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


                               SECURITY AGREEMENT

                                      among

                      UNION ACCEPTANCE FUNDING CORPORATION

                                    as Seller

                         ENTERPRISE FUNDING CORPORATION,

                                   as Company,

                               UAFC-1 CORPORATION,

                                    as Debtor

                          UNION ACCEPTANCE CORPORATION,

                      Individually and as Collection Agent

                                       and

                             BANK OF AMERICA, N.A.,

       as Collateral Agent, Administrative Agent, Agent and Bank Investor


                            Dated as of May 25, 2000

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


<PAGE>

                                          TABLE OF CONTENTS

                                                                            Page

                                              ARTICLE I

DEFINITIONS

                      SECTION 1.1  Certain Defined Terms.......................2
                      SECTION 1.2  Other Terms................................27
                      SECTION 1.3  Computation of Time Periods................27

                                             ARTICLE II

GRANT OF SECURITY INTEREST AND SETTLEMENTS
                      SECTION 2.1  Grant of Security Interest.................27
                      SECTION 2.2  Carrying Costs, Fees and Other
                                        Costs and Expenses....................28
                      SECTION 2.3  Allocations of Collections;
                                        Reserve Account Advances;
                                        Servicer Advances.....................28
                      SECTION 2.4  Liquidation Settlement Procedures..........31
                      SECTION 2.5  Fees.......................................32
                      SECTION 2.6  Protection of Interest of the
                                        Collateral Agent......................32
                      SECTION 2.7  Payments on Receivables; Application of
                                        Payments..............................33
                      SECTION 2.8  Payments and Computations, Etc.............34
                      SECTION 2.9  Reports....................................34
                      SECTION 2.10  Collection Account........................34
                      SECTION 2.11  Prefunding Account; Prefunding Interest
                                        Reserve Account; Interest Reserve
                                        Deposits; Interest Reserve Advances;
                                        Reimbursements........................36
                      SECTION 2.12  Prefunding Account and Prefunding Interest
                                        Reserve Account Withdrawals...........38
                      SECTION 2.13  Yield Supplement Account, Deposits;
                                        Withdrawals...........................39
                      SECTION 2.14  Reserve Account; Withdrawals; Releases....42
                      SECTION 2.15  Optional Release..........................44




                                                  i


<PAGE>



                                             ARTICLE III

REPRESENTATIONS AND WARRANTIES
                      SECTION 3.1  Representations and Warranties
                                        of the Debtor.........................47
                      SECTION 3.2  Representations and Warranties of the
                                        Collection Agent......................51
                      SECTION 3.3  Reaffirmation of Representations
                                        and Warranties........................52

                                             ARTICLE IV

CONDITIONS PRECEDENT
                      SECTION 4.1  Conditions to Effectiveness................53

                                              ARTICLE V

COVENANTS

                      SECTION 5.1  Affirmative Covenants of the
                                        Debtor, the Seller and UAC............56
                      SECTION 5.2  Negative Covenants of Debtor,
                                        the Seller and UAC....................61
                      SECTION 5.3  Acceptable Hedging Arrangements............63

                                             ARTICLE VI

ADMINISTRATION AND COLLECTIONS
                      SECTION 6.1  Appointment of Collection Agent............64
                      SECTION 6.2  Duties of Collection Agent.................64
                      SECTION 6.3  Collection Agent Defaults..................66
                      SECTION 6.4  Rights After Designation of
                                        New Collection Agent..................66
                      SECTION 6.5  Responsibilities of the Debtor.............67

                                             ARTICLE VII

TERMINATION EVENTS
                      SECTION 7.1  Termination Events.........................68
                      SECTION 7.2  Termination................................70
                      SECTION 7.3  Proceeds...................................71



                                                 ii


<PAGE>




                                            ARTICLE VIII

THE COLLATERAL AGENT
                      SECTION 8.1  Duties of the Collateral Agent.............72
                      SECTION 8.2  Compensation and Indemnification of
                                        Collateral Agent......................73
                      SECTION 8.3  Representations, Warranties and
                                        Covenants of the Collateral Agent.....74
                      SECTION 8.4  Liability of the Collateral Agent..........75
                      SECTION 8.5  Merger or Consolidation of, or
                                        Assumption of the
                                        Obligations of, the Collateral Agent..77
                      SECTION 8.6  Limitation on Liability of the Collateral
                                        Agent and Others......................78
                      SECTION 8.7  Indemnification of the Secured Parties.....78

                                             ARTICLE IX

MISCELLANEOUS

                      SECTION 9.1  Term of Agreement..........................79
                      SECTION 9.2  Waivers; Amendments........................79
                      SECTION 9.3  Notices....................................80
                      SECTION 9.4  Governing Law; Submission to Jurisdiction;
                                        Integration...........................82
                      SECTION 9.5  Severability; Counterparts.................83
                      SECTION 9.6  Successors and Assigns.....................83
                      SECTION 9.7  Waiver of Confidentiality..................84
                      SECTION 9.8  Confidentiality Agreement..................84
                      SECTION 9.9  No Bankruptcy Petition Against
                                        the Company...........................84
                      SECTION 9.10  No Recourse Against Stockholders,
                                        Officers or Directors.................85
                      SECTION 9.11  Further Assurances........................85
                      SECTION 9.12  Characterization of the Transactions
                                        Contemplated by the Agreement;
                                        Tax Treatment.........................85




                                                 iii


<PAGE>



                                              EXHIBITS

EXHIBIT A             Credit and Collection Policy

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

EXHIBIT C             Financial Definitions

EXHIBIT D             Form of Settlement Statement

EXHIBIT E             Form of UAFC-1 Withdrawal Notice

EXHIBIT F             List of Actions and Suits

EXHIBIT G             Schedule of Locations of Records

EXHIBIT H             List of Subsidiaries, Divisions and
                      Tradenames

EXHIBIT I             Form of Opinion of Barnes & Thornburg

EXHIBIT J             Form of Opinion of Barnes & Thornburg





                                                 iv


<PAGE>






                                         SECURITY AGREEMENT


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

                                       PRELIMINARY STATEMENTS

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

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

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

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



                                                  1


<PAGE>



                                              ARTICLE I

                                             DEFINITIONS

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

                  "Acceptable  Hedging  Arrangement" means a hedging arrangement
entered  into by the  Collection  Agent or the Debtor,  between the Debtor and a
swap counterparty whose long-term debt obligations are rated investment grade by
Moody's and S&P, in  compliance  with Section 5.3 hereof,  that locks in a fixed
spread of at least 600 basis points lower than the weighted  average APR for the
Receivables  based upon an amortization  schedule  determined  using a 1.60% ABS
prepayment  assumption  or such other  prepayment  assumption as approved by the
Collateral Agent.

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

                  "Acquisition  Subsidiary"  shall mean PAC, UACFC, or any other
wholly-owned  subsidiary  of UAC  which has  entered  into (i)  agreements  with
dealers in certain states for the  origination or purchase of  Receivables,  and
(ii) an  agreement  with UAC  pursuant  to which UAC  acquires  all  Receivables
originated  or purchased by such  Acquisition  Subsidiary,  provided that in the
case of any  acquisition  subsid iary other than PAC and UACFC,  the  Collateral
Agent shall have  consented to such entity as an Acquisition  Subsidiary,  after
having had the opportunity to review such entity's  agreement with UAC and other
related documentation, such consent not to be unreasonably withheld.

 .




                                                  2


<PAGE>



                  "Adjusted  LIBOR Rate" means,  with respect to any  Settlement
Period,  a rate per annum equal to (x) 0.65% plus (y) the sum (rounded  upwards,
if  necessary,  to the next  higher  1/100 of 1%) of (A) the  rate  obtained  by
dividing (i) the applicable  LIBOR Rate by (ii) a percentage equal to 100% minus
the reserve  percentage used for determining the maximum reserve  requirement as
specified  in  Regulation  D  (including,   without  limitation,  any  marginal,
emergency,  supplemental,  special or other  reserves) that is applicable to the
Agent during such  Settlement  Period in respect of  eurocurrency  or eurodollar
funding,  lending or liabilities  (or, if more than one  percentage  shall be so
applicable,  the  daily  average  of  such  percentage  for  those  days in such
Settlement Period during which any such percentage shall be applicable) plus (B)
the then daily net annual assessment rate (rounded upwards, if necessary, to the
nearest  1/100 of 1%) as  estimated  by the Agent for  determining  the  current
annual  assessment  payable  by the  Agent  to  the  Federal  Deposit  Insurance
Corporation  in  respect  of  eurocurrency  or  eurodollar  funding,  lending or
liabilities.

                  "Administrative   Agent"  shall  mean  Bank  of  America,   as
administra tive agent.

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

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

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



                                                  3


<PAGE>



                  "Amended  and  Restated  Security  Agreement"  shall  mean the
Amended and Restated Security Agreement,  dated as of May 12, 2000 among UAC, as
Collection  Agent,  the Seller,  UAFCC,  the  Collateral  Agent,  MBIA Insurance
Corporation and the Company, as amended and restated.

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

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

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

                  "Bank of  America"  shall have the  meaning  specified  in the
preamble hereto.

                  "Base Rate" shall mean,  a rate per annum equal to the greater
of (i) the prime rate of interest  announced by the Liquidity Provider from time
to time, changing when and as said prime rate changes (such rate not necessarily
being the lowest or best rate charged by the  Liquidity  Provider)  and (ii) the
rate equal to the  weighted  average  of the rates on  overnight  Federal  funds
transactions  with  members of the Federal  Reserve  System  arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next  preceding  Business Day) by the Federal  Reserve Bank of New York,
or, if such rate is not so  published  for any day that is a Business  Day,  the
average of the  quotations  for such day for such  transactions  received by the
Liquidity  Provider from three  Federal  funds  brokers of  recognized  standing
selected by it plus 2.0%.

                  "Borrowing  Base  Percentage"  shall  mean  the sum of (a) the
product of (i) the Prime Percentage and (ii) 98.25%,  and (b) the product of (i)
the Non-Prime Percentage and (ii) 87%.

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



                                                  4


<PAGE>



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

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

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

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

                  (c)  to  pay  the  Accrued   Interest   Component  of  Related
Commercial Paper with respect to any Settlement Period (it being understood that
to the extent the Company has  obtained  funding  under the  Liquidity  Provider
Agree  ment  or  a  Credit  Support  Agreement,  the  Company  will  not  obtain
duplicative funding in the commercial paper markets);

                  (d) to pay the Dealer Fee;

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

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




                                                  5


<PAGE>



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

                  (h) to pay the costs of the Company  with respect to the Yield
Protection Provision; and

                                    (ii) the  Program  Fee,  the  Administrative
         Fee, and  Liquidity Fee accrued from the first day through the last day
         of such Settle ment Period whether or not such amount is payable during
         such Settlement Period.

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

                  "Closing Date" shall mean May 25, 2000.

                  "Collateral"  shall have the meaning  specified in Section 2.1
hereof.

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

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

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



                                                  6


<PAGE>



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

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

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

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

                  "Commitment Termination Date" shall mean March 1, 2001 or such
later  date to which the  Commitment  Termination  Date may be  extended  by the
Debtor,  the Agent and the Bank  Investors  not later  than 45 days prior to the
then current Commitment Termination Date.

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

                  "Conduit  Assignee"  shall have the meaning  specified  in the
Note Purchase Agreement.

                  "Contract"  shall  mean any and all retail  installment  sales
contracts or installment notes and security agreements relating to the sale of a
new or used  automobile,  light  duty  truck or van and other  writings  related
thereto now existing and hereafter  created or acquired by UAC or an Acquisition
Subsidiary and assigned from time to time (i) to the Seller pursuant to the UAFC
Sale and Purchase  Agree ment and  subsequently  assigned from the Seller to the
Debtor pursuant to the UAFC- 1 Sale and Purchase Agreement or (ii) to the Debtor
from a Warehouse pursuant to a Warehouse Transfer Agreement.

                  "Credit  and  Collection  Policy"  shall  mean the  Collection
Agent's  credit and  collection  policy or policies  and  practices  relating to
"prime" and "non- prime" automobile installment sales contracts, existing on the
date  hereof  and  referred  to  in  Exhibit  A  attached  hereto,  as  amended,
supplemented or otherwise modified and in effect from time to time in compliance
with Section 5.2(d).

