AMENDMENT NUMBER 1 TO THE AMENDED AND RESTATED

                               SECURITY AGREEMENT

                  AMENDMENT  NUMBER  1 TO  THE  AMENDED  AND  RESTATED  SECURITY
AGREEMENT  (this  "Amendment"),  dated as of June 30,  2000,  by and among UNION
ACCEPTANCE  FUNDING  CORPORATION,  an  Indiana  corporation,  as Seller (in such
capacity, the "Seller"), UAFC CORPORATION, a Delaware corporation, as debtor (in
such  capacity,  the  "Debtor"),   UNION  ACCEPTANCE  CORPORATION,   an  Indiana
corporation  ("UAC"),  individually  and in its capacity as collection agent (in
such capacity,  the  "Collection  Agent"),  ENTERPRISE  FUNDING  CORPORATION,  a
Delaware  corporation (the "Company"),  MBIA INSURANCE  CORPORATION,  a New York
stock insurance company,  as financial guaranty insurer (the "Insurer") and BANK
OF  AMERICA,   N.A.,  a  national  banking   association  ("Bank  of  America"),
individually  and as collateral agent for the Company,  the Bank Investors,  and
the Insurer (in such  capacity,  the  "Collateral  Agent")  amended that certain
Amended and Restated Security Agreement dated as of May 12, 2000 (such agreement
as so amended, the "Security Agreement").

                  WHEREAS,  the  parties  hereto  mutually  desire  to  make  an
amendment to the Security Agreement as hereinafter set forth;

                  NOW, THEREFORE, the parties hereby agree as follows:

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

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

                  ""Facility Limit" shall mean $350,000,000."

                  SECTION 2. Limited  Scope.  This  amendment is specific to the
circumstances  described above and does not imply any future amendment or waiver
of rights allocated to the Issuer, the Borrower,  any Bank Investor or the Agent
under the Security Agreement.

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

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

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

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

                                        ENTERPRISE FUNDING CORPORATION,
                                          as Company

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


                                        UAFC CORPORATION,
                                          as Debtor

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


                                        UNION ACCEPTANCE FUNDING
                                          CORPORATION, as Seller

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






                                                      7


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                                        UNION ACCEPTANCE CORPORATION,
                                          individually and as Collection Agent



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


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

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


                                      MBIA INSURANCE CORPORATION, as
                                        Insurer

                                      By: /s/ Nicholas Sourbis
                                          Name: Nicholas Sourbis
                                          Title: