SECURITY AGREEMENT


                                      among


                             UAC BOAT FUNDING CORP.
                                   as Debtor,


                         ENTERPRISE FUNDING CORPORATION,
                                   as Company,


                                NATIONSBANK, N.A.
                      individually and as Collateral Agent,


                      CAPITAL MARKETS ASSURANCE CORPORATION
                            as Surety Bond Provider,


                                       and


                          UNION ACCEPTANCE CORPORATION
                             as Seller and Servicer


                            Dated as of April 3, 1997




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                                TABLE OF CONTENTS

                                                                            Page
                                    ARTICLE I
                                   DEFINITIONS

SECTION 1.1      Definitions.................................................  2

                         ARTICLE II
                 GRANT OF SECURITY INTEREST

SECTION 2.1      Grant of Security Interest.................................. 34
SECTION 2.2      Subrogation................................................. 36
SECTION 2.3      Increase of Note;Limit on
                 Commercial Paper Maturity................................... 36
SECTION 2.4      Release of Receivables...................................... 38
SECTION 2.5      Yield Supplement Account, Deposits,
                 Withdrawals................................................. 40

                                   ARTICLE III
                    REPRESENTATIONS, WARRANTIES AND COVENANTS
                                  OF THE DEBTOR

SECTION 3.1     Representations and Warranties
                Concerning Receivables....................................... 44
SECTION 3.2     Covenants of the Debtor...................................... 45

                                   ARTICLE IV
                          SERVICING AND ADMINISTRATION

SECTION 4.1     Servicing.................................................... 54
SECTION 4.2     Duties of the Servicer....................................... 56
SECTION 4.3     Rights After Designation of
                Successor Servicer........................................... 57
SECTION 4.4     Responsibilities of the Debtor............................... 58
SECTION 4.5     Monthly Debtor's Certificate................................. 58
SECTION 4.6     Additional Representations and Warranties
                of UAC as Servicer........................................... 58

                                    ARTICLE V
                           ALLOCATION AND APPLICATION
                         OF COLLECTIONS; RESERVE ACCOUNT

SECTION 5.1    Collections................................................... 60
SECTION 5.2    Remittances to the Secured Parties............................ 64
SECTION 5.3    Reserve Account............................................... 65
SECTION 5.4    Carrying Costs Account........................................ 68


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                                                                            Page


                                   ARTICLE VI
                      TERMINATION EVENTS; WIND-DOWN EVENTS

SECTION 6.1    Termination Events............................................ 71
SECTION 6.2    Wind-Down Events.............................................. 74
SECTION 6.3    Remedies...................................................... 74
SECTION 6.4    Application of Proceeds....................................... 76

                                   ARTICLE VII
                              THE COLLATERAL AGENT

SECTION 7.1    Duties of the Collateral Agent................................ 77
SECTION 7.2    Compensation and Indemnification
               of Collateral Agent........................................... 78
SECTION 7.3    Representations, Warranties and
               Covenants of the Collateral Agent............................. 78
SECTION 7.4    Liability of the Collateral Agent............................. 79
SECTION 7.5    Merger or Consolidation of,
               or Assumption of the Obligations
               of, the Collateral Agent...................................... 82

                                  ARTICLE VIII
                                  MISCELLANEOUS

SECTION 8.1    Notices, Etc.................................................. 84
SECTION 8.2    Successors and Assigns........................................ 85
SECTION 8.3    Severability Clause........................................... 86
SECTION 8.4    Amendments.................................................... 86
SECTION 8.5    Governing Law................................................. 86
SECTION 8.6    No Bankruptcy Petition Against
               the Company................................................... 86
SECTION 8.7    Setoff........................................................ 86
SECTION 8.8    No Recourse................................................... 87
SECTION 8.9    Further Assurances; Replacement Surety
               Bond.......................................................... 87
SECTION 8.10   Other Costs, Expenses and
               Related Matters............................................... 87
SECTION 8.11   Direction of Collateral Agent; Replacement
               Surety Bond................................................... 88
SECTION 8.12   Counterparts.................................................. 88
SECTION 8.13   Headings...................................................... 88



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                                                                            Page

                                    EXHIBITS

EXHIBIT A                  Receivables Schedule                            A-1
EXHIBIT B                  Form of Surety Bond                             B-1
EXHIBIT C                  Location of Records                             C-1
EXHIBIT D                  Form of Monthly Debtor's Certificate            D-1
EXHIBIT E                  Servicing Agreement                             E-1


                                       iii



<PAGE>

                               SECURITY AGREEMENT


                  SECURITY  AGREEMENT (this  "Agreement"),  dated as of April 3,
1997 among ENTERPRISE FUNDING CORPORATION, a Delaware corporation,  as a secured
party  (together  with its  successors  and assigns,  the  "Company"),  UAC BOAT
FUNDING CORP., a Delaware  corporation,  as debtor (together with its successors
and assigns, the "Debtor"),  CAPITAL MARKETS ASSURANCE  CORPORATION,  a New York
monoline stock insurance company, as a secured party and as Surety Bond Provider
(in such capacity, the "Surety Bond Provider"), UNION ACCEPTANCE CORPORATION, an
Indiana  corporation  (the  "Seller" or the  "Servicer,"  as  appropriate),  and
NATIONSBANK, N.A., a national banking association ("NationsBank"),  individually
and as  collateral  agent  (together  with its  successors  and  assigns in such
capacity, the "Collateral Agent").


                              W I T N E S S E T H :

                  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 security interest in the
Boats  and the  Collections  derived  therefrom  during  the  full  term of this
Agreement;

                  WHEREAS,  pursuant to the Insurance Agreement, the Surety Bond
Provider  has issued its Surety Bond 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 such
Note to pay the  principal of and interest on such 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 the
Note, the Note Purchase Agreement and the Insurance Agreement;




<PAGE>



                  NOW THEREFORE, the parties hereto agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.1  Definitions.  All  capitalized  terms used herein
shall have the  meanings  herein  specified,  and shall  include in the singular
number the plural and in the plural number the singular:

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

                  "Acquisition  Subsidiary" shall mean a wholly owned subsidiary
of the Seller  which has entered  into (i)  agreements  with  Dealers in certain
states for the  origination  or purchase of  Receivables,  and (ii) an agreement
with the Seller pursuant to which the Seller acquires all Receivables originated
or purchased by the Acquisition Subsidiary.

                  "Adjusted  LIBOR Rate" means,  with respect to any  Collection
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 Collection Period
in respect of eurocurrency or eurodollar funding, lending or


                                                    2

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liabilities (or, if more than one percentage  shall be so applicable,  the daily
average of such percentage for those days in such Collection 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 by
the  Agent  to  the  Federal  Deposit   Insurance   Corporation  in  respect  of
eurocurrency or eurodollar funding, lending or liabilities.

                  "Administrative  Agent"  shall  mean  NationsBank,   N.A.,  as
administrative agent for the Company.

                  "Administrative  Fee" shall have the meaning  specified in the
Fee Letter.

                  "Advance Termination Date" means the second Business Day after
the  delivery  by the  Company to the Debtor and the  Surety  Bond  Provider  of
written notice that the Company elects to cease  advancing  additional  funds to
the Debtor.

                  "Adverse Claim" shall mean a lien,  security interest,  charge
or  encumbrance,  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 a Person,  any other
Person which  directly or  indirectly  controls,  is  controlled  by or is under
common  control  with such  Person.  The term  "control"  means the  possession,
directly or  indirectly,  of the power to direct or cause the  direction  of the
management  and policies of a Person,  whether  through the  ownership of voting
securities, by contract or otherwise.

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

                  "Agreement" shall mean this Security Agreement, as it may from
time to time be amended,  supplemented or otherwise  modified in accordance with
the terms hereof.

                  "Amount  Financed"  with  respect  to a  Receivable  means the
amount  advanced under the  Receivable  toward the purchase price of the related
Boat and any related costs.


                                                    3

<PAGE>




                  "Annual  Percentage  Rate" or "APR" of a Receivable  means the
annual rate of finance charges stated in the Receivable.

                  "Available  Collections"  shall  mean,  with  respect  to each
Remittance Date, all Collections received by the Servicer, from whatever source,
during or with respect to the prior Collection Period.

                  "Bailee" means a "Bailee"  within the meaning of Section 9-305
of the UCC.

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

                  "Base  Rate"  means,  a rate per annum equal to the greater of
(i) the prime rate of interest  announced by the Liquidity Provider (or, if more
than one  Liquidity  Provider,  then by  NationsBank,  N.A.)  from time to time,
changing  when and as said prime rate changes (such rate not  necessarily  being
the lowest or best rate charged by the Liquidity Provider (or NationsBank,  N.A.
as  applicable))  and (ii) the sum of (a)  1.50%  and (b) 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 transactions received by the Liquidity Provider
(or, if more than one Liquidity Provider, then by NationsBank,  N.A.) from three
Federal funds brokers of recognized standing selected by it.

                  "Boat" shall mean,  with respect to a  Receivable,  any new or
used boat,  boat motor,  accompanying  boat trailer or Personal  Watercraft  and
accompanying  trailer,  together  with all  accessories  thereto,  securing  the
related Obligor's indebtedness thereunder.

                  "Borrowing  Base" shall mean, at any time,  the sum of (a) the
Borrowing Base (Boats) and (b) the Borrowing Base (Personal Watercraft).



                                                    4

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                  "Borrowing   Base  (Boats)"  shall  mean,  at  any  time,  the
aggregate outstanding  Principal Balance of all Eligible Receivables  originated
in connection with the sale of a Boat (other than Personal Watercraft).

                  "Borrowing  Base  (Personal  Watercraft)"  shall mean,  at any
time, the sum of (a) the Borrowing  Base  (Personal  Watercraft - Extended Term)
and (b) the Borrowing Base (Personal Watercraft - Regular Term).

                  "Borrowing  Base (Personal  Watercraft - Extended Term)" shall
mean, the aggregate  outstanding  Principal Balance of all Eligible  Receivables
originated  in  connection  with  the sale of  Personal  Watercraft  with  49-60
scheduled monthly payments at origination.

                  "Borrowing  Base  (Personal  Watercraft - Regular Term)" shall
mean, the aggregate  outstanding  Principal Balance of all Eligible  Receivables
originated in  connection  with the sale of Personal  Watercraft  which had less
than 49 scheduled monthly payments at origination.

                  "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 or Indianapolis, Indiana are authorized or required by law
to close.

                  "Carrying Costs Account" shall mean the account established in
Section 5.4 hereof.

                  "Carrying Costs" shall mean for a Collection Period the sum of
(i)  the  sum  of the  dollar  amount  of the  Company's  obligations  for  such
Collection  Period  determined on an accrual basis in accordance  with generally
accepted  accounting  principles  consistently  applied (a) to pay interest with
respect to  Purchased  Interests  pursuant to the  provisions  of the  Liquidity
Agreement  (such interest to be calculated  based on the Adjusted LIBOR Rate, if
available,  otherwise the Base Rate,  provided that if a Termination Event shall
have occurred and if a Surety Bond Provider  Default shall have  occurred,  such
interest  shall be  calculated at the Base Rate plus 2.00%)  outstanding  at any
time during such  Collection  Period accrued from the day of the  acquisition of
the related  Purchased  Interest through the last day of such Collection  Period
whether or not such interest is payable


                                                    5

<PAGE>



during  such  Collection  Period  and to pay  interest  with  respect to amounts
disbursed  with respect to the Note by the Credit Support  Provider  pursuant to
the Credit  Support  Agreement  outstanding  at any time during such  Collection
Period accrued from the first day of the  acquisition  of the related  Purchased
Interest or the day on which such amounts are  disbursed  by the Credit  Support
Provider  through  the last day of such  Collection  Period  whether or not such
interest  is payable  during  such  Collection  Period,  (b) to pay the  Accrued
Interest   Component  with  respect  to  such  Collection  Period,  (c)  without
duplication to pay a dealer fee of 0.05% per annum of the face amount of Related
Commercial Paper issued during such Collection  Period,  (d) to pay any past due
interest  not paid in  clause  (a) and (b)  with  respect  to  prior  Collection
Periods,  and (e) to pay the costs of the Company with respect to the  operation
of the Yield  Protection  Provision,  which amounts paid pursuant to this clause
(e) shall not  exceed 1% per annum of the Net  Investment  and (ii) the  Program
Fee, Liquidity Fee and Administrative Fee accrued from the first day through the
last day of such Collection  Period whether or not such amount is payable during
such  Collection  Period,  the sum of which  amounts  shall not exceed 0.30% per
annum  of  the  Net  Investment,  in  the  case  of  the  Program  Fee  and  the
Administrative  Fee and which  amount  shall not  exceed  0.17% per annum of the
Facility Limit,  in the case of the Liquidity Fee. During any Collection  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 (b) and (c) above, Carrying Costs shall include interest on
the daily  average  Net  Investment  for the  related  Collection  Period at the
Adjusted LIBOR Rate, or if such rate is  unavailable,  at the Base Rate, or if a
Surety Bond Provider Default and a Termination  Event shall have occurred and be
continuing, at the Base Rate plus 2.00%.

                  "Certificated  Securities" means "certificated  securities" as
defined in Section 8-102(l)(a) of the UCC which are in the continuous possession
in the State of North Carolina of the Financial Intermediary.

                  "Clearing Corporation" means The Depository Trust Company.



                                                    6

<PAGE>



                  "Clearing   Corporation    Securities"   means   "certificated
securities"  as  defined  in  Section  8-102(l)(a)  of the UCC  which are in the
continuous  possession  in the  States  of  North  Carolina  or New  York of the
Clearing Corporation or a Custodian Bank.

                  "Closing Date" shall mean April 3, 1997.

                  "Code"  shall  mean the  Internal  Revenue  Code of  1986,  as
amended from time to time (including any successor statute), and the regulations
promulgated and the rulings issued thereunder.

                  "Collateral"  shall have the  meaning set forth in Section 2.1
of this Agreement.

                  "Collateral  Agent"  shall  mean  NationsBank,  N.A.,  or  any
successor thereto, as Collateral Agent hereunder.

                  "Collection   Account"  shall  mean  the  account  established
pursuant to Section 4.1(b) of this Agreement.

                  "Collection  Period" shall mean with respect to any Remittance
Date, the calendar month immediately preceding the month of such Remittance Date
(and with  respect to the  initial  Remittance  Date,  the time  period from the
Closing Date to April 30, 1997).

                  "Collections" shall mean all Principal Collections and Finance
Charge Collections  received by the Servicer in respect of the Collateral in the
form of cash,  checks,  wire  transfers or other form of payment,  but shall not
include any late fees,  insufficient  check charges and related charges assessed
against Obligors.

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

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

                  "Common Stock" shall mean the 100 shares of the Debtor's $1.00
par value common stock.



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                  "Company"  shall  mean  Enterprise  Funding   Corporation,   a
Delaware corporation, together with its successors and assigns.

                  "Contract" shall mean a retail  installment  sales contract or
installment loan and security interest contract.

                  "Credit  Guidelines" shall mean policies and procedures of the
Servicer,  relating to the  operation  of the marine  financing  business of the
Servicer,  including,  without  limitation,  the  policies  and  procedures  for
determining the  creditworthiness  of retail marine  installment  sales contract
customers,  the  extension  of  credit to such  customers  and  relating  to the
maintenance and collection of retail marine installment sales contracts, as such
policies and procedures may be amended from time to time.

                  "Credit  Support  Agreement"  means any 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 of Commercial Paper.

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

                  "Cumulative  Charge-Off  Ratio" shall mean with respect to any
date of determination,  a fraction  (expressed as a percentage) the numerator of
which  is  equal  to (A)  the  aggregate  principal  balance  at the  time  such
Receivable became a Defaulted  Receivable of all Receivables which were added to
the Collateral from the period  commencing on the day immediately  following the
cut-off  date  relating  to the most  recent  Take-Out  (or,  prior to the first
Take-Out,  since the Closing  Date) and ending on the last  calendar  day of the
fourth month prior to such date of determination; provided, however, that if the
cut-off  date  relating  to the most  recent  Take-Out  occurred  less than four
calendar months prior to the date of determination  then the ending date of such
period shall be the last day of the calendar  month  immediately  preceding  the
date of  determination,  minus (B) the aggregate  dollar  amount of  Liquidation
Proceeds received on


                                                    8

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the  Receivables  designated in clause (A) above and the denominator of which is
equal to the aggregate  outstanding  principal  balance of Receivables as of the
time  such  Receivables  were  added  to  the  Collateral  for  all  Receivables
designated in clause (A) above.

                  "Custodian  Bank"  means a  "custodian  bank"  as  defined  in
Section 8-102(4) of the UCC.

                  "Dealer"  shall  mean a factory  authorized  dealer  which has
entered into a Dealer Agreement with the Seller or an Acquisition Subsidiary.

                  "Dealer Agreement" shall mean the agreement between the Seller
or an  Acquisition  Subsidiary  and a  Dealer  relating  to  the  purchase  of a
Receivable.

                  "Debtor"  shall mean UAC Boat Funding Corp. and its successors
and assigns.

                  "Default  Ratio" shall mean,  with  respect to any  Collection
Period, a fraction (expressed as a percentage) (x) the numerator of which is the
aggregate Principal Balance of all Eligible Receivables in existence on the last
day of such Collection  Period which became  Defaulted  Receivables  during such
Collection Period and (y) the denominator of which is the aggregate  outstanding
Principal  Balance  of all  Eligible  Receivables  as of the  first  day of such
Collection Period.

                  "Defaulted Receivable" shall mean each Receivable with respect
to  which  (i) in  accordance  with  the  Credit  Guidelines  the  Servicer  has
determined that eventual payment in full is unlikely,  (ii) the related Boat has
been repossessed or (iii) any payment is over 120 days contractually delinquent.

                  "Delinquent  Receivable"  shall mean each Receivable (i) as to
which any payment, or part thereof,  remains unpaid for 30 days or more from the
original due date for such payment and (ii) is not a Defaulted Receivable.

                  "Delinquency  Ratio"  shall mean,  with respect to any date of
determination,  a fraction (expressed as a percentage) the numerator of which is
the aggregate outstanding Principal Balance of all Eligible Receivables


                                                    9

<PAGE>



which are Delinquent Receivables as of such date and the denominator of which is
the aggregate  outstanding  Principal Balance of all Eligible  Receivables as of
such date  provided,  however,  that with respect to (i) the  calculation of the
Noteholder's   Percentage   (Boats)  and   Noteholder's   Percentage   (Personal
Watercraft-Regular  Term) the denominator of the Delinquency Ratio calculated on
the date of  determination  occurring  in each  December  and  (ii) the  Monthly
Debtor's  Certificate,  the denominator of the Delinquency  Ratio  calculated on
each date of  determination  occurring in each October and each month thereafter
until a Take-Out  shall have  occurred  shall  equal the  aggregate  outstanding
Principal Balance of all Eligible Receivables as of the date of determination in
the third prior month.