                  "Credit Support  Agreement"  shall mean the agreement  between
the Company and the Credit  Support  Provider  evidencing  the obligation of the
Credit



                                                  7


<PAGE>



Support Provider to provide credit support to the Company in connection with the
issuance by the Company of Commercial Paper.

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

                  "Cut-Off Date" shall mean May 25, 2000.

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

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

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

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

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

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



                                                  8


<PAGE>



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

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



                                                  9


<PAGE>



                                    (i)     (A) which shall have been either (x)
         originated  by or through a factory  authorized  dealer,  a  nationally
         recognized  rental car  outlet,  or a  nationally  recognized  used car
         superstore,  in each case  located  in the  United  States  and  which,
         together  with the Contract  related  thereto,  shall have been validly
         assigned by such dealer to an Acquisition Subsidiary or to UAC pursuant
         to the  terms of such  Contract,  for the  retail  sale of the  related
         Financed  Vehicle in the ordinary  course of its  business,  shall have
         been validly  assigned to UAC if such  Receivable  had been assigned by
         such a dealer to an Acquisition  Subsidiary  (other than PAC) or to PFC
         if such  Receivable  had been  assigned  by such a dealer to PAC or UAC
         d/b/a PAC,  shall have been fully and properly  executed by the parties
         thereto, and shall have been advanced directly to or for the benefit of
         the Obligor for the  purchase of the  related  Financed  Vehi cle,  (y)
         originated by an  Acquisition  Subsidiary or UAC for the retail sale of
         the related  Financed  Vehicle in the ordinary  course of its business,
         shall have been  validly  assigned to UAC if such  Receivable  had been
         originated by an Acquisition  Subsidiary  (other than PAC) or to PFC if
         such  Receivable had been assigned by such a dealer to PAC or UAC d/b/a
         PAC,  shall  have  been  fully and  properly  executed  by the  parties
         thereto, and shall have been advanced directly to or for the benefit of
         the Obligor for the purchase of the related  Financed  Vehi cle, or (z)
         repurchased  by  UAC  from  a  trust  pursuant  to a ten  percent  call
         provision  in a  Securitization  (B) shall have been sold (x) by UAC to
         the Seller  pursuant to the UAFC Sale and Purchase  Agreement and shall
         have been sold by UAFC to the Debtor  pursuant  to the UAFC-1  Sale and
         Purchase Agreement or (y) to the Debtor from another Warehouse pursuant
         to a Warehouse  Transfer  Agreement,  and, in either case, to which the
         Debtor has good title thereto, free and clear of all Adverse Claims and
         (C)  the  Contract  related  to  which  shall  contain   customary  and
         enforceable  provisions such that the rights and remedies of the holder
         thereof shall be adequate for the realization against the collateral of
         the benefits of the security provided thereby;

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



                                                 10


<PAGE>



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

                                    (iv) which is not a Delinquent Receivable at
         the time of the initial creation of an interest of the Company therein;
         provided,  however,  that if a Receivable is a Delinquent Receivable at
         the time of initial  creation  of an interest of the Company and at any
         time subsequently is not a Delinquent  Receivable,  such Receivable may
         become an Eligible Receivable from such time going forward;

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

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

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

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

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

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

                                    (xi)    which arises under a Contract that,
         together  with the  Receivable  related  thereto,  is in full force and
         effect and constitutes the legal,  valid and binding  obligation of the
         related



                                                 11


<PAGE>



         Obligor  enforceable  against such Obligor in accordance with its terms
         and is not subject to any offset, counterclaim or other defense at such
         time;

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

                           (xiii)   which   (A)   satisfies    all    applicable
requirements of the Credit and Collection Policy and is a Prime Receiv able or a
Non-Prime  Receivable,  (B) arises  under a Contract  which does not require the
Obligor  under such Contract to consent to the transfer of the rights and duties
of the Debtor  and Seller  under  such  Contract,  and which does not  contain a
confidentiality  provision  that purports to restrict the ability of the Company
to exercise its rights under this Agreement,  including, without limitation, its
right to review the Contract,  (C) arises under a Contract with respect to which
UAC, any Acquisition  Subsidiary,  the Seller and the Debtor have each performed
all  obligations  required to be  performed by them thereun der, and delivery of
the Financed Vehicle to the related Obligor has occurred,  and (D) complies with
such  other  criteria  and  requirements  as the  Company  may from time to time
reasonably specify to the Debtor following sixty (60) days' notice;

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



                                                 12


<PAGE>



                                    (xv) with respect to any Receivable  that is
         an Undocumented  Receivable,  all documentation required to be received
         after the  origination  of such  Receivable  pursuant to the Credit and
         Collection  Policy has been  received  and  accepted by the  Collection
         Agent within  twenty (20) days  following the date of the initial draft
         drawn  by  the  originating  dealer  on  UAC  in  connection  with  the
         origination of such Receivable.

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

                  "ERISA Affiliate"  means, with respect to any Person,  (i) any
corpora  tion  which is a member of the same  controlled  group of  corporations
(within the meaning of Section  414(b) of the Internal  Revenue Code of 1986 (as
in effect  from  time to time,  the  "Code"))  as such  Person;  (ii) a trade or
business (whether or not incorporated)  under common control (within the meaning
of Section  414(c) of the Code) with such Person;  or (iii) a member of the same
affiliated  service group (within the meaning of Section  414(n) of the Code) as
such  Person,  any  corporation  described  in clause  (i) above or any trade or
business described in clause (ii) above.

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

                  "Excess Delinquent  Receivables Balance" shall mean an amount,
calculated on the day a Take-Out occurs and for each day until the next Take-Out
occurs,  equal to the  excess,  if any,  of (i) the  Outstanding  Balance of all
Delinquent  Receivables  which  are  also  Eligible  Receivables  at any time of
determination  over (ii) the  product  of 2.5% and the Net  Receivables  Balance
(calculated  without giving effect to clause (iv) of the definition  thereof) at
any time of determination; provided,



                                                 13


<PAGE>



that if the Excess Delinquent  Receivables  Balance shall, at any time since the
most  recent  Take-Out,  be less than or equal to zero,  the  Excess  Delinquent
Receivables  Balance  shall be deemed  to be zero from such time  until the next
Take-Out shall occur.

                  "Face Amount" shall mean (i) with respect to Commercial  Paper
issued on a  discount  basis,  the face  amount  stated  therein,  and (ii) with
respect to Commercial Paper which is  interest-bearing,  the principal amount of
and  interest  accrued  and to accrue  on such  Commercial  Paper to its  stated
maturity.

                  "Facility Limit" shall mean  $200,000,000  provided,  however,
that if on June 30,  2000,  the  facility  limit  referenced  in the Amended and
Restated  Security  Agreement has not been reduced to $350,000,000 then Facility
Limit shall mean $50,000,000.

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

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

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

                  "Fitch" shall mean Fitch IBCA, Inc.

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

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

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



                                                 14


<PAGE>



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

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

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

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

                  "LIBOR Rate" means, with respect to any Settlement Period, the
rate  determined by Bank of America to be (i) the per annum rate for deposits in
U.S.  Dollars for a term of one month which  appears on the  Telerate  Page 3750
Screen on the day that is two  London  Business  Days  prior to the first day of
such Settlement  Period except,  that if such first day of the Settlement Period
is not a Business  Day,  then the first  preceding  day that is a  Business  Day
(rounded  upwards,  if necessary,  to the nearest 1/100,000 of 1%), (ii) if such
rate does not appear on the  Telerate  Page 3750  Screen,  the term "LIBOR Rate"
with respect to that  Settlement  Period shall be the  arithmetic  mean (rounded
upwards, if necessary, to the nearest 1/100,000 of 1%) of the offered quotations
obtained by Bank of America from four major banks in the London interbank market
selected by Bank of America (the "Reference Banks") for deposits in U.S. Dollars
to leading banks in the London interbank  market as of approximately  11:00 a.m.
(London time) on the day that is two London Business Days prior to the first day
of such Settlement Period, unless such first day of the



                                                 15


<PAGE>



Settlement  Period is not a Business Day, in which case, the first preceding day
that is a Business Day or (iii) if fewer than two  Reference  Banks provide Bank
of  America  with such  quotations,  the LIBOR  Rate shall be the rate per annum
which Bank of America determines to be the arithmetic mean (rounded upwards,  if
necessary,  to the  nearest  1/100,000  of 1%) of the offered  quotations  which
leading  banks in New York City  selected  by Bank of America are quoting in the
New York  interbank  market on such date for  deposits  in U.S.  dollars  to the
Reference Banks or; if fewer than two such quotations are available,  to leading
European and Canadian banks.

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

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

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

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

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

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



                                                 16


<PAGE>



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

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

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

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

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

                  "Net Investment" shall mean the sum of (i) all amounts paid to
the Debtor for the Initial Funding plus (ii) the cumulative amount of Prefunding
Deposits minus (iii) the aggregate  amount released from the Prefunding  Account
and applied to reduce the Net  Investment  pursuant to Section 2.12,  minus (iv)
the aggregate  amount released from the Prefunding  Interest Reserve Account and
applied to reduce the Net Investment pursuant to Section 2.12, minus (v) the sum
of (a)  the  aggregate  amount  of  Receipts  of  Principal  on  deposit  in the
Collection Account, plus (b) the aggregate amount of Receipts of Principal which
have  been  received  by the  Collec  tion  Agent  on or  prior  to any  date of
determination but have not yet been deposited in the Collection Account (if such
Receipts of Principal are not so deposited therein within 2 Business Days of the
receipt thereof by the Collection Agent the "Net Investment"  shall thereupon be
recalculated, effective as of the original date of



                                                 17


<PAGE>



determination, without giving effect to such Receipts of Principal) plus (c) the
aggregate amount of Collections received and applied by the Agent to reduce such
Net Investment pursuant to Section 2.3, minus (vi) the aggregate amount of funds
received and applied to reduce such Net Investment  pursuant to Sections 2.7 and
2.15 ; provided that the Net  Investment  shall be restored in the amount of any
Collections  so  received  and applied if at any time the  distribution  of such
Collections is re scinded or must otherwise be returned for any reason.

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

                  "Net  Receivables  Balance" means at any time the  Outstanding
Balance of the Eligible  Receivables  at such time reduced by the sum of (i) the
amount by which the aggregate  Outstanding  Balance of Undocumented  Receivables
exceeds $6,750,000,  plus (ii) the aggregate Outstanding Balance of all Eligible
Receivables which are Defaulted  Receivables,  plus (iii) the amount, if any, by
which the aggregate  outstanding  Balance of all Eligible  Receivables which are
Non-Prime  Receivables  exceeds the  product of (x) 20% and (y) the  Outstanding
Balance of all Eligible Receivables, plus (iv) the Excess Delinquent Receivables
Balance.

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

                  "Non-Prime   Percentage"   shall  mean  100%  less  the  Prime
Percentage.

                  "Non-Prime   Receivable"   shall  mean  an  account  which  is
identified on the  Collection  Agent's  master  servicing  record as a "type 15"
account.



                                                 18


<PAGE>



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

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

                  "Note  Purchase   Agreement"  shall  mean  that  certain  Note
Purchase Agreement, dated as of May 25, 2000, among the Debtor, the Company, the
Bank Investors and the Agent.

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

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

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

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

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

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

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



                                                 19


<PAGE>



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

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

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

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

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

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

                  "Prime  Percentage" shall mean the Net Receivables  Balance of
all Prime Receivables divided by the Net Receivables Balance.

                  "Prime  Receivable"  shall mean an account which is identified
on the Collection Agent's master servicing record as a "type 25" account.

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

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



                                                 20


<PAGE>



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

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

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

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

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

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

                                    (i) all of the  Debtor's  interest in the Fi
         nanced Vehicles (including  repossessed vehicles) or in any document or
         writing  evidencing any security  interest in any Financed  Vehicle and
         all of the  Debtor's  interest  in all  rights  to  payment  under  all
         insurance contracts with respect to a Financed Vehicle, including,



                                                 21


<PAGE>



         without  limitation,  any  monies  collected  from  whatever  source in
         connection  with any default of an Obligor  with  respect to a Financed
         Vehicle  and any  proceeds  from  claims or refunds of  premiums on any
         physical damage, lender's single interest,  credit life, disability and
         hospitalization   insurance  policies  covering  Financed  Vehicles  or
         Obligors;

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

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

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

                                    (v)  all of  the  Debtor's  interest  in all
         Records,   documents  and  writings   evidencing  or  related  to  such
         Receivables or the Contracts; and (vi) all Proceeds of the foregoing.

