Document:

<PAGE>

                                                                  Exhibit 10.8.1
                             EMPLOYMENT AGREEMENT

          This EMPLOYMENT AGREEMENT ("Agreement"), which is dated as of January
24, 2002, is made by and between VARIFLEX, INC., a Delaware corporation, located
at 5152 North Commerce Avenue, Moorpark, California, 93021 and hereinafter
referred to as "the Company", and PETAR KATURICH, whose address is
XXXXXXXXXXXXXXX , California XXXXX, hereinafter referred to as "Executive",
based upon the following:

                                   RECITALS
                                   --------

          WHEREAS, the Company wishs to retain the services of Executive as its
Chief Financial Officer and to set forth in this Agreement the duties and
responsibilities Executive has agreed to undertake on behalf of the Company; and

          WHEREAS, Executive wishes to render services to the Company as its
Chief Financial Officer and to have set forth in this Agreement the duties and
responsibilities he has agreed to undertake on behalf of the Company; and

          THEREFORE, in consideration of the foregoing and of the mutual
promises contained in this Agreement, the Company and Executive (who are
sometimes individually referred to as a "party" and collectively referred to as
the "parties") agree as follows:

                                   AGREEMENT
                                   ---------

          1.  "COMPANY" DEFINED.  The term "the Company" as used in this
              -----------------
Agreement shall mean Variflex, Inc.

          2.  SPECIFIED PERIOD.
              ----------------

          (a) INITIAL TERM.  Subject to paragraphs 9, 10 and 11, the Company
              ------------
hereby employs Executive pursuant to the terms of this Agreement and Executive
hereby accepts employment with the Company pursuant to the terms of this
Agreement for the period beginning on February 4, 2002 ("Commencement Date") and
ending on February 3, 2005 (the "Initial Expiration Date"), the day before the
three (3) year anniversary of the Commencement Date.

          (b) RENEWAL OF TERM.  Subject to paragraphs 9, 10 and 11, this
              ---------------
Agreement will be automatically renewed for an additional one (1) year term on
the Initial Expiration Date and on each anniversary date of the Initial
Expiration Date occurring thereafter, unless either party gives written notice
to the other, at least ninety (90) days prior to the Initial Expiration Date or
prior to the date of expiration of the then applicable renewal term of this
Agreement (the "Renewal Expiration Date"), as applicable, that the party desires
to terminate this Agreement.
<PAGE>

          (c) TERM.  For purposes of this Agreement, "Term" shall mean the
              ----
period beginning on the Commencement Date and ending on the earlier of (i) the
date on which Executive's employment is terminated pursuant to paragraphs 9, 10
or 11 of this Agreement, (ii) the Initial Expiration Date if this Agreement is
not automatically renewed pursuant to paragraph 2(b) above, or (iii) the then
applicable Renewal Expiration Date if the then renewal term is not automatically
renewed for an additional one (1) year period pursuant to paragraph 2(b) above.

          3.  GENERAL DUTIES.  Executive shall report only to the Company's
              --------------
Chief Executive Officer and the Company's Board of Directors (the "Board").
Executive shall devote his entire productive time, ability, and attention to the
Company's business during the Term of this Agreement.  Unless otherwise modified
by the Board, the Executive shall serve as the Chief Financial Officer of the
Company.  In this capacity, Executive shall do and perform all services, acts,
or things necessary or advisable to discharge his duties under this Agreement,
including, but not limited to, acting as immediate manager and supervisor of the
Company's accounting department, maintaining the Company's financial reporting
systems, acting as the Company's liaison with its certified public accountants
so that all financial information required to be prepared and filed with the
Securities and Exchange Commission or other regulatory agencies will be done in
a correct and timely manner, assisting with the preparation of filings required
by any federal or state taxing authority, acting as the Company's liaison with
its investors, managing the Company's cash in accordance with those standards
set forth by the Board, maintaining internal accounting controls and rendering
to the Board, at its meetings or when the Board otherwise requests, an account
or report of the financial condition of the Company.  Executive shall perform
such other duties as are commonly performed by the Chief Financial Officer of a
publicly traded corporation or which may from time to time be prescribed by the
Board or the Chief Executive Officer consistent with such duties.  Executive
shall not work for any other person, firm or entity during the Term of this
Agreement.

