Document:

AMENDMENT NUMBER 1 TO THE AMENDED AND RESTATED
                             NOTE PURCHASE AGREEMENT

                  AMENDMENT  NUMBER 1 TO THE AMENDED AND RESTATED  NOTE PURCHASE
AGREEMENT (this "Amendment"), dated as of June 30, 2000 among ENTERPRISE FUNDING
CORPORATION, a Delaware corporation, as lender (together with its successors and
assigns, the "Company"),  UAFC CORPORATION, a Delaware corporation,  as borrower
(together with its successors and assigns,  the "Issuer"),  and BANK OF AMERICA,
N.A.,  a national  banking  association  ("Bank of  America"),  as agent for the
Company and the Bank Investors (in such capacity,  together with its successors,
the "Agent") and as a Bank Investor,  amending that certain Amended and Restated
Note Purchase  Agreement dated as of May 12, 2000 (such agreement as so amended,
the "Note Purchase Agreement").

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

                  WHEREAS, the Insurer and the Majority Investors have consented
to the execution and delivery of this Amendment by the parties hereto.

                  NOW THEREFORE, the parties hereby agree as follows:

                  SECTION 1. Definitions.  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 Note Purchase Agreement.

         (a) Section 1.1 of the Note  Purchase  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.   Effectiveness.   This  Amendment   shall  become
effective  upon  receipt  by the  Agent  of (i) a  fully  executed  copy of this
Amendment  and  Amendment  Number  1 to the  Security  Agreement,  of even  date
herewith,  (ii) an executed  replacement Note substantially in the form attached
hereto as Exhibit A, and (iii) an endorsement to the Insurance Policy reflecting
the amended  Facility  Limit and otherwise  acceptable to the Agent (or, in lieu
thereof,  the  Issuer  may  cause to be  delivered  to the  Agent a  replacement
Insurance Policy reflecting the amended Facility Limit and otherwise in the form
of the Insurance Policy issued on the Closing Date).

                  SECTION 3. Limited  Scope.  This  amendment is specific to the
circumstances  described above and does not imply any future amendment or waiver
of rights allocated to the Issuer, the Borrower,  any Bank Investor or the Agent
under the Note Purchase Agreement.

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

                  SECTION 5. 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 6.  Ratification.  Except as expressly affected by the
provisions  hereof,  the Note Purchase 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 Note
Purchase Agreement to "this Agreement",  "hereunder",  "herein" or words of like
import shall mean and be a reference to the Note  Purchase  Agreement as amended
by the Amendment.

              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

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

                                        UAFC CORPORATION,
                                        as Issuer

                                        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:

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

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

Consented and agreed:

MBIA INSURANCE CORPORATION

By: /s/ Denise M
         Name: Denise M
         Title:---------------------------------------------------------------

                     AMENDED AND RESTATED SECURITY AGREEMENT

                                      among

                         ENTERPRISE FUNDING CORPORATION,

                                   as Company,

                      UNION ACCEPTANCE FUNDING CORPORATION,

                                    as Seller

                                UAFC CORPORATION,

                                    as Debtor

                          UNION ACCEPTANCE CORPORATION,

                      Individually and as Collection Agent

                           MBIA INSURANCE CORPORATION

                                   as Insurer

                                       and

                             BANK OF AMERICA, N.A.,

                      as Collateral Agent and Bank Investor

                            Dated as of May 12, 2000

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

<PAGE>

                                          TABLE OF CONTENTS

                                                                            Page

                                              ARTICLE I

DEFINITIONS

SECTION 1.1  Certain Defined Terms.............................................2
SECTION 1.2  Other Terms......................................................28
SECTION 1.3  Computation of Time Periods......................................28

                                             ARTICLE II

GRANT OF SECURITY INTEREST AND SETTLEMENTS

SECTION 2.1  Grant of Security Interest.......................................28
SECTION 2.2  Carrying Costs, Fees and Other Costs and Expenses................29
SECTION 2.3  Allocations of Collections; Reserve Account Advances;
             Servicer Advances................................................30
SECTION 2.4  Liquidation Settlement Procedures................................33
SECTION 2.5  Fees.............................................................34
SECTION 2.6  Protection of Interest of the Collateral Agent...................34
SECTION 2.7  Payments on Receivables; Application of Payments.................35
SECTION 2.8  Payments and Computations, Etc...................................36
SECTION 2.9  Reports..........................................................36
SECTION 2.10 Collection Account...............................................37
SECTION 2.11 Prefunding Account; Prefunding Interest Reserve Account;
             Interest Reserve Deposits; Interest Reserve Advances;
             Reimbursements...................................................38
SECTION 2.12 Prefunding Account and Prefunding Interest Reserve Account
             Withdrawals......................................................41
SECTION 2.13 Yield Supplement Account, Deposits; Withdrawals..................42
SECTION 2.14 Reserve Account; Withdrawals; Releases; Draws
             on Policy........................................................44
SECTION 2.15 Optional Release.................................................46
SECTION 2.16 Hedging Amounts..................................................50

                                                  i

<PAGE>

                                             ARTICLE III

REPRESENTATIONS AND WARRANTIES

SECTION 3.1          Representations and Warranties of the Debtor.............52
SECTION 3.2          Representations and Warranties of the Collection Agent...55
SECTION 3.3          Reaffirmation of Representations and Warranties..........57

                                             ARTICLE IV

CONDITIONS PRECEDENT

SECTION 4.1          Conditions to Effectiveness..............................58

                                              ARTICLE V

COVENANTS

SECTION 5.1          Affirmative Covenants of the Debtor, the Seller and UAC..60
SECTION 5.2          Negative Covenants of Debtor, the Seller and UAC.........65
SECTION 5.3          Acceptable Hedging Arrangements..........................67

                                             ARTICLE VI

ADMINISTRATION AND COLLECTIONS

SECTION 6.1          Appointment of Collection Agent..........................68
SECTION 6.2          Duties of Collection Agent...............................68
SECTION 6.3          Collection Agent Defaults................................70
SECTION 6.4          Rights After Designation of New Collection Agent.........71
SECTION 6.5          Responsibilities of the Debtor...........................72

                                             ARTICLE VII

TERMINATION EVENTS

SECTION 7.1          Termination Events.......................................72
SECTION 7.2          Termination..............................................74
SECTION 7.3          Proceeds.................................................76