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

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



                                                 22


<PAGE>



                  "Required  Reserve  Account Amount" shall mean, at any time of
determination,  an  amount  equal to the  product  of (a)  1.00% and (b) the Net
Invest ment divided by the Noteholder's Percentage.

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

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

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

                  "Reserve  Account  Guaranty"  shall mean the amount  available
pursuant  to any  guaranty  of the  amount  required  to be kept in the  Reserve
Account  pursuant to this  Agreement and the other  Transaction  Documents.  Any
Reserve  Account  Guaranty  shall be  approved by the  Collateral  Agent and the
Majority Investors.

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

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

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

                  "Securitization"  shall mean a structured finance  transaction
estab  lished  by or on  behalf  of the  Debtor  or an  affiliate,  to which the
released Contracts and related Receivables will be subject.

                  "Seller"  shall gave the  meaning  specified  in the  preamble
hereto.

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

                  "Servicing Fee" shall mean, for any Settlement Period, the fee
payable pursuant to Section 2.3 on the related Remittance Date by the Company to



                                                 23


<PAGE>



the Collection  Agent, in an amount equal to 1.0% per annum on the amount of the
aggregate  Outstanding  Balance of the  Receivables  as of the first day of such
Settle ment Period.

                  "Settlement  Period" shall mean any calendar  month,  provided
that the initial Settlement Period shall commence on the Cut-Off Date and end on
June 30, 2000.

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

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

                  "Take-Out" shall mean the release, pursuant to Section 2.15(a)
or 2.15(d),  by the Collateral  Agent of Receivables  and the Contracts  related
thereto.  In order to qualify as a "Take-Out",  the Take-Out Percentage shall be
no greater than 10%.

                  "Take-Out   Percentage"   shall  mean,  with  respect  to  any
Securitization, the percentage equal to (A) 100% minus (B) a fraction (expressed
as a  percentage)  equal  to  (i)  the  aggregate  Outstanding  Balance  of  the
Receivables being released pursuant to such  Securitization  divided by (ii) the
Net   Receivables   Balance  as  of  the  cut-off   date   applicable   to  such
Securitization.

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

                  "Target Net Yield" shall mean 5.0%

                  "Termination  Date"  shall  mean  the  earliest  of  (i)  that
Business Day  designated by the Debtor to the Agent as the  Termination  Date at
any time following



                                                 24


<PAGE>



60 days'  written  notice  to the  Agent,  (ii) the date of  termination  of the
liquidity  commitment of the  Liquidity  Provider  under the Liquidity  Provider
Agreement, (iii) the date of termination of the commitment of the Credit Support
Provider under the Credit Support Agreement, (iv) the day on which a Termination
Event  occurs  pursuant  to  Section  7.1,  (v) two  business  days prior to the
Commitment  Termination  Date, or (vi) March 1, 2001,  unless  extended prior to
such date by an agreement between the Company, the Agent and the Bank Investors.

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

                  "Transaction  Documents"  shall mean this Agreement,  the Note
Purchase Agreement, the Note, the UAFC Sale and Purchase Agreement,  UAFC-1 Sale
and Purchase Agreement,  the Fee Letter and all other agreements,  documents and
instruments delivered pursuant thereto or in connection therewith.

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

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

                  "UACFC" shall mean UAC Finance Corporation, an Indiana corpora
tion, and its successors and assigns.

                  "UAFC  Sale and  Purchase  Agreement"  shall mean the sale and
purchase  agreement dated as of May 25, 2000,  between the Seller, as purchaser,
and UAC, as seller,  as  amended,  modified  or  supplemented  from time to time
hereafter.

                  "UAFC-1  Corporation"  shall have the meaning specified in the
preamble hereto.

                  "UAFC-1 Sale and Purchase  Agreement"  shall mean the sale and
purchase  agreement dated as of May 25, 2000 between the Seller, as seller,  and
Debtor,  as purchaser,  as amended,  modified or supplemented  from time to time
thereafter.

                  "UAFCC" shall mean UAFC  Corporation,  a Delaware  corporation
formerly known as Union Acceptance Funding Corporation, a Delaware corporation.



                                                 25


<PAGE>



                  "UARC" shall mean Union Acceptance Receivables Corporation,  a
Delaware  corporation,  and its  successors  and assigns,  or any other  special
purpose company agreed to by UAC and the Agent.

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

                  "Warehouse"  shall mean the  Debtor,  UAFCC or UAFC-2  Corpora
tion.

                  "Warehouse  Transfer"  shall mean the transfer of  Receivables
pursuant to a Warehouse Transfer Agreement.

                  "Warehouse   Transfer  Agreement"  shall  mean  any  agreement
pursuant to which the Debtor purchases  Receivables from or sells Receivables to
a Ware house, which agreement shall be acceptable to the Agent.

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

                  "Year-end  Receivable  Transfer"  shall mean the  transfer  of
Receiv  ables from the Debtor to UARC or to the Debtor  from UARC solely for the
purpose of minimizing the Florida intangible tax.

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

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



                                                 26


<PAGE>



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

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

                                             ARTICLE II

                             GRANT OF SECURITY INTEREST AND SETTLEMENTS

                  SECTION 2.1 Grant of Security  Interest.  As security  for the
prompt  and  complete  payment  of the  Note and the  performance  of all of the
Debtor's obligations under the Note, the Note Purchase Agreement, this Agreement
and the other Transaction Documents,  the Debtor hereby grants to the Collateral
Agent,  for the  benefit of the  Secured  Parties,  without  recourse  except as
provided  herein,  a  security  interest  in and  continuing  Lien on all of the
Debtor's property,  in existence on the Cut-Off Date or thereafter  acquired and
wherever located,  including,  without  limitation,  all of its right, title and
interest in, to and under all accounts,  contract rights,  general  intangibles,
chattel  paper,   instruments,   documents,   money,   cash,  deposit  accounts,
certificates  of  deposit,  goods,  letters of credit,  securities,  invest ment
property,  financial  assets or  security  entitlements  (all of the  foregoing,
collec tively, the "Collateral");  provided,  that once the Collateral Agent has
released  its  interest in a  Receivable  and the related  Contract  pursuant to
Section 2.7 or 2.15 hereof, such Receivable and related Contract shall no longer
be part of the Collateral.

                  In connection with such grant, the Debtor agrees to record and
file, at its own expense,  financing  statements  with respect to the Collateral
now existing and hereafter  created meeting the requirements of applicable state
law in such manner and in such  jurisdictions  as are  necessary  to perfect the
first priority security interest of the Collateral Agent in the Collateral,  and
to deliver a file-stamped copy of such



                                                 27


<PAGE>



financing  statements or other  evidence of such filing (which may, for purposes
of this Section 2.1,  consist of telephone  confirmation  of such filing) to the
Collateral  Agent on or prior to the Closing Date.  In addition,  the Debtor and
the Collection  Agent agree to clearly and  unambiguously  mark their respective
general ledgers and all accounting  records and documents and all computer tapes
and  records  to  show  that  the  Collateral,  including  that  portion  of the
Collateral  consisting of the Receiv ables and the related Contracts,  have been
pledged to the Collateral Agent hereunder.

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

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

                  (a) On each  Determination  Date, the  Collection  Agent shall
allocate all  Collections  received  during the preceding  Settlement  Period as
Receipts of Interest or Receipts of Principal. On each Remittance Date, Receipts
of Interest plus all earnings during the related Settlement Period on amounts on
deposit in the Prefunding  Account plus all amounts  deposited in the Prefunding
Interest Reserve Account with respect to the related Settlement Period (together
with any  earnings  thereon  during  such  Settlement  Period) to the extent not
required  pursuant to Section 2.11 to be distributed to the Collection  Agent in
reimbursement  for  previously  advanced  Interest  Reserve  Advances  plus  any
Interest  Reserve  Advance made by the Collection  Agent on such Remittance Date
pursuant to Section  2.11 plus any  payments to the Debtor  under an  Acceptable
Hedging  Arrangement (it being understood that prior to a Termination  Event and
provided that Acceptable Hedging



                                                 28


<PAGE>



Arrangements are in place,  proceeds from the termination of any Acceptable Hedg
ing  Arrangements  in connection with a  Securitization  will be released to the
Debtor and not  constitute  "Available  Funds")  plus all  amounts to be applied
pursuant to Section  2.14(c)(ii)(y) (the aggregate of such amounts in respect of
any  remittance  date,  the  "Available   Funds")  shall  be  applied,   without
duplication, by the Collection Agent as follows:

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

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

                                    (iii) third,  to the extent of any remaining
         Available  Funds, to pay to the Collateral  Agent all fees and expenses
         due pursuant to Section 8.2 hereof;

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

                                    (v) fifth,  to the  extent of any  remaining
         Available  Funds,  to the payment of the Agent,  for the account of the
         Company  and the  Bank  Investors,  as  applicable,  to be  applied  in
         reduction of the Net Investment,  of the amount by which to satisfy the
         Net Asset Test;

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



                                                 29


<PAGE>



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

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

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

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

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

                                    (xii) twelfth, any remaining Available Funds
                  shall be paid to the Debtor.

                           (b) On any  Business  Day on which  Commercial  Paper
issued in connection herewith matures,  the Collection Agent may apply and remit
to the Agent,  in  reduction  of the Net  Investment,  any Receipts of Principal
received on or prior to such day and not previously remitted to the Agent in any
such case in an



                                                 30


<PAGE>



amount not to exceed the principal  component of such maturing Commercial Paper.
On each  Remittance  Date,  the  Collection  Agent  shall apply and remit to the
Agent,  in reduction of the Net Investment,  all Receipts of Principal  received
with respect to the prior Settlement  Period and not previously  remitted to the
Agent pursuant to the preceding sentence.

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

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



                                                 31


<PAGE>



with respect  thereto.  Any such documents  shall be prepared by or on behalf of
the Debtor at the expense of the Debtor.

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

                  SECTION 2.6  Protection of Interest of the  Collateral  Agent.
(a) The Debtor agrees that from time to time,  at its expense,  it will promptly
execute and deliver all instruments and documents and take all actions as may be
necessary or as the Collateral Agent may reasonably  request in order to perfect
or protect  the  Collateral  or to enable the  Collateral  Agent to  exercise or
enforce any of its rights hereunder.  Without limiting the foregoing, the Debtor
will, upon the request of the Collateral  Agent, in order to accurately  reflect
the security  interest of the Collateral  Agent in the  Collateral,  execute and
file  such  financing  or  continuation  statements  or  amendments  thereto  or
assignments  thereof  (as  permitted  pursuant  to Section 9.6 hereof) as may be
requested by the Collateral  Agent and mark its master data  processing  records
(or to cause such records to be marked) so as to indicate the Collateral Agent's
security  interest in the portion of the Collateral  consisting of  Receivables,
the related  Contracts,  the Collections  and the Related  Security with respect
thereto. The Debtor agrees that it shall take all actions necessary to cause UAC
and the  Seller  to  similarly  mark  its  records  to  reflect  the sale of the
Receivables and the Contracts to the Seller and the Debtor,  as applicable,  and
the  Collateral  Agent's  security  interest  in the  Receivables,  the  related
Contracts,  the Collections and the Related Security with respect  thereto.  The
Debtor shall, at its own expense,  upon request of the Collateral Agent,  obtain
such  additional  search reports as the Collateral  Agent shall request.  To the
fullest  extent  permitted  by  applicable  law, the  Collateral  Agent shall be
permitted to sign and file  continuation  statements and amendments  thereto and
assignments  thereof without the Debtor's  signature.  Carbon,  photo graphic or
other  reproduction  of this  Agreement  or any  financing  statement  shall  be
sufficient as a financing  statement.  The Debtor shall neither change its name,
identity or corporate  structure  (within the meaning of Section 9-402(7) of the
Relevant  UCC as in effect  in the  State of  Florida)  nor  relocate  its chief
executive  office or any office where Records are kept unless it shall have: (i)
given the  Collateral  Agent at least thirty (30) days prior notice  thereof and
(ii) prepared at the Debtor's  expense and delivered to the Collateral Agent all
financing statements,  instruments and other documents necessary to preserve and
protect the Collateral or requested by the Collateral  Agent in connection  with
such change or relocation.  Any filings under the Relevant UCC or otherwise that
are occasioned by such change in



                                                 32


<PAGE>



name or  location  shall be made at the  expense of the  Debtor.  On the Closing
Date,  the Debtor  shall  deliver to the  Collateral  Agent a listing by account
number of the Contracts as of the Cut-Off Date,  which listing shall  constitute
Schedule A hereto and is hereby incorporated herein by reference.  On the second
Business Day after the end of each Settlement  Period,  the Debtor shall deliver
to the Collateral Agent an updated listing by account number of the Contracts as
of the last day of such Settle ment Period (giving effect to any releases by the
Company  pursuant to Section 2.7 or Section  2.15) and such  updated  list shall
thereupon  constitute  Schedule A hereto and is hereby incorporated by reference
herein.