                  "Determination Date" shall mean with respect to any Remittance
Date,  two  Business  Days  prior to the day of the month in which  the  related
Remittance Date falls.

                  "Dollar," "Dollars" and the symbol "$" shall mean lawful money
of the United States of America.

                  "EFC  Collateral  Agent"  shall  mean  NationsBank,   N.A.  as
collateral agent in respect of the Company's Commercial Paper program.

                  "Eligible  Institution" shall mean a depositary institution or
trust  company  which has a short-term  credit rating from Moody's and S&P of at
least "P-1" and "A-1", respectively,  and a long-term credit rating from Moody's
and S&P of at least "A2" and "A", respectively.

                  "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
depositary  institution  or trust  company  incorporated  under  the laws of the
United  States of America or any state  thereof and subject to  supervision  and
examination by Federal or state banking or depositary  institution  authorities;
provided,  however, that at the time of 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 such obligation whose rating is
based


                                                    10

<PAGE>



on collateral or on the credit of a Person other than such  institution or trust
company) of such  depositary  institution  or trust  company shall have a credit
rating from  Moody's and S&P of at least "P-1" and "A-1",  respectively,  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
by S&P;  (iii)  certificates  of deposit  having,  at the time of  investment or
contractual  commitment to invest  therein,  a rating from Moody's and S&P of at
least "P-1" and "A-1",  respectively;  (iv)  investments  in money  market funds
rated in the highest investment category or otherwise approved in writing by the
applicable rating agencies, (b) demand deposits in any depositary 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
investment or  contractual  commitment to invest  therein,  a credit rating from
Moody's and S&P of at least "P-1" and "A-1",  respectively,  (d) Eurodollar time
deposits  having a credit  rating  from  Moody's  and S&P of at least  "P-1" and
"A-1", respectively, 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 investment therein, a
rating from Moody's and S&P of at least "P-1" and "A-1", respectively.

                  "Eligible  Receivables"  shall  mean,  as  of  any  day,  each
Receivable of the Debtor:

                           (a)  which (i) shall have been originated
in the United  States by the Seller or a Dealer for the retail sale of a Boat in
the  ordinary  course of such  Dealer's  business,  shall  have  been  fully and
properly  executed  by the  parties  thereto,  shall have been  purchased  by an
Acquisition  Subsidiary or the Seller from such Dealer under an existing  Dealer
Agreement,  as  applicable,  shall have been validly  assigned by such Dealer to
such  Acquisition  Subsidiary or the Seller,  as  applicable,  and if applicable
shall have been validly assigned by such  Acquisition  Subsidiary to the Seller,
and shall have been  validly  assigned by the Seller to the  Debtor,  (ii) shall
have created or shall create a valid,  subsisting and enforceable first priority
perfected  security  interest  in favor of the  Seller  and/or the Debtor in the
related financed Boat, which security interest has been


                                                    11

<PAGE>



assigned  to the  Debtor and shall be  validly  assignable  by the Debtor to the
Collateral  Agent for the benefit of the Surety Bond  Provider  and the Company,
(iii) shall contain  customary and  enforceable  provisions such that the rights
and remedies of the holder thereof shall be adequate for realization against the
collateral of the benefits of the security, (iv) 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 the level payment) that fully
amortize  the  Amount  Financed  over the  original  contractual  term and yield
interest at the APR, and (v) shall  provide for, in the event that such contract
is prepaid,  a  prepayment  that fully pays the  principal  balance and includes
accrued but unpaid interest through the date of prepayment in an amount at least
equal to the APR;

                  (b) which,  together with the sale of the related Boat,  shall
have  complied  at the  time it was  originated  or made,  and at the date  such
Receivable is included as Collateral  hereunder,  shall comply,  in all material
respects with all requirements of applicable Federal,  state, and local laws and
regulations thereunder,  including,  without limitation, usury laws, the Federal
Truth-in-Lending  Act,  the Equal  Credit  Opportunity  Act,  the Federal  Trade
Commission Act, the Fair Credit Billing Act, the Fair Credit  Reporting Act, the
Fair Debt Collection Practices Act, the Magnuson-Moss  Warranty Act, the Federal
Reserve  Board's  Regulations  B and Z,  the  Federal  Trade  Commission  Credit
Practices  Rule,  state unfair and  deceptive  trade  practice  laws,  and state
adaptations  of the  National  Consumer Act and of the Uniform  Consumer  Credit
Code, and any other  applicable  consumer credit,  equal credit  opportunity and
disclosure laws;

                  (c)  which  shall  represent  the  genuine,  legal,  valid and
binding payment obligation in writing of the Obligor thereunder,  enforceable by
the holder thereof in accordance with its terms;

                  (d) which  shall not be due from the United  States of America
or  any  state  or  local   government   or  from  any  agency,   department  or
instrumentality  of  the  United  States  of  America  or  any  state  or  local
government;



                                                    12

<PAGE>



                  (e) which, as of the date such Receivable first became part of
the Collateral,  shall not have been satisfied,  subordinated or rescinded,  nor
shall the related Boat have been released from the security interests granted by
such related Receivable in whole or in part;

                  (f) which, as of the date such Receivable first became part of
the  Collateral,  no waiver (other than any waiver with respect to a delinquency
in payment permitted in accordance with the Servicer's Credit Guidelines) of any
term thereof shall be in effect;

                  (g) which, as of the date such Receivable first became part of
the Collateral,  no right of rescission,  setoff,  counterclaim or defense shall
have been asserted or threatened with respect to such Receivable;

                  (h) which, as of the date such Receivable first became part of
the  Collateral,  no liens or claims were on file for work,  labor or  materials
relating  to the related  Boat which liens are prior to, or equal or  coordinate
with, the security interest in the Boat granted by such Receivable;

                  (i) which, as of the date such Receivable first became part of
the Collateral,  no default,  breach, violation or event permitting acceleration
under the terms of such  Receivable  (other than any of such event to the extent
caused by or resulting  from a delinquency  in payment)  shall have occurred and
neither the Seller nor the Debtor shall have waived any of the foregoing;

                  (j) the  terms  of such  Receivable  require  the  Obligor  to
maintain physical damage insurance;

                  (k)  with  respect  to  which  (i) the  Debtor  has  good  and
marketable  title  thereto free and clear of all liens,  encumbrances,  security
interests and rights of others,  other than the lien of the Collateral Agent for
the  benefit of the Surety Bond  Provider  and the Company and (ii) the sale and
assignment  thereof to the Debtor  pursuant to the Purchase  Agreement  has been
perfected under the UCC;

                  (l) which shall not have been  originated  in or be subject to
the laws of, any jurisdiction under


                                                    13

<PAGE>



which the sale,  transfer and assignment of such  Receivable  under the Purchase
Agreement or the grant of a security interest therein pursuant to this Agreement
shall be unlawful, void or voidable;

                  (m) with  respect  to which all  filings  (including,  without
limitation,  UCC filings)  necessary in any  jurisdiction to give the Collateral
Agent a first priority perfected security interest therein shall have been made;

                  (n) of which there shall be in  existence  one,  and only one,
original executed copy of each Receivable;

                  (o) with  respect to which the related  Obligor is required to
make payments to a lockbox under the control of the Servicer;

                  (p) with  respect  to which  the  perfection  of the  security
interest in the related Boat is not governed by the federal Ship Mortgage Act of
1920, as amended;

                  (q) which constitutes  "chattel paper" under and as defined in
Article 9 of the UCC;

                  (r)  which  shall  have had at  origination  not more than 240
scheduled  monthly  payments,  provided,  that with  respect  to any  Receivable
related to a Personal Watercraft,  such Receivable shall have had at origination
not more than 60 scheduled monthly payments;

                  (s) which, as of the date such  Receivable  became part of the
Collateral, is not a Delinquent Receivable;

                  (t) with respect to which the original  copies and all related
documents and instruments are kept at the office of UAC;

                  (u) which is not a  Defaulted  Receivable  as of the date such
Receivable became part of the Collateral;

                  (v) which when  originated and as of the date such  Receivable
became part of the Collateral, was


                                                    14

<PAGE>



originated and serviced in compliance with the Credit Guidelines; and

                  (w) with  respect  to which,  as of the date  such  Receivable
became part of the Collateral,  the related Obligor was not noted in the records
of the  Seller,  the  Servicer  or the Debtor as the  subject of any  bankruptcy
proceeding.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.

                  "ERISA  Affiliate"  shall mean with respect to the Debtor,  at
any time, each trade or business  (whether or not  incorporated)  that would, at
the time, be treated together with the Debtor as a single employer under Section
4001 of ERISA or Sections 414(b), (c), (m) or (o) of the Code.

                  "Facility  Limit"  shall mean  $50,000,000;  provided  that on
March 10, 1998 the Facility Limit shall be increased to $75,000,000.

                  "Federal Book-Entry Securities" means securities issued by the
U.S.  Treasury,  FNMA or by FHLMC which are maintained in book-entry form on the
records of the Federal Reserve Bank of Richmond.

                  "Fee  Advance"  shall mean any advance by the  Servicer or any
successor Servicer, in its sole discretion,  in an amount equal to the Liquidity
Fee and/or the Unused  Portion of the Surety Bond  Premium,  the sum of all such
advances during the term hereof not to exceed $500,000.

                  "Fee  Letter"  shall  mean the  letter  agreement,  dated  the
Closing  Date,  among the Company,  the  Administrative  Agent and the Debtor in
respect of the payment by the Debtor of certain fees.

                  "Finance Charge  Collections"  shall mean, with respect to any
Collection  Period,  the sum of the following  amounts:  (i) that portion of all
collections  on  Receivables  allocable  to interest  (excluding  any late fees,
insufficient   check  charges  or  related  charges  against   Obligors),   (ii)
Liquidation Proceeds, (iii) the amount paid by the Debtor in respect of a breach
of the


                                                    15

<PAGE>



representation  set forth in Section  3.1(a)  pursuant to clause (y) of the last
paragraph of Section 3.1,  (iv) interest and  investment  earnings or amounts on
deposit in the Collection Account, (v) Interest Rate Hedge Receipts and (vi) any
amounts  withdrawn  from the  Yield  Supplement  Account  and  deposited  in the
Collection  Account on or with  respect to the  Remittance  Date related to such
Collection Period.

                  "Finance  Charge  Collections  (Net Yield)"  shall mean,  with
respect to any Collection  Period,  the sum of the following  amounts:  (i) that
portion of all collections on Receivables  allocable to interest  (excluding any
late fees, insufficient check charges or related charges against Obligors), (ii)
Liquidation Proceeds, (iii) the amount paid by the Debtor in respect of a breach
of the  representation set forth in Section 3.1(a) pursuant to clause (y) of the
last paragraph of Section 3.1, (iv) interest and investment  earnings or amounts
on deposit in the Collection Account, (v) Interest Rate Hedge Receipts, (vi) the
Facility  Fee (as defined in the Fee  Letter),  (vii) the Unused  Portion of the
Surety Bond Premium and (viii) any amounts  withdrawn from the Yield  Supplement
Account  and  deposited  in the  Collection  Account  on or with  respect to the
Remittance Date related to such Collection Period.

                  "Financial Intermediary" means NationsBank, N.A. and any other
entity  acting in the  capacity  of a  "financial  intermediary"  as  defined in
Section 8-313(4) of the UCC.

                  "Financial  Intermediary  Securities  Account" means a reserve
account which is a securities account  maintained by the Financial  Intermediary
in the name of NationsBank, N.A. as Collateral Agent for the Secured Parties.

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

                  "Governmental  Authority"  shall  mean the  United  States  of
America,  any  state or  other  political  subdivision  thereof  and any  entity
exercising  executive,  legislative,   judicial,  regulatory  or  administrative
functions of or pertaining to government.



                                                    16

<PAGE>



                  "Guaranty"   shall   mean  any   agreement,   undertaking   or
arrangement  by which any Person  guarantees,  endorses,  or  otherwise  becomes
contingently  liable  (whether  directly,  or  indirectly  by way of  agreement,
contingent or otherwise,  or purchase,  to provide funds for payment,  to supply
funds to or otherwise invest in the debtor,  or otherwise to assure the creditor
against loss) upon, the indebtedness,  obligation or liability of any Person, or
guarantees the payment of dividends or other distributions upon the stock of any
corporation.

                  "Hedge   Counterparty"   shall  mean  any  Person   reasonably
acceptable  to the Surety Bond  Provider who enters into an Interest  Rate Hedge
with the Debtor pursuant to Section 6.1(n) hereof.

                  "Ineligible  Receivable" shall mean each Receivable other than
an Eligible Receivable.

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

                  "Instruments"  means "instruments" as defined in Section 9-105
of the UCC.

                  "Insurance  Agreement"  shall mean that certain  Insurance and
Reimbursement  Agreement  dated as of April 3, 1997 among UAC,  as Seller and as
Servicer, the Collateral Agent, the Debtor and the Surety Bond Provider.

                  "Interest  Component"  shall  mean,  (i) with  respect  to any
Related  Commercial  Paper  issued on an  interest-bearing  basis,  the interest
payable on such Related  Commercial Paper at its maturity  (including any dealer
commissions)  and (ii) with respect to any Related  Commercial Paper issued on a
discount basis, the portion of the face amount of such Related  Commercial Paper
representing  the discount  incurred in respect  thereof  (including  any dealer
commissions to the extent included as part of such discount).


                  "Interest  Rate Hedge"  shall mean any  interest  rate hedging
arrangement  entered into by the Debtor in compliance with Section 6.1(n) hereof
and acceptable to the Surety Bond Provider.



                                                    17

<PAGE>



                  "Interest Rate Hedge  Receipts"  shall mean for any Collection
Period,  any amounts  paid by the Hedge  Counterparty  to the  Collateral  Agent
during such  Collection  Period pursuant to the terms of any Interest Rate Hedge
during such Collection Period.

                  "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 Collection Period, the
rate per annum  (rounded  upwards,  if  necessary,  to the nearest  1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London  interbank
offered rate for deposits in U.S.  dollars at  approximately  11:00 a.m. (London
time) two London Business Days prior to the first day of such Collection  Period
for a term of one month. If for any reason such rate is not available,  the term
"LIBOR Rate" shall mean, for any Collection  Period, the rate per annum (rounded
upwards,  if necessary,  to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London  inter-  bank  offered  rate for  deposits in dollars at
approximately  11:00 a.m.  (London  time) two London  Business Days prior to the
first day of such Collection Period for a term of one month; provided,  however,
if more  than one  rate is  specified  on the  Reuters  Screen  LIBO  Page,  the
applicable rate shall be the arithmetic mean of all such rates.

                  "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  for the  purpose  of  security,
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 Uniform
Commercial Code (other than any such financing statement filed for informational
purposes  only) or  comparable  law of any  jurisdiction  to evidence any of the
foregoing.

                  "Liquidation  Proceeds"  shall mean (i)  proceeds of any claim
under any credit insurance policy and (ii)


                                                    18

<PAGE>



all monies  collected in connection  with the disposition of any Boat (including
any  recoveries  received  after the  disposition  of the  related  Boat),  from
whatever  source,  securing a  Defaulted  Receivable,  net of the sum of (x) any
amounts expended by the Servicer in connection with the liquidation of such Boat
for the account of the Obligor  and (y) any such  amounts  required by law to be
remitted to the Obligor.

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

                  "Liquidity  Fee" shall have the meaning  specified  in the Fee
Letter.

                  "Liquidity Provider" shall mean the Person or Persons who will
provide  liquidity support to the Company in connection with the issuance by the
Company  of its  Commercial  Paper and shall  include  any  Person  acquiring  a
participation interest therein.

                  "London Business Day" 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.

                  "Material  Adverse Change" Any  circumstance or event which in
the reasonable  judgment of the Surety Bond Provider,  so long as no Surety Bond
Provider  Default has occurred and is continuing (a) may be reasonably  expected
to cause a material  adverse  change to the validity or  enforceability  of this
Agreement  or the  Servicing  Agreement,  (b) may be  reasonably  expected to be
material  and  adverse  to the  financial  condition,  business,  operations  or
property of the Servicer or (c) may be reasonably  expected to materially impair
the ability of the Servicer to fulfill its  obligations  under this Agreement or
the Servicing Agreement.

                  "Maximum  Permitted  Borrowing  Base" shall mean, at any time,
(a) the sum of (1) the Maximum  Permitted  Borrowing  Base  (Boats) plus (2) the
Maximum Permitted  Borrowing Base (Personal  Watercraft) minus (b) the aggregate
Principal Balance of all Eligible Receivables which


                                                    19

<PAGE>



are Precomputed Receivables to the extent that such aggregate amount exceeds 10%
of the Borrowing Base.

                  "Maximum Permitted  Borrowing Base (Boats)" shall mean, at any
time,  the product of the  Noteholder's  Percentage  (Boats) times the Borrowing
Base (Boats).

                  "Maximum Permitted Borrowing Base (Personal Watercraft)" shall
mean,  at any  time  the  sum  of  (a)  the  Noteholder's  Percentage  (Personal
Watercraft  -  Extended  Term)   multiplied  by  the  Borrowing  Base  (Personal
Watercraft  -  Extended  Term)  and (b) the  Noteholder's  Percentage  (Personal
Watercraft - Regular Term) multiplied by the Borrowing Base (Personal Watercraft
- Regular Term).

                  "Minimum  Required  APR"  shall  mean,  as of  the  end of the
related  Collection  Period,  the then  current  yield to maturity of the United
States  Treasury  Security  having a maturity  of three years (as  published  on
Bloomberg at the close of such  Business  Day) plus the sum of (a) the Servicing
Fee  (calculated as if UAC or an Affiliate is not the Servicer) and (b)(i) 2.70%
per annum in the case of Boats (other than Personal  Watercraft)  and (ii) 3.70%
per annum in the case of Personal Watercraft.

                  "Monthly   Debtor's   Certificate"   shall  have  the  meaning
specified in Section 4.5 hereof.

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

                  "Multiemployer  Plan"  shall  mean a  "multiemployer  plan" as
defined in Section  4001(a)(3) of ERISA to which  contributions are or have been
made by the Debtor or any ERISA Affiliate of the Debtor.

                  "Net Investment"  shall mean with respect to any Determination
Date, (i) the amount of the Initial Funding and any Subsequent Funding occurring
on or prior to such Determination Date less (ii) all Collections  distributed to
the Noteholder in reduction of the Net Investment pursuant to Section 5.1 hereof
on or prior to such  Determination  Date less (iii) any draws  from the  Reserve
Account  distributed to the Noteholder in reduction of the Net Investment,  less
(iv) any amounts  paid to the  Noteholder  allocable  to  principal  pursuant to
Section 3.1, less (v) amounts deposited in the Collection Account


                                                    20

<PAGE>



pursuant to Section 6.1(m) and less (vi) draws on the Surety Bond distributed to
the  Noteholder in reduction of the Net  Investment  provided  however that such
draws on the Surety  Bond shall not reduce the Surety Bond  Provider's  right of
subrogation in the Net Investment before giving effect to any such draws.