          4.  NONCOMPETITION, NONSOLICITATION AND NONINTERFERENCE AND
              -------------------------------------------------------
PROPRIETARY PROPERTY AND CONFIDENTIAL INFORMATION PROVISIONS.
------------------------------------------------------------

          (a) NONCOMPETITION.
              --------------

              (1) "Applicable Definitions" - For purposes of this paragraph 4,
                   ----------------------
the following capitalized terms shall have the definitions set forth below:

                  i.  "Business Segments" - The term "Business Segment" is
                       -----------------
defined as each portion of the Company's (or the Company's affiliates')
business, including, without limitation, the production, distribution,
marketing, and sales of the Company's (or the Company's affiliates') products or
product lines, and the purchasing of raw materials and supplies in connection
therewith.

                  ii. "Competitive Business" - The term "Competitive Business"
                       --------------------
is defined as any business that is or may be competitive with or similar to or
adverse to any of the Company's (or the Company's affiliates') Business
Segments, whether such business is conducted by a proprietorship, partnership,
corporation or other entity or venture.

                                       2
<PAGE>

          iii.  "Territory" - The term "Territory" is defined as the geographic
                 ---------
area (both within the United States and internationally) in which any Business
Segment is carried on including, by way of example and not limitation, the
entire geographic area in which the Company conducts various phases of any such
Business Segment, including purchasing, production, distribution, promotional
and marketing activities, sales, and location of plants and warehouses.

      (2) Covenant Not to Compete.  Executive hereby covenants and agrees that
          -----------------------
(A) during the Term of this Agreement and (B) if Executive is paid a severance
benefit pursuant to paragraph 10 of this Agreement, for six (6) months following
the termination of this Agreement, Executive shall not, with respect to any
Business Segment and within the boundaries of the Territory applicable to such
Business Segment, without the prior written consent of the Company (which
consent may be withheld in the sole and absolute discretion of the Company),
directly or indirectly, either alone or in association or in connection with or
on behalf of any person, firm, partnership, corporation or other entity or
venture now existing or hereafter created: (i) be or become interested or
engaged in, directly or indirectly, with any Competitive Business including,
without limitation, being or becoming an organizer, investor, lender, partner,
joint venturer, stockholder, officer, director, employee, manager, independent
sales representative , associate, consultant, agent, supplier, vendor, vendee,
lessor, or lessee to any Competitive Business, or (ii) in any manner associate
with, or aid or abet or give information or financial assistance to any
Competitive Business, or (iii) use or permit the use of Executive's name or any
part thereof to be used or employed in connection with any Competitive Business
(collectively and severally, the "Noncompetition Covenants"). Notwithstanding
the foregoing, the provisions of this paragraph 4(a)(2) shall not be deemed to
prevent the purchase or ownership by Executive as a passive investment of no
more than 5% of the outstanding capital shares of any publicly held corporation,
so long as any other obligation or duty under the Noncompetition Covenants are
not breached. Executive shall have the right to waive his entitlement to all of
the severance benefits otherwise required to be paid to him pursuant to
paragraph 10 of this Agreement, in which event restrictions in paragraph
4(a)(2)(B) of this Agreement shall not apply.

      (3) Separate Covenants.  The Noncompetition Covenants shall be construed
          ------------------
to be divided into separate and distinct Noncompetition Covenants with respect
to (i) each Business Segment and (ii) each matter or type of conduct described
therein. Each of such divided Noncompetition Covenants shall be separate and
distinct from all such other Noncompetition Covenants with respect to the same
or any other Business Segment.

      (4) Acknowledgments.  Executive acknowledges that:  (i) the covenants and
          ---------------
the restrictions contained in the Noncompetition Covenants are necessary,
fundamental, and required for the protection of the Company's business; (ii) the
Noncompetition Covenants relate to matters which are of a special, unique and
extraordinary value; and (iii) a breach of any of the Noncompetition Covenants
will result in irreparable harm and damages which cannot be adequately
compensated by a monetary award.

      (5) Judicial Limitation.  Notwithstanding the foregoing, if at any time a
          -------------------
court of competent jurisdiction holds that any portion of any Noncompetition
Covenant is unenforceable by reason of its extending for too great a period of
time or over too great a geographical area or by reason of its being too
extensive in any other respect, such

                                       3
<PAGE>

Noncompetition Covenant shall be interpreted to extend only over the maximum
period of time, maximum geographical area, or maximum extent in all other
respects, as the case may be, as to which it may be enforceable, all as
determined by such court in such action.

          (b) NONSOLICITATION AND NONINTERFERENCE.
              -----------------------------------

              (1)   Covenants.  Executive hereby covenants and agrees that
                    ---------
during the Term of this Agreement, and for a period of one (1) year from the
date this Agreement terminates or expires, Executive shall not, either for
Executive's own account or directly or indirectly in conjunction with or on
behalf of any person, partnership, corporation or other entity or venture:

                    i.  Solicit or employ or attempt to solicit or employ any
person who is then or has, within twelve (12) months prior thereto, been an
officer, partner, manager, agent or employee of the Company or any affiliate of
the Company whether or not such a person would commit a breach of that person's
contract of employment with the Company or any affiliate of the Company, if any,
by reason of leaving the service of the Company or any affiliate of the Company
(the "Nonsolicitation Covenant"); or

                    ii. On behalf of, directly or indirectly, any Competitive
Business (as such term is defined in paragraph 4(a)(1)ii., or for the purpose of
or with the reasonably foreseeable effect of harming the business of the
Company, solicit the business of any person, firm or company which is then, or
has been at any time during the preceding twelve (12) months prior to such
solicitation, a customer, client, contractor, supplier or vendor of the Company
or any affiliate of the Company (the "Noninterference Covenant").

              (2)   Acknowledgments.  Each of the parties acknowledges that:
                    ---------------
(i) the covenants and the restrictions contained in the Nonsolicitation and
Noninterference Covenants are necessary, fundamental, and required for the
protection of the business of the Company; (ii) such Covenants relate to matters
which are of a special, unique and extraordinary value; and (iii) a breach of
either of such Covenants will result in irreparable harm and damages which
cannot be adequately compensated by a monetary award.

              (3)   Judicial Limitation.  Notwithstanding the foregoing, if at
                    -------------------
any time, despite the express agreement of the Company and Executive, a court of
competent jurisdiction holds that any portion of any Nonsolicitation or
Noninterference Covenant is unenforceable by reason of its extending for too
great a period of time or by reason of its being too extensive in any other
respect, such Covenant shall be interpreted to extend only over the maximum
period of time or to the maximum extent in all other respects, as the case may
be, as to which it may be enforceable, all as determined by such court in such
action.

          (c) PROPRIETARY PROPERTY; CONFIDENTIAL INFORMATION.
              ----------------------------------------------

              (1) "Applicable Definitions" For purposes of this paragraph 4(c),
                   ----------------------
the following capitalized terms shall have the definitions set forth below:

                  i.  "Confidential Information" - The term "Confidential
                       ------------------------
Information" is collectively and severally defined as any information, matter or
thing of a secret, confidential or private nature, whether or not so labeled,
which is connected with the Company's business,