                                                 ii

<PAGE>

                                            ARTICLE VIII

THE COLLATERAL AGENT

SECTION 8.1          Duties of the Collateral Agent...........................76
SECTION 8.2          Compensation and Indemnification of Collateral Agent.....78
SECTION 8.3          Representations, Warranties and Covenants of the
                     Collateral Agent.........................................78
SECTION 8.4          Liability of the Collateral Agent........................79
SECTION 8.5          Merger or Consolidation of, or Assumption of the
                     Obligations of, the Collateral Agent.....................82
SECTION 8.6          Limitation on Liability of the Collateral Agent
                        and Others............................................83
SECTION 8.7          Indemnification of the Secured Parties...................83

                                             ARTICLE IX

MISCELLANEOUS

SECTION 9.1          Term of Agreement........................................84
SECTION 9.2          Waivers; Amendments......................................84
SECTION 9.3          Notices..................................................85
SECTION 9.4          Governing Law; Submission to Jurisdiction; Integration...88
SECTION 9.5          Severability; Counterparts...............................89
SECTION 9.6          Successors and Assigns...................................89
SECTION 9.7          Waiver of Confidentiality................................90
SECTION 9.8          Confidentiality Agreement................................90
SECTION 9.9          No Bankruptcy Petition Against the Company...............90
SECTION 9.10         No Recourse Against Stockholders, Officers or Directors..91
SECTION 9.11         Further Assurances.......................................91
SECTION 9.12         Exercise of Rights by Insurer............................91
SECTION 9.13         Characterization of the Transactions Contemplated by
                     the Agreement; Tax Treatment.............................92

                                                 iii

<PAGE>

                                              EXHIBITS

EXHIBIT A             Credit and Collection Policy

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

EXHIBIT C             Form of Policy

EXHIBIT D             Form of Settlement Statement

EXHIBIT E             Form of UAFC 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>

                               AMENDED AND RESTATED SECURITY AGREEMENT

                  THIS   AMENDED   AND   RESTATED   SECURITY   AGREEMENT   (this
"Agreement"),  dated as of May 12, 2000,  by and among UNION ACCEP TANCE 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").

                                       PRELIMINARY STATEMENTS

                  WHEREAS,  the parties  identified in the  preceding  paragraph
desire to amend and restate the Existing Security Agreement (defined below).

                  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,  Union  Acceptance  Funding  Corporation,  a Delaware
corporation, referred to in the Existing Security Agreement has changed its name
to UAFC Corporation and Union Acceptance Funding Corporation, an Indiana corpora
tion referred to herein is a new entity;

                  WHEREAS,  pursuant to the Insurance Agreement, the Insurer has
issued its Policy to provide  for the full and timely  payment of all amounts of
interest due on and principal of the Note;

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

                                                  1

<PAGE>

                  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, the Note Purchase Agreement and the Insurance Agreement;

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

                                              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"  shall  have  the  meaning
specified in the Insurance Agreement.

                  "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, or any 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.

                  "Adjusted  LIBOR Rate" means,  with respect to any  Settlement
Period, a rate per annum equal to the sum (rounded upwards, if necessary, to the
next higher 1/100 of 1%) of (A) the rate obtained by dividing (i) the applicable
LIBOR Rate by (ii) a percentage equal to 100% minus the reserve  percentage used
for  determining  the maximum  reserve  requirement as specified in Regulation D
(includ ing, 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.

                  "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.

                                                  2

<PAGE>

                  "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%.

                  "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.

                  "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;

                                                  3

<PAGE>

                           (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;

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

                           (h) to pay the costs of the Company  with  respect to
the Yield Protection  Provision,  which amounts paid pursuant to this clause (h)
shall not exceed 1.00% per annum of the Net Investment; 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
the sum of which amounts shall not exceed 0.17% per annum of the Net  Investment
plus 0.11% per annum of the Facility Limit.

                                                  4

<PAGE>

                  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 an Insurer Default and a Termination Event
shall have occurred and be continu ing, at the Base Rate plus 2.00%.

                  "Closing Date" shall mean September 18, 1998.

                  "Collateral"  shall have the meaning  specified in Section 2.1
hereof;  provided,  that the term  "Collateral"  specifically  excludes Modified
Receivables.

                  "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.

                  "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.

                                                  5

<PAGE>

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

                  "Commitment Termination Date" shall mean September 7, 2000, or
such later date to which the Commitment  Termination Date may be extended by the
Debtor,  the Agent and the Bank  Investors  not later  than 30 days prior to the
then current Commitment Termination Date.

                  "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 in the case of
certain Receivables  existing on the Cut-Off Date, created or acquired by PAC or
UAC d/b/a PAC) and assigned from time to time to (i) the Debtor  pursuant to the
Sale  and  Purchase  Agreement  or the  PFC  Sale  and  Purchase  Agreement,  as
applicable,  (ii) the Seller  pursuant to the UAFC Sale and  Purchase  Agreement
which shall  subsequently  be assigned from the Seller to the Debtor pursuant to
the UAFCC  Sale and  Purchase  Agreement  or (iii) 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  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.

                                                  6

<PAGE>

                  "Cut-Off Date" shall mean September 17, 1998.

                  "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 mean UAFC Corporation,  a Delaware  corporation
(known  under  the  Existing  Security  Agreement  as Union  Acceptance  Funding
Corporation, a Delaware corporation).

                  "Defaulted  Receivable" shall mean, for any Settlement Period,
a Receivable: (i) as to which any payment (in excess of $10.00), 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 Collec tion 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.

                  "Duff  &  Phelps"  shall  mean  Duff &  Phelps  Credit  Rating
Company.

                  "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  "D-1+"  from  Duff &  Phelps,  if such
institution  is rated by Duff & Phelps,  and of at least  "F-1+" from Fitch,  if
such institution is rated by Fitch.

                  "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)

                                                  7

<PAGE>

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 Duff &
Phelps of at least "D-1+",  if such  investment  is rated by Duff & Phelps,  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 Duff &  Phelps,  if such  investment  is rated by Duff &
Phelps,  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+",  respectively,  and from Duff & Phelps of at least  "D-1+",  if such
certificates  of deposit are rated by Duff & Phelps,  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  contractual
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 Duff & Phelps of at least
"D-1+", if such commercial paper is rated by Duff & Phelps, 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 Duff & Phelps of at least "D-1+", if
such deposits are rated by Duff & Phelps,  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 Duff & Phelps of at least "D-1+",  if
such party is rated by Duff & Phelps,  and from Fitch of at least "F-1", if such
party is rated by Fitch.

                                                  8

<PAGE>

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

                                    (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 UAC or 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, or (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 originated by 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  Vehicle,  (B) shall have been sold by
         UAC or PFC to the Debtor pursuant to the Sale and Purchase Agreement or
         the PFC Sale and Purchase  Agreement,  as applicable or shall have been
         sold by UAC to the  Seller  pursuant  to the  UAFC  Sale  and  Purchase
         Agreement and subsequently sold by the Seller to the Debtor pursuant to
         the UAFCC Sale and  Purchase  Agree  ment,  or to the Debtor by another
         Warehouse  pursuant  to a Ware house  Transfer  Agreement  and to which
         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 pro vided thereby;

                           (ii)  the   Obligor  of  which  is  recorded  in  the
         Collection Agent's records as having a United States billing address,

                                                  9

<PAGE>

         is a natural person, and is not a government or a governmental subdi
         vision or agency;

                           (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;

                                                 10

<PAGE>

                           (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
         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  re
         quirements  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  or the  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; and

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

                                                 11

<PAGE>

                  "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,  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.

                                                 12

<PAGE>

                  "Existing   Security   Agreement"   shall  mean  the  Security
Agreement,  dated as of September 18, 1998 among UAC, the Debtor, the Collateral
Agent, the Insurer and the Company.

                  "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 $500,000,000.

                  "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.

                  "Hedge Proceeds  Account" shall have the meaning  specified in
Section 2.16(a).

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

                  "Insurance  Agreement"  shall mean that  certain  Amended  and
Restated Insurance and Reimbursement Agreement,  dated as of May 12, 2000, among
the

                                                 13

<PAGE>

Collection Agent, the Debtor,  the Seller,  the Collateral Agent and the Insurer
as amended, redefined or supplemented from time to time.

                  "Insurer"  shall mean MBIA Insurance  Corporation,  a New York
stock insurance company.

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

                  "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.

                  "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,

                                                 14

<PAGE>

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 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.

                                                 15

<PAGE>

                  "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.

                  "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.

                  "Modified Receivable" means indebtedness owed to the Debtor by
an Obligor  (without giving effect to any transfer under this Agreement) under a
Con tract which has been  modified and is  classified as a type 44, 45, 74 or 75
receivable in the Debtor's  records,  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.

                  "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

                                                 16

<PAGE>

funded by the Bank Investors,  (a) the LIBOR Rate, (b) plus 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 determination, without giving
effect  to such  Receipts  of  Principal)  plus  (c)  the  aggregate  amount  of
Collections  received  and applied by the Company to reduce such Net  Investment
pursuant to Section 2.3, minus (vi) draws on the Policy distrib uted and applied
in reduction of Net  Investment,  and minus (vii) the aggregate  amount of funds
received  and applied to reduce such Net  Investment  pursuant to Sections  2.7,
2.15 and 2.16;  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  rescinded  or must  otherwise be returned for any reason;
provided further,  that as to the Insurer,  draws made under the Policy will not
reduce the principal amount due under the Note.

                  "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)(xiii) on any prior Remittance Date.

                                                 17

<PAGE>

                  "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 $15,000,000, 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) 5% 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 the Net Receivables Balance
of all Non-Prime Receivables divided by the Net Receivables Balance.

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

                  "Non-Prime   Receivable"   shall  mean  an  account  which  is
identified on the  Collection  Agent's  master  servicing  record as a "type 14"
account.

                  "Noteholder's  Percentage"  shall mean an amount equal to 100%
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 equal 100%

                  "Note Purchase  Agreement" shall mean that certain Amended and
Restated Note Purchase  Agreement,  dated as of May 12, 2000,  among the Debtor,
the Company,  the Bank  Investors and the Agent as amended,  restated and supple
mented from time to time.

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

                                                 18

<PAGE>

                  "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.

                  "PFC Sale and Purchase  Agreement" shall mean the Purchase and
Assignment  Agreement,  dated as of February  28,  1998,  among the  Debtor,  as
purchaser,  and PFC,  as seller,  as amended to the date  hereof and as amended,
modified or supplemented from time to time hereafter.

                  "Policy" shall mean that certain financial  guaranty insurance
policy, substantially in the form attached hereto as Exhibit C.

                  "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

                                                 19

<PAGE>

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.

                  "Premium"  shall have the meaning  specified in the  Insurance
Agree ment.

                  "Prime  Receivable"  shall mean an account which is identified
on the Collection Agent's master servicing record as a "type 24" 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.

                  "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.

                                                 20

<PAGE>

                  "Receivable"  shall mean indebtedness owed to the Debtor by an
Obligor  (without  giving  effect to any transfer  hereunder)  under a Contract,
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 Receiv  able
hereunder. The term "Receivable" specifically excludes Modified Receivables.

                  "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,  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;

                                                 21

<PAGE>

                           (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 Re  cords,
         documents  and writings  evidencing  or related to such Receiv ables 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.

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

                  "Required   Reserve   Account   Percentage"   shall  mean  the
percentage  specified in the following table  corresponding to the percentage of
Non-Prime Receivables in relation to the Net Receivables Balance:

                                                 22

<PAGE>

Percentage of Non-Prime Receivables   Required Reserve Account Percentage
2.51% or greater                      3.00%
0.0 to 2.50%                          2.75%

                  "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 rated at least  investment  grade by S&P and
Moody's.

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

                  "Sale and  Purchase  Agreement"  shall  mean,  as  applicable,
either or both of (i) the Amended and Restated Sale and Purchase Agreement dated
as of December 23, 1996,  between the Debtor, as purchaser,  and UAC, as seller,
and (ii) the  Amended  and  Restated  Sale and  Purchase  Agreement  dated as of
December  23,  1996,  between  PFC, as  purchaser,  and UAC, as seller,  each as
amended to the date hereof and as amended, modified or supplemented from time to
time hereafter.

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

                  "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.

                                                 23

<PAGE>

                  "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 have 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
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
October 31, 1998.

                  "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,  the  Agent,  Moody's,  S&P and the  Insurer 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),  excluding  releases due to Warehouse  Transfers,  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

                                                 24

<PAGE>

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  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)  September 7, 2000,  unless
extended prior to such date pursuant to a Revolving Period Extension (as defined
in the Insurance Agreement).

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

                  "Transaction  Documents"  shall mean this Agreement,  the Note
Purchase Agreement, the Note, the Sale and Purchase Agreement, the UAFC Sale and
Purchase  Agreement,  the  UAFCC  Sale and  Purchase  Agreement,  the  Insurance
Agreement,  the Policy,  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.

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

                                                 25

<PAGE>

                  "UAFC  Sale and  Purchase  Agreement"  shall mean the sale and
purchase  agreement dated as of May 12, 2000,  between the Seller,  as purchaser
and UAC, as seller.