                  (b) The Collection  Agent shall instruct all Obligors to cause
all  Collections  to be deposited  directly with a Lock-Box Bank. The Collection
Agent  shall not add any bank as a  Lock-Box  Bank to those  listed on Exhibit B
without the consent of the Collateral  Agent pursuant to Section 5.2(f).  If the
Debtor or the  Collection  Agent  receives  any  Collections,  the Debtor or the
Collection Agent, as applicable,  shall immediately, but in any event within two
(2) Business Days of receipt, remit such Collections to a Lock-Box Account.

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

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

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

then,  in either such event,  the  Collateral  Agent shall  release its security
interest in and Lien on such Receivable and the related Contract; provided, that
it shall be a condition  precedent to any such release that, after giving effect
to such release,  the amount on deposit in the Reserve Account is at least equal
to the Required Reserve Account Amount;  provided further,  that if such release
would  result in the Net Asset  Test not being  satisfied,  then as a  condition
precedent to such release the Debtor shall deposit into the  Collection  Account
all Finance  Charges accrued with respect to such Receivable as of such time and
an amount equal to the amount which, if applied to



                                                 33


<PAGE>



the  reduction  of the Net  Investment,  would  cause the Net  Asset  Test to be
satisfied.  Such amount, excluding any accrued Finance Charges, shall be applied
as a Receipt of Principal  pursuant to Section 2.3. All  collections  of Finance
Charges received with respect to any such released  Receivable  through the last
day of the Settlement Period in which such Receivable is released shall continue
to constitute Receipts of Interest hereunder.

                  SECTION 2.8 Payments and Computations,  Etc. All amounts to be
paid or deposited by the Debtor or the Collection  Agent hereunder shall be paid
or deposited in accordance  with the terms hereof no later than 12:00 noon. (New
York City  time) on the day when due in  immediately  available  funds;  if such
amounts are payable to the Company or the Bank Investors,  they shall be paid or
deposited  in the Agent's  account  indicated in Section  9.3,  until  otherwise
notified by the Agent,  the Company or any Bank Investor.  The Debtor shall,  to
the extent permitted by law, pay to the applicable  Secured Parties upon demand,
interest on all amounts not paid or  deposited  when due to the Secured  Parties
hereunder at a rate equal to 2% per annum plus the Base Rate.  All  computations
of Carrying  Costs,  interest and all per annum fees hereunder  shall be made on
the  basis of a year of 360 days for the  actual  number  of days  elapsed.  Any
computations  of amounts  payable by the Debtor  hereunder to any of the Secured
Parties,  the Liquidity Provider or the Credit Support Provider shall be binding
absent manifest error.

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

                  SECTION   2.10   Collection   Account.   (a)  There  shall  be
established on the Closing Date and  maintained,  for the benefit of the Secured
Parties,  with the  Collateral  Agent,  a segregated  account  (the  "Collection
Account"),  bearing a desig nation clearly  indicating  that the funds deposited
therein are held for the benefit of the  Secured  Parties.  Subject to the terms
hereof, the Collateral Agent shall possess



                                                 34


<PAGE>



all right, title and interest in and to all funds deposited from time to time in
the  Collection  Account.  The  Collateral  Agent will  maintain the  Collection
Account at an Eligible  Institution.  If the  Eligible  Institution  holding the
Collection  Account shall cease to be an Eligible  Institution,  the  Collateral
Agent shall have the right to direct the transfer of the  Collection  Account to
an  Eligible  Institution.  The Collec  tion Agent  shall  remit  daily from the
Lock-Box  Account,  within two (2) Business Days of receipt,  to the  Collection
Account  all  Collections  received  with  respect to any  Receivables.  On each
Remittance  Date,  all  interest  and  earnings  (net of losses  and  investment
expenses) on funds on deposit in the  Collection  Account shall be considered to
be Receipts of Interest and shall be distributed  hereunder as such. On the date
on which the Net  Investment  is zero and all amounts  payable  hereunder by the
Debtor have been paid in full, any funds  remaining on deposit in the Collection
Account shall be paid to the Debtor.

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

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

                  (d) Funds on deposit in the  Collection  Account  (other  than
investment  earnings)  shall be invested by the Collateral  Agent in "overnight"
Eligible  Investments that will mature so that such funds will be available,  if
needed, on the next day. No Eligible Investment may be liquidated or disposed of
prior to its  maturity.  All proceeds of any such Eligible  Investment  shall be
deposited in the Collection  Account.  Investments may be made in the Collection
Account on any date (provided such investments  mature in accordance  herewith),
only after  giving  effect to deposits to and  withdrawals  from the  Collection
Account on such date.  Realized  losses,  if any,  on amounts  invested  in such
Eligible Investments shall be



                                                 35


<PAGE>



charged against investment earnings on amounts on deposit in the Collection
Account.

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

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

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

                  (a) (1) There shall be  established  on the  Closing  Date and
maintained,  for the benefit of the Secured Parties,  with the Collateral Agent,
two segregated accounts (the "Prefunding  Account" and the "Prefunding  Interest
Reserve Account"),  each bearing a designation clearly indicating that the funds
deposited  therein are held for the benefit of the Secured  Parties.  Subject to
the terms  hereof,  the  Collateral  Agent shall  possess  all right,  title and
interest  in and to all  funds  deposited  from  time to time in the  Prefunding
Account and the Prefunding  Interest Reserve Account.  The Collateral Agent will
maintain the Prefunding  Account and the Prefunding  Interest Reserve Account at
an Eligible  Institution.  If the Eligible  Institution  holding the  Prefunding
Account or the Prefunding Interest Reserve Account shall cease to be an Eligible
Institution, the Collateral Agent shall have the right to direct the transfer of
the Prefunding Account or the Prefunding Interest Reserve Account to an Eligible
Institution.

                  (2)  Funds  on  deposit  in the  Prefunding  Account  and  the
Prefunding Interest Reserve Account shall be invested by the Collateral Agent in
Eligible Investments by or at the written direction of the Debtor, provided that
if a Termination Event shall have occurred, such investments shall be made as



                                                 36


<PAGE>



directed by the Collateral Agent. Any such written  directions shall specify the
particular  investment to be made and shall  certify that such  investment is an
Eligible Investment and is permitted to be made under this Agreement.

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

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

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

                  (6) Eligible Investments shall be maintained in the Prefunding
Account and the Prefunding  Interest  Reserve Account by the Collateral Agent in
such  manner  as may be  necessary  to  maintain  the first  priority  perfected
security  interest  in favor of the  Collateral  Agent on behalf of the  Secured
Parties. Bank of America,  agrees (and any other Securities Intermediary holding
the  Prefunding  Account or the  Prefunding  Interest  Reserve  Account shall so
agree) that



                                                 37


<PAGE>



it shall not agree to comply  with  Entitlement  Orders  (as  defined in Section
8-102 of the 1994  version  of the  Official  Text of  Article 8 of the  Uniform
Commercial  Code) with  respect  to the  Prefunding  Account  or the  Prefunding
Interest  Reserve  Account  given to it by any Person other than the  Collateral
Agent.

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

                  (c) On  each  Remittance  Date,  the  Collection  Agent  shall
deposit  to the  Collection  Account  an amount  equal to the  Interest  Reserve
Advance,  if any, for such Remittance Date. In the event that, on any Remittance
Date,  the amount  earned  over the  preceding  Settlement  Period on amounts on
deposit in the Prefunding Account shall exceed an amount equal to the product of
(i) the daily  weighted  average  amount on  deposit in the  Prefunding  Account
during the preceding Settlement Period, (y) the Targeted Interest Rate (on a per
annum basis) and (z) a fraction, the numerator of which is the number of days in
the  related  Settlement  Period  and the  denominator  of  which  is  360,  the
Collateral  Agent shall release such excess amount from the Prefunding  Interest
Reserve Account to the Collection Agent in reimbursement for previously advanced
Interest Reserve Advances or, to the extent no such unreimbursed advances exist,
the Collection  Agent shall apply such excess amount as part of Available  Funds
under Section 2.3(a).

                  SECTION  2.12  Prefunding  Account  and  Prefunding   Interest
Reserve Account Withdrawals.

                  (a) On any  Business  Day,  upon  receipt by the Agent and the
Collateral  Agent not  later  than  11:00  a.m.  New York  City time of  written
certification  in  substantially  the form of Exhibit E (a "Withdrawal  Notice")
from the Debtor setting forth,  among other things,  the amount  requested to be
released from the Prefunding Account and certifying that (i) after giving effect
to the amount to be funded with respect to such additional Receivables,  the Net
Asset Test shall be



                                                 38


<PAGE>



satisfied,  (ii) the amount on deposit in the Reserve  Account shall not be less
than the Required  Reserve Account Amount  (calculated (x) immediately  prior to
the related  Prefunding  Date and (y) as if such  Prefunding  Deposit shall have
occurred),  (iii)  the  Debtor  shall  have  made any  deposit  into  the  Yield
Supplement  Account  required  pursuant to Section 2.13 in connection  with such
Receivables,  if any, and (iv) the Collection  Agent shall be in compliance with
the  requirements  of  Section  5.3 in  respect  of such  Prefunding  Date,  the
Collateral  Agent  shall  release  to the Debtor  the  amount  requested  by the
Collection Agent.

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

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

                  SECTION 2.13  Yield Supplement Account, Deposits; Withdrawals.

                  (a) On the day of the  Initial  Funding  with  respect  to all
Receivables  recorded on the Collection  Agent's master servicing  records as of
such day and on any Business Day thereafter on which a Receivable is recorded on
the Collection Agent's master servicing  records,  the Debtor shall deposit into
the Yield Supplement  Account for each such Receivable with respect to which the
related Contract  provides for interest to accrue thereunder at a rate less than
the Minimum  Required APR (determined as of the date of such  recordation on the
Collection  Agent's  master  servicing  records) an amount (each such amount,  a
"Required  Yield  Deposit  Amount")  equal to the  product  of (i) the number of
monthly payments



                                                 39


<PAGE>



originally  required  under such  Contract  and (ii) an amount  equal to (x) the
scheduled monthly payment on such Contract which would be required to be made by
the  Obligor  thereunder  if such  Contract  had a rate per  annum  equal to the
Minimum  Required APR minus (y) the scheduled  monthly  payment on such Contract
which would be required to be made by the Obligor  thereunder  if such  Contract
had  a  rate  per  annum  equal  to  the  rate  set  forth  in  such   Contract.
Notwithstanding  the forego  ing,  no  Required  Yield  Deposit  Amount  need be
deposited  to the  Yield  Supplement  Account  until  the  total  amount  of all
undeposited Required Yield Deposit Amounts equals or exceeds $10,000.

                  (b) (1) There shall be  established  on the  Closing  Date and
maintained,  for the  benefit of the Company  and the Bank  Investors,  with the
Collat eral Agent,  a  segregated  account  (the  "Yield  Supplement  Account"),
bearing a designation  clearly  indicating that the funds deposited  therein are
held for the benefit of the Secured  Parties.  Subject to the terms hereof,  the
Collateral Agent shall possess all right, title and interest in and to all funds
deposited  from time to time in the Yield  Supplement  Account.  The  Collateral
Agent will maintain the Yield Supplement Account at an Eligible Institution.  If
the Eligible  Institution holding the Yield Supplement Account shall cease to be
an Eligible Institution, the Collateral Agent shall have the right to direct the
transfer of the Yield Supplement Account to an Eligible Institution.

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

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



                                                 40


<PAGE>



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

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

                  (6) Eligible Investments in the Yield Supplement Account shall
be  maintained  by the  Collateral  Agent in such manner as may be  necessary to
maintain the first priority  perfected security interest in the Yield Supplement
Account in favor of the Collateral Agent on behalf of the Secured Parties.  Bank
of America  agrees  (and any other  Securities  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.