                  "Net Yield" shall mean,  as of the last day of any  Collection
Period,  the product of (i) 4 and (ii) a  fraction,  the  numerator  of which is
equal to Finance Charge  Collections (Net Yield) for such Collection  Period and
each of the  immediately  preceding two Collection  Periods minus Carrying Costs
for such Collection Period and each of the immediately  preceding two Collection
Periods  minus the  aggregate  Principal  Balance of  Receivables  which  became
Defaulted  Receivables during such Collection Period and each of the immediately
preceding two  Collection  Periods  minus the Servicing Fee for such  Collection
Period and each of the  immediately  preceding two Collection  Periods minus the
Surety Bond Premium during such  Collection  Period and each of the  immediately
preceding two Collection  Periods and the denominator of which is the average of
the  outstanding  Principal  Balance  of  the  Eligible  Receivables  over  such
Collection Period and the immediately preceding two Collection Periods provided,
that the  calculation  of Net Yield shall not be made or  applicable  during any
Collection  Period  following a  Take-Out,  but prior to the  Termination  Date,
during which Collection Period the Net Investment equals zero.

                  "Note" shall mean the note issued by the Debtor to the Company
pursuant to Section 2.1(e) of the Note Purchase Agreement.

                  "Noteholder"  shall mean the  Company as holder of the Note or
any assignee thereof.

                  "Noteholder's  Percentage  (Boats)" shall be 85% provided that
(A) on and following each Ratio  Calculation  Date  (September) on which (i) the
Delinquency  Ratio as of the end of the previous  Collection Period is less than
2.25% and (ii) the  Cumulative  Charge-Off  Ratio as of the end of the  previous
Collection Period is less than 1.00%, the Noteholder's  Percentage (Boats) shall
be 88%, (B) on and following any Ratio  Calculation Date (December) on which (i)
the Delinquency  Ratio as of the end of the previous  Collection  Period is less
than 3.50% and (ii)


                                                    21

<PAGE>



the Cumulative  Charge-Off Ratio as of the end of the previous Collection Period
is less than 1.50%, the Noteholder's  Percentage  (Boats) shall mean 90% and (C)
for so long as S&P has not provided  written notice to the Surety Bond Provider,
the Agent and the Debtor that such determination will cause an S&P Rating Event;

         provided,  however, that on any date after the Noteholder's  Percentage
         (Boats) has been determined  previously  pursuant to clauses (A) or (B)
         above and on or after any subsequent Ratio Calculation Date (September)
         with respect to on which the Delinquency Ratio or Cumulative Charge-Off
         Ratio exceeds the percentages set forth in clause (A) above,  (1) if no
         Take-Out has occurred, the Noteholder's Percentage (Boats) shall remain
         at the amount  determined  previously  pursuant  to clauses (A) and (B)
         above or (2) if a Take-out  has occurred  the  Noteholder's  Percentage
         (Boats) shall be reduced to 85%,  provided,  further,  that on any date
         after  the   Noteholder's   Percentage   (Boats)  has  been  determined
         previously  pursuant  to  clauses  (A) or (B) above and on or after any
         subsequent Ratio  Calculation Date (December) with respect to which the
         Delinquency   Ratio  or   Cumulative   Charge-Off   Ratio  exceeds  the
         percentages  set forth in clause  (B)  above,  (1) if no  Take-Out  has
         occurred,  the  Noteholder's  Percentage  (Boats)  shall  remain at the
         amount determined  previously  pursuant to clauses (A) and (B) above or
         (2) if a Take-out  has  occurred the  Noteholder's  Percentage  (Boats)
         shall be reduced to 88%.

In addition,  on any date on which the Target Net Yield exceeds the Net Yield as
of the last day of the previous  Collection  Period,  the Noteholder  Percentage
(Boats) shall equal the percentage determined above minus the product of (a) 3.5
and (b) the difference between (1) Target Net Yield and (2) Net Yield.


                  "Noteholder's Percentage (Personal Watercraft- Extended Term)"
shall mean with  respect to Personal  Watercraft  with 49-60  scheduled  monthly
payments at origination,  65%, provided that on any date on which the Target Net
Yield  exceeds  the Net  Yield  as of the last  day of the  previous  Collection
Period, the Noteholder Percentage (Personal Watercraft - Extended Term) shall be


                                                    22

<PAGE>



65% minus the product of (a) 2.0 and (b) the  difference  between (1) Target Net
Yield and (2) Net Yield.

                  "Noteholder's  Percentage (Personal Watercraft- Regular Term)"
shall mean with respect to any Personal  Watercraft  with less than 49 scheduled
monthly  payments at origination,  80%,  provided that (A) on and following each
Ratio  Calculation Date (September) on which (i) the Delinquency Ratio as of the
end of the prior  Collection  Period is less than 2.25% and (ii) the  Cumulative
Charge- Off Ratio as of the end of the previous  Collection  Period is less than
1.00%, the Noteholder's Percentage (Personal Watercraft - Regular Term) shall be
83%, (B) on and following any Ratio Calculation Date (December) on which (i) the
Delinquency  Ratio as of the end of the  prior  Collection  Period  is less than
3.50%  and  (ii)  the  Cumulative  Charge-Off  Ratio  at the  end  of the  prior
Collection  Period is less than 1.50%,  the  Noteholder's  Percentage  (Personal
Watercraft  -  Regular  Term)  shall  be 85%  and (c) for so long as S&P has not
provided  written notice to the Surety Bond  Provider,  the Agent and the Debtor
that such determination will cause an S&P Rating Event;

         provided,  however, that on any date after the Noteholder's  Percentage
         (Personal  Watercraft - Regular  Term) has been  determined  previously
         pursuant  to  clauses  (A) or (B) above and on or after any  subsequent
         Ratio   Calculation   Date   (September)  with  respect  to  which  the
         Delinquency   Ratio  or   Cumulative   Charge-Off   Ratio  exceeds  the
         percentages  set forth in clause  (A)  above,  (1) if no  Take-Out  has
         occurred,  the Noteholder's  Percentage  (Personal Watercraft - Regular
         Term)  shall  remain at the amount  determined  previously  pursuant to
         clauses  (A)  and (B)  above  or (2) if a  Take-Out  has  occurred  the
         Noteholder's  Percentage  (Personal  Watercraft- Regular Term) shall be
         reduced  to  80%,  provided,  further,  that  on  any  date  after  the
         Noteholder's  Percentage  (Personal Watercraft - Regular Term) has been
         determined  previously  pursuant  to clauses (A) or (B) above and on or
         after any subsequent Ratio  Calculation Date (December) with respect to
         which the Delinquency Ratio or Cumulative  Charge-Off Ratio exceeds the
         percentages  set forth in clause  (B)  above,  (1) if no  Take-out  has
         occurred,  the Noteholder's  Percentage  (Personal  Watercraft  Regular
         Term) shall remain at the amount determined


                                                    23

<PAGE>



         previously  pursuant  to clauses (A) and (B) above or (2) if a Take-out
         has occurred the Noteholder's Percentage (Personal Watercraft - Regular
         Term) shall be reduced to 83%.

In addition,  on any date on which the Target Net Yield exceeds the Net Yield as
of the last day of the previous  Collection  Period,  the Noteholder  Percentage
(Personal  Watercraft-Regular  Term) shall be the amount  determined above minus
the product of (a) 2.0 and (b) the  difference  between (1) Target Net Yield and
(2) Net Yield.

                  "Note  Purchase   Agreement"  shall  mean  the  Note  Purchase
Agreement  dated  as of  April  3,  1997  among  the  Debtor,  the  Company  and
NationsBank as Agent and as a Bank  Investor,  as such agreement may be amended,
modified and supplemented from time to time.

                  "Obligor" shall mean, for any Receivable, each person who owes
payments under such Receivable.

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

                  "Pay Out  Commencement  Date"  shall  mean the date on which a
Termination Event is deemed to occur pursuant to Section 6.1 hereof.

                  "PBGC" shall mean the Pension Benefit Guaranty  Corporation or
any other entity succeeding to the functions  currently performed by the Pension
Benefit Guaranty Corporation.

                  "Person" shall mean and include an individual,  a partnership,
a corporation  (including a business trust), a joint stock company,  a trust, an
unincorporated  association,  a joint venture or other entity or a government or
an agency or political subdivision thereof.

                  "Personal Watercraft" shall mean a vessel less than 16 feet in
length, propelled by machinery and designed to be operated sitting, standing, or
kneeling on, instead of inside, the vessel.



                                                    24

<PAGE>



                  "Plan" shall mean any employee  pension  benefit plan that (a)
is or has been maintained by the Debtor or any ERISA Affiliate of the Debtor, or
to which  contributions by any such Person are or have been required to be made,
(b) is  subject  to  the  provisions  of  Title  IV of  ERISA  and  (c) is not a
Multiemployer Plan.

                  "Plan  Event"  shall  mean (a) the  provisions  of a notice of
intent  to  terminate  any Plan  under  Section  4041 of ERISA  other  than in a
"standard  termination",  or the  treatment  of a Plan  amendment  as a distress
termination  under  Section 4041 of ERISA,  (b) the receipt of any notice by any
Plan to the  effect  that the PBGC  intends  to apply for the  appointment  of a
trustee to administer any Plan, (c) the termination of any Plan which may result
in a material  liability to the Debtor,  (d) the withdrawal of the Debtor or any
ERISA  Affiliate of the Debtor from any Plan  described in Section 4063 of ERISA
which may result in a material  liability  of the  Debtor,  (e) the  complete or
partial  withdrawal of the Debtor or any ERISA  Affiliate of the Debtor from any
Multiemployer Plan which may result in a material liability of the Debtor, (f) a
"reportable  event" described in Section 4043 of ERISA (other than a "reportable
event" not subject to the  provision  for 30-day notice to the PBGC) or an event
described in Section  4068(f) of ERISA which may result in a material  liability
of the  Debtor,  and (g) any other event or  condition  which under ERISA or the
Code may  constitute  grounds for the  imposition of a lien on the assets of the
Debtor in  respect  of any Plan or  Multiemployer  Plan  which is not  corrected
within 30 days.

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

                  "Potential  Wind-Down Event" means an event which, but for the
lapse of time or the giving of notice,  or both,  would  constitute  a Wind-Down
Event.

                  "Precomputed  Receivable" means any Receivable under which the
portion of a payment  allocable  to interest  and the portion  allocable  to the
Amount Financed is determined  according to the sum of periodic  balances or the
sum of  monthly  balances  or any  equivalent  method or are  monthly  actuarial
receivables.



                                                    25

<PAGE>



                  "Premium  Portion"  shall have the  meaning  specified  in the
Insurance Agreement.

                  "Premium  Side Letter  Agreement"  means that  certain  letter
agreement  dated  April 3, 1997  among the  Surety  Bond  Provider,  UAC and the
Debtor.

                  "Principal  Balance"  of a  Receivable  as  of  the  close  of
business on any date means the Amount Financed minus all  Collections  collected
by the Servicer to and including  such day with respect to such  Receivable  and
applied by the Servicer in accordance  with the Servicer's  customary  servicing
procedures to reduce the principal balance thereof; provided,  however, that the
Principal  Balance  of any  Receivable  which  has  been  charged-off  or  which
otherwise  qualifies as a Defaulted  Receivable or an  Ineligible  Receivable as
defined herein or with respect to which the Debtor has failed to make a required
deposit  into the Yield  Supplement  Account  pursuant  to the terms of  Section
2.5(b) shall have a Principal Balance of zero.

                  "Principal  Collections"  means,  for any Remittance Date, the
sum of the following  amounts with respect to the preceding  Collection  Period:
(i) that portion of all collections on Receivables allocable to principal,  (ii)
the amount paid by the Debtor in respect of a breach of the  representation  set
forth in Section 3.1(a)  pursuant to clause (x) of the last paragraph of Section
3.1 and (iii)  prepayments of any refunded item included in the Amount Financed,
such as extended warranty protection plan costs, or physical damage, credit life
or disability  insurance premiums.  Principal  Collections shall not include any
late  fees,  insufficient  check  charges or related  charges  assessed  against
Obligors.

                  "Principal  Component"  shall mean with respect to  Commercial
Paper (A) in the case of Commercial Paper issued on a discount basis, the amount
of proceeds received by the Company upon the sale thereof and (B) in the case of
Commercial Paper issued on an interest-bear- ing basis, the face amount thereof.

                  "Program Fee" shall mean a fee payable  monthly to the Company
by the Debtor, the terms of which are set forth in the Fee Letter.



                                                    26

<PAGE>



                  "Purchase  Agreement" shall mean the Amended and Restated Sale
and  Purchase  Agreement,  dated as of April 3, 1997,  between  the  Debtor,  as
purchaser thereunder,  and the Seller, as seller thereunder,  as the same may be
amended,  modified and  supplemented  from time to time in  accordance  with the
terms thereof and hereof.

                  "Purchased  Interest"  shall mean the interest in the Note, if
any, acquired by the Liquidity Provider.

                  "Ratio Calculation Date" shall mean either a Ratio Calculation
Date (September) or a Ratio Calculation Date (December).

                  "Ratio   Calculation   Date   (September)"   shall  mean  each
Determination Date occurring in the month of September.

                  "Ratio   Calculation   Date   (December)"   shall   mean  each
Determination Date occurring in the month of December.

                  "Receivable"  shall mean indebtedness owed to the Debtor under
a  Contract,   whether  constituting  an  account,  chattel  paper,  instrument,
mortgage,  deed of trust or general intangible,  arising out of or in connection
with the sale of a Boat  including  the  rendering  of services by the Dealer in
connection therewith,  and 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
pursuant to Section  2.4  hereof,  it shall no longer  constitute  a  Receivable
hereunder.

                  "Receivable  Schedule"  shall mean the schedule of Receivables
(which schedule may be in the form of a computer file or microfiche) attached as
Exhibit A to this  Agreement,  as amended or modified from time to time pursuant
to the terms of this Agreement.

                  "Receivables  File"  shall have the meaning  specified  in the
Purchase Agreement.

                  "Related  Commercial  Paper" shall mean  Commercial  Paper the
proceeds of which were used to acquire, or refinance, the Net Investment.


                                                    27

<PAGE>




                  "Relevant  UCC  State"  shall  mean the States of New York and
Indiana.

                  "Re-Liening  Expense" shall mean all expenses  incurred by the
Servicer,  the Collateral  Agent or any secured party pursuant to Section 6.3(b)
hereof for the purpose of re-titling the Boats to name the  Collateral  Agent as
first  lienholder on the  certificate of title thereto and to effect any filings
or other actions  necessary to perfect the Collateral  Agent's interest as first
lienholder in the related Boat motors and trailers.

                  "Remittance  Date"  shall  mean  the  10th  day of each  month
beginning  May 12,  1997,  or, if such 10th day is not a Business  Day, the next
succeeding Business Day.

                  "Replacement Event" shall mean the placing on "Creditwatch" or
other similar list with negative implications,  the claims paying ability of the
Surety Bond  Provider or the  downgrade,  reduction or withdrawal of the ratings
assigned by Moody's or S&P to the Surety Bond Provider's claims paying ability.

                  "Replacement   Surety   Bond"   shall  mean  a  surety   bond,
substantially  in the form  attached  hereto  as  Exhibit  B and  which has been
provided pursuant to Sections 8.8 and 8.10 hereof.

                  "Required  Reserve Account Balance" shall mean an amount equal
to the product of (i) 0.75% and (ii) the Net Investment.

                  "Requirements   of  Law"  for  any   Person   shall  mean  the
certificate of  incorporation  or articles of  association  and by-laws or other
organizational or governing  documents of such Person, and any law, treaty, rule
or regulation,  or determination of an arbitrator or Governmental  Authority, in
each case  applicable  to or binding upon such Person or to which such Person is
subject, whether Federal, state or local (including,  without limitation,  usury
laws,  the Federal Truth in Lending Act and Regulation Z and Regulation B of the
Board of Governors of the Federal Reserve System).

                  "Reserve Account" shall mean the account established  pursuant
to Section 5.3 hereof.



                                                    28

<PAGE>



                  "S&P" shall mean Standard & Poor's  Ratings  Group, a Division
of The McGraw-Hill Companies.

                  "S&P Rating  Event"  shall mean an event which would cause S&P
to downgrade,  withdraw or place on "Creditwatch" with negative implications its
rating of the Receivables facility.

                  "Secured  Parties" shall mean the Company,  the Bank Investors
and the Surety Bond Provider and their respective successors and assigns.

                  "Seller" means Union Acceptance Corporation.

                  "Servicer"  shall  mean UAC as  servicer  under the  Servicing
Agreement or any successor Servicer.

                  "Servicer Advance" shall have the meaning
specified in Section 5.1(b).

                  "Servicer  Event of Default" shall mean (a) the failure of the
Servicer to make any payment,  transfer or deposit as required hereunder,  under
the Note Purchase Agreement or the Servicing  Agreement,  (b) the failure of the
Servicer to observe or perform in any material respect any other representation,
warranty,   covenant  or  agreements  of  the  Servicer  (including  its  Credit
Guidelines) as reasonably determined by the Surety Bond Provider as set forth in
the Servicing  Agreement,  (c) the occurrence of any Material Adverse Change and
(d) an event of the type described in Section 6.1(c) shall occur with respect to
the Servicer.

                  "Servicer  Transfer"  shall have the meaning  specified in the
Servicing Agreement.

                  "Servicing  Agreement"  shall mean the  Amended  and  Restated
Servicing Agreement, dated as of April 3, 1997, between UAC as servicer, and the
Debtor, as such agreement may be amended, modified and supplemented from time to
time, attached hereto as Exhibit E.

                  "Servicing Fee" shall mean, for any Collection Period, the fee
payable pursuant to the Servicing Agreement by the Debtor to the Servicer,  such
amount  not to exceed  1.00% per  annum in the case of UAC or an  affiliate  and
1.50% per annum in the case of any successor Servicer


                                                    29

<PAGE>



unaffiliated  with UAC, in each case,  on the  aggregate  outstanding  Principal
Balance of Receivables as of the first day of such Collection Period.

                  "Settlement  Sheet"  shall  mean a  certificate  signed  by an
officer of the Debtor  setting forth the Borrowing Base and Net Investment as of
the date of such certificate.

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

                  "Subsidiary"  means  any  corporation  more  than  50%  of the
outstanding voting securities of which shall at any time be owned or controlled,
directly or indirectly,  by the Debtor or by one or more  Subsidiaries or by the
Debtor and one or more Subsidiaries,  or any similar business organization which
is so owned or controlled.