                  "UAFCC" shall mean UAFC Corporation,  a Delaware  corporation,
and its successors and assigns,  previously  known as Union  Acceptance  Funding
Corporation a Delaware corporation.

                  "UAFCC Sale and  Purchase  Agreement"  shall mean the sale and
purchase  agreement dated as of May 12, 2000,  between the Debtor, as purchaser,
and UAFC, as seller.

                  "UARC" shall mean Union Acceptance Receivables Corporation,  a
Delaware  corporation,  and its  successors and assigns 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 UAFC Corporation, UAFC-1 Corporation or
UAFC-2 Corporation.

                  "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 and the Insurer.

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

                                                 26

<PAGE>

                  "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 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.

                  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,  the Insurance
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

                                                 27

<PAGE>

under  all  accounts,  contract  rights,  general  intangibles,  chattel  paper,
instruments,  documents, money, cash, deposit accounts, certificates of deposit,
goods, letters of credit, securities,  investment property,  financial assets or
security  entitlements (all of the foregoing,  collectively,  the "Collateral");
provided,  that once the Company 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 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.

                                                 28

<PAGE>

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

                  (a) On each  Determination  Date, the  Collection  Agent shall
allocate all Collections  received during the preceding  Settlement Period as Re
ceipts 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 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 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)  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 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  an
         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

                                                 29

<PAGE>

         unpaid Carrying Costs (exclusive of all amounts payable pursuant to the
         Yield  Protection  Provision) 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 the Net  Investment  less the
         quotient of (A) the amount on deposit in the Prefunding Account and (B)
         100% less the  quotient of (x) the percent  age used to  determine  the
         Required  Reserve  Account Amount and (y) the  Noteholder's  Percentage
         exceeds  the  product  of  the  Noteholder's  Percentage  and  the  Net
         Receivables Balance;

                           (vi) sixth, to the extent of any remaining  Available
         Funds,  to  the  Insurer,  the  aggregate  amount  of any  previ  ously
         unreimbursed draws on the Policy,  plus accrued interest thereon at the
         rate provided in the Insurance Agreement;

                           (vii)  seventh,   to  the  extent  of  any  remaining
         Available  Funds,  to the Insurer,  the Premium,  including any overdue
         Premium,  accrued  interest  thereon  plus any  amounts  owed under the
         Policy or the Insurance Agreement;

                           (viii)  eighth,   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;

                           (ix) ninth, 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;

                                                 30

<PAGE>

                           (x) tenth,  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;

                           (xi)  eleventh,   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;

                           (xii)  twelfth,   to  the  extent  of  any  remaining
         Available  Funds,  to pay all  amounts  due under the Yield  Protection
         Provision;

                           (xiii) thirteenth, to the extent of any remain
         ing Available Funds, to the Collection  Agent, in reimbursement for any
         Net Negative  Hedging Amounts  incurred by the Collection Agent and not
         previously reimbursed;

                           (xiv)  fourteenth,  to the  extent of any  remain ing
         Available  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

                           (xv) fifteenth,  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 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.

                                                 31

<PAGE>

                  (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.  In the event
that any such Reserve  Account  Advance and/or  advance  pursuant to any Reserve
Account  Guaranty  is not made by 11:00  a.m.  (New York  City  time) on the day
requested by the Collection  Agent,  there shall be made a draw under the Policy
equal to the amount of such  deficiency,  which amount shall be paid directly to
the Agent and 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

                                                 32

<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 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 and the Insurer 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 or the Insurer in
connection with such change or relocation. Any filings under the Relevant UCC or
otherwise that are

                                                 33

<PAGE>

occasioned  by such change in name or  location  shall be made at the expense of
the Debtor.  On the Closing  Date,  the Debtor shall  deliver to the  Collateral
Agent and the  Insurer 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
Settlement  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) and the
Insurer.  The  Collection  Agent shall not terminate any bank as a Lock-Box Bank
unless the  Collateral  Agent and the Insurer shall have  received  fifteen (15)
days' prior notice of such  termination.  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)  as to  any  Undocumented  Receivable,  all  documentation
required to be received after the origination of such Receivable pursuant to the
Credit  and  Collection  Policy  has  not  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; or

                                                 34

<PAGE>

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

then,  in any such  event,  the  Collateral  Agent shall  release  its  security
interest in and Lien on such Receivable and the related Contract;  provided 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  an amount  equal to the  amount  which,  if  applied to the
reduction of the Net Investment, would cause the Net Asset Test to be satisfied.
Such amount 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 hereun
der.

                  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;  if such  amounts are
payable to the Insurer, they shall be paid or deposited in the Insurer's account
indicated in Section 9.3, until  otherwise  notified by the Insurer.  The Debtor
shall,  to the extent  permitted by law, pay to the applicable  Secured  Parties
upon  demand,  interest  on all  amounts  not paid or depos ited 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,  the
Administra tive Agent,  Moody's, S&P and the Insurer, (i) a Settlement Statement
as of the end of the  preceding  Settlement  Period,  (ii) if  requested  by the
Collateral  Agent,  the  Administrative  Agent or the Insurer,  a computer  tape
listing by Obligor all Receiv ables, together with an aging of such Receivables,
and (iii) such other  information as the Collateral  Agent,  the  Administrative
Agent or the  Insurer may  reasonably  request.  The Agent shall  provide to the
Debtor,  on the day prior to each  Determina  tion  Date,  a monthly  settlement
statement  containing  information  relating to the amount of each obligation of
the Company which comprises 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 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 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.

                  (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.

                                                 35

<PAGE>

                  (d) Funds on deposit in the  Collection  Account  (other  than
investment  earnings)  shall be  invested  by the  Collateral  Agent in Eligible
Invest  ments  that will  mature so that such  funds  will be  available  on the
Remittance  Date with respect to the  Settlement  Period during which such funds
were received.  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  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

                                                 36

<PAGE>

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
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 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  and  the
Prefunding  Interest  Reserve Account shall be invested in Eligible Invest ments
that will mature  overnight.  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

                                                 37

<PAGE>

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 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).

                                                 38

<PAGE>

                  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 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.

                                                 39

<PAGE>

                  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  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 $1,000.

                  (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

                                                 40

<PAGE>

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.

                  (4) No Eligible Investment in the Yield Supple

ment  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

                                                 41

<PAGE>

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 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; Draws on
Policy.

                  (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 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.

                                                 42

<PAGE>

                  (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
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 Eligible  Investments  with maturities such that all
funds on deposit in the Reserve Account will be available on the next succeeding
Remittance Date following such  investment.  The Collateral Agent shall maintain
possession of the negotiable  instruments or securities,  if any, evidencing the
Eligible Investments from the time of purchase thereof until the time of sale or
maturity.