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



                                                 41


<PAGE>



Agent, for the account of the Company and the Bank Investors, as applicable, and
applied in reduction of the Net Investment.

                  SECTION 2.14  Reserve Account; Withdrawals; Releases.

                  (a) (1) There shall be  established  on the  Closing  Date and
maintained, for the benefit of the Secured Parties, with the Collateral Agent, a
segregated  account  (the  "Reserve  Account"),  bearing a  designation  clearly
indicating  that the funds  deposited  therein  are held for the  benefit of the
Secured Parties. Subject to the terms hereof, the Collateral Agent shall possess
all right, title and interest in and to all funds deposited from time to time in
the Reserve  Account.  The Collateral Agent will maintain the Reserve Account at
an Eligible Institution. If the Eligible Institution holding the Reserve Account
shall cease to be an Eligible  Institution,  the Collateral Agent shall have the
right to direct the transfer of the Reserve Account to an Eligible  Institution.
On each  Funding Date and each  Prefunding  Date,  the Debtor shall  deposit (or
cause to be withheld  from  proceeds  from the  issuance  of Related  Commercial
Paper)  to the  credit  of the  Reserve  Account  an  amount  equal to an amount
necessary to fund the Reserve  Account to the Re quired Reserve  Account Amount.
The amount of any Reserve Account Guaranty shall be counted toward the amount of
funds available in the Reserve Account.

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

                  (3) The  Collateral  Agent agrees that it shall not accept for
credit to the Reserve  Account any  investment  as to which it has knowl edge of
any  adverse  claim  thereto.  Bank of  America  hereby  agrees  (and any  other
Securities  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.

                  (4) No  Eligible  Investment  in the  Reserve  Account  may be
liquidated or disposed of prior to its maturity. All proceeds of any such



                                                 42


<PAGE>



Eligible  Investment shall be deposited in the Reserve Account.  Investments may
be made in the Reserve Account on any date (provided such investments  mature in
accordance  herewith),  only after giving effect to deposits to and  withdrawals
from such account on such date.  Realized losses, if any, on amounts invested in
such  Eligible  Investments  shall be charged  against  investment  earnings  on
amounts on deposit in the Reserve Account, as applicable.

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

                  (6) 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.  Bank of America agrees (and any other Securities  Intermediary
holding  the Reserve  Account  shall so agree) that it shall not agree to comply
with Entitlement  Orders (as defined in Section 8-102 of the 1994 version of the
Official Text of Article 8 of the Uniform  Commercial  Code) with respect to the
Reserve Account given to it by any Person other than the Collateral Agent.

                  (b) Funds on deposit in the Reserve  Account shall be invested
by the Collateral Agent in "overnight"  Eligible Investments that will mature so
that such funds will be available,  if needed,  on the next day. The  Collateral
Agent shall maintain possession of the negotiable instruments or securities,  if
any,  evidenc ing the  Eligible  Investments  from the time of purchase  thereof
until the time of sale or maturity.  Such investments  shall be held in the name
of the Collateral Agent, for the benefit of the Secured Parties.

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



                                                 43


<PAGE>



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

                  (iii) After the occurrence of the Termination Date, the day on
which the Net Investment is zero and the Secured Parties shall have received all
Aggregate  Unpaids the Collateral  Agent shall release to the Debtor all amounts
on deposit in the Reserve Account

                  SECTION 2.15 Optional Release.

                  (a) On any  Business  Day,  the Debtor shall have the right to
require the Collateral Agent to release its security interest in and its Lien on
the Contracts and the related  Receivables  (excluding any Contracts and related
Receiv ables booked after the cut-off date  applicable  to a  Securitization  or
Warehouse Transfer,  on the terms and conditions set forth herein. It shall be a
condition  precedent  to any such  release  that (i) the Debtor shall pay to the
Company and the Bank  Investors,  as  applicable,  an amount equal to the amount
necessary to cause the Net Asset Test to be satisfied after giving effect to the
proposed release,  (ii) the amount to be paid pursuant to clause (i) above shall
(x) not be  greater  than the  principal  component  of the  Company's  maturing
Commercial  Paper which was issued to fund the Net  Investment  or the principal
component  subject to the funding period  utilized by the Bank Investors and the
Liquidity Provider to fund the Net Investment, as applicable and (y) be at least
$5,000,000,  (iii) the Debtor shall deposit to the Collection  Account an amount
equal to the sum of (x) all unreimbursed  Servicer Advances and (y) all interest
costs  associated  with the  Company's  Commer  cial  Paper  issued  to fund its
interest in the Contracts and related  Receivables pro posed to be reassigned or
all interest  costs  associated  with any funding  periods  utilized by the Bank
Investors or the Liquidity  Provider with respect to their respec tive interests
in  such  Contracts  and  related  Receivables,  as  applicable,  as well as all
Carrying Costs accrued through the date of the maturity of such Commercial Paper
or funding period, (iv) the Debtor shall have given the Agent and the Collateral



                                                 44


<PAGE>



Agent at least ten (10) days prior  written  notice of its  intention to request
release with respect to such  Contracts  and  Receivables,  and (v) after giving
effect to such release the amount on deposit in the Reserve  Account shall be at
least equal to the Required  Reserve Account Amount.  It is the intention of the
parties that the Debtor  shall pay to the Agent,  for the benefit of the Company
and  the  Bank  Investors,  as  applicable,   and  the  Collection  Account,  as
applicable,  such amounts as are required under this Section on the closing date
of such Securitization or Warehouse Transfer.

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

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

                  Upon the deposit to the Collection  Account and the payment by
the Debtor of the amounts described in this Section,  the Collateral Agent shall
execute and deliver to the Debtor,  at the Debtor's  expense,  such documents or
instruments  as are  necessary  to terminate  the  Collateral  Agent's  security
interest  in the  Receivables  and  the  Contracts  related  thereto.  Any  such
documents shall be prepared by or on behalf of the Debtor.

                  (b) In connection with a Securitization or Warehouse Transfer,
the  Debtor  shall have the right,  from time to time  thereafter  (but not more
frequently  than once per calendar week), on the maturity date of any Commercial
Paper note issued by the Company to fund the Net  Investment or upon the termina
tion of any  funding  period  utilized  by the  Liquidity  Provider  or the Bank
Investors,  as  applicable,  to require  the  Collateral  Agent to  release  its
security   interest  in  and  Lien  on  specified   Contracts  and  the  related
Receivables,  provided that (x) such Contracts and related Receivables are to be
assigned or sold by the Debtor, directly or indirectly,  to a structured finance
vehicle established by or on behalf of the Debtor or an affiliate, in connection
with an  asset-securitization  or other structured financing having a prefunding
(or similar) feature, (y) the aggregate  Outstanding Balance of such Receivables
shall be (i) not greater than the principal component of such



                                                 45


<PAGE>



maturing  Commercial  Paper or the principal  component  subject to such funding
period, as applicable and (ii) at least $5,000,000 and (z) the Debtor shall have
given the Agent and the  Collateral  Agent at least seven (7) days prior written
notice of its  intention to effect a release with respect to such  Contracts and
Receivables.  Any such release shall be in consideration  for the deposit by the
Debtor  into the Collec  tion  Account of an amount  equal to the sum of (i) the
Outstanding  Balance of such Receivables on the day of such assignment plus (ii)
an amount equal to the sum of (x) all unreimbursed Servicer Advances and (y) all
interest costs associated with the Company's Commercial Paper issued to fund its
interest in the Contracts and related  Receivables  proposed to be reassigned or
all interest  costs  associated  with any funding  periods  utilized by the Bank
Investors or the Liquidity  Provider with respect to their respective  interests
in  such  Contracts  and  related  Receivables,  as  applicable,  as well as all
Carrying Costs accrued through the date of the maturity of such Commercial Paper
or funding period.  The amount  described in clause (i) above shall be allocated
and  applied on such day  (whether or not a  Remittance  Date) as  described  in
Section  2.3(b) as a Receipt of  Principal,  and the amount  described in clause
(ii) above shall be applied on such day  (whether or not a  Remittance  Date) in
the order of priorities set forth in Section 2.3(a) as a Receipt of Interest (in
which  case  "Settle  ment  Period"  as used in said  Section  2.3(a)  shall  be
considered to be the period from the last date of the previous Settlement Period
to the date on which the amounts  required to be paid under this Section 2.15(b)
are paid).  The Debtor shall also be obligated to pay to the Agent (i) an amount
equal to $2,500 as an administrative  fee in connection with any such assignment
and (ii) the reasonable  legal fees and expenses of the Company,  the Collateral
Agent,  the Bank Investors and the Adminis  trative Agent incurred in connection
with any such  release.  Upon the  deposit  to the  Collection  Account  and the
payment by the Debtor of the amounts  described in this Section,  the Collateral
Agent shall  execute and deliver to the Debtor,  at the Debtor's  expense,  such
documents or instruments  as are necessary to terminate the  Collateral  Agent's
interest  in the  Receivables  and  the  Contracts  related  thereto.  Any  such
documents shall be prepared by or on behalf of the Debtor.

                  (c) On any  Business  Day,  the Debtor shall have the right to
require the Collateral Agent to release its security interest in and its Lien on
specified  Contracts and the related Receivables on the terms and conditions set
forth  herein.  It shall be a  condition  precedent  to any such  release  that,
immediately after such release,  (i) the Debtor shall pay to the Company and the
Bank Investors, as applicable,  an amount equal to the amount necessary to cause
the Net  Asset  Test to be  satisfied  calculated  after  giving  effect  to the
proposed  release  plus  all  Finance  Charges  accrued  with  respect  to  such
Receivables as of such time and (ii) after giving



                                                 46


<PAGE>



effect to such release, the amount on deposit in the Reserve Account shall be at
least equal to the Required Reserve Account Amount.

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

                                             ARTICLE III

                                   REPRESENTATIONS AND WARRANTIES

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

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

                  (b) Corporate and Governmental  Authorization;  Contravention.
The execution,  delivery and performance by the Debtor of this Agreement and the
other Transaction  Documents are within the Debtor's corporate powers, have been
duly authorized by all necessary  corporate  action,  require no action by or in
respect of, or filing with, any governmental body, agency or official (except as



                                                 47


<PAGE>



contemplated  by Section 2.6),  and do not  contravene,  or constitute a default
under,  any provision of applicable  law or regulation or of the  Certificate of
Incorporation or Bylaws of the Debtor or of any agreement, judgment, injunction,
order,  decree  or other  instrument  binding  upon the  Debtor or result in the
creation  or  imposition  of any  lien  on  assets  of  the  Debtor  (except  as
contemplated  by Section  2.6),  or require the  consent or approval  of, or the
filing of any notice or other documentation with, any governmental  authority or
other Person (except as contemplated by Section 2.6).

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

                  (d) Perfection. Immediately preceding each Funding, the Debtor
shall be the  owner of all of the  Receivables,  free  and  clear of all  liens,
encumbrances,  security interests,  preferences or other security arrangement of
any kind or nature  whatsoever,  except as permitted by this  Agreement  and the
other Transaction Documents. On or prior to each Funding and each day on which a
Receivable  is sold to the Seller by UAC  pursuant to the UAFC Sale and Purchase
Agreement  or to the Debtor by UAFC  pursuant  to the UAFC-1  Sale and  Purchase
Agreement  or  pursuant  to the Debtor by a  Warehouse  pursuant  to a Warehouse
Transfer Agreement,  all financing statements and other documents required to be
recorded or filed in order to perfect and protect (i) the  Debtor's  interest in
the  Receivables,  the  Contracts  related  thereto,  the Related  Security with
respect thereto and all Proceeds thereof against all creditors of and purchasers
from UAC, the Seller, PFC, UAFC, any Warehouse or any Acquisition Subsidiary and
(ii) the Collateral  Agent's interest in the Collateral against all creditors of
and purchasers from the Debtor,  and all filing fees and taxes, if any,  payable
in connection with such filings shall have been paid in full.

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



                                                 48


<PAGE>




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

                  (g) Action, Suits. Except as set forth in Exhibit F, there are
no actions,  suits or  proceedings  pending,  or to the  knowledge of the Debtor
threatened,  against or affecting  the Debtor or any  Affiliate of the Debtor or
their respective properties,  in or before any court,  arbitrator or other body,
which may have a material  adverse effect on the Debtor's ability to perform its
obligations  hereunder  or under the UAFC  Sale and  Purchase  Agreement  or the
UAFC-1 Sale and Purchase Agreement.