                  "Supplemented  Receivable" shall have the meaning set forth in
Section 2.5(b) hereof.

                  "Surety   Bond"   shall  mean  that   certain   unconditional,
irrevocable surety bond,  substantially in the form annexed hereto as Exhibit B,
to be issued by the Surety Bond Provider and naming the Agent as beneficiary.

                  "Surety Bond Premium" shall have the meaning  specified in the
Insurance Agreement.

                  "Surety Bond Provider"  shall mean Capital  Markets  Assurance
Corporation, a New York monoline stock insurance company.

                  "Surety Bond Provider  Default"  shall mean the failure by the
Surety Bond Provider to make a required payment under the Surety Bond.

                  "Take-Out"  shall have the  meaning  specified  in Section 2.4
hereof.

                  "Target Net Yield" shall mean 2.00% per annum.

                  "Targeted Monthly Principal  Payment" shall mean, with respect
to each  Remittance  Date, the amount  necessary to reduce the Net Investment to
the Maximum Permitted Borrowing Base.


                                                    30

<PAGE>




                  "Telerate   Page  3750"   shall  mean  the   British   Bankers
Association  Libor  Rates  (determined  at  11:00  a.m.  London  time)  that are
published by Dow Jones Telerate, Inc.

                  "Termination   Date"  means  the  earliest  of  (i)  that  day
designated by the Debtor as the  Termination  Date at any time following 60 days
written  notice to the  Agent,  (ii) the date of  termination  of the  Company's
program  liquidity  facilities  provided  by  any  Liquidity  Agreement  or  the
Company's credit support  facilities  provided by any Credit Support  Agreement,
(iii)  the Pay Out  Commencement  Date,  (iv)  two  Business  Days  prior to the
Commitment  Termination  Date, (v) the day on which an Advance  Termination Date
shall occur,  or (vi) 364 days from closing,  unless extended prior to such date
pursuant  to  a  Revolving   Period  Extension  (as  defined  in  the  Insurance
Agreement).

                  "Termination  Event"  shall  have  the  meaning  specified  in
Section 6.1 hereof.

                  "Transaction   Documents"  shall  mean  this  Agreement,   the
Purchase Agreement,  the Note Purchase Agree- ment, the Insurance Agreement, the
Servicing Agreement and the Surety Bond.

                  "Transfer"  or  "Transferred,"   when  used  with  respect  to
Eligible Investments held or to be held in the Reserve Account means:

                  (a)  with  respect  to  each  Clearing  Corporation  Security,
transfer to the  Collateral  Agent will occur upon the latest of: (w) the making
by the Clearing  Corporation  of  appropriate  entries on its books reducing the
appropriate  securities account of the transferor and increasing the appropriate
securities account of the Financial  Intermediary by the amount of such Clearing
Corporation Security,  (x) the sending of a confirmation to the Collateral Agent
by the Financial  Intermediary  of the purchase by the Collateral  Agent of such
Clearing  Corporation  Security and (y) the  identification by book entry to the
Financial  Intermediary  Securities Account by the Financial Intermediary of the
Clearing Corporation Securities as belonging to the Collateral Agent;



                                                    31

<PAGE>



                  (b) with respect to each  Certificated  Security,  transfer to
the  Collateral  Agent  will  occur  upon the  latest  of (x) the  sending  of a
confirmation  by the Financial  Intermediary  of the purchase by the  Collateral
Agent of such Certificated  Security and (y) the identification by book-entry to
the Financial  Intermediary  Securities Account by the Financial Intermediary of
such Certificated Security as belonging to the Collateral Agent;

                  (c) with respect to each Federal Book-Entry Security, transfer
to the  Collateral  Agent  will  occur  upon the latest of (x) the making by the
Federal Reserve Bank of Richmond of appropriate entries transferring the Federal
Book-Entry  Security on its books and records to the  book-entry  account of the
Financial  Intermediary at the Federal Reserve Bank of Richmond, (y) the sending
of a  confirmation  by  the  Financial  Intermediary  of  the  purchase  by  the
Collateral   Agent  of  such  Federal   Book-  Entry   Security,   and  (z)  the
identification by book-entry to the Financial Intermediary Securities Account by
the Financial  Intermediary of such Federal Book-Entry  Security as belonging to
the Collateral Agent;

                  (d) with respect to Instruments in the possession of a Bailee,
in the State of North  Carolina,  the  sending  of  notice to the  Bailee by the
Collateral  Agent of the  security  interest  of the  Collateral  Agent  and the
sending of an acknowledgment of such notice to the Collateral Agent; and

                  (e) with  respect to any  Eligible  Investment,  by any method
creating  a  perfected  security  interest  in  favor of the  Collateral  Agent,
provided  that the  Debtor  shall  have  delivered  an opinion of counsel to the
Collateral  Agent,  Moody's and S&P to the effect that the  Collateral  Agent on
behalf of the Secured  Parties has a valid  perfected  first  priority  security
interest in such Eligible Investment.

                  "UAC" shall mean Union Acceptance Corporation.

                  "Uniform  Commercial  Code" or "UCC"  shall  mean the  Uniform
Commercial Code as adopted in the Relevant UCC State.

                  "Unused  Portion"  shall  have the  meaning  specified  in the
Insurance Agreement.


                                                    32

<PAGE>




                  "Wind-Down  Event" shall have the meaning specified in Section
6.2.

                  "Yield  Protection  Provision"  shall mean the compensation of
the Company and each Bank  Investor by the Debtor of the  Company's and the Bank
Investors'  costs due to increased  taxes,  reserves and funding costs  incurred
under Section 4.2 of the Note Purchase Agreement.

                  "Yield Supplement  Account" shall mean the account established
by the  Debtor,  in the name of the  Collateral  Agent,  for the  benefit of the
Secured Parties, pursuant to Section 2.5 hereof.

                  "Yield  Supplement  Amount"  shall  mean,  with  respect  to a
Supplemented  Receivable  and with respect to each  Remittance  Date,  an amount
equal to the excess,  if any, of (i) interest for the related  Collection Period
on the outstanding  Principal  Balance of such Receivable as of the first day of
the  related  Collection  Period at a rate  equal to the  Minimum  Required  APR
(determined  as of the last Business Day of the  Collection  Period during which
such Receivable  first became part of the Collateral) over (ii) interest for the
related  Collection  Period at the APR set forth in the related  Contract on the
outstanding  Principal  Balance  of such  Receivable  as of the first day of the
related Collection Period.

                  "Yield   Supplement   Deposit  Amount"  shall  mean  for  each
Supplemented  Receivable,  the aggregate of the Yield Supplement Amounts for the
period  commencing  with the Collection  Period in which each such  Supplemented
Receivable  first becomes part of the  Collateral and ending with the Collection
Period during which the scheduled maturity of each such Supplemented  Receivable
occurs,  assuming that  payments on such  Supplemented  Receivables  are made as
scheduled and no prepayments thereon are made.


                                                    33

<PAGE>



                                   ARTICLE II

                           GRANT OF SECURITY INTEREST

                  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 obligations under the Note, the Note Purchase Agreement,  the Insurance
Agreement and this Agreement,  the Debtor hereby grants to the Collateral Agent,
on behalf of the Secured Parties,  a security interest in and continuing Lien on
all of the  Debtor's  right,  title  and  interest  in,  to and  under  (i)  all
Receivables,  and the Contracts related thereto, now or hereafter existing,  all
monies due or to become due with respect  thereto (not  including any late fees,
insufficient  check  charges and related  charges  assessed  against  Obligors),
whether such  amounts are  considered  accounts,  general  intangibles  or other
property,  all monies or  remittances  on deposit in any lockbox  account  which
constitute proceeds of the Receivables and the Contracts (not including any late
fees,  insufficient check charges and related charges assessed against Obligors)
and all  monies on  deposit  in the  Collection  Account,  the Yield  Supplement
Account, the Carrying Costs Account, and the Reserve Account and any investments
made with the amounts on deposit in such accounts;  (ii) the security  interests
in the Boats  granted by Obligors  pursuant to the related  Receivables  and any
accessions  thereto;  (iii) any  proceeds  from claims on any  physical  damage,
credit life,  lender's single  interest,  disability,  hospitalization  or other
insurance policies covering Boats or Obligors and any Liquidation Proceeds; (iv)
the  interest  of the  Seller  in any  proceeds  from  Dealers  relating  to the
Receivables;  (v) all documents  relating to such Receivable  including  without
limitation all documents  contained in the related  Receivables  File;  (vi) any
investment earnings on the Collection Account, Yield Supplement Account, Reserve
Account and Carrying Costs Account,  (vii) any Interest Rate Hedge Receipts; and
(viii) proceeds of any and all of the foregoing;  in addition, the Debtor hereby
assigns to the  Collateral  Agent all of its rights  under each of the  Purchase
Agreement and the Servicing  Agreement with respect to the  Receivables  and the
Contracts   related   thereto   (all  of  the   foregoing,   collectively,   the
"Collateral").  The  foregoing  pledge does not  constitute an assumption by the
Collateral Agent of any obligations of the Debtor to


                                                    34

<PAGE>



Obligors or any other  Person in  connection  with the  Collateral  or under any
agreement  and  instrument   relating  to  the  Collateral,   including  without
limitation  any  obligation  to make  future  advances  to or on  behalf of such
Obligors.

                  In  connection  with such pledge,  the Debtor agrees to record
and  file,  at  its  own  expense,  financing  statements  with  respect  to the
Collateral now existing and hereafter  created for the transfer of chattel paper
and general intangibles (each as defined in Article 9 of the UCC as in effect in
the Relevant UCC State) meeting the requirements of applicable state law in such
manner  and in such  jurisdictions  as are  necessary  to perfect  the  security
interest  in  the  Collateral  to  the  Collateral   Agent,  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 Agent on or prior to the Closing Date.  In addition,  the
Debtor agrees to clearly and unambiguously  mark all computer tapes and computer
records,  if any, to show that the Receivables and the Contracts related thereto
have been pledged to the Collateral Agent hereunder.

                  In  connection  with such pledge,  the Debtor agrees to direct
UAC as Servicer,  on or prior to the Closing Date,  to indicate,  on or prior to
the Closing Date,  clearly and  unambiguously in its computer tapes and computer
records  described in the preceding  paragraph  that the  Receivables  have been
pledged to the  Collateral  Agent pursuant to this  Agreement.  The Debtor shall
deliver to the Collateral  Agent a computer file or microfiche list containing a
true and complete list of all such Receivables, identified by account number and
Principal  Balance as of two Business Days prior to the Closing Date.  Such file
or list shall be marked as the Receivable Schedule,  delivered to the Collateral
Agent as confidential and proprietary  information,  and is hereby  incorporated
into and made a part of this  Agreement.  The  Debtor  agrees to  deliver to the
Collateral  Agent  at  such  times  as  requested  by the  Collateral  Agent  in
connection with a third-party's request to review Schedule A, as provided in the
financing statement filed by the Collateral Agent under the UCC, a computer file
or  microfiche  list  containing  a true and  complete  list of all  Receivables
subject to the lien of this Agreement, identified


                                                    35

<PAGE>



by account number and by outstanding  Principal  Balance as of such day or date.
Such updated and revised file or list shall be marked as the Receivable Schedule
and  Schedule  A to  this  Agreement,  delivered  to  the  Collateral  Agent  as
confidential and proprietary information, shall replace the previously delivered
Receivable Schedule identified as Schedule A, and shall be incorporated into and
made a part of this Agreement.  The Debtor agrees to direct the Servicer, by the
end of each Collection  Period,  to indicate  clearly and  unambiguously  in its
computer  files  that  the  Receivables  acquired  by  the  Debtor  during  such
Collection  Period have been pledged to the  Collateral  Agent  pursuant to this
Agreement.

                  SECTION 2.2 Subrogation.  The Debtor,  the Company,  each Bank
Investor, the Collateral Agent and the Surety Bond Provider acknowledge that, to
the extent of any payment made under the Surety Bond,  the Surety Bond  Provider
is to be fully  subrogated to the extent of such  payment,  to the rights of the
Noteholder  to any  moneys  paid or  payable  to such  holder in  respect of the
corresponding amounts due on such Note and under the Note Purchase Agreement (it
being  understood that the Surety Bond Provider shall be entitled to payments in
respect of such  subrogation only to the extent that no amounts are at such time
due and payable to the Noteholder under the Note). The parties hereto each agree
to such  subrogation and each further agrees to execute such  instruments and to
take such  actions as, in the sole  judgment of the Surety  Bond  Provider,  are
necessary to evidence such  subrogation  and to perfect the rights of the Surety
Bond  Provider to receive any moneys paid or payable  hereunder,  under the Note
Purchase Agreement and the Insurance Agreement.

                  SECTION 2.3  Increase in  Principal  Amount of Note;  Limit on
Commercial Paper Maturity. (a) The Debtor may increase the outstanding principal
amount under the Note only upon satisfaction of the following conditions:

                                    (i)  neither  (x)  a  Termination  Event,  a
         Potential Termination Event or the Commitment  Termination Date (in the
         case of a Funding by the Company or the Bank Investors) nor (y) (in the
         case of a Funding by the Company only) a Wind-Down  Event,  a Potential
         Wind- Down Event, the Termination Date or the Advance  Termination Date
         shall have occurred and be continuing;


                                               36

<PAGE>



                  

                                    (ii)  after   giving   effect  to  any  such
         increase,  the Net  Investment  shall not be greater  than the  Maximum
         Permitted  Borrowing  Base and the Net  Investment  plus  the  Interest
         Component shall not exceed the Facility Limit and the Collateral Agent,
         the Agent and the Surety Bond Provider  shall have received an executed
         certification  by an  authorized  officer of the  Servicer  showing the
         calculations necessary to support the foregoing;

                                    (iii) each  representation  and  warranty of
         the Debtor herein or in the Note Purchase  Agreement  shall be true and
         correct  with  respect to the Debtor and each  Receivable  included  in
         either  the  Borrowing   Base  (Boats)  or  Borrowing   Base  (Personal
         Watercraft) is an Eligible Receivable as of the date of such Funding;

                                    (iv) the Company is able to obtain funds for
         the making of such Funding in the  commercial  paper market or pursuant
         to the Liquidity Agreement (only in the case of a Funding to be made by
         the Company);

                                    (v) the Debtor  shall have  deposited in the
         Reserve Account,  or shall have given  irrevocable  instructions to the
         Agent to withhold  from the  proceeds of such Funding and to deposit in
         the Reserve  Account,  an amount equal to the amount necessary to cause
         the  amount on  deposit in the  Reserve  Account to at least  equal the
         Required Reserve Account Balance  (calculated as if such increase shall
         have occurred); and

                                    (vi) the Surety  Bond shall be in full force
         and effect and no Surety Bond Provider Default shall have occurred.

                  (b) The Company shall not issue any Related  Commercial  Paper
with a  maturity  in  excess  of 60 days in  connection  with any  financing  or
refinancing of an increase in the Note.


                                                    37

<PAGE>

                  SECTION 2.4 Release of  Receivables.  On any Business Day, the
Debtor  shall have the right to require the  Collateral  Agent to release all of
the  Collateral  Agent's  right,  title and  interest  in and to all or  certain
specified  Receivables on the terms and conditions set forth herein. It shall be
a condition  precedent to any such  release that (i) after giving  effect to any
such  release,  the Net  Investment  shall  not  exceed  the  Maximum  Permitted
Borrowing  Base,  such  determination  to be based on the  most  recent  Monthly
Debtor's  Certificate or Settlement Sheet delivered by the Debtor provided that,
if after giving effect to any such release,  the Net Investment shall exceed the
Maximum Permitted  Borrowing Base, the Debtor shall pay to the Collateral Agent,
on or prior to such  Business  Day, for payment to the  Noteholder on the day of
receipt  from the Debtor,  an amount equal to the amount  necessary,  if any, to
reduce  the Net  Investment  such that the Net  Investment  does not  exceed the
Maximum Permitted Borrowing Base after giving effect to such release,  (ii) such
release does not result in a  Termination  Event,  (iii) the Debtor shall pay to
the  Collateral  Agent,  on or prior to such  Business  Day,  for payment to the
Noteholder on the day of receipt from the Debtor,  an amount equal to all unpaid
Carrying  Costs  (including  Carrying  Costs  not  yet  accrued)  to the  extent
reasonably determined by the Collateral Agent to be attributable to that portion
of the Net  Investment  to be reduced as a result of the payment  referred to in
clause (i) above,  (iv) the Debtor shall have given the  Collateral  Agent,  the
Surety Bond Provider and the Agent at least five (5) days prior  written  notice
of its intention to request the release of such Receivables, and (v) all amounts
due hereunder, under the Note Purchase Agreement and the Insurance Agreement, to
the  extent  accrued  to the  date of such  release  or,  at the  option  of the
Collateral Agent,  acting upon the instructions of the Agent and the Surety Bond
Provider,  acting  separately,  accrued  to such date and to accrue  thereafter,
shall be fully  paid;  provided,  however,  that if such  release  is a  partial
release,  the Delinquency Ratio and the Cumulative  Charge- off Ratio shall each
be recalculated as of the most recent Ratio Calculation Date, as if such partial
release had already occurred and such partial release shall


                                                    38

<PAGE>



only  occur  if the  Noteholder's  Percentage  would  not  be  reduced  by  such
recalculation  of the related  Delinquency  Ratio and the Cumulative  Charge-off
Ratio. It is the intention of the parties that, to the extent the Company is the
Noteholder  and the Company is funding its interest in the Note through  Related
Commercial  Paper,  the Debtor shall pay to the Collateral Agent such amounts as
are required  under this Section on the Business Day preceding the maturity date
of the Related  Commercial  Paper  issued by the Company to fund its interest in
the Note.  The  Company  agrees to use its  reasonable  efforts to  reinvest  in
overnight  Eligible  Investments  any payments  received by the Company from the
Debtor in  respect  of  maturing  Commercial  Paper  prior to the  Business  Day
preceding  such  maturity  and remit the  proceeds  of such  investments  to the
Debtor.

                  The amount  described  in clause (i) above upon receipt by the
Noteholder shall be applied in reduction of the Net Investment.

                  The Debtor shall also be obligated to pay the reasonable legal
fees and expenses of the Collateral Agent, the Company, each Bank Investor,  the
Surety Bond Provider, the Administrative Agent and the Agent arising
in connection with any such release.

                  The Debtor  shall at least once in each twelve  month  period,
the first  such  period to  commence  April 3,  1997,  cause the  release of all
Receivables  in  existence  as of a date  not  more  than 31 days  prior  to the
proposed date of release,  and shall make the requisite payments described above
and satisfy the requisite  conditions  precedent  described  above to cause such
release to occur (such a release, a "Take-Out").