                                                 43

<PAGE>

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).  To the extent  that  amounts
available in the Reserve  Account are  insufficient  to cover such costs and the
Debtor  fails to make a deposit  to the  Reserve  Account  in the amount of such
shortfall,  the Agent  shall  make a demand  for  payment  under  the  Policy in
accordance with its terms.

                  (ii) In the event that on any Remittance  Date or day on which
a Take-Out  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 Take-Out, 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 upon the
earlier  of (i) the day on which  the Net  Investment  is zero  and the  Secured
Parties shall have received all Aggregate  Unpaids and (ii) the day on which the
aggregate  Outstanding  Balance of the Receivables shall be zero, 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, to which the released Contracts and related Receivables will
be subject) on

                                                 44

<PAGE>

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  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,
(iv) the Debtor shall have given the Agent, the Collateral Agent and the Insurer
at least ten (10) days prior written notice of its intention to request  release
with respect to such Contracts and Receivables,  (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,  and (vi) all amounts due and owing to the
Insurer from the Debtor shall have been paid in full. 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.

                                                 45

<PAGE>

                  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 Take-Out,  the Debtor shall have the
right, from time to time thereafter (but not more frequently than once per calen
dar week),  on the maturity date of any Commercial  Paper note issued by the Com
pany to fund the Net  Investment or upon the  termination  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  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,  the Collateral  Agent
and the Insurer 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
Collection Account of an amount equal to the sum of (i) the Outstanding  Balance
of such  Receivables  on the day of such  assignment  plus (ii) all  accrued and
unpaid interest thereon (whether or not due thereunder) at the rate set forth in
the related Contracts to such date of assignment. 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  "Settlement  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
Administrative  Agent  incurred in connection  with any such  release.  Upon the
deposit to the Collection Account and

                                                 46

<PAGE>

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 docu ments 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,  (ii)  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,  and (iii) all amounts  due and owing to the  Insurer  from the
Debtor shall have been paid in full.

                  (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,  (iii) the Debtor shall have given the
Collateral Agent, the Administrative  Agent and the Insurer at least thirty (30)
days  prior  written  notice  of its  intention  to effect  such a  release  the
Contracts  and  Receivables,  and (iv) all  amounts due and owing to the Insurer
from the Debtor shall have been paid in full.

                                                 47

<PAGE>

                  SECTION 2.16 Hedging Amounts.

                  (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 "Hedge Proceeds 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 Hedge  Proceeds  Account.  The  Collateral  Agent  will  maintain  the Hedge
Proceeds Account at an Eligible Institution. If the Eligible Institution holding
the Hedge  Proceeds  Account  shall  cease to be an  Eligible  Institution,  the
Collateral  Agent  shall  have the right to  direct  the  transfer  of the Hedge
Proceeds  Account  to an  Eligible  Institution.  Funds on  deposit in the Hedge
Proceeds Account shall be invested by the Collateral Agent in overnight Eligible
Investments.

                  (2) Funds on deposit in the Hedge  Proceeds  Account  shall be
invested in Eligible  Investments by or at the written  direction of the Debtor,
provided that if a Termination Event shall have occurred, 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 Hedge Proceeds 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 Hedge Proceeds  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
Hedge Proceeds Account from the Collateral Agent.

                  (4) No Eligible Investment held in the Hedge

Proceeds  Account may be liquidated  or disposed of prior to its  maturity.  All
proceeds  of any such  Eligible  Investment  shall  be  deposited  in the  Hedge
Proceeds  Account.  Investments may be made in the Hedge Proceeds 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 Hedge
Proceeds Account.

                                                 48

<PAGE>

                  (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
Hedge Proceeds Account.

                  (6)  Eligible  Investments  shall be  maintained  in the Hedge
Proceeds  Accounts 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 Hedge Proceeds  Account given to it by any
Person other than the Collateral Agent.

                  (b) On and after the occurrence of any Termination Event or in
the event of the  receipt  of any  proceeds  received  by the  Collection  Agent
pursuant  to any  Acceptable  Hedging  Arrangement  and  immediately  thereafter
Acceptable  Hedging  Arrangements  which satisfy the requirements of Section 5.3
are not in place,  the Collection  Agent,  for the benefit of the Debtor,  shall
remit to the Collateral  Agent for deposit into the Hedge  Proceeds  Account any
proceeds received by the Collection Agent of any Acceptable Hedging Arrangement.
Such amounts shall be held by the Collateral Agent as security for the repayment
to the Company,  the Bank Investors and the Insurer,  as applicable,  of the Net
Investment  and the  Aggregate  Unpaids.  At any time after the  deposit of such
amounts to the credit of the Hedge Proceeds  Account,  the Collateral  Agent may
apply such amounts either (i) to reduce the Net Investment,  (ii) to provide for
the payment to the Company,  the Bank Investors and the Insurer,  as applicable,
of the Aggregate Unpaids, or (iii) to purchase an interest rate hedge acceptable
to the Insurer.  Upon the termination of this  Agreement,  provided that the Net
Investment  shall be zero and all other Aggre gate Unpaids  shall have been paid
in full, the Collateral Agent shall release to the Debtor any amounts  remaining
on deposit in the Hedge Proceeds Account.

                                                 49

<PAGE>

                                   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
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  Debtor  or Seller  by UAC  pursuant  to the Sale and
Purchase  Agreement,  the UAFC Sale and Purchase Agreement,  as applicable,  and
subse  quently  sold to the Debtor by the Seller  pursuant to the UAFCC Sale and
Purchase  Agreement or sold 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, 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.

                  (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 Sale and Purchase Agreement or the UAFCC 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 UAFCC

                                                 50

<PAGE>

Sale and Purchase Agreement or from a Warehouse pursuant to a Warehouse Transfer
Agreement,  (b)  to pay  down  debt  in  connection  with  the  purchase  of the
Receivables  and  Contracts  pursuant to the Sale and Purchase  Agreement or the
UAFCC Sale and  Purchase  Agreement  or pursuant to a Warehouse  Transfer  Agree
ment, 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 UAFCC Sale and Purchase  Agreement or by a 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.

                  (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 September 17, 1998, the aggregate Outstanding Balance
of the Receivables in existence was $86,193,823.44 and the aggregate Outstanding
Balance of all Eligible Receivables was $85,808,215.61.

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                  (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 UAC to the Seller  pursuant to the UAFC Sale
and Purchase  Agreement and subsequent sale by the Seller to the Debtor pursuant
to the  UAFCC  Sale and  Purchase  Agreement  or by a  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,

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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.