                  (h) Use of Proceeds.  The proceeds of any Funding will be used
by the Debtor to (a) acquire the Receivables,  the Contracts related thereto and
the Related Security with respect thereto from the Seller pursuant to the UAFC-1
Sale and Purchase Agreement or from a Warehouse,  (b) to pay down debt in connec
tion with the purchase of the Receivables  and Contracts  pursuant to the UAFC-1
Sale and Purchase Agreement or pursuant to a Warehouse Transfer Agreement or (c)
to make distributions constituting a return of capital.

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

                  (j) Good Title.  Upon each  Funding and on each day on which a
Receivable and related  Contract is sold to the Debtor by the Seller pursuant to
the UAFC-1 Sale and  Purchase  Agreement or by another  Warehouse  pursuant to a
Warehouse  Transfer  Agreement,  the Collateral  Agent shall acquire a valid and
perfected  first  priority  security  interest  in each  Receivable  and related
Contract  that  exists on the date of such  Funding  and sale and in the Related
Security  and Collec  tions with  respect  thereto free and clear of any Adverse
Claim.



                                                 49


<PAGE>




                  (k) Tradenames, Etc. As of the date hereof: (i) the Debtor has
only the  subsidiaries  and divisions  listed on Exhibit H hereto;  and (ii) the
Debtor has,  within the last five (5) years,  operated only under the tradenames
identified  in Exhibit H hereto,  and,  within the last five (5) years,  has not
changed its name, merged with or into or consolidated with any other corporation
or been the  subject  of any  proceeding  under  Title 11,  United  States  Code
(Bankruptcy), except as disclosed in Exhibit H hereto.

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

                  (m)  Coverage;  Amount of  Receivables.  The Net Asset Test is
currently  satisfied.  As of May 25, 2000, the aggregate  Outstanding Balance of
the Receivables in existence was $0 and the aggregate Outstanding Balance of all
Eligible Receivables was $0.

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

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

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

                  (q)  Lock-Box  Accounts.  The names and  addresses  of all the
Lock-Box Banks,  together with the account  numbers of the Lock-Box  Accounts at
such Lock-Box  Banks,  are specified in Exhibit B hereto (or at such other Lock-
Box Banks and/or with such other Lock-Box  Accounts as have been notified to the
Administrative  Agent).  All Obligors have been  instructed to make payment to a
Lock-Box Account.

                  (r)  Insurance  Policies.  At the  time  of the  sale  of each
Receivable  and  related  Contract  by the Seller to the Debtor  pursuant to the
UAFC-1



                                                 50


<PAGE>



Sale and Purchase  Agreement or by another Warehouse to the Debtor pursuant to a
Warehouse Transfer Agreement, each Financed Vehicle is required to be covered by
physical damage and liability insurance obtained by the related Obligor at least
in the amount required by the related Contract, and each such required insurance
policy is required to name UAC as loss payee and is required to be in full force
and effect.

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

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

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

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

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



                                                 51


<PAGE>



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

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

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

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

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



                                                 52


<PAGE>



                                   ARTICLE IV

                              CONDITIONS PRECEDENT

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

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

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

                  (c) A Certificate  of the  Secretary of the Seller  certifying
(i) the names and signatures of the officers and other agents  authorized on its
behalf to execute this  Agreement  and the other  Transaction  Documents and any
other  docu  ments to be  delivered  by it  hereunder  or  thereunder  (on which
Certificate the Collateral Agent and the Secured Parties may  conclusively  rely
until such time as the



                                                 53


<PAGE>



Collateral Agent and the Secured Parties shall receive from the Seller a revised
Certificate meeting the requirements of this clause (c)(i)),  (ii) a copy of the
Seller's Certificate of Incorporation,  as amended to the date hereof, certified
by the Secretary of State of the State of Delaware, (iii) a copy of the Seller's
By-laws,  as  amended  to the date  hereof,  (iv) a copy of  resolutions  of the
Seller's Board of Directors  approving the transactions  contemplated hereby and
(v) a certificate of the Secretary of State of the State of Delaware  certifying
the Seller's good standing.

                  (d) Copies of proper financing statements (Form UCC-1), naming
UAC as the  debtor in favor of the  Seller as  secured  party and the  Debtor as
assignee of the secured party or other similar  instruments  or documents as may
be  necessary or in the  reasonable  opinion of the Seller  desirable  under the
Relevant  UCC to perfect the  Seller's  security  interest  in the  Receivables,
Related Security and Collections, free and clear of any Adverse Claim.

                  (e) Copies of proper financing statements (Form UCC-1), naming
the  Seller  as the  debtor  in favor of the  Debtor  as  secured  party and the
Collateral  Agent,  for the benefit of the Secured  Parties,  as assignee of the
secured party or other similar  instruments  or documents as may be necessary or
in the reasonable  opinion of the Collateral  Agent desirable under the Relevant
UCC to perfect  the  Debtor's  security  interest  in the  Receivables,  Related
Security and Collections, free and clear of any Adverse Claim.

                  (f) Copies of proper financing statements (Form UCC-3), naming
the Collateral Agent, for the benefit of the Secured Parties, as assignee of the
UCC-1 financing statement reference in Section 4.1(d).

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

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



                  54


<PAGE>



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

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

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

                  (l) An  executed  copy of the Fee  Letter  and  payment of the
arrangement fee specified therein.

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

                  (n)  Unless  waived  by  the  Agent  or  no  Receivables   are
transferred, a Release Agreement, dated as of May 25, 2000, between the Company,
Union Acceptance  Corporation,  MBIA Insurance  Corporation and Bank of America,
releasing  the  security  interest in the  Receivables  granted  pursuant to the
Security Agreement,  dated as of September 18, 1998, between the Company,  Union
Accep tance Corporation, MBIA Insurance Corporation and Bank of America.

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

                  SECTION 4.2 Further Conditions.

                  (a) The Collateral Agent shall receive,  within thirty days of
the Closing Date,  certificates of qualification as a foreign corporation issued
by the  Secretaries  of State or other  similar  officials of each  jurisdiction
where such  qualification is material to the  transactions  contemplated by this
Agreement and the



                                                 55


<PAGE>



other  Transaction  Documents,  in each case,  dated as of a recent date for the
Debtor, the Seller and the Collection Agent.

                  (b) The  Collateral  Agent  shall  receive  by June 6, 2000 an
opinion of Barnes & Thornburg, special counsel to the Seller, the Debtor and the
Collection  Agent  covering  bankruptcy  matters  regarding  the sale of certain
Receiv ables from UACFC to UAC, as agreed upon by the Agent and UAC.

                  (c) It is a condition  subsequent  to the  Closing  Date and a
condition  precedent to the initial  Funding  that the Agent and the  Collection
Agent  shall  agree  to the  terms  of  financial  covenants  applicable  to the
Collection Agent and such agreed upon terms (and related  definitions)  shall be
attached hereto as Exhibit C.

                                              ARTICLE V

                                              COVENANTS

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



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

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



                                                 56


<PAGE>



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


                                    (ii) Quarterly Reporting.  Within forty-five
                  (45) days after the close of the first three quarterly periods
                  of each of its fiscal years, for itself and its  Subsidiaries,
                  consolidated  unaudited balance sheets as at the close of each
                  such period and consolidated 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 its chief financial officer.


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

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



                                                 57


<PAGE>



                                    (v) Change in Credit and Collection  Policy.
                  Within ten (10) days after the date any material  change in or
                  amend ment to the Credit and Collection Policy is made, a copy
                  of the Credit and Collection  Policy then in effect indicating
                  such change or amend ment.

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

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

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

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

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



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<PAGE>



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

                  (d) Furnishing of Information  and Inspection of Records.  The
Debtor will furnish to the Collateral Agent and the Secured Parties from time to
time such information with respect to the Receivables as the Collateral Agent or
any  Secured  Party  may  reasonably  request,  including,  without  limitation,
listings   identifying  the  Obligor  and  the  Outstanding   Balance  for  each
Receivable.  Upon at least two (2) Business Days prior notice,  the Debtor,  the
Seller and UAC will during regular business hours permit the Collateral Agent or
any Secured Party, or their agents or  representatives,  (i) to examine and make
copies of and  abstracts  from all  Records  and (ii) to visit the  offices  and
properties of the Debtor,  the Seller and UAC for the purpose of examining  such
Records,  and to discuss  matters  relating to Receivables or the Debtor's,  the
Seller's  or UAC's  performance  hereunder  or under the UAFC Sale and  Purchase
Agreement and the UAFC-1 Sale and Purchase  Agreement  with any of the officers,
employees or independent  public  accountants  of the Debtor,  the Seller or UAC
having knowledge of such matters.

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

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

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



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<PAGE>




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

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

                  (j)  Separate  Business.  The Debtor shall at all times (a) to
the extent the Debtor's office is located in the offices of UAC or any Affiliate
of UAC,  pay fair  market rent for its  executive  office  space  located in the
offices  of UAC or any  Affiliate  of UAC,  (b)  maintain  the  Debtor's  books,
financial  statements,  accounting  records and other  corporate  documents  and
records  separate from those of UAC or any other  entity,  (c) not commingle the
Debtor's assets with those of UAC or any other entity (it being  understood that
certain  Collections  on  Receivables  owned by the  Debtor  may be  temporarily
commingled  with  collections  on other  receivables  serviced by UAC);  (d) act
solely in its  corporate  name and  through  its own autho  rized  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,  includ ing the maintenance of current minute books,
and the Debtor shall cause its financial statements to be prepared in accordance
with generally  accepted  accounting  princi ples 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.

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



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<PAGE>



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


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

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

                  (c) No Amendment of UAFC-1 Sale and Purchase  Agreement or the
UAFC Sale and Purchase Agreement. The Debtor or the Seller, as applicable, shall
not amend or otherwise modify the UAFC-1 Sale and Purchase Agreement or the UAFC
Sale and Purchase  Agreement  without the prior  written  consent of the Secured
Parties.

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

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



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<PAGE>


                           (f)  Change  in  Payment  Instructions  to  Obligors.
Neither  the  Debtor,  the Seller nor UAC nor the  Collection  Agent will add or
terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account to or
from those listed in Exhibit B hereto or make any change in its  instructions to
Obligors regard ing payments to be made to any Lock-Box Account, unless (i) such
instructions are to deposit such payments to another  existing  Lock-Box Account
or (ii) the Collateral  Agent and the  Administrative  Agent shall have received
written  notice of such  addition,  termination or change at least 15 days prior
thereto.

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

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

                           (i)      Sale Treatment.

                                    (i) Neither the Seller nor UAC will  account
                  for (including for accounting and tax purposes),  or otherwise
                  treat,  the  transactions  contemplated  by the UAFC  Sale and
                  Purchase  Agree  ment in any  manner  other  than as a sale of
                  Receivables by UAC to the Seller;

                                    (ii)  Neither the Debtor nor the Seller will
                  account for (including  for  accounting and tax purposes),  or
                  otherwise treat,  the transactions  contemplated by the UAFC-1
                  Sale and Purchase Agreement in any manner other than as a sale
                  of Receivables by the Seller to the Debtor.

                  (j) No Change in Account Type. Once the Debtor,  the Seller or
UAC has granted a security  interest in a Receivable  to any party,  the Debtor,
the Seller or UAC, as  applicable,  shall (i) maintain the separate  field desig
nation containing the account type of such Receivable as it is identified on the



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<PAGE>



Debtor's,  the Seller's or UAC's, as applicable,  computer  records and (ii) not
change or cause to be  changed  the  account  type of such  Receivable  as it is
identified  on the  Debtor's,  the Seller's or UAC's,  as  applicable,  computer
records or the computer  records of any servicer of the  Receivables,  in either
case without  obtaining a release of the security interest or the consent of the
Agent to such change in account type.

                  (k) Other Debt. Except as provided for herein, the Debtor will
not create, incur, assume or suffer to exist any indebtedness whether current or
funded,  or any  other  liability  other  than (i)  indebtedness  of the  Debtor
representing fees,  expenses and indemnities arising hereunder or under the UAFC
Sale and Purchase  Agreement or the UAFC-1 Sale and Purchase  Agreement  for the
purchase price of the Receivables under the UAFC Sale and Purchase  Agreement or
the  UAFC-1  Sale  and  Purchase  Agreement,  as  applicable,   and  (ii)  other
indebtedness incurred in the ordinary course of its business in an amount not to
exceed  $9,500  (except  for  indebtedness   incurred  in  connection  with  the
repurchase of Receivables from UARC) at any time outstanding.