                  Upon the deposit to the Collection  Account and the payment to
the respective parties 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  Collateral  Agent's
interest  in the  applicable  Receivables  and the  proceeds  thereof.  Any such
documents shall be prepared by or on behalf of the Debtor and shall specifically
identify  (by loan or account  number and  outstanding  Principal  Balance)  the
Receivables in which


                                                    39

<PAGE>



the Collateral Agent's security interest is to be released.

                  SECTION 2.5  Yield Supplement Account, Deposits, Withdrawals.

                                    (a) On or before the  Initial  Funding,  the
         Debtor  shall  establish a segregated  account  (the "Yield  Supplement
         Account")  with the  Collateral  Agent  in the  name of the  Collateral
         Agent,  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 shall  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 Surety Bond  Provider (as long as no Surety
         Bond Provider  Default has occurred and is  continuing)  shall have the
         right to direct  the  transfer  of the Yield  Supplement  Account to an
         Eligible  Institution.  Notwithstanding  the foregoing,  the Collateral
         Agent shall not withdraw any funds from, or otherwise  exercise control
         over,  the  Yield  Supplement   Account  except  as  provided  in  this
         Agreement. All amounts on deposit in the Yield Supplement Account shall
         be held by the Collateral Agent for the benefit of the Secured Parties.

                                    (b) On or  prior  to each  Remittance  Date,
         with respect to all Receivables  which were added as Collateral  during
         the  Collection  Period  relating to such  Remittance  Date, the Debtor
         shall (i)  deposit  into the Yield  Supplement  Account  or (ii)  shall
         instruct the Collateral Agent to make such deposit from the proceeds of
         Related  Commercial Paper issued on such Remittance Date, for each such
         Receivable  with  respect to which the related  Contract  provides  for
         interest to accrue  thereunder at a rate less than the Minimum Required
         APR (determined as of the last Business Day of such Collection  Period)
         (each,  a  "Supplemented  Receivable")  an  amount  equal to the  Yield
         Supplement   Deposit  Amount  in  respect  of  each  such  Supplemented
         Receivable.

                                    (c)  (i)  Funds  on  deposit  in  the  Yield
         Supplement  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,


                                                    40

<PAGE>



such  investments  shall be made as directed by the Surety Bond  Provider (or by
the Collateral Agent, if there shall have been a Surety Bond Provider  Default).
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.

                                    (ii) All  investments  of amounts on deposit
         in the Yield Supplement Account shall be accomplished in a manner so as
         to cause such  investments to be  Transferred to the Collateral  Agent;
         provided  that upon the  effectiveness  in the State of New York of the
         1994  Official  Text  of  Article  8 of the  Uniform  Commercial  Code,
         investments  need  not be  Transferred  to the  Collateral  Agent.  The
         Collateral  Agent agrees that,  without the prior consent of the Surety
         Bond Provider,  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, N.A. hereby agrees (and any other Financial
         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.

                                    (iii)   Funds  on   deposit   in  the  Yield
         Supplement  Account  on the  Closing  Date and  thereafter  shall be so
         invested  in  Eligible  Investments  that  mature on the  Business  Day
         preceding the succeeding Remittance Date. No Eligible Investment may be
         liquidated  or disposed of prior to its  maturity.  All proceeds of any
         Eligible Investment shall be deposited in the Yield Supplement Account.
         Investments may be made on any date (provided such  investments  mature
         in accordance with the preceding sentence), only after giving effect to
         deposits to and withdrawals from the Yield  Supplement  Account on such
         date.  Not later  than 11:00  a.m.  (New York time) on each  Remittance
         Date, all interest and earnings (net of losses and investment expenses,
         if any) received since the


                                               41

<PAGE>



         previous  Remittance Date (or since the Closing Date in the case of the
         first  Remittance  Date) on funds on  deposit  in the Yield  Supplement
         Account shall be withdrawn by Collateral Agent and shall be remitted to
         the Debtor.  Realized  losses,  if any, on amounts invested in Eligible
         Investments shall be charged against undistributed  investment earnings
         on amounts on deposit in the Yield Supplement Account.

                                    (iv) The Debtor and the Surety Bond Provider
         shall each  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  and the  Surety  Bond
         Provider,  respectively,  that is  authorized  to provide  instructions
         relating to investments in Eligible Investments.

                  (d) 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, N.A. agrees (and any other Financial Intermediary
holding the Yield Supplement  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.

                  All  amounts  or  property  credited  to the Yield  Supplement
Account shall be subject to the lien of the  Collateral  Agent until released or
withdrawn from the Yield Supplement Account.

                  (e) Funds may be released  from the Yield  Supplement  Account
under the  circumstances  described in this Section  2.5(e).  On each Remittance
Date the Collateral Agent shall withdraw from the Yield Supplement Account,  the
Yield Supplement Amount (as set forth in the Monthly Debtor's  Certificate) with
respect to each  Supplemented  Receivable  and  deposit  such  amount(s)  in the
Collection  Account.  On any day on which  the  Collateral  Agent,  pursuant  to
Section 2.4, releases to the Debtor


                                                    42

<PAGE>



its  interest in a Contract  and related  Receivable  with  respect to which the
Debtor  deposited  funds in the Yield  Supplement  Account  pursuant  to Section
2.5(b),  the amount of such  deposit  less any amounts  released  from the Yield
Supplement  Account  with  respect to such  Receivable  shall be released to the
Debtor.  Amounts on deposit in the Yield Supplement  Account will be released to
the Debtor each Remittance Date to the extent the amount on deposit in the Yield
Supplement Account exceeds the sum of all projected Yield Supplement Amounts for
all future  Remittance  Dates,  assuming that future  scheduled  payments on all
Supplemented   Receivables  are  made  on  their  scheduled  due  dates  and  no
prepayments  thereon  occur.  Upon the  occurrence of a Termination  Event,  all
amounts on deposit in the Yield  Supplement  Account  shall be  withdrawn at the
option of the  Surety  Bond  Provider  (for so long as no Surety  Bond  Provider
Default has occurred and is continuing) or the Administrative Agent (for so long
as a Surety Bond  Provider  Default has  occurred and is  continuing)  from such
account and applied in reduction of the Net Investment.  Each of the Debtor, the
Seller, the Company and the Surety Bond Provider acknowledge that the Collateral
Agent shall have no liability for amounts  withdrawn  from the Yield  Supplement
Account in reliance upon a Monthly Debtor's Certificate.



                                                    43

<PAGE>



                                   ARTICLE III

                    REPRESENTATIONS, WARRANTIES AND COVENANTS
                                  OF THE DEBTOR

                  SECTION  3.1   Representations   and   Warranties   Concerning
Receivables.  The Debtor  represents  and  warrants  to and  covenants  with the
Collateral  Agent and the  Secured  Parties  as of the  Closing  Date and,  with
respect to any  Receivables  added to the Collateral  after the Closing Date, on
and as of the date such Receivables were added to the Collateral that:

                  (a)  Eligible  Receivable.  Each  Receivable  included  in the
applicable Borrowing Base is an Eligible Receivable.

                  (b) 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 8.1 hereof and the offices  where the Debtor keeps all its
records, are located at the address(es) described on Exhibit C.

                  (c) Merger and Consolidation. As of the date hereof the Debtor
has not changed its name,  merged  with or into or  consolidated  with any other
corporation or been the subject of any proceeding  under Title 11, United States
Code (Bankruptcy).

         In the event of a breach  of the  representation  set forth in  Section
3.1(a) with respect to any Receivable, such Receivable shall be deemed to have a
Principal  Balance of zero for purposes of calculating the applicable  Borrowing
Base and the  Debtor  shall pay to the  Collateral  Agent for  deposit  into the
Collection  Account  an  amount  equal to the sum of (x) the  lesser  of (A) the
amount,  if any,  by which the Net  Investment  exceeds  the  Maximum  Permitted
Borrowing Base (after giving effect to any such exclusion) and (B) the Principal
Balance  (determined  in this case without  giving  effect to the proviso in the
definition  thereof) of the Receivable with respect to which the breach occurred
and (y) an amount equal to interest accrued and unpaid on such Receivable at the
related APR through the day  immediately  preceding  the  succeeding  Remittance
Date.  Such  payment  shall  be made on the  Business  Day  preceding  the  next
Remittance Date.


                                                    44

<PAGE>




                           SECTION 3.2  Covenants of the Debtor

                  The Debtor hereby  covenants to the  Collateral  Agent and the
Secured Parties, so long as any amounts shall be outstanding under the Note, the
Note  Purchase  Agreement  or the  Insurance  Agreement or the Surety Bond is in
effect, that:

                  (a) Corporate Existence. The Debtor will preserve and maintain
its existence as a corporation duly organized and existing under the laws of the
jurisdiction  of its  incorporation  and will remain duly qualified as a foreign
corporation under the laws of each other jurisdiction in which the failure to so
qualify  would have a material  adverse  effect on the  ability of the Debtor to
perform its obligations under this Agreement,  the Note Purchase Agreement,  the
Note, the Insurance Agreement or the Purchase Agreement.

                  (b) Losses, Etc. In any suit,  proceeding or action brought by
the Collateral Agent or any Secured Party for any sum owing thereto,  the Debtor
will save,  indemnify  and keep the  Collateral  Agent and the  Secured  Parties
harmless from and against all expense,  loss or damage suffered by reason of any
defense, setoff,  counterclaim,  recoupment or reduction of liability whatsoever
of the Obligor under such  Receivable,  arising out of a breach by the Debtor of
any  obligation  under  the  related  Receivable  or  arising  out of any  other
agreement,  indebtedness  or  liability at any time owing to or in favor of such
Obligor or its successor from the Debtor, and all such obligations of the Debtor
shall be and remain  enforceable  against and only  against the Debtor and shall
not be enforceable against the Collateral Agent or any Secured Party.

                  (c)  Compliance  With Law.  The  Debtor  will  comply,  in all
material  respects,  with all acts,  rules,  regulations,  orders,  decrees  and
directions of any  governmental  authority  applicable to the Receivables or any
part  thereof;  provided,  however,  that the Debtor may contest any act,  rule,
regulation,  order,  decree or direction in any reasonable manner which will not
materially  and  adversely  affect  the  rights of the  Collateral  Agent in the
Receivables or the collectability of the Receivables.



                                                    45

<PAGE>



                  (d) No  Instruments.  The Debtor  will take no action to cause
any  Receivable to be evidenced by any  instrument  (as defined in the UCC as in
effect in the Relevant UCC State).

                  (e)  No  Liens.   Except  for  the  conveyances   contemplated
hereunder,  the Debtor  will not sell,  pledge,  assign or transfer to any other
Person,  or  grant,  create,  incur,  assume  or suffer to exist any Lien on any
Receivable or any interest therein;  the Debtor will notify the Collateral Agent
of the  existence  of any  Lien on any  Receivable  immediately  upon  discovery
thereof;  and the  Debtor  shall  defend the right,  title and  interest  of the
Collateral Agent in, to and under the applicable  Receivables against all claims
of third parties claiming through or under the Debtor;  provided,  however, that
nothing in this Section  3.2(e) shall prevent the Debtor from suffering to exist
upon any of the Receivables any Liens for taxes and other  governmental  charges
if such taxes or  governmental  charges shall not at the time be due and payable
or if the Debtor shall  currently  be  contesting  the validity  thereof in good
faith by appropriate  proceedings and shall have set aside on its books adequate
reserves with respect thereto.

                  (f) Notice to  Collateral  Agent.  The Debtor  will advise the
Collateral  Agent promptly,  in reasonable  detail,  (i) of any Lien asserted or
claim made against any of the Receivables,  (ii) of the occurrence of any breach
by the Debtor of any of its representations,  warranties and covenants contained
herein  and  (iii) of the  occurrence  of any other  event  which  would  have a
material  adverse  effect on the  Collateral  Agent's  security  interest in the
Receivables or the collectability thereof.

                  (g) Books and Records. The Collateral Agent and its agents and
representatives shall at all times have reasonable access during normal business
hours to all the computer tapes, books, correspondence and records of the Debtor
insofar as they  relate to the  Receivables,  and the  Collateral  Agent and its
agents and  representatives  may examine the same,  take extracts  therefrom and
make  photocopies  thereof,  and the Debtor  agrees to render to the  Collateral
Agent or its agents and representatives,  at the Debtor's cost and expense, such
clerical and other assistance as may be reasonably


                                                    46

<PAGE>



requested with regard thereto. The Debtor hereby assigns to the Collateral Agent
and its  agents and  representatives  all rights the Debtor has or shall have to
examine  computer  tapes,   books,   correspondence   and  records  relating  to
Receivables  serviced by the Servicer or any  successor  servicer  thereto.  The
Collateral  Agent  acknowledges  that in  exercising  the rights and  privileges
conferred in this Section 3.2(g) it, or its agents and representatives, may from
time to time obtain  knowledge of  information  and  practices set forth in such
computer tapes, books,  correspondence and records (whether in the possession of
the Debtor or the Servicer) of a confidential nature and in which the Debtor has
a proprietary  interest.  The Collateral Agent agrees that all such information,
practices,  books, correspondence and records are to be regarded as confidential
information and that (i) it shall retain in strict  confidence and shall use its
best efforts to ensure that its representatives  retain in strict confidence and
will not disclose  without the prior written consent of the Debtor any or all of
such information, practices, books, correspondence and records furnished to them
and (ii) it will not,  and will use its best  efforts to ensure  that its agents
and  representatives  will  not,  make any use  whatsoever  (other  than for the
purposes contemplated by this Agreement) of any of such information,  practices,
computer  tapes,  books,  correspondence  and records  without the prior written
consent of the Debtor, unless such information (i) is generally available to the
public,  (ii)  is  required  by  law  to be  disclosed  or is  requested  by any
Governmental Authority having authority over the Company, any Bank Investor, the
Agent, the Collateral Agent, the Administrative Agent, the Surety Bond Provider,
any  Liquidity  Provider or Credit  Support  Provider or (iii) is  requested  by
Moody's or S&P in connection with their rating of the Company's Commercial Paper
or the implied rating on the facility.

                  (h)  Administrative  Procedures.  The Debtor will maintain and
implement administrative operating procedures (including, without limitation, an
ability to  recreate  records  evidencing  the  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.



                                                    47

<PAGE>



                  (i) UCC  Filings.  The  Debtor  shall  execute  and file  such
continuation  statements  and any other  documents  requested by the  Collateral
Agent or which may be required by law to fully preserve and protect the interest
of the Collateral Agent hereunder in and to the Receivables.

                  (j)  Change  of  Location.  The  Debtor  will not (i)  without
providing  30 days'  notice to the Agent,  the  Surety  Bond  Provider,  and the
Collateral  Agent and without  filing such  amendments to any  previously  filed
financing  statements  as the  Collateral  Agent may  require,  (A)  change  the
location of its principal  executive office or the location of the offices where
the records relating to the accounts are kept, and (B) change its name, identity
or  corporate  structure  in any  manner  which  would,  could or might make any
financing statement or continuation  statement filed by the Debtor in accordance
with this Agreement seriously  misleading within the meaning of Section 9-402(7)
of the UCC or any applicable enactment of the UCC.

                  (k)  Reporting.  The  Debtor  will  furnish,  or  cause  to be
furnished to the Agent,  the Surety Bond Provider,  the Collateral Agent (unless
otherwise provided to the Collateral Agent) and, each of Moody's and S&P:

                                    (i) Notice of Termination  Event,  Potential
         Termination Event or Servicer Event of Default. As soon as possible and
         in any event within five days after the occurrence of each  Termination
         Event, or each Potential Termination Event hereunder,  or each Servicer
         Event of Default,  a statement of the chief financial  officer or chief
         accounting  officer  of  the  Debtor  setting  forth  details  of  such
         Termination  Event,  Potential  Termination  Event or Servicer Event of
         Default and the action  which the Debtor  proposes to take with respect
         thereto.

                                    (ii) Change in Credit Guidelines.  Within 15
         days of the effectiveness of any material change in or amendment to the
         Credit  Guidelines  notice  thereof,  and  within  30 days  after  such
         effective date, a copy of the


                                               48

<PAGE>



         Credit Guidelines, then in effect indicating such change or amendment.

                                    (iii) Annual  Reporting.  Within ninety (90)
         days after the close of each of its  fiscal  years,  audited  financial
         statements,  prepared in accordance with generally accepted  accounting
         principles  on a  consolidated  basis  for UAC  and  its  subsidiaries,
         including  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 Collateral
         Agent and the Surety Bond  Provider)  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 each of 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.

                                    (iv) Quarterly Reporting.  Within forty-five
         (45) days after the close of the first three quarterly  periods of each
         of its  fiscal  years,  for  UAC  and  its  subsidiaries,  consolidated
         unaudited  balance  sheets  as of the  close of each  such  period  and
         consolidated related 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 UAC's chief financial officer.

                                    (v)  Compliance  Certificate.   Concurrently
         with the  delivery  by the  Debtor  of the  financial  statements  with
         respect  to UAC and its  subsidiaries  including  the  Debtor  required
         hereunder,  a compliance  certificate signed by an appropriate  officer
         reasonably familiar with the applicable provisions of this


                                               49

<PAGE>



         Agreement  stating that no  Termination  Event,  Potential  Termination
         Event or Servicer Event of Default exists,  or if any Termination Event
         or Potential  Termination  Event exists,  stating the nature and status
         thereof.

                  (l) The Debtor shall not, without the prior written consent of
the Collateral Agent,

                                    (i) engage in any business or activity other
         than those set forth in Article  [III] of the Debtor's  Certificate  of
         Incorpora- tion;

                                    (ii)  incur  any  indebtedness,   assume  or
         guaranty  an  indebtedness   of  any  other  entity,   other  than  any
         indebtedness  to the Seller  thereof  incurred in  connection  with the
         acquisition of Receivables, which indebtedness shall be subordinated to
         all other  obligations of the Debtor or engage in any transactions with
         any affiliates,  except as contemplated under this Agreement,  the Note
         Purchase Agreement, the Servicing Agreement or pursuant to a Take-Out;

                                    (iii)    institute    proceedings    to   be
         adjudicated  bankrupt or insolvent,  or consent to the  institution  of
         bankruptcy  or  insolvency  proceedings  against it, or file a petition
         seeking or consent to  reorganization  or relief  under any  applicable
         federal  or  state  law  relating  to  bankruptcy,  or  consent  to the
         appointment of a receiver, liquidator,  assignee, trustee, sequestrator
         (or other similar official) of the corporation or a substantial part of
         its property,  or make any assignment for the benefit of creditors,  or
         admit in  writing  its  inability  to pay its debts  generally  as they
         become due, or take corporate action in furtherance of any such action,
         in each case,  without the  affirmative  vote of 100% of the members of
         the Board of Directors of the Debtor.

                                    (iv) fail to (a) to the extent the  Debtor's
         office is located in the offices


                                               50

<PAGE>



         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 liabilities, 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 maintenance 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  Affiliate 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.

                                    (v) amend,  alter, change or repeal Articles
         III, IV, V, VI, and XI of its Certificate of Incorporation as in effect
         on the date hereof without the prior written consent of the Surety Bond
         Provider.


                                               51

<PAGE>




                                    (vi)  transfer  any  shares  of  its  Common
         Stock,  or issue  additional  shares of its  Common  Stock or any other
         equity  interests  in the Debtor to any Person other than the Seller or
         acquire any shares of stock or equity  interest in any other  entity or
         have any subsidiaries.

                                    (vii) change its name, merge with or into or
         be consolidated with any other corporation.

                  (m) Opinion of Counsel.  At the end of each calendar  quarter,
commencing  in June,  1997,  with  respect  to any state in which  Obligors  are
located with respect to Eligible  Receivables  that account for more than 10% of
the aggregate Principal Balance of Eligible Receivables and with respect to such
state,  the Debtor has not  previously  delivered  a security  interest  opinion
relating to the Boats,  the Debtor shall be required to deliver a legal  opinion
satisfactory  to the Surety Bond Provider,  counsel for the Surety Bond Provider
and S&P and shall be required to deliver a copy of such opinion to Moody's as to
the status of the security  interest of the Collateral  Agent,  on behalf of the
Secured Parties, in the related Boats, provided that any Eligible Receivable the
Obligor of which is located  in a state that  accounts  for more than 10% of the
aggregate  Principal  Balance of Eligible  Receivables  and with respect to such
state the Debtor has failed to deliver the security  interest opinion  described
above,  the  Principal  Balance of such  Eligible  Receivable  for  purposes  of
calculating the Borrowing Base shall be deemed to be $0.

                                                    52

<PAGE>

                  (n) Yield Supplement  Account.  The Debtor shall, with respect
to each Supplemented Receivable, deposit the Yield Supplement Deposit Amount, on
or prior to the Business Day prior to the Remittance  Date relating to the first
Collection Period during which such  Supplemented  Receivable became part of the
Collateral, into the Yield Supplement Account for the period commencing with the
Collection Period in which each such Supplemented  Receivable first becomes part
of the  Collateral  and  ending  with the  Collection  Period  during  which the
scheduled maturity of each such Supplemented  Receivable  occurs,  assuming that
payments  on  such  Supplemented  Receiv  ables  are  made as  scheduled  and no
prepayments thereon are made.



                                                    53

<PAGE>



                                   ARTICLE IV

                          SERVICING AND ADMINISTRATION

                  SECTION  4.1   Servicing.   (a)  Pursuant  to  the   Servicing
Agreement,  the Debtor has contracted with Union Acceptance  Corporation ("UAC")
to act as servicer to manage,  collect and administer  each of the  Receivables.
Until such time as UAC is terminated as servicer under the Servicing  Agreement,
references to the Servicer herein shall refer to UAC as servicer under the terms
of the Servicing  Agreement.  In the event of a Servicer  Event of Default,  the
Collateral  Agent,  acting,  for so long as no Surety Bond Provider  Default has
occurred, upon the written direction of the Surety Bond Provider, shall have the
right  to cause  the  Debtor  to  terminate  UAC as  servicer  thereunder.  Upon
termination  of UAC as servicer of the  Receivables  pursuant to Section 6.02 of
the Servicing  Agreement,  the Collateral Agent,  acting upon, for so long as no
Surety Bond Provider Default has occurred,  the written  direction of the Surety
Bond  Provider  shall have the right to appoint a successor  servicer  and enter
into a servicing  agreement with such successor servicer at such time and direct
the  Collateral  Agent in the exercise of its rights  under  Section 4.3 hereof.
Such  appointment  shall be subject to the consent of the Debtor,  which consent
shall not be unreasonably  withheld;  provided,  however,  that if a Termination
Event shall have occurred,  or a Potential Termination Event shall have occurred
and be continuing, the consent of the Debtor shall not be required. In the event
that a successor  Servicer is not appointed within 30 days of the Servicer Event
of Default which led to the termination of the preceding Servicer,  NationsBank,
N.A. shall thereupon be appointed to act as successor  Servicer and NationsBank,
N.A.  agrees to so act. Such  servicing  agreement  shall specify the duties and
obligations  of such  successor  Servicer,  and  all  references  herein  to the
Servicer  shall be deemed to refer to such successor  servicer.  Notwithstanding
the above,  NationsBank,  N.A. may appoint any established financial institution
having a net  worth of not less than  $50,000,000  and  whose  regular  business
includes the servicing of automobile or marine  installment  sales  contracts as
the successor Servicer hereunder.



                                                    54

<PAGE>



                  (b)  There  shall  be  established  on the  Closing  Date  and
maintained, for the benefit of the Secured Parties in the name of the Collateral
Agent, a segregated  account (the "Collection  Account"),  bearing a designation
clearly  indicating that the funds deposited therein are held for the benefit of
the Secured  Parties.  Funds on deposit in the  Collection  Account  (other than
investment  earnings) shall be invested by the Collateral Agent at the direction
of the Debtor in Eligible  Investments  that will mature so that such funds will
be available prior to the next Remittance Date, except that in the case of funds
representing  Collections with respect to a succeeding  Collection Period,  such
Eligible  Investments  may mature so that such funds will be  available no later
than the Business Day prior to the Remittance Date for such  Collection  Period.
Any funds on  deposit  in the  Collection  Account  to be so  invested  shall be
invested solely in Eligible Investments.  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
Surety Bond  Provider (as long as no Surety Bond  Provider  Default has occurred
and is continuing) shall have the right to direct the transfer of the Collection
Account to an Eligible  Institution.  On each Remittance  Date, all interest and
earnings  (net of losses  and  investment  expenses)  on funds on deposit in the
Collection Account shall be included in Available Collections and be distributed
pursuant to Section 5.1.

                  (c) After the  Initial  Funding,  the Debtor  shall  cause the
Servicer under the Servicing  Agreement to deposit all  Collections  (other than
Liquidation  Proceeds which shall be deposited on or prior to the  Determination
Date) into the Collection  Account no later than two Business Days after receipt
thereof.

                  (d) On or before ninety (90) days after the end of each fiscal
year of the Servicer,  beginning  with the fiscal year ending June 30, 1997, the
Servicer  shall cause a firm of  independent  public  accountants  (who may also
render other  services to the Servicer or the Debtor) to furnish a report to the
Collateral  Agent  and the  Secured  Parties  to the  effect  that they have (i)
compared  the  information   contained  in  the  Monthly  Debtor's  Certificates
delivered  during  such  fiscal  year,  based on a sample  size  provided by the
Collateral Agent, with the


                                                    55

<PAGE>



information  contained in the Contracts and the Servicer's  records and computer
systems for such period,  and that, on the basis of such agreed upon procedures,
such  firm is of the  opinion  that the  information  contained  in the  Monthly
Debtor's Certificates reconciles with the information contained in the Contracts
and the  Servicer's  records and computer  system and that the  servicing of the
Receivables has been conducted in compliance with this Agreement,  (ii) verified
the  aggregate  Principal  Balance  of the  Receivables  as of the  end of  each
Collection  Period during such fiscal year,  and (iii) verified that a sample of
Receivables  treated by the Servicer 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
Servicer's  records  and  computer  system  used in  servicing  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 statement.

                  SECTION 4.2 Duties of the Servicer.

                  (a) The  Servicer  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  Guidelines.
Each of the Debtor and the  Secured  Parties  hereby  appoints  as its agent the
Servicer,  from time to time designated  pursuant to Section 4.1, to enforce its
respective  rights  and  interests  in and under the  Collateral.  So long as no
Termination  Event shall have  occurred,  the  Servicer  may,  unless  otherwise
required by law, in accordance with the Credit  Guidelines,  extend the maturity
of  Receivables,  as the Servicer may  determine to be  appropriate  to maximize
Collections  thereof.  The Servicer shall hold in trust for the Secured  Parties
all records which  evidence or relate to all or any part of the  Collateral.  In
the event that a successor  Servicer is appointed,  the outgoing  Servicer shall
deliver to the successor Servicer and the successor Servicer shall hold in trust
for the Debtor and the Secured  Parties all records which  evidence or relate to
all or any part of the Collateral.


                                                    56

<PAGE>




                  (b) If UAC or any affiliate  thereof is not the Servicer,  the
Collateral Agent, with the consent of the Surety Bond Provider and the Agent 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 1.50% per annum.  The
Servicer,  if other than UAC, 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.

                  SECTION 4.3 Rights After Designation of Successor Servicer. At
any time following the  designation  of a Servicer  (other than UAC) pursuant to
Section 4.1:

                                    (i)  The  Collateral   Agent  may  intercept
         payments  made by or on behalf of Obligors  and direct that  payment of
         all  amounts  payable  under any  Receivable  be made  directly  to the
         Collateral Agent or its designee.

                                    (ii) The  Debtor  shall,  at the  Collateral
         Agent's  request  and at  the  Debtor's  expense,  give  notice  of the
         Collateral  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  Collateral
         Agent's  request,  (A)  assemble  all of the  records  relating  to the
         Collateral,  including all Receivables  Files,  and shall make the same
         available to the Collateral Agent at a place selected by the Collateral
         Agent or its designee,  and (B)  segregate  all cash,  checks and other
         instruments  received by it from time to time constituting  collections
         of Collateral in a manner acceptable to the Collateral Agent and shall,
         promptly upon  receipt,  remit all such cash,  checks and  instruments,
         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


                                               57

<PAGE>



         Debtor necessary or desirable,  in the  determination of the Collateral
         Agent,  to collect all amounts due under any and all of the  Collateral
         with respect  thereto,  including,  without  limitation,  endorsing the
         Debtor's name on checks and other instruments  representing Collections
         and enforcing the Receivables.

                  SECTION 4.4 Responsibilities of the Debtor. Anything herein to
the  contrary  notwithstanding,   the  Debtor  shall  (i)  perform  all  of  its
obligations  under the Receivables to the same extent as if a security  interest
in such  Receivables  had not been  granted  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, nor shall any of them be
obligated to perform any of the obligations of the Debtor thereunder.

                  SECTION   4.5   Monthly   Debtor's   Certificate.    On   each
Determination  Date,  the Debtor  shall  deliver to the Agent,  the Surety  Bond
Provider and the  Collateral  Agent a certificate in  substantially  the form of
Exhibit D attached hereto (the "Monthly  Debtor's  Certificate") for the related
Collection  Period.  The Agent shall provide to the Debtor,  by the day prior to
the related  Determination  Date in the calendar month  following the Collection
Period to which such Monthly Debtor's Certificate relates,  information relating
to the amount of each obligation of the Company which  comprises  Carrying Costs
for such  Collection  Period.  The Monthly  Debtor's  Certificate  shall specify
whether a  Termination  Event is deemed to have  occurred  with  respect  to the
Collection Period preceding such Determination Date. Upon receipt of the Monthly
Debtor's  Certificate,  the  Collateral  Agent  shall  rely (and  shall be fully
protected in so relying) on the information  contained  therein for the purposes
of making distributions and allocations as provided for herein.

                  SECTION 4.6 Additional  Representations  and Warranties of UAC
as Servicer.  UAC, in its capacity as Servicer,  represents  and warrants to the
Surety Bond Provider and the Collateral Agent, as of the Closing Date


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<PAGE>



that the only material  servicing computer systems and related software utilized
by the Servicer to service the Receivables  are provided by Alltell  Information
Services,  Inc. (formerly known as Systematics System Financial Services,  Inc.)
under an  agreement  (and  related  non-exclusive  license)  and related  letter
agreements dated July 13, 1994 and October 25, 1994.  Should the Servicer or any
of its Affiliates  develop and implement computer software for servicing that is
owned or  exclusively  licensed to the Servicer or an Affiliate and utilize such
software in the servicing of the Receivables,  the Surety Bond Provider shall be
entitled  to compel a license or  sublicense  for the benefit of the Surety Bond
Provider  or its  designee  of any such  rights to the extent  the  Surety  Bond
Provider deems reasonably  necessary and appropriate to assure that it or a duly
appointed   successor  servicer  would  be  able  to  continue  to  service  the
Receivables should that be required in accordance with the Servicing Agreement.


                                                    59

<PAGE>



                                    ARTICLE V

                           ALLOCATION AND APPLICATION
                         OF COLLECTIONS; RESERVE ACCOUNT

                  SECTION 5.1  Collections.  (a) On each  Remittance  Date,  the
Collateral   Agent  shall  determine  by  reference  to  the  Monthly   Debtor's
Certificate,  the Available Collections with respect to such Remittance Date and
shall  withdraw  such  amount  from the  Collection  Account  including  amounts
deposited in the Collection  Account from the Yield Supplement  Account pursuant
to Section  2.5(e) and allocate and pay such amounts in the  following  order of
priority:

                                    (i)  to  the  Servicer,  to  repay  Servicer
         Advances  and  then  to the  successor  Servicer,  to pay  any  and all
         expenses  relating to a Servicer  Transfer  then due and payable  which
         have not been previously paid by or on behalf of the Debtor;

                         (ii) if UAC or an Affiliate is
         not the Servicer, to the Servicer, an amount
         equal to the Servicing Fee;

                                    (iii) to the Agent,  for the  account of the
         Company or the Bank Investors an amount equal to Carrying Costs payable
         on such Remittance Date;

                                    (iv)  to  the  Carrying  Costs  Account,  an
         amount  equal to  interest  accrued  on the  Related  Commercial  Paper
         through such Remittance Date net of all such amounts paid in respect of
         the Interest Component of Related Commercial Paper on the maturity date
         thereof on or prior to such Remittance Date;

                                    (v) to the  Agent,  for the  account  of the
         Company or the Bank Investors,  an amount equal to the Targeted Monthly
         Principal Payment;


                                    (vi)  to  the  Collateral   Agent,  for  the
         account of the Hedge Counterparty, any


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<PAGE>



         amounts owed to the Hedge  Counterparty  under any Interest Rate Hedge,
         which have not previously been paid;

                                    (vii)  if  UAC  or  an   Affiliate   is  the
         Servicer, to the Servicer, an amount equal to the Servicing Fee;

                                    (viii)  provided  no  Surety  Bond  Provider
         Default  shall have  occurred  and be  continuing,  to the Surety  Bond
         Provider, the Unused Portion and the Premium Portion of the Surety Bond
         Premium,  including  any  overdue  Surety  Bond  Premiums  and  accrued
         interest thereon at the rate provided in the Insurance Agreement;

                                    (ix)  to  the  Surety  Bond  Provider,   the
         aggregate  amount of any  previously  unreimbursed  draws on the Surety
         Bond (plus any other amounts  payable to the Surety Bond Provider under
         the  Insurance  Agreement,  plus accrued  interest  thereon at the rate
         provided in the Insurance Agreement);

                                    (x)   to the Collateral Agent or
         the Surety Bond  Provider,  the amount to be applied by the  Collateral
         Agent or the Surety Bond Provider,  as appropriate,  to pay any and all
         Re-Liening Expenses then due and payable which have not been previously
         paid by or on behalf of the Debtor;

                                    (xi) after the  occurrence  of a Termination
         Event,  to the Noteholder to reduce the Net  Investment,  until the Net
         Investment has been reduced to zero;

                                    (xii) to the  Reserve  Account,  the  amount
         necessary to increase  the amount on deposit in the Reserve  Account to
         the Required Reserve Account Balance;

                                    (xiii) to the Agent,  for the account of the
         Persons  entitled  thereto,  an amount equal to all other  amounts owed
         under the Note Purchase Agreement;


                                               61

<PAGE>





                                    (xiv) to the  Servicer,  an amount  equal to
         reimburse  any Fee  Advance  then due and  payable  which  has not been
         previously paid by or on behalf of the Debtor; and

                                    (xv)   prior   to   the   occurrence   of  a
         Termination  Event,  all remaining  amounts shall be distributed to the
         Debtor.  Following the occurrence of a Termination  Event all remaining
         amounts will be held in the  Collection  Account and applied  until all
         amounts owing to the Secured  Parties under the  Transaction  Documents
         have been paid in full.

                  (b) On any date that a tranche  of  Related  Commercial  Paper
matures  whether  or not such date is a  Remittance  Date  (each,  an  "Interest
Payment Date"), the Interest Component of matured or maturing Related Commercial
Paper due and  payable  on such day shall be  payable  as  interest  on the Note
("Note Interest").  Accordingly,  the Collateral Agent,  acting upon notice from
the  Administrative  Agent,  shall withdraw such amount from funds on deposit in
the Carrying  Cost  Account,  to the extent of amounts on deposit  therein,  and
remit such  amount to the Agent for the  account of the  Company.  To the extent
that amounts  withdrawn by the Collateral  Agent from the Carrying Costs Account
are  insufficient to pay such costs,  the Collateral  Agent,  acting upon notice
from the  Administrative  Agent,shall  withdraw  the  amount  of such  remaining
shortfall from the Collection  Account,  to the extent of Collections on deposit
therein,  and remit such amount to the Agent for the account of the Company.  To
the  extent  that  amounts  withdrawn  by the  Agent,  as  specified  above  are
insufficient  to pay such  costs,  the  Servicer,  acting  upon  notice from the
Administrative Agent, shall make an advance in an amount equal to such costs due
and payable on such day (a  "Servicer  Advance")  and remit to the Agent for the
account of the Company, the amount of such advance provided,  however,  that the
Servicer  shall not be obligated  to make any such advance  except to the extent
that the  Servicer  reasonably  expects to be  reimbursed  for such advance on a
succeeding  Remittance  Date pursuant to Section  5.1(a)(i).  To the extent that
amounts  advanced by the  Servicer  are  insufficient  to pay such costs and the
Debtor fails to make a payment to the Collateral Agent on such day in the amount
of such shortfall, the


                                                    62

<PAGE>



Collateral Agent shall withdraw the amount of such remaining  shortfall from the
Reserve  Account,  to the extent of amounts on deposit  therein,  and remit such
amount to the Agent,  for the account of the  Company.  To the extent that there
remains a shortfall,  the Agent shall make a demand for payment under the Surety
Bond,  in accordance  with the terms  thereof.  Amounts  required to be remitted
pursuant to this Section  5.1(b) to the Agent or the  Collateral  Agent shall be
remitted in  immediately  available  funds to the Agent's  account no later than
11:00 a.m., New York City time, on the date due.

                  (c) If the  Available  Collections  in respect of a Remittance
Date are  insufficient to pay the sum of the amounts to be distributed  pursuant
to clauses (i)  through  (iii) of Section  5.1(a),  the  Collateral  Agent shall
withdraw the amount of such shortfall from the Reserve Account, to the extent of
amounts on deposit  therein,  and apply such  amount to the payment of the items
described in clauses  (i),  (ii) and (iii) of Section  5.1(a),  in that order of
priority.