                  (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 June 30, 1998, (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.

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<PAGE>

         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.

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<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  (a)(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

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<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 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  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 Indiana  certifying
the Seller's existence.

                  (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 referenced in Section 4.1(d).

                  (g)  Copies  of  proper  financing  statements  (Form  UCC-3),
amending  the Form  UCC-1  that  names UAC as the debtor and Debtor as a secured
party to reflect the Debtor's name change from Union Acceptance  Funding Corpora
tion to UAFC Corporation.

                  (h)  Copies  of  proper  financing  statements  (Form  UCC-3),
amending  the Form UCC-1 that names the Debtor  (when known as Union Accep tance
Funding  Corporation)  as debtor and the Company as secured party to reflect the
Debtor's  name  change  from  Union  Acceptance  Funding   Corporation  to  UAFC
Corporation.

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                  (i) Copies of proper  financing  statements  (Form UCC-3),  if
any,  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.

                  (j)  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 [Initial Funding]
listing all effective financing  statements which name the Debtor, the Seller or
UAC(under its present name and any previous  name) as debtor and which are filed
in  jurisdic  tions 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 Con tracts).

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

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

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

                                              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 (or, in the case of the first  sentence  of clauses  (iii),
(iv), and clause (ix), the

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Debtor) will furnish to the  Administrative  Agent, the Collateral Agent and the
Insurer:

                           (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,  the  Collateral
         Agent,  and the Insurer)  which report shall be unqualified as to going
         concern  and scope of audit and shall  state  that such  consoli  dated
         financial  statements  present fairly the financial position of UAC and
         its  Subsidiaries  at the  dates  indicated  and the  results  of their
         operations  and their cash flow for the periods  indicated is in confor
         mity with GAAP and that the  examination  had been made in accor  dance
         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  treasurer  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 contemplated by Section 5.2(k), together
         with the  financial  statements  hereunder,  a compliance  certifi cate
         signed by the chief  financial  officer of UAC showing the compu tation
         of, and showing compliance with, each of the quarterly finan cial tests
         or conditions set forth in Section 5.2(k).

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<PAGE>

                           (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.

                           (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, UAC or
         any ERISA Affiliates of the Debtor, the Seller or UAC receives from the
         Internal Revenue Ser vice, the Pension Benefit Guaranty  Corporation or
         the U.S. Depart ment of Labor.

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

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<PAGE>

                           (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.

                  (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  Sale  and  Purchase
Agreement,  the UAFC Sale and Purchase  Agreement or the UAFCC Sale and Purchase
Agreement,  as  applicable,  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

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                  Agent,  the  Insurer,  Moody's and S&P 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.

                  (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, as applicable,  separate from those of UAC or any other entity, (c) not
commingle  the  Debtor's  assets with those of UAC or any other entity (it being
understood  that certain  Collections on Receivables  owned by the Debtor may be
temporarily  commingled with collections on other receivables  serviced by UAC);
(d) act solely in its corporate name and through its own authorized officers and
agents,  (e) make  investments  directly  or by brokers  engaged and paid by the
Debtor or its agents  (provided  that if any such Agent is an  Affiliate  of the
Debtor it shall be  compensated  at a fair  market rate for its  services),  (f)
separately  manage the Debtor's  liabilities from those of UAC or any Affiliates
of UAC and pay its own liabilities,  including all administrative expenses, from
its own separate  assets,  and (g) pay from the Debtor's  assets all obligations
and  indebtedness of any kind incurred by the Debtor.  The Debtor shall abide by
all corporate  formalities,  including the  maintenance of current minute books,
and the Debtor  shall  cause its  financial  statements  to be prepared in accor
dance with generally accepted  accounting  principles in a manner that indicates
the

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<PAGE>

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.

                  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,  none of the Debtor, the Seller or 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, none of the Debtor,  the Seller or 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 Sale and  Purchase  Agreement.  The
Seller shall not amend or otherwise modify the UAFC Sale and Purchase  Agreement
without the prior written consent of the Secured Parties.

                  (d) No  Amendment of UAFCC Sale and  Purchase  Agreement.  The
Debtor shall not amend or otherwise modify the UAFCC Sale and Purchase Agreement
without the prior written consent of the Secured Parties.

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<PAGE>

                           (e) No Amendment of Sale and Purchase Agreement.  The
Debtor  shall not amend or  otherwise  modify  the Sale and  Purchase  Agreement
without the prior written consent of the Secured Parties.

                           (f) No Change in  Business  or Credit and  Collection
Policy.  None of the Debtor, the Seller or 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.

                           (g) Sale of  Assets,  Etc.  None of the  Debtor,  the
Seller or 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  Take-Out,  Year-end  Receivable  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).

                           (h) Change in Payment Instructions to Obligors.  None
of the Debtor,  the Seller, or UAC or 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.

                           (i) 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.

                           (j) No Mergers,  Etc. None of the Debtor,  the Seller
or 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,  the Seller or UAC,  respectively,  is the surviving
entity.

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                           (k)      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 UAC will  account for  (including
         for accounting and tax purposes),  or otherwise treat, the transactions
         contemplated by the Sale and Purchase Agree ment, as applicable, in any
         manner other than as a sale of Receivables by UAC to the Debtor; and

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

                           (l) 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,  under
the UAFCC Sale and Purchase  Agreement for the purchase price of the Receivables
under the  UAFCC  Sale and  Purchase  Agreement  or under the Sale and  Purchase
Agreement for the purchase price of the Receivables  under the Sale and Purchase
Agreement,  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,  the  Collateral  Agent  and  the  Insurer  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 after January 1, 1999,  qualifies as an Acceptable Hedging Arrangement
(as  defined  in the  Insurance  Agreement),  and  (ii) in  connection  with any
Settlement Statement provided hereunder, provide an

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executed copy of all existing Acceptable Hedging Arrangements,  which Acceptable
Hedging  Arrangements  shall be satisfactory to the  Administrative  Agent,  the
Collateral  Agent and the  Insurer,  and with respect to which at any time after
the occurrence of a Termination  Event the Debtor shall be the  beneficiary,  in
respect of an aggregate  notional  amount at least equal to the Net  Investment.
The form and structure and counterparty to each Acceptable  Hedging  Arrangement
shall be acceptable to the  Administrative  Agent,  the Collateral Agent and the
Insurer 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  Receiv ables  released to the Debtor  pursuant to Section 2.15 by the
aggregate Outstanding Balance of such Receivables).