                  SECTION 5.3 Acceptable  Hedging  Arrangements.  The Collection
Agent  shall  (i)  at or  prior  to the  time  of any  Funding,  provide  to the
Administrative  Agent and the Collateral Agent an officer's  certificate stating
that  the  Collection  Agent  has  Acceptable  Hedging   Arrangements  in  place
satisfying  the  conditions of this Section 5.3 as set forth below and qualifies
as an Acceptable Hedging Arrange ment and (ii) in connection with any Settlement
Statement  provided  hereunder,   provide  an  executed  copy  of  all  existing
Acceptable Hedging Arrangements,  which Acceptable Hedging Arrangements shall be
satisfactory  to the  Administrative  Agent and the Collateral  Agent,  and with
respect  to which  the  Debtor  shall be the  benefi  ciary,  in  respect  of an
aggregate  notional  amount  at  least  equal  to the  Net  Investment.  After a
Termination  Event (i) such a hedge shall be under the  complete  control of the
Agent  and  (ii) if such a  hedge  is a swap,  the  notional  balance  shall  be
maintained  at no  greater  than  the Net  Receivables  Balance.  The  form  and
structure and  counterparty  to each  Acceptable  Hedging  Arrangement  shall be
acceptable to the  Administrative  Agent and the Collateral Agent and must be in
full force and effect at all times  during which the Net  Investment  is greater
than zero (however  such  required  amount may be reduced for the period of time
between  the  pricing  and  the  funding  of a  structured  financing  utilizing
Receivables  released to the Debtor  pursuant to Section  2.15 by the  aggregate
Outstanding Balance of such Receivables).



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<PAGE>



                                             ARTICLE VI

                                   ADMINISTRATION AND COLLECTIONS

                  SECTION 6.1  Appointment of Collection  Agent.  The servicing,
administering  and  collection  of the  Receivables  shall be  conducted by such
Person (the  "Collection  Agent") so designated  from time to time in accordance
with this Section  6.1.  Until the  Collateral  Agent gives notice to UAC of the
designation of a new Collection  Agent, UAC is hereby  designated as, and hereby
agrees to perform the duties and obligations  of, the Collection  Agent pursuant
to the terms  hereof.  The  Collateral  Agent  shall  upon the  occurrence  of a
Collection Agent Default or any other Termination Event, designate as Collection
Agent any Person (including  itself) to succeed UAC or any successor  Collection
Agent,  on the condition in each case that any such Person so  designated  shall
agree to perform the duties and obligations of the Collection  Agent pursuant to
the terms hereof. The Company may notify any Obligor of its security interest in
the Contracts and the related Receivables.

                  SECTION 6.2 Duties of Collection Agent.

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



                                                 64


<PAGE>



the Secured Parties in accordance with their respective  interests,  all Records
which  evidence or relate to Receivables  or Related  Security.  Notwithstanding
anything to the contrary  contained herein,  the Collateral Agent shall have the
absolute  and  unlimited  right to direct  the  Collection  Agent  (whether  the
Collection  Agent is the Debtor or any other  Person) to  commence or settle any
legal action to enforce  collection of any  Receivable  or to foreclose  upon or
repossess any Related Security.

                  (b)  The  Collection  Agent  shall,  as  soon  as  practicable
following  receipt  thereof,  turn over to the  Debtor  any  collections  of any
indebtedness  of any Obligor which is not a Receivable.  If UAC or any affiliate
thereof is not the Collection  Agent, the Collection  Agent, by giving three (3)
Business Days' prior written  notice to the  Collateral  Agent 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  135%  of the
reasonable and appropriate  out-of-pocket  costs and expenses of such Collection
Agent incurred in connection with the perfor mance of its obligations  hereunder
as documented to the reasonable  satisfaction  of the  Collateral  Agent and the
Agent.  The  Collection  Agent,  if  other  than  the  Debtor,  shall as soon as
practicable  upon  demand,  deliver to the Debtor all Records in its  possession
which  evidence  or  relate  to  indebtedness  of  an  Obligor  which  is  not a
Receivable.

                  (c) On or before ninety (90) days after the end of each fiscal
year of the  Collection  Agent,  beginning  with the fiscal year ending June 30,
2001, the Collection Agent shall cause a firm of independent  public accountants
(who may also render other  services to the  Collection  Agent or the Debtor) to
furnish a report on applying agreed upon  procedures to the Collateral  Agent to
the  effect  that  they  have (i)  compared  the  information  contained  in the
Settlement  Statements and Withdrawal Notices delivered during such fiscal year,
based on a sample size provided by the Agent, with the information  contained in
the Contracts and the Collection  Agent's records and computer  systems for such
period,  (ii)  verified  the  Net  Receivables  Balance  as of the  end of  each
Settlement  Period during such fiscal year,  and (iii) verified that a sample of
Receivables  treated by the  Collection  Agent as Eligible  Receivables  in fact
satisfied the requirements of the definition  thereof contained herein, and (iv)
conducted a 'negative  confirmation' of a sample of the Receivables and verified
that the Collection  Agent's  records and computer  system used in 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 report.



                                                 65


<PAGE>




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

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

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

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

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

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


                  (d) the  Collection  Agent shall breach any covenant set forth
in Exhibit C.

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

                                    (i) The Agent may direct that payment of all
                  amounts  payable under any  Receivable be made directly to the
                  Collateral Agent or any designee.




                                                 66


<PAGE>



                                    (ii)  The  Debtor  shall,   at  the  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  Agent's
                  request,  (A) assemble all of the Records,  and shall make the
                  same available to the Collateral  Agent at a place selected by
                  the  Collateral  Agent or any designee,  and (B) segregate all
                  cash, checks and other instruments received by it from time to
                  time  constituting  Collections  of  Receiv  ables 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 Debtor  necessary or  desirable,  in
                  the  determination  of the  Collateral  Agent,  to collect all
                  amounts due under any and all Receivables and Related Security
                  with respect thereto, including, without limitation, endorsing
                  the Debtor's name on checks and other instruments representing
                  Collections  and enforcing  such  Receivables  and the related
                  Contracts.

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



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<PAGE>



                                   ARTICLE VII

                               TERMINATION EVENTS

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

                  (a) any representation,  warranty,  certification or statement
made by the  Debtor,  the  Seller  or UAC in this  Agreement,  the UAFC Sale and
Purchase  Agreement,  the UAFC-1  Sale and  Purchase  Agreement  or in any other
Transaction  Document shall prove to have been incorrect in any material respect
when made or deemed made; or

                  (b)  the  Debtor,  the  Seller  or UAC  shall  default  in the
performance of (i) any payment  obligation  hereunder or under the UAFC Sale and
Purchase  Agreement,  the UAFC-1 Sale and  Purchase  Agreement or (ii) any other
covenant or  undertaking  hereunder  or under the UAFC Sale and  Purchase  Agree
ment,  the UAFC-1 Sale and Purchase  Agreement  which in the case of this clause
(ii) shall remain unremedied for five (5) days; or

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

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

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

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

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

                  (h) there shall have occurred any material  adverse  change in
the  operations  of the  Debtor,  the Seller or the  Collection  Agent since the
Closing



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<PAGE>



Date,  or any other  event  shall have  occurred  which  materially  affects the
Debtor's,  the Seller's or the Collection  Agent's ability to either collect the
Receivables  or to perform  under  this  Agreement,  the UAFC Sale and  Purchase
Agreement  the  UAFC-1  Sale and  Purchase  Agreement  or any other  Transaction
Document; or

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

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

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

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


                  (m) the Net Investment is greater than the Facility Limit;

                  (n) the Net  Yield as of any  Determination  Date is less than
2.00% during a  Settlement  Period in which the Net  Investment  is greater than
zero each day of such Settlement Period;


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

Notwithstanding  the foregoing,  with respect to an event occurring described in
paragraph  (a) or (f),  to the extent  such  event is  related  to a  particular
Receivable or Receivables,  such event shall not constitute a Termination  Event
if the Debtor timely fulfills its obligations with respect to such Receivable or
Receivables pursuant to Section 2.7 hereof.



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<PAGE>



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

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

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

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

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



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<PAGE>



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

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

                  The Debtor and the Collection Agent agree that they shall take
all actions  (including  reliening of the  certificates  of title or other title
documents in the name of the Collateral  Agent on behalf of the Secured Parties)
and execute all  documents as may be  necessary  or requested by the  Collateral
Agent to perfect its interest in the Collateral,  including, without limitation,
to perfect the Collateral  Agent's security  interest in the Financed  Vehicles.
The Debtor,  the Seller and UAC hereby grant to the Collateral  Agent, on behalf
of the Secured  Parties,  a power of attorney to act in their place and stead to
take all actions as may be necessary to perfect the Collateral  Agent's security
interest  in the  Financed  Vehicles.  Each of UAC,  the  Seller  and the Debtor
acknowledge  that such power of attorney is irrevoca  ble and is coupled with an
interest. In connection with any sale of the Receivables by the Collateral Agent
after the occurrence of a Termination Event, the Debtor shall have, for a period
of five (5) Business  Days after notice of such  proposed sale from or on behalf
of the Secured  Parties,  the right to repurchase  the  Receivables  and related
Contracts for a price,  payable in  immediately  available  funds,  in an amount
equal to the Aggregate Unpaids.

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



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<PAGE>



                                            ARTICLE VIII

                                        THE COLLATERAL AGENT

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

                  All  Collections  received  by the  Collateral  Agent from the
Collection  Agent or otherwise  will,  pending  remittance  to the Secured Party
entitled  thereto,  be held in trust by the Collateral  Agent for the benefit of
the Secured  Parties and  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 II hereof.

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

                  Except as otherwise  provided  herein,  the  Collateral  Agent
shall not resign from the  obligations  and duties  hereby  imposed on it except
upon  determina  tion that (i) the  performance  of its duties  hereunder  is no
longer  permissible  under applicable law and (ii) there is no reasonable action
which the Collateral Agent could



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<PAGE>



take  to  make  the  performance  of  its  duties  hereunder  permissible  under
applicable  law.  Any  such  determination  permitting  the  resignation  of the
Collateral  Agent  shall be  evidenced  as to clause  (i) above by an opinion of
counsel  to such  effect  delivered  to the  Collateral  Agent  and the  Secured
Parties.  Notwithstanding  the foregoing,  the  Collateral  Agent may resign if,
after demand therefor,  it does not receive payment of any compensation due from
the Debtor  pursuant  to the letter  agreement  described  in  Section  8.2.  No
resignation of the  Collateral  Agent shall become  effective  until a successor
Collateral Agent approved by the Agent and the successor  Collateral Agent shall
have  assumed the  responsibilities  and  obligations  of the  Collateral  Agent
hereunder.

                  SECTION 8.2  Compensation  and  Indemnification  of Collateral
Agent.  The Collateral  Agent shall be compensated for its activities  hereunder
and reimbursed for reasonable  out-of-pocket  expenses (including (i) securities
transaction  charges  not  waived  due to the  Collateral  Agent's  receipt of a
payment  from  a  financial   institution   with  respect  to  certain  Eligible
Investments,  as specified by the Debtor and (ii) the  compensation and expenses
of its counsel and agents) pursuant to a separate letter  agreement  between the
Collateral  Agent and the Debtor.  All such amounts  shall be payable from funds
available therefor in accordance with Section 2.3(a)(iii).  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 from a failure to
comply therewith).

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



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<PAGE>



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

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

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

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

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



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<PAGE>



                  SECTION 8.4 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
Collat eral 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 certifi cates or opinions furnished to the Collateral
Agent and conforming to the require ments of this Agreement.

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

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

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

                  (e) Without  limiting the  generality of this Section 8.4, the
Collateral  Agent  shall  have no duty (i) to see to any  recording,  filing  or
depositing of this Agreement or any other Transaction  Document or any financing
statement  or  continuation  statement  evidencing  a security  interest  in the
Receivables or the Financed  Vehicles,  or to see to the maintenance of any such
recording or filing or depositing or to any recording,  refiling or redepositing
of any  thereof,  (ii)  to see to any  insurance  of the  Financed  Vehicles  or
Obligors  or to  effect  or  maintain  any such  insurance,  (iii) to see to the
payment or discharge of any tax,  assessment or other governmental charge or any
Lien or  encumbrance  of any kind  owing with  respect  to,  assessed  or levied
against, any part of the Receivables,  (iv) to confirm or verify the contents of
any reports or certificates of the Collection  Agent or the Debtor  delivered to
the Collateral Agent pursuant to this Agreement believed by the Collateral Agent
to be  genuine  and to have been  signed or  presented  by the  proper  party or
parties or



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<PAGE>



(v) to inspect the  Financed  Vehicles at any time or ascertain or inquire as to
the  performance  or  observance  of any of the  Debtor's,  the  Seller's or the
Collection  Agent's  representations,  warranties or covenants or the Collection
Agent's duties and  obligations  as Collection  Agent and as custodian of books,
records, files and com puter records relating to the Receivables.