                  (d) If on any  Remittance  Date,  after  giving  effect to any
withdrawals from the Reserve Account  pursuant to Section 5.1(c),  there remains
any shortfall in amounts available to pay the amounts to be distributed pursuant
to clause (iii) of Section 5.1 (a), the Servicer,  or any successor Servicer may
make a Fee Advance in respect of the  Liquidity  Fee, and if the Servicer or any
successor  Servicer declines to make a Fee Advance with respect to any Liquidity
Fee due  thereunder,  or after  giving  effect  such Fee  Advance,  a  shortfall
remains,  the Agent shall review the terms of the Surety  Bond,  and if a demand
for payment may be made thereunder for any such shortfall,  the Agent shall make
a demand thereunder in accordance with the terms of the Surety Bond.

                  (e) If on any  Remittance  Date,  after  giving  effect to any
withdrawals  from the  Reserve  Account  pursuant  to  Section  5.1(c),  the Net
Investment   exceeds  the   outstanding   Principal   Balance  of  the  Eligible
Receivables,  the Collateral Agent shall withdraw the amount of such excess from
the Reserve  Account,  to the extent of amount on deposit therein and distribute
such amount as principal on the Note in reduction of the Net Investment.  To the
extent the Net Investment exceeds the outstanding


                                                    63

<PAGE>



Principal  Balance  of  the  Eligible  Receivables  after  such  withdrawal  and
distribution,  the Agent  shall  review the terms of the Surety  Bond,  and if a
demand for payment may be made  thereunder  with  respect to  principal  for the
amount by which the Net Investment exceeds the outstanding  Principal Balance of
the Eligible Receivables, the Agent shall make a demand thereunder in accordance
with the terms of the Surety Bond.

                  (f) If on any  Remittance  Date,  after  giving  effect to any
withdrawals from the Reserve Account  pursuant to Section 5.1(c),  there remains
any  shortfall  in  amounts  available  to pay the amount to be  distributed  in
respect of the Unused  Portion of the Surety  Bond  Premium  pursuant  to clause
(viii) of Section 5.1(a),  the Servicer or any successor Servicer may make a Fee
Advance in respect of the Unused Portion of such Surety Bond Premium.

                  (g) To the extent that the Collateral  Agent shall receive any
late fees,  insufficient  check  charges and similar  charges  assessed  against
Obligors, the Collateral Agent shall remit such amounts to, or upon the order of
the Servicer,  if UAC, otherwise,  the Debtor. Such amounts shall be so remitted
by the Collateral Agent to the Servicer notwithstanding that a Termination Event
shall have occurred.

                  (h) In the event that an Interest  Rate Hedge is entered  into
by the Debtor in compliance with Section 6.1(n),  then in such event all amounts
payable by the Hedge Counterparty to the Debtor shall be deposited directly into
the  Collection  Account and as of any Remittance  Date shall comprise  Interest
Rate Hedge  Receipts  and all such  amounts  shall be treated as Finance  Charge
Collections hereunder.

                  SECTION  5.2  Remittances  to the  Secured  Parties.  On  each
Remittance Date, the Collateral Agent shall remit all applicable amounts to each
Secured  Party in accordance  with the  provisions of Section 5.1. The foregoing
notwithstanding,  the final  remittance  in respect of the Note shall be made in
the applicable  manner  specified above only upon  presentation and surrender of
the Note at the office of the Debtor specified by it in the notice of such final
remittance or repurchase.



                                                    64

<PAGE>



                  SECTION  5.3  Reserve  Account.  (a) On or before the  Initial
Funding, the Debtor shall establish a segregated account (the "Reserve Account")
with the Collateral  Agent in the name of the Collateral  Agent, 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 shall maintain the Reserve
Account at an Eligible  Institution.  If the  Eligible  Institution  holding the
Reserve  Account  shall  cease to be an  Eligible  Institution,  the Surety Bond
Provider  (as long as no  Surety  Bond  Provider  Default  has  occurred  and is
continuing)  shall have the right to direct the transfer of the Reserve  Account
to an Eligible Institution.  Notwithstanding the foregoing, the Collateral Agent
shall not  withdraw any funds from,  or otherwise  exercise  control  over,  the
Reserve Account except as provided in this Agreement.  All amounts on deposit in
the Reserve Account shall be held by the Collateral Agent for the benefit of the
Secured Parties.

                  (b) On or prior  to the  Initial  Funding,  the  Debtor  shall
deposit or cause to be deposited in the Reserve  Account,  the Required  Reserve
Account Balance (calculated as if such Initial Funding had occurred). The Debtor
shall  deposit  into the Reserve  Account all amounts  which are  required to be
deposited  therein  by this  Agreement.  The  Collateral  Agent  shall  promptly
withdraw from the Reserve Account all amounts required to be withdrawn therefrom
pursuant  to Section  5.1(b) and 5.1(c)  hereof,  and shall  either (i) pay such
amounts to the Agent, for the account of the Company (in the case of withdrawals
pursuant to Section  5.1(b)) or (ii)  deposit  such amounts to the credit of the
Collection  Account (in the case of  withdrawals  therefrom  pursuant to Section
5.1(c)).

                  (c) Prior to the occurrence of a Termination  Event and to the
extent that amounts on deposit in the Reserve  Account on any  Remittance  Date,
after giving effect to any required  withdrawals  therefrom on such day,  exceed
the Required  Reserve  Account  Balance,  such excess amounts shall be withdrawn
from the Reserve Account by the Collateral Agent and remitted to the Debtor.

                  (d) (i)  Funds on  deposit  in the  Reserve  Account  shall be
invested in Eligible Investments by or at


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<PAGE>



the written direction of the Debtor,  provided that if a Termination Event shall
have  occurred,  such  investments  shall be made as directed by the Surety Bond
Provider  (or by the  Collateral  Agent if there  shall have been a Surety  Bond
Provider  Default).  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.

                                    (ii) All  investments  of amounts on deposit
         in the Reserve Account shall be accomplished in a manner so as to cause
         such  investments to be Transferred to the Collateral  Agent;  provided
         that  upon  the  effectiveness  in the  State  of New  York of the 1994
         Official Text of Article 8 of the Uniform Commercial Code,  investments
         need not be Transferred to the Collateral  Agent.  The Collateral Agent
         agrees that, without the prior consent of the Surety Bond Provider,  it
         shall not accept for credit to the Reserve Account any investment as to
         which it has knowledge of any adverse claim thereto.  NationsBank, N.A.
         hereby agrees (and any other Financial Intermediary holding the 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 Reserve  Account
         from the Collateral Agent.

                                    (iii)   Funds  on  deposit  in  the  Reserve
         Account on the  Closing  Date and  thereafter  shall be so  invested in
         Eligible  Investments  that mature such that such funds or the proceeds
         thereof will be available for withdrawal pursuant to Section 5.1(b) and
         5.1(c) on the maturity date of Related  Commercial  Paper; in any event
         the maturity of any Eligible  Investment  shall not exceed 30 days.  No
         Eligible  Investment  may be  liquidated  or  disposed  of prior to its
         maturity. All proceeds of any Eligible Investment shall be deposited in
         the Reserve Account. Investments may be made on any date (provided such
         investments  mature in accordance  with the preceding  sentence),  only
         after giving effect to deposits to and with-


                                               66

<PAGE>



         drawals from the Reserve Account on such date. Realized losses, if any,
         on amounts  invested in Eligible  Investments  shall be charged against
         investment earnings on amounts on deposit in the Reserve Account.

                                    (iv) The Debtor and the Surety Bond Provider
         shall each  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  and the  Surety  Bond
         Provider,  respectively,  that is  authorized  to provide  instructions
         relating to investments in Eligible Investments.

                  (e) 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, N.A. agrees (and any other Financial 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.

                  All amounts or property  credited to the Reserve Account shall
be subject to the lien of the Collateral  Agent until released or withdrawn from
the Reserve Account.

                  (f) If and to the  extent  that  the Net  Investment  has been
reduced  to zero and all  amounts  owed by the  Debtor  to the  Secured  Parties
hereunder,  under the Note Purchase Agreement, the Insurance Agreement, the Note
and any  other  Transaction  Document  have been paid in full,  any  amounts  on
deposit in the Reserve  Account  shall be  released to the Debtor.  In the event
that  thereafter the Debtor shall request that the  Noteholder  increase its Net
Investment,  it shall be a condition  precedent thereto that the Reserve Account
be funded in an amount  equal to the  Required  Reserve  Account  Balance  after
giving effect to any such requested increase in the Net Investment.



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<PAGE>




                  SECTION  5.4  Carrying  Costs  Account.  (a) On or before  the
Initial Funding,  the Debtor shall establish a segregated account (the "Carrying
Costs Account") with an Eligible Institution  designated by the Collateral Agent
in the name of the Collateral Agent, for the benefit of the Secured Parties.  If
the Eligible Institution holding the Carrying Costs Account shall cease to be an
Eligible  Institution,  the  Surety  Bond  Provider  (as long as no Surety  Bond
Provider Default has occurred and is continuing)  shall have the right to direct
the transfer of the Carrying Costs Account to an Eligible  Institution.  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 Carrying Costs
Account.  Notwithstanding the foregoing, the Collateral Agent shall not withdraw
any funds from, or otherwise  exercise  control over, the Carrying Costs Account
except as provided  in this  Agreement.  All amounts on deposit in the  Carrying
Costs Account shall be held for the benefit of the Secured Parties.

                  (b) The Servicer shall deposit into the Carrying Costs Account
all amounts  which are  required  to be  deposited  therein  pursuant to Section
5.1(a)(iv). The Collateral Agent shall promptly withdraw from the Carrying Costs
Account  all  amounts  required to be  withdrawn  therefrom  pursuant to Section
5.1(b) hereof,  and shall pay such amounts to the Agent,  for the account of the
Company.

                  (c) (i) Funds on deposit in the Carrying  Costs  Account shall
be invested in Eligible Investments by the Collateral Agent.

                                    (ii) All  investments  of amounts on deposit
         in the Carrying Costs Account shall be  accomplished  in a manner so as
         to cause such  investments to be  Transferred to the Collateral  Agent;
         provided  that upon the  effectiveness  in the State of New York of the
         1994  Official  Text  of  Article  8 of the  Uniform  Commercial  Code,
         investments  need  not be  Transferred  to the  Collateral  Agent.  The
         Collateral  Agent agrees that,  without the prior consent of the Surety
         Bond  Provider,  it shall not accept for credit to the  Carrying  Costs
         Account  any  investment  as to which it has  knowledge  of any adverse
         claim


                                               68

<PAGE>



         thereto.  The Collateral  Agent shall cause any Financial  Intermediary
         holding  the  Carrying  Costs  Account  to  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
         Carrying Costs Account from the Collateral Agent.

                                    (iii) Funds on deposit in the Carrying Costs
         Account on the  Closing  Date and  thereafter  shall be so  invested in
         Eligible  Investments that mature such that sufficient  amounts of such
         funds or the proceeds thereof will be available for withdrawal pursuant
         to Section 5.1(b) on the maturity date of Related  Commercial Paper; in
         any event the maturity of any Eligible  Investment  shall not exceed 30
         days. No Eligible  Investment may be liquidated or disposed of prior to
         its  maturity.  All  proceeds  of  any  Eligible  Investment  shall  be
         deposited in the Carrying Costs Account. Investments may be made on any
         date (provided such investments mature in accordance with the preceding
         sentence), only after giving effect to deposits to and withdrawals from
         the Carrying Costs Account on such date.  Realized  losses,  if any, on
         amounts  invested  in  Eligible  Investments  shall be charged  against
         investment  earnings  on  amounts  on  deposit  in the  Carrying  Costs
         Account.

                  (d) 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.  Any Financial  Intermediary holding the Carrying Costs Account
shall agree that it shall 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 Carrying  Costs Account given to it by any
Person other than the Collateral Agent.

                  All amounts or property credited to the Carrying Costs Account
shall be subject to the lien of the


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<PAGE>



Collateral Agent until released or withdrawn from the Carrying Costs Account.

                  (f) On each Distribution Date, all investment earnings (net of
any losses) on Eligible  Investments earned during the related Collection Period
shall be released to the  Debtor.  If and to the extent that the Net  Investment
has been  reduced  to zero and all  amounts  owed by the  Debtor to the  Secured
Parties hereunder,  under the Note Purchase Agreement,  the Insurance Agreement,
the Note and any other Transaction  Document have been paid in full, any amounts
on deposit in the Carrying Costs Account shall be released to the Debtor.


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<PAGE>



                                   ARTICLE VI

                      TERMINATION EVENTS; WIND-DOWN EVENTS

                  SECTION   6.1   Termination   Events.   The   occurrence   and
continuation of any one of the following  events shall be a "Termination  Event"
under this Agreement:

                  (a) failure on the part of the Debtor to pay or disburse  when
due the amounts  provided for herein  (with the  exception of any failure to pay
any Yield  Supplement  Amount),  in the Note Purchase  Agreement,  the Insurance
Agreement,  or in the Note and such failure  continues  for two Business Days or
the  failure on the part of UAC to make any  payment or effect any  transfer  of
Receivables  under the  Purchase  Agreement  or the Servicer to make any payment
under the Servicing Agreement and such failure continues for two Business Days;

                  (b)  failure  (i) by the Debtor or the  Seller,  to observe or
perform any term, covenant, condition or agreement set forth in Sections 3.2(a),
(d),  (e),  (f),  (i),  (k)(i) and (l) of this  Agreement or the Servicer in the
Servicing  Agreement,  or (ii) of any  representation or warranty of the Debtor,
the Seller or the Servicer  contained herein, the Note Purchase  Agreement,  the
Purchase  Agreement,  the Insurance  Agreement or the Servicing  Agreement to be
true and  correct in all  material  respects on any day when made or deemed made
hereunder or thereunder,  or (iii) by the Debtor to observe or perform any other
term, covenant, condition or agreement provided for herein or in the Note (other
than a term  addressed  in clause (i) above)  which,  in the case of clause (ii)
above  continues  for a period of thirty  (30) days after the earlier of (u) the
date on which written notice of such breach shall have been given to the Debtor,
the Seller or the  Servicer,  by the  Agent,  the Surety  Bond  Provider  or the
Collateral  Agent,  or (v) the date on which the  Debtor,  the  Servicer  or the
Seller became aware of such breach,  or which,  in the case of clause (ii) above
continues  for a period of ten (10) days  after the  earlier  of (x) the date on
which written  notice of such failure  shall have been given to the Debtor,  the
Servicer or the Seller by the Agent,  the Surety Bond Provider or the Collateral
Agent or (y) the date on which the Debtor,  the  Servicer  or the Seller  became
aware of such failure; notwithstanding clause (ii) above, in the


                                                    71

<PAGE>



event the Debtor  makes the  payment  required  by Section  3.1 as a result of a
breach of the  representation  set forth in Section  3.1(a),  the breach of such
representation shall not constitute a Termination Event hereunder;


                  (c) the Debtor,  the Seller or the Servicer  shall  consent to
the  appointment of a conservator  or receiver or liquidator in any  insolvency,
readjustment  of  debt,   marshalling  of  assets  and  liabilities  or  similar
proceedings  of or relating to the Debtor,  the Seller or the  Servicer,  as the
case may be, or of or relating to all or substantially all of its property, or a
decree  or  order  of  a  court  or  agency  or  supervisory   authority  having
jurisdiction in the premises for the appointment of a conservator or receiver or
liquidator in any insolvency,  readjustment  of debt,  marshalling of assets and
liabilities or similar proceedings,  or for the winding-up or liquidation of its
affairs, shall have been entered against the Debtor, the Seller or the Servicer,
as the case may be,  and such  decree  or order  shall  have  remained  in force
undischarged  or unstayed for a period of 60 days; or the Debtor,  the Seller or
the Servicer shall admit in writing its inability to pay its debts  generally as
they become due, file a petition to take  advantage of an applicable  insolvency
or reorganization  statute, make any assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations;  or the Debtor, the Seller or
the  Servicer,  as the case may be, shall become unable for any reason to pledge
Collateral to the  Collateral  Agent in accordance  with the  provisions of this
Agreement;

                  (d) the Debtor or the  Servicer (if the Servicer is UAC) shall
enter into any merger or consolidation or shall convey all or substantially  all
of its assets to another  Person,  wherein  the case of a merger,  it is not the
surviving entity;

                  (e) a Servicer Event of Default shall occur;

                  (f) the Delinquency  Ratio averaged over any three consecutive
Collection Periods shall equal or exceed 4%;



                                                    72

<PAGE>



                  (g) the  Default  Ratio  averaged  over any three  consecutive
Collection Periods shall equal or exceed 1.75%;

                  (h) the  Collateral  Agent shall fail for any reason to have a
valid and perfected first priority  security  interest in the Collateral and the
proceeds thereof;

                  (i) the Seller or the Servicer  shall default and such default
shall  continue  for a period of 30 days in any  payment  in excess of  $100,000
contained in any agreement for borrowed money to which it is a party;

                  (j) any demand for payment is made under the Surety Bond;

                  (k) a  Surety  Bond  Provider  Default  has  occurred  and  is
continuing;

                  (l) the term of the Surety  Bond is not at least  equal to the
term of the latest maturing Receivable plus 366 days);

                  (m) (i) (x) At any time the Net Investment  exceeds the sum of
the Borrowing Base (Boats) plus the Borrowing Base (Personal  Watercraft) or (y)
the Net Investment exceeds the Maximum Permitted  Borrowing Base for a period of
sixty consecutive Business Days and the Debtor fails to (A) deliver a Settlement
Sheet indicating an increase in the Maximum  Permitted  Borrowing Base such that
the Maximum  Permitted  Borrowing  Base exceeds the Net Investment or (B) make a
deposit into the  Collection  Account to be applied as principal in reduction of
the Net Investment in an amount such that the Maximum  Permitted  Borrowing Base
exceeds the Net Investment;

                  (n) the Net Yield with respect to any Determination Date shall
be less than 1% and none of (x) a Take-Out,  (y) delivery of a Settlement  Sheet
by the Debtor  indicating an increase in the Maximum  Permitted  Borrowing  Base
such that the Maximum Permitted Borrowing Base exceeds the Net Investment or (z)
the Debtor has entered into an Interest Rate Hedge acceptable to the Surety Bond
Provider, shall have occurred within 30 days;



                                                    73

<PAGE>



                  (o) a  Take-Out  does not occur at least  once every 12 months
provided that the initial Take-Out shall occur no later than April 3, 1998;

                  (p) a downgrade in the claims-paying rating of the Surety Bond
Provider below "Aa" or "AA" by Moody's or S&P,  respectively,  provided that the
Servicer  has  not  succeeded  in  finding  a  successor  Surety  Bond  Provider
acceptable to the Agent within 30 days of such downgrade; or

                  (q) any of this Agreement,  the Note Purchase  Agreement,  the
Insurance Agreement, the Purchase Agreement, the Servicing Agreement or the Note
shall cease to be in full force and effect.