                                             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,  upon the written  request of the
Insurer shall, or may, with the consent of the Insurer, upon the occurrence of a
Collection Agent Default or any other Termination Event, designate as Collection
Agent any Person (including  itself) acceptable to the Insurer 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,  but in any event the Company
shall notify  Moody's and S&P of any Collection  Agent Default.  The Company may
notify any  Obligor of its  security  interest in the Con tracts 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

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care and diligence,  and in accordance  with the Credit and  Collection  Policy.
Each of the Debtor,  the  Company,  each Bank  Investor  and the Insurer  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,  the
Bank Investor's or the Insurer'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 accor dance 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 Com pany,  upon the  direction  or with the consent of the
Insurer,  the Debtor shall deliver to the  Collection  Agent and the  Collection
Agent shall hold in trust for the Debtor and 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, the Agent
and the Insurer,  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 110% of the reasonable and appropriate  out-of-pocket costs and expenses
of such  Collection  Agent  incurred in connection  with the  performance of its
obligations  hereunder  as  documented  to the  reasonable  satisfaction  of the
Collateral Agent, the Agent and the Insurer. 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.

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<PAGE>

                           (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, 1999,  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.

                           (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, the Company or the Insurer shall have the right to conduct (or
to cause its accoun  tants 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

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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.

                  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 or the Insurer  may direct  that  payment of all
         amounts payable under any Receivable be made directly to the Collateral
         Agent and the Insurer, as applicable, or their respective designees.

                  (ii) The Debtor shall, at the Agent's or the Insurer's request
         and at the  Debtor's  expense,  give notice of the Collat eral  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  or the  Insurer's
         request,  (A)  assemble  all of the  Records,  and shall  make the same
         available to the  Collateral  Agent and the Insurer at a place selected
         by the Collateral Agent and the Insurer or their respective  designees,
         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 the Insurer 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,

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<PAGE>

         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.

                                             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 UAFCC
Sale and Purchase Agreement,  the UAFC Sale and Purchase Agreement, the Sale and
Pur chase  Agreement or in any other  Transaction  Document  shall prove to have
been incorrect in any material respect when made or deemed made;

                           (b) the  Debtor,  the Seller or UAC shall  default in
the performance of (i) any payment obligation  hereunder or under the UAFCC Sale
and Purchase  Agreement  or under the UAFC Sale and Purchase  Agreement or under
the Sale and  Purchase  Agreement  or (ii) any  other  covenant  or  undertaking
hereunder or under the UAFCC Sale and Purchase  Agreement or under the UAFC Sale
and Purchase  Agreement or under the 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 any of
them; or

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                           (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  the
Receivables and Related Security and Collections with respect thereto,  free and
clear of any Adverse Claim; or

                           (g) any 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  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 UAFCC Sale and
Purchase Agreement,  the UAFC Sale and Purchase Agreement, the 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

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                           (m) the Net  Yield  as of any  Determination  Date is
less than 2.00%;

                           (n) a draw is made  under the  Policy  or an  Insurer
Default has occurred and is continuing;

                           (o) the Insurer shall have given notice that an event
of default has occurred and is continuing under the Insurance Agreement;

                           (p)  the  term  of the  Policy  is  not  of the  term
required by the  Company  (which term shall be at least equal to the term of the
latest maturing Receivable in the facility plus 90 days); and

                           (q) 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.

                  SECTION  7.2  Termination.   If  a  Termination  Event  occurs
hereunder and is continuing,  the Collateral  Agent, at the written direction of
the Insurer shall, or the Collateral Agent may, with the consent of the Insurer,
in either case by notice to the Debtor,  (i) if UAC is the  Collection  Agent at
the time, terminate UAC as Collec tion 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,  if an Insurer
Default shall have occurred,  2%, to be applicable to the Net Investment (except
in the case of a Termination Event described under clauses (i) and (j) above, in
which case the Adjusted LIBOR Rate or the Base Rate, as applicable, shall be

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<PAGE>

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.

                  No waiver of any  Termination  Event or Potential  Termination
Event shall be effective without the prior written consent of the Insurer.

                  If the Note is  declared  due and payable in  accordance  with
this Section 7.2, the Collateral  Agent shall,  at the direction of the Insurer,
and may, with the consent of the Insurer, 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, (ii) due and payable
by the Debtor under the Note Purchase  Agreement,  and (iii) all amounts due and
payable by the Debtor under the Insurance Agreement;

                  (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 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

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         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  Debtor  and the Seller
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.

                                            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

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<PAGE>

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 and the  Insurer,  such  resignation  shall not be  effective  until a
successor  Collateral  Agent  acceptable  to the  Insurer  shall  have  accepted
appointment as Collateral  Agent  hereunder and shall have agreed to be bound by
the terms of this Agreement.

                  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 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  Insurer and the
successor   Collateral  Agent  shall  have  assumed  the   responsibilities  and
obligations of the Collateral Agent hereunder.

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                  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)  hereof with any
increase in such amounts to be approved by the Insurer.  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 Collat eral
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).

                           (a) The Debtor shall indemnify the Collateral  Agent,
its officers, directors,  employees and agents for, and hold it harmless against
any loss,  liability  or expense  incurred  without  willful  misconduct,  gross
negligence or bad faith on its part,  arising out of or in  connection  with (i)
the  acceptance or administra  tion 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.

                  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

                                                 75

<PAGE>

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.

                  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.

                                                 76

<PAGE>

                           (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,  the Insurer 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 (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

                                                 77

<PAGE>

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.

                           (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

                                                 78

<PAGE>

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 consoli dation or
into  which the  Collateral  Agent is merged or the  Person  which  acquires  by
conveyance  or  transfer  the  properties  and  assets of the  Collateral  Agent
substantially as an entirety shall be a corporation organized and existing under
the laws of the  United  States  of  America  or any  State or the  District  of
Columbia  and,  if the  Collateral  Agent  is not the  surviving  entity,  shall
expressly assume, by an agreement supplemental hereto, executed and delivered to
the Secured Parties in form satisfactory to the Secured Parties, the performance
of every covenant and obligation of the Collateral Agent hereunder; and

                           (ii)  the  Collateral  Agent  has  delivered  to  the
Secured Parties 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.

                                                 79

<PAGE>

                  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 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.

