under the Policy."

                  SECTION 2. Amendment to Section  2.3(a)(i).  Section 2.3(a)(i)
of the Security Agreement is hereby deleted and replaced with the following:

              "(i)  first,  (A) to pay any  amounts  due  under  any  Acceptable
              Hedging Arrangements, pro rata, in accordance with the amounts due
              thereunder,  and (B) to the  Reserve  Account,  in the  amount  of
              Reserve Account Advances related to such Settlement Period;"

                  SECTION 3. Limited  Scope.  This  amendment is specific to the
circumstances  described above and does not imply any future amendment or waiver
of rights  allocated to the Debtor,  the  Collection  Agent,  the Insurer or the
Collateral Agent under the Security Agreement.

                  SECTION 4. Governing Law. THIS AMENDMENT  SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                  SECTION 5. 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 6.  Ratification.  Except as expressly affected by the
provisions  hereof, the Security Agreement as amended shall remain in full force
and  effect in  accordance  with its terms and  ratified  and  confirmed  by the
parties  hereto.  On and after the date hereof,  each  reference in the Security
Agreement  to "this  Agreement",  "hereunder",  "herein" or words of like import
shall  mean and be a  reference  to the  Security  Agreement  as amended by this
Amendment.

                  SECTION 7. Revolving Period Extension.  The Insurer agrees and
acknowledges that by giving its consent to this Amendment,  this Amendment shall
constitute a Revolving  Period  Extension  under and as defined in the Insurance
Agreement,  notwithstanding that the date of this Amendment is less than 30 days
prior to September 17, 1999.




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

                                        ENTERPRISE FUNDING CORPORATION,
                                          as Company



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

                                       UNION ACCEPTANCE FUNDING
                                          CORPORATION, as Debtor



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


                                    UNION ACCEPTANCE CORPORATION,
                                          individually and as Collection Agent



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




<PAGE>




                                        MBIA INSURANCE CORPORATION,
                                        as Insurer



                                    By: /s/ Nicholas Sourbis
                                        ------------------------------------
                                            Name:Nicholas Sourbis
                                            Title: Managing Director

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



                                    By: /s/ Brian D. Krum
                                        ------------------------------------
                                            Name: Brain D. Krum
                                            Title: Vice President