                  SECTION 6.2 Wind-Down Events.  The occurrence and continuation
of any one of the  following  events  shall be a  "Wind-Down  Event"  under this
Agreement:

                  (a) the  Liquidity  Provider  or the Credit  Support  Provider
shall have  notified the Agent that an event of default has  occurred  under the
Liquidity Agreement or the Credit Support Agreement, respectively;

                  (b) the Company's Commercial Paper shall no longer be rated at
least "A-2", in the case of S&P, and at least "P-2", in the case of Moody's; or

                  (c) either  the  Liquidity  Fee or the  Unused  Portion of the
Surety Bond Premium shall not be paid pursuant to Section 5.1.


                  SECTION 6.3 Remedies.  If a Termination  Event as specified in
Section 6.1 shall have occurred,  the Agent or the Collateral Agent may, in each
case, with the consent of the Surety Bond Provider (provided that no Surety Bond
Provider  Default shall have occurred),  or shall upon the written  direction of
the Surety Bond Provider  (provided  that no Surety Bond Provider  Default shall
have  occurred)  have the right to declare  by written  notice to the Debtor any
date as the Pay Out  Commencement  Date and to declare all  amounts  outstanding
under the Note,  the Note Purchase  Agreement and the Insurance  Agreement to be
then due and  payable.  If the Note and such other  amounts are declared due and
payable, the Col-


                                                    74

<PAGE>



lateral Agent may, with the consent of the Surety Bond  Provider,  or shall upon
the written direction of the Surety Bond Provider  (provided that no Surety Bond
Provider Default shall have occurred) do any one or more of the following:

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

                  (b) cause the Debtor to take all steps  necessary to cause the
certificate  of title or other  evidence of  ownership of the related Boat to be
revised to name the Collateral  Agent on behalf of the Secured  Parties as first
lienholder  and to  effect  any  filings  or take any  actions  necessary  under
applicable  certificate  of title  statutes  to perfect the  Collateral  Agent's
interest  as  first  lienholder  in the  boat  motors  and  boat  trailers  if a
Termination Date has occurred or upon the occurrence of a Termination Event upon
the  discretion of the Surety Bond  Provider,  if the Surety Bond Provider shall
have  determined  that such  action is prudent to protect  the  interest  of the
Secured  Parties  hereunder.  Any costs  associated  with such  revision  of the
certificate of title or other evidence of ownership  shall be paid by the Debtor
and to the extent such costs are not paid by the Debtor such unpaid  costs shall
be recovered as described in Section 5.1 hereof.

                  (c) cause the Debtor to cease purchasing  Receivables from the
Seller,  and retain in  satisfaction  of any  amounts  owed by 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;

                  (d) pursue any  available  remedy by pro- ceeding 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 on 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 con-


                                                    75

<PAGE>



tained in this Agreement to be observed or performed by the Debtor;

                           (e)  exercise any remedies of a secured
party under the Uniform 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, subject to Section 8.7 hereof.

                  SECTION 6.4 Application of Proceeds.  Any proceeds received by
the  Collateral  Agent  from  the  sale,   disposition  or  liquidation  of  the
Collateral,  including  as a  result  of any  sale  or  foreclosure  thereon  as
contemplated by Section 6.3 above, shall be applied as follows:

                  (a) to the payment of (i) all  accrued and unpaid  interest in
accordance with Section 5.1 hereof and (ii) principal on the Note;

                  (b) to the reimbursement of all amounts due and payable to the
Hedge Counterparty under any Interest Rate Hedge;

                  (c) to the  reimbursement of all draws made on the Surety Bond
and the payment of all accrued and unpaid interest related thereto;

                  (d) to the payment of all other amounts due  hereunder,  under
the Note  Purchase  Agreement  or the  Insurance  Agreement  to the  Agent,  the
Collateral  Agent,  the Company,  the Surety Bond Provider or the Bank Investors
(pro rata among them in the event sufficient funds are not available to pay such
Persons in full); and

                  (e) any  remainder  after  the  payment  in full of all of the
foregoing, to the Debtor.


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<PAGE>



                                   ARTICLE VII

                              THE COLLATERAL AGENT

                  SECTION 7.1 Duties of the  Collateral  Agent.  The  Collateral
Agent,  both prior to the occurrence of a Termination  Event or Wind-Down  Event
hereunder and after a Termination Event or Wind-Down 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 or Wind-Down  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
Servicer 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 together 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 provisions of Article V hereof.

                  Except as otherwise  provided  herein,  the  Collateral  Agent
shall not resign from the  obligations  and duties  hereby  imposed on it except
upon determination 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 Secured  Parties,  Moody's
and S&P.  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  7.2.  No
resignation of the  Collateral  Agent shall become  effective  until a successor
Collateral  Agent  approved  by the  Secured  Parties  shall  have  assumed  the
responsibilities and obligations of the Collateral Agent hereunder.


                                                    77

<PAGE>




                  SECTION 7.2  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 the reasonable
compensation  and  expenses of its  counsel  and agents)  pursuant to a separate
letter  agreement  between the Collateral  Agent and the Debtor.  Subject to the
terms of such letter  agreement,  the Collateral  Agent shall be required to pay
the expenses 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 arising from a
failure to comply therewith).

                  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.  The  provisions  of this  Section 7.2 shall  survive the
termination of this Agreement.

                  SECTION 7.3  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 entering into this Agreement,  the Note Purchase  Agreement and the
Insurance Agreement.

                  (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


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<PAGE>



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 have been duly authorized by the Collateral  Agent
by all necessary corporate action on the part of the Collateral Agent.

                  (c) Binding  Obligation.  This Agreement  constitutes a legal,
valid and binding obligation of the Collateral Agent,  enforceable in accordance
with  its  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  de-  livery  of  this
Agreement by the  Collateral  Agent,  and the  performance  of the  transactions
contemplated  by  this  Agreement  and  the  fulfillment  of  the  terms  hereof
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  7.4  Liability  of  the  Collateral  Agent.  (a)  The
Collateral  Agent shall be liable in  accordance  herewith 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.


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<PAGE>




                  (b) The  Collateral  Agent shall not be liable for an error of
judgment made in good faith, 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.

                  (d) The  Collateral  Agent shall not be charged with knowledge
of any  Termination  Event or Wind-  Down  Event  unless an  officer  personally
familiar with and currently responsible for administering this Agreement obtains
actual  knowledge of such event or the Collateral  Agent receives written notice
of such event from the  Debtor,  the  Servicer,  the  Company,  the Surety  Bond
Provider or the Agent, as the case may be.

                  (e) Without  limiting the  generality of this Section 7.4, the
Collateral  Agent  shall  have no duty (i) to see to any  recording,  filing  or
depositing  of  this  Agreement  or any  agreement  referred  to  herein  or any
financing statement or continuation  statement evidencing a security interest in
the Receivables or the Boats, 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 Boats, 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 Servicer 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  Boats  at any  time  or  ascertain  or  inquire  as to the  performance  or
observance of any of the Debtor's or the Servicer's representations,  warranties
or  covenants  or the  Servicer's  duties and  obligations  as  Servicer  and as
custodian  of  books,  records,  files  and  computer  records  relating  to the
Receivables under the Servicing Agreement.


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                  (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 Servicer 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
Monthly Debtor's Certificate, certificate of auditors, or any other certificate,
statement,   instrument,  opinion,  report,  notice,  request,  consent,  order,
appraisal,  bond or other  paper or  document  reasonably  believed  by it to be
genuine and to have been signed or presented 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  Agreement,  at the  request,  order or  direction  of a  Secured  Party
pursuant to the  provisions of this  Agreement,  unless such Secured Party 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 or a Wind-Down
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


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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  or
Wind-Down  Event  before  the  Collateral  Agent  has  received  notice  of such
Termination  Event or Wind-  Down  Event and after the  curing or waiving of all
Termination  Events or Wind-Down  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.

                  (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  responsible  for any misconduct or negligence of any such agent or custodian
appointed with due care by it hereunder.

                  SECTION 7.5 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:



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                                    (i)   the   corporation   formed   by   such
         consolidation  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 and Moody's 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 7.5
         and that all conditions  precedent herein provided for relating to such
         transaction have been complied with.


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<PAGE>



                                  ARTICLE VIII
                                  MISCELLANEOUS

                  SECTION 8.1 Notices, Etc. Except where telephonic instructions
or notices are authorized herein to be given, all notices, demands, instructions
and other  communications  required or permitted to be given to or made upon any
party  hereto  shall be in writing and shall be sent by  facsimile  transmission
with a confirmation  of the receipt  thereof and shall be deemed to be given for
purposes  of this  Agreement  on the day  that  the  receipt  of such  facsimile
transmission is confirmed in accordance with the provisions of this Section 8.1.
In  addition,  the Debtor  agrees to deliver to the  Surety  Bond  Provider  all
notices provided by it to the Collateral  Agent pursuant to this Agreement,  the
Servicing Agreement and the Purchase Agreement.  Unless otherwise specified in a
notice sent or delivered in  accordance  with the  foregoing  provisions of this
Section,  notices,  demands,  instructions  (including payment instructions) and
other  communications  in writing shall be given to or made upon the  respective
parties hereto at their respective  addresses and accounts indicated below, and,
in the case of  telephonic  instructions  or notices,  by calling the  telephone
number or numbers indicated for such party below:

                  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  10281
                           Attention:  Gary Carlin
                           Telephone: (212) 236-7200
                           Telecopy:  (212) 236-7584

                           (with a copy to the Administrative Agent)

                  If to the Debtor:

                           UAC Boat Funding Corp.
                           250 N. Shadeland Avenue, Suite 230-A
                           Indianapolis, Indiana 46219
                           Attention:  Melanie Otto
                           Telephone:  (317) 231-6311
                           Telecopy:   (317) 231-7926


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<PAGE>




                  If to the Collateral Agent, the Administrative
Agent or the Agent:

                           NationsBank N.A.
                           NationsBank Corporate Center
                           100 North Tryon Street
                           NC1-007-10-07
                           Charlotte, North Carolina  28255-0001
                           Attention:  Michelle M. Heath
                               Investment Banking
                            Telephone: (704) 386-7922
                            Telecopy: (704) 388-9169
                              Payment Information:
                              Bankers Trust Company
                           ABA #: 021001033
                           Acct. #:
                           Reference:

                  If to the Surety Bond Provider:

                           Capital Markets Assurance Corporation
                           885 Third Avenue
                           New York, New York 10022
                           Attention:  Managing Director -
                                                     Credit Enhancement
                           Telephone:  (212) 755-1155
                           Telecopy:   (212) 755-5462
                           Payment Information: The Bank of New York
                           ABA #: 021-000-018 IOC 565
                           Acct. #: 052040
                           Reference: UAC BFC WH

                  SECTION 8.2  Successors and Assigns.  This Agreement  shall be
binding upon the Debtor,  the Collateral Agent, the Secured Parties,  the Seller
and their  respective  successors  and permitted  assigns and shall inure to the
benefit of the Debtor,  the Servicer,  the Collateral Agent, the Secured Parties
and the Seller and their respective  successors and permitted  assigns including
any Bank  Investors and the Liquidity  Provider;  provided that the Debtor shall


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not assign any of its rights or obligations  hereunder without the prior written
consent of the Collateral  Agent acting upon written  instruction of the Secured
Parties.  The Debtor and the Collateral Agent hereby  acknowledge that the Agent
has  granted a  security  interest  in all of its  rights  hereunder  to the EFC
Collateral Agent. In addition,  the Debtor hereby acknowl edges that the Company
may at any time and from  time to time  assign  all or a portion  of its  rights
hereunder to the Liquidity Provider pursuant to the Liquidity Agreement.

                  SECTION  8.3  Severability  Clause.  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 unenforceable such provision in any other jurisdiction.

                  SECTION  8.4  Amendments.  This  Agreement  and the rights and
obligations  of the parties  hereunder may not be changed  orally but only by an
instrument in writing  signed by the party against which  enforcement is sought.
The  parties  hereunder  agree  that  they will not  amend,  modify,  waive,  or
terminate any provisions of this Agreement  without the written  consent of each
party hereto and written  notice to each of Moody's and S&P.  The Debtor  agrees
that it shall enter into any amendment  reasonably  requested by the Surety Bond
Provider  or the  Collateral  Agent to put into effect any  Interest  Rate Hedge
pursuant to Section 6.1(n).

                  SECTION 8.5 Governing Law. This  Agreement  shall be construed
in accordance with and governed by the laws of the State of New York.

                  SECTION 8.6 No Bankruptcy  Petition  Against the Company.  The
Debtor and each of the other parties  hereto  covenant and agree that,  and each
such  Person  agrees  that they shall  cause any  successor  servicer  appointed
pursuant to Section 4.1 to covenant  and agree that,  prior to the date which is
one year and one day after the payment in full of all Commercial Paper issued by
the  Company  it will  not  institute  against,  or join  any  other  Person  in
instituting against, the Company or the Debtor, any bankruptcy,  reorganization,
arrangement,  insolvency or liquidation proceedings,  or other proceedings under
any federal or state bankruptcy or similar law.

                  SECTION 8.7 Setoff. To the extent permitted by applicable law,
the Debtor hereby irrevocably and


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unconditionally  waives  all right of  setoff  that it may have  under  contract
(including  this  Agreement),  applicable  law or otherwise  with respect to any
funds or monies of the  Debtor at any time held by or in the  possession  of the
Collateral Agent.

                  SECTION  8.8  No  Recourse.   Except  as  otherwise  expressly
provided in this  Agreement,  it is understood  and agreed that the Debtor shall
not be liable for  amounts due under the Note,  this  Agreement,  the  Insurance
Agreement  or  the  Note  Purchase  Agreement,  except  to  the  extent  of  the
Collateral,  for any losses  suffered by the Company in respect of the Note. The
preceding  sentence  shall not relieve the Debtor from any  liability  hereunder
with respect to its representations, warranties, covenants and other payment and
performance obligations herein described.

                  SECTION 8.9 Further  Assurances;  Replacement Surety Bond. The
Debtor  agrees to do such  further acts and things and to execute and deliver to
the  Collateral  Agent  such  additional  assignments,  agreements,  powers  and
instruments  as are  required by the  Collateral  Agent to carry into effect the
purposes of this  Agreement or to better assure and confirm unto the  Collateral
Agent its rights, powers and remedies hereunder. The Debtor further agrees, that
after the  occurrence of a Replacement  Event and upon the request of the Agent,
the Debtor will obtain a  Replacement  Surety Bond,  acceptable to the Agent and
the Company within 30 days of such request and shall pay or cause to be paid all
amounts due and payable to the current Surety Bond Provider.

                  SECTION 8.10 Other Costs,  Expenses and Related  Matters.  (a)
The Debtor  agrees,  upon  receipt of a written  invoice,  to pay or cause to be
paid,  and to save the  Collateral  Agent  harmless  against  liability  for the
payment  of,  all  reasonable   out-of-pocket   expenses   (including,   without
limitation,  reasonable  attorneys',  accountant's and other third parties' fees
and expenses,  any filing fees and expenses incurred by officers or employees of
the Collateral  Agent)  incurred by or on behalf of the Collateral  Agent (i) in
connection  with the  negotiation,  execution,  delivery and preparation of this
Agreement and any documents or  instruments  delivered  pursuant  hereto and the
transactions contemplated hereby (including,  without limitation, the perfection
or protec-


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<PAGE>



tion of the Collateral  Agent's  security  interest in the  Collateral) and (ii)
from time to time (a) relating to any amendments, waivers or consents under this
Agreement,  (b) arising in connection with the Collateral Agent's or its agent's
enforcement  or  preservation  of rights  (including,  without  limitation,  the
perfection  and protection of the Collateral  Agent's  security  interest in the
Collateral under this  Agreement),  or (c) arising in connection with any audit,
dispute,  disagreement,  litigation or preparation for litigation involving this
Agreement.

                  SECTION 8.11 Direction of Collateral Agent; Replacement Surety
Bond. The Collateral Agent  acknowledges that unless expressly  indicated to the
contrary  herein,  all of its rights under this Agreement  shall be exercised at
the direction of the Surety Bond Provider  unless there shall have been a Surety
Bond  Provider  Default.   The  Collateral  Agent  further   acknowledges  that,
notwithstanding  anything to the  contrary  herein,  upon the  direction  of the
Company or the Agent,  the Collateral Agent shall release the Surety Bond to the
Surety Bond Provider upon the occurrence of a Replacement Event,  provided that;
(i) a Replacement Surety Bond, acceptable to (and issued by an entity acceptable
to) the Company and the Agent has been previously or simultaneously delivered to
the Collateral  Agent and (ii) all amounts due and payable to the current Surety
Bond Provider pursuant to the terms of the Security  Agreement and the Insurance
Agreement have been paid in full.

                  SECTION 8.12  Counterparts.  This Agreement may be executed in
any  number  of  copies,  and by the  different  parties  hereto  on the same or
separate  counterparts,  each  of  which  shall  be  deemed  to be  an  original
instrument.

                  SECTION 8.13 Headings. Section headings used in this Agreement
are for  convenience of reference only and shall not affect the  construction or
interpretation of this Agreement.


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                  IN WITNESS WHEREOF,  the Debtor, the Seller, the Company,  the
Collateral Agent, the Surety Bond Provider and, solely, with respect to Sections
4.1 and 5.3,  NationsBank,  N.A.  in its  individual  capacity  have caused this
Agreement to be executed by their respective  officers thereunto duly authorized
as of the day and year first above written.

                                            UAC BOAT FUNDING CORP.
                                            as Debtor


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


                                            UNION ACCEPTANCE CORPORATION
                                              as Seller and Servicer


                                            By: /s/ Rick A. Brown
                                      Name:  Rick A. Brown
                                     Title:  Vice President and Chief Financial
                                             Officer


                                            ENTERPRISE FUNDING CORPORATION
                                             as Company


                                            By:  /s/ Stewart L. Cutler
                                      Name: Stewart L. Cutler
                                     Title: Vice President


                                            NATIONSBANK, N.A.
                                               individually and as
                                               Collateral Agent

                                           By:  /s/ Stan Meihaus
                                      Name: Stan Meihaus
                                     Title: Vice President


                                            CAPITAL MARKETS ASSURANCE
                                            CORPORATION
                                              as Surety Bond Provider
                                            By: /s/ Scott Mangan
                                      Name: Scott Mangan
                                     Title: Vice President


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