                                                 80

<PAGE>

                                             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, the Insurer and the Majority  Investors (and, if Article VI or
the  rights or duties of the  Collateral  Agent  are  affected  thereby,  by the
Collateral  Agent);  pro vided,  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 termination of any Commitment,  (iv) change the
percentage of the  Commitments or the 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 Servicing Fee to
a percentage greater than 1.0% per annum of the aggregate Outstanding Balance of
the Receiv ables as of the first day of the related  Settlement  Period,  (viii)
modify any provisions of this Agreement,  the UAFCC Sale and Purchase Agreement,
the UAFC Sale and Purchase Agreement or the Sale and Purchase Agreement relating
to the timing of payments  required to be made by the Issuer,  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.  Notice to Moody's and S&P will be provided for all
waivers, consents, approvals, amendments and extensions with respect to or under
the Transaction  Documents.  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:
         -----------------

         ENTERPRISE FUNDING CORPORATION
         c/o Global Securitization Services, LLC
         25 West 43rd St., Suite 704
         New York, New York 10036

                                                 81

<PAGE>

         Attention: Kevin Burns
         Telephone: (212) 302-8331
         Telecopy: (212) 302-8767
         Payment Information:
         Bankers Trust Company
         ABA# 021001033
         Account# 01419647
         Reference Enterprise Funding - UAC

         (with a copy to the Administrative Agent)

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

         UAFC CORPORATION
         9240 Bonita Beach Road, Suite 1109-C
         Bonita Springs, Florida 34135-4250
         Attn: Leeanne W. Graziani, President
         Telephone:  (941) 948-1852
         Telecopy:   (941) 948-1855
         Payment Information:
         Union Federal Savings Bank

         of Indianapolis

         ABA #: 2740-7048-4
         Account #: 590070304
         Reference: Nations Line

         If to the Seller:
         ----------------

         UNION ACCEPTANCE FUNDING CORPORATION
         250 North Shadeland Avenue
         Indianapolis, Indiana 46219
         Attn: Rick A. Brown, Vice President
         Telephone: (317) 231-7934
         Telecopy: (317) 231-6469

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

         UNION ACCEPTANCE CORPORATION
         250 North Shadeland Avenue

                                                 82

<PAGE>

         Indianapolis, Indiana  46219
         Attn: Ashley Vukovits, Finance Officer
         Telephone:  (317) 231-2717
         Telecopy:   (317) 231-7926

         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 the to Insurer:
         -----------------

         MBIA INSURANCE CORPORATION
         113 King Street
         Armonk, New York  10504
         Attn:  Insured Portfolio Management - SF
         Telephone:  (914) 273-4949
         Telecopy:  (914) 765-3163
         Payment Information: MBIA Insurance Corporation

         ABA #: 021-000-021
         Account #: 910-2-721728
         Reference: UAFCC Enterprise Auto WH

                                                 83

<PAGE>

         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 #: 1093601650000
         Reference: UAC

         If to S&P:
         ---------

         STANDARD & POOR'S RATINGS SERVICES
         25 Broadway
         New York, New York 10004-1064
         Attention:  Michael Bilello
         Telephone: (212) 208-5531
         Telecopy: (212) 208-0030

         If to Moody's:
         -------------

         MOODY'S INVESTORS SERVICE
         99 Church Street, 4th Floor
         New York, New York 10007
         Attention:  Rochelle Tarlowe
         Telephone: (212) 553-3854
         Telecopy: (212) 553-3856

                  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,  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

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<PAGE>

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 none
of the Debtor,  the Seller,  UAC or 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 and the Insurer.  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.

                           (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

                                                 85

<PAGE>

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 Insurer, 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, the Insurer and the Collection Agent hereby cove
nants 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  any
bankruptcy,  reorganization, arrange ment, insolvency or liquidation proceedings
or other similar  proceeding under the laws of the United States or any state of
the United States.

                                                 86

<PAGE>

                  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.  No recourse under any  obligation,
covenant or agreement of the Company  contained in this  Agreement  shall be had
against  Merrill  Lynch Money Markets Inc. (or any  affiliate  thereof),  or any
stockholder,  officer or director of the Company, as such, by the enforcement of
any assessment or by any legal or equitable proceeding, by virtue of any statute
or otherwise;  it being  expressly  agreed and understood that this Agreement is
solely a corporate  obligation  of the Company,  and that no personal  liability
whatsoever  shall attach to or be incurred by Merrill  Lynch Money  Markets Inc.
(or any affiliate  thereof),  or the stockholders,  officers or directors of the
Company,  as such, or any of them, under or by reason of any of the obligations,
covenants or agreements of the Company  contained in this Agreement,  or implied
therefrom,  and that any and all personal  liability for breaches by the Company
of any of such obligations,  covenants or agreements, either at common law or at
equity,  or by statute or constitution,  of Merrill Lynch Money Markets Inc. (or
any affiliate  thereof) and every such  stockholder,  officer or director of the
Company is hereby expressly waived as a condition of and  consideration  for the
execution of this Agreement.

                  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 or
the Insurer to carry into effect the  purposes  of this  Agreement  or to better
assure and confirm unto the Collateral  Agent or the Insurer its rights,  powers
and remedies hereunder.

                  SECTION 9.12 Exercise of Rights by Insurer. All rights granted
to the Insurer pursuant to this Agreement shall terminate during the pendency of
a payment  default by the Insurer  under the Policy or during the  pendency of a
Surety  Insolvency  (as defined in the  Insurance  Agreement as in effect on the
date hereof) and during such time the  Insurer's  rights may be exercised by the
Collateral Agent or Company,  provided,  however,  the Insurer's rights shall be
reinstated in full, immedi ately upon the cure of such default.

                                                 87

<PAGE>

                  SECTION 9.13 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 Sale and  Purchase  Agreement,  the
UAFCC  Sale and  Purchase  Agreement  or  pursuant  to each  Warehouse  Transfer
Agreement with respect to the  Receivables  and with respect to any  obligations
thereunder of the Seller, UAC or any party to the aforementioned  agreements, 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 9.13. 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 Sale and Purchase  Agreement,  the UAFC
Sale and Purchase Agreement,  any Warehouse Transfer Agreement or the UAFCC Sale
and Purchase  Agreement 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 Sale and  Purchase  Agreement,  the
UAFC Sale and Purchase  Agreement or the UAFCC Sale and Purchase  Agreement with
respect to the Receivables or the Contracts  without the prior consent of either
the Collateral Agent, the Administrative Agent or the Insurer.

                           (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.

                                                 88

<PAGE>

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

                                          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:

                                          UNION ACCEPTANCE CORPORATION,
                                            individually and as Collection Agent

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

                                                 89

<PAGE>

                                       MBIA INSURANCE CORPORATION,
                                          as Insurer

                                       By: /s/ Teresa Manning
                                              Name: Teresa Manning
                                              Title:

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

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

                                       90

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