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

                  (g) The  Collateral  Agent may rely and shall be  protected in
acting or refraining from acting upon any resolution, officer's certificate, any
Settlement  Statement,  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 Agree ment, at the request,  order or direction of the Agent pursuant to
the  provisions  of this  Agreement,  unless the Agent shall have offered to the
Collateral Agent reasonable  security or indemnity  against the costs,  expenses
and liabilities  that may be incurred therein or thereby;  nothing  contained in
this Agreement,  however, shall relieve the Collateral Agent of its obligations,
upon the  occurrence of a  Termination  Event (that shall not have been cured or
waived),  to  exercise  such  of the  rights  and  powers  vested  in it by this
Agreement,  and to use the same degree of care and skill in their  exercise as a
prudent person would exercise or use under the  circumstances  in the conduct of
his or her own affairs.



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<PAGE>




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

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


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

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

                           (i) the corporation  formed by such  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



                                                 77


<PAGE>



         form satisfactory to the Secured Parties, the performance of every
         covenant and obligation of the Collateral Agent hereunder; and

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

                  SECTION 8.6  Limitation on Liability of the  Collateral  Agent
and Others. The directors, officers, employees or agents of the Collateral Agent
shall not be under any  liability to the Agent,  any Secured  Party or any other
Person  hereunder  or pursuant to any  document  delivered  hereunder,  it being
expressly understood that all such liability is expressly waived and released as
a condition  of, and as consider  ation for, the  execution  of this  Agreement;
provided,  however,  that  this  provision  shall  not  protect  the  directors,
officers,  employees  and agents of the  Collateral  Agent against any liability
which would otherwise be imposed by reason of willful misfea sance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of  obligations  and duties  hereunder.  Except as provided in Section  8.4, the
Collateral  Agent shall not be under any  liability to any Secured  Party or any
other  Person  for any  action  taken or for  refraining  from the taking of any
action in its capacity as Collateral  Agent pursuant to this  Agreement  whether
arising from express or implied duties under this Agreement;  provided, however,
that this provision shall not protect the Collateral Agent against any liability
which would otherwise be imposed by reason of willful misfeasance,  bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. The Collateral Agent may rely in good faith
on any document of any kind prima facie  properly  executed and submitted by any
Person respecting any matters arising hereunder.  The Collateral Agent shall not
be under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its duties to administer the Collections and the Collection
Account in accordance  with this Agreement  which in its reasonable  opinion may
involve it in any expense or liability.

                  SECTION  8.7  Indemnification  of  the  Secured  Parties.  The
Collateral  Agent shall  indemnify  and hold  harmless the Agent and the Secured
Parties from and against any loss, liability, expense, damage or injury suffered
or sustained by reason of willful misfeasance, bad faith, or gross negligence in
the  performance of the duties of the Collateral  Agent or by reason of reckless
disregard of obligations and duties of



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<PAGE>



the Collateral  Agent  hereunder or by reason of the acts,  omissions or alleged
acts or  omissions  of the  Collateral  Agent  pursuant to this  Agreement.  The
provisions  of this  indemnity  shall run directly to and be  enforceable  by an
injured party subject to the limitations hereof.

                                             ARTICLE IX

                                            MISCELLANEOUS

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

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

                  (b) Any  provision of this  Agreement may be amended or waived
if, but only if, such  amendment is in writing and is signed by the Debtor,  the
Collection Agent and the Majority Investors (and, if Article VI or the rights or
duties of the Collateral Agent are affected thereby,  by the Collateral  Agent),
except as provided in this Agreement; provided, that no such amendment or waiver
shall,  unless  signed by each Bank  Investor  directly  affected  thereby,  (i)
increase the  Commitment of a Bank  Investor,  (ii) reduce the Net Investment or
rate of  interest  to  accrue  thereon  or any  fees or  other  amounts  payable
hereunder,  (iii)  postpone  any date  fixed for the  payment  of any  scheduled
distribution  in respect of the Net Investment or interest with respect  thereto
or any  fees or other  amounts  payable  hereunder  or for  termina  tion of any
Commitment, (iv) change the percentage of the Commitments or the



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number of Bank Investors,  which shall be required for the Bank Investors or any
of them to take any action  under this  Section or any other  provision  of this
Agreement,  (v) extend or permit the  extension  of the  Commitment  Termination
Date, (vi) reduce or impair Collections or the payment of fees payable hereunder
to the Bank Investors or delay the scheduled  dates for payment of such amounts,
(vii) increase the Servic ing Fee to a percentage greater than 1.0% per annum of
the aggregate  Outstanding Balance of the Receivables as of the first day of the
related Settlement Period,  (viii) modify any provisions of this Agreement,  the
UAFC-1  Sale and  Purchase  Agree  ment,  the UAFC Sale and  Purchase  Agreement
relating to the timing of payments required to be made by the Debtor, the Seller
or UAC or the application of the proceeds of such payments,  or (ix) provide for
the  appointment of any Person (other than the Agent) as a successor  Collection
Agent.  In the event the  Collateral  Agent  requests  the  Company's  or a Bank
Investor's consent pursuant to the foregoing provisions and the Collateral Agent
does not receive a consent  (either  positive or  negative)  from the Company or
such Bank Investor  within 10 Business Days of the Company's or Bank  Investor's
receipt  of such  request,  then the  Company  or such  Bank  Investor  (and its
percentage  interest hereunder) shall be disregarded in deter mining whether the
Collateral Agent shall have obtained sufficient consent hereun der.

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

         If to the Company:
         -----------------




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<PAGE>



         ENTERPRISE FUNDING CORPORATION
         c/o Global Securitization Services, LLC
         114 W. 47th Street, Suite 1715
         New York, New York  10036
         Attention: Kevin Burns
         Telephone:  (212) 302-8331
         Telecopy:   (212) 302-8767
         Payment Information:
         Bankers Trust Company

         ABA#021001033
         Account#00362917

         Reference Enterprise Funding - UAFC-1

         (with a copy to the Administrative Agent)

         If to the Debtor:
         ----------------

         UAFC-1 CORPORATION
         9240 Bonita Beach Road, Suite 1109-D
         Bonita Springs, Florida 34135-4250
         Attn: Leeanne W. Graziani, President
         Telephone:  (941) 948-1853
         Telecopy:   (941) 948-1855
         Payment Information:
         Union Federal Savings Bank
         of Indianapolis

         ABA #:274070484
         Account #: 590085484
         Reference: UAFC-1 Corporation

         If to UAC:
         ---------

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




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<PAGE>



         If to the Collateral Agent:
         --------------------------

         BANK OF AMERICA, N.A.
         Bank of America Corporate Center--10th Floor
         Charlotte, North Carolina  28255
         Attention:  Michelle M. Heath--
              Investment Banking
         Telephone:  (704) 386-7922
         Telecopy:   (704) 388-9169

         If to the Administrative Agent:
         ------------------------------

         BANK OF AMERICA, N.A.
         Bank of America Corporate Center--10th Floor
         Charlotte, North Carolina  28255
         Attention:  Michelle M. Heath--
              Investment Banking
         Telephone:  (704) 386-7922
         Telecopy:   (704) 388-9169

         If to the Agent:
         ---------------

         BANK OF AMERICA, N.A.
         Bank of America Corporate Center
         100 North Tryon Street
         Charlotte, North Carolina 28255

         NC1-007-10-07
         Telephone:  (704) 386-7922
         Telecopy:  (704) 388-9169
         Payment Information:  Bank of America, N.A.
         ABA #: 053000196
         Account #: 109360 1650000
         Reference: UAC

                  SECTION  9.4  Governing  Law;   Submission  to   Jurisdiction;
Integration.

                  (a) This  Agreement  shall be  governed  by and  construed  in
accordance  with the laws of the  State of New  York.  Each of the  Debtor,  the
Seller



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<PAGE>



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

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

                  SECTION 9.5 Severability;  Counterparts. This Agreement may be
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed shall be deemed to be an
original and all of which when taken together shall  constitute one and the same
Agreement.   Any   provisions  of  this   Agreement   which  are  prohibited  or
unenforceable  in  any  jurisdic  tion  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 9.6 Successors and Assigns.

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



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<PAGE>



                  (b) Each of the Debtor,  the Seller and UAC hereby  agrees and
consents to the  assignment  by the Company from time to time of all or any part
of its rights under, interest in and title to this Agreement and the Note to any
Liquid ity Provider.

                  (c) The  parties  hereto  agree  that  the  counterparties  to
Acceptable  Hedging  Arrangements  shall be third  party  beneficiaries  of this
Agreement and that the provisions of Section  2.3(a) may not be amended  without
the prior consent of such counterparties.

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

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

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



                                                 84


<PAGE>



arrangement,  insolvency or liquidation  proceedings or other similar proceeding
under the laws of the United States or any state of the United States.

                  SECTION  9.10 No Recourse  Against  Stockholders,  Officers or
Directors. Notwithstanding anything to the contrary contained in this Agreement,
the  obligations of the Company under this  Agreement and all other  Transaction
Documents  are solely the  corporate  obligations  of the  Company  and shall be
payable  solely from the assets of the Company in excess of funds  necessary  to
pay matured and maturing Commercial Paper.

                  SECTION 9.11 Further Assurances.  The Debtor agrees to do such
further acts and things and to execute and deliver to the Secured  Parties,  the
Admin  istrative  Agent or 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..

                  SECTION 9.12 Characterization of the Transactions Contemplated
by the  Agreement;  Tax  Treatment.  (a) The  parties  hereto  agree  that  this
Agreement shall constitute a security agreement under applicable law. The Seller
hereby  assigns to the  Debtor all of its rights to payment  under the UAFC Sale
and Purchase Agree ment with respect to the  Receivables and with respect to any
obligations  thereunder of UAC with respect to the  Receivables;  and the Debtor
hereby assigns to the Collateral  Agent, for the benefit of the Secured Parties,
all of its rights to payment (i) under the UAFC Sale and Purchase  Agreement and
the UAFC-1 Sale and Purchase  Agreement and pursuant to each Warehouse  Transfer
Agreement with respect to the  Receivables  and with respect to any  obligations
thereunder  of UAC,  the  Seller or UAFC,  as  applicable,  with  respect to the
Receivables (ii) under or in connection with any Acceptable Hedging  Arrangement
and (iii) the  rights  assigned  to the  Debtor  under this  Section  9.12.  The
Collateral Agent agrees that upon any release of a Receivable or Contract to the
Debtor,  the  Collateral  Agent shall be deemed to have  released  its  security
interest  therein and  reassigned  to the Debtor all of the  Collateral  Agent's
rights under the UAFC Sale and Purchase Agreement,  the UAFC-1 Sale and Purchase
Agreement or pursuant to each Warehouse Transfer Agreement, as applica ble, with
respect to such  Receivable  or Contract.  The Debtor agrees that neither it nor
the Collection  Agent shall give any consent or waiver  required or permitted to
be given under the UAFC-1  Sale and  Purchase  Agreement,  the UAFC Sale and Pur
chase Agreement or any Warehouse Transfer Agreement, as applicable, with respect



                                                 85


<PAGE>



to the  Receivables  or the  Contracts  without the prior  consent of either the
Collateral Agent or the Administrative Agent.

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



                                                 86


<PAGE>



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

                                      UAFC-1 CORPORATION,
                                        as Debtor

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


                                       ENTERPRISE FUNDING CORPORATION,
                                         as Company

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


                                       UNION ACCEPTANCE FUNDING
                                         CORPORATION, as Seller

                                       By: /s/ Maureen A. Schoch
                                           Name: Maureen A. Schoch
                                           Title:


                                       UNION ACCEPTANCE CORPORATION,
                                         individually and as Collection Agent


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






                                                 87


<PAGE>



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

                                      BY:/s/ Brian D. Krum
                                          Name: Brian D. Krum
                                          Title:



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