                                       4
<PAGE>

Business Segments, or methods of operation or concerning any of the Company's
suppliers, customers, licensors, licensees or others with whom the Company has a
business relationship, and which has current or potential value to the Company
or the unauthorized disclosure of which could be detrimental to the Company.
Confidential Information shall be broadly defined and shall include, by way of
example and not limitation: (i) matters of a business nature available only to
management and owners of the Company of which Executive may become aware (such
as information concerning customers, vendors and suppliers, including their
names, addresses, credit or financial status, buying or selling habits,
practices, requirements, and any arrangements or contracts that the Company may
have with such parties, the Company's marketing methods, plans and strategies,
the costs of materials, the prices the Company obtains or has obtained or at
which the Company sells or has sold its products or services, the Company's
manufacturing and sales costs, the amount of compensation paid to employees of
the Company and other terms of their employment, financial information such as
financial statements, budgets and projections, and the terms of any contracts or
agreements the Company has entered into) and (ii) matters of a technical nature
(such as product information, trade secrets, know- how, formulae, innovations,
inventions, devices, discoveries, techniques, formats, processes, methods,
specifications, designs, patterns, schematics, data, compilation of information,
test results, and research and development projects). For purposes of the
foregoing, the term "trade secrets" shall mean the broadest and most inclusive
interpretation of trade secrets as defined by Section 3426.1(d) of the
California Civil Code (the Uniform Trade Secrets Act) and cases interpreting the
scope of said Section. "Confidential Information" does not include information
which (i) is or becomes generally available to the public through no wrongful
act of Executive, or (ii) was available to or otherwise in the possession of
Executive prior to the date of this Agreement, provided Executive acquired such
information through lawful means and from a source who or which was not under a
duty of non-disclosure.

          ii.  "Proprietary Property" - The term "Proprietary Property" is
                --------------------
collectively and severally defined as any written or tangible property owned or
used by the Company in connection with the Company's business, whether or not
such property also qualifies as Confidential Information.  Proprietary Property
shall be broadly defined and shall include, by way of example and not
limitation, products, samples, equipment, files, lists, books, notebooks,
records, documents, memoranda, reports, patterns, schematics, compilations,
designs, drawings, data, test results, contracts, agreements, literature,
correspondence, spread sheets, computer programs and software, computer print
outs, other written and graphic records, and the like, whether originals,
copies, duplicates or summaries thereof, affecting or relating to the business
of the Company, financial statements, budgets, projections, invoices.

          (2)  Ownership of Proprietary Property.  Executive acknowledges that
               ---------------------------------
all Proprietary Property which Executive may prepare, use, observe, come into
possession of and/or control shall, at all times, remain the sole and exclusive
property of the Company.  Executive shall, upon demand by the Company at any
time, or upon the cessation of Executive's employment, irrespective of the time,
manner, cause or lack of cause of such cessation, immediately deliver to the
Company or its designated agent, in good condition, ordinary wear and tear and
damage by any cause beyond the reasonable control of Executive excepted, all
items of the Proprietary Property which are or have been in Executive's
possession or under his control, as well as a statement describing the
disposition of all items of the Proprietary Property

                                       5
<PAGE>

previously in Executive's possession in the event Executive has not previously
returned such items of the Proprietary Property to the Company.

          (3)  Agreement Not to Use or Divulge Confidential Information.
               --------------------------------------------------------
Executive agrees that he will not, at any time, in any fashion, form or manner,
unless specifically consented to in writing by the Company, either directly or
indirectly use, divulge, transmit or otherwise disclose or cause to be used,
divulged, transmitted or otherwise disclosed to any person, firm or corporation,
in any manner whatsoever (other than in Executive's performance of duties for
the Company or except as required by law) any Confidential Information of any
kind, nature or description.  The foregoing provisions shall not be construed to
prevent Executive from making use of or disclosing information which is in the
public domain through no fault of Executive, provided, however, specific
information shall not be deemed to be in the public domain merely because it is
encompassed by some general information that is published or in the public
domain or in Executive's possession prior to Executive's employment with the
Company.

          (4)  Acknowledgment of Secrecy.  Executive acknowledges that the
               -------------------------
Confidential Information is not generally known to the public or to other
persons who can obtain economic value from its disclosure or use and that the
Confidential Information derives independent economic value thereby, and
Executive agrees that he shall take all efforts reasonably necessary to maintain
the secrecy and confidentiality of the Confidential Information and to otherwise
comply with the terms of this Agreement.

          (5)  Inventions, Discoveries.  Executive acknowledges that any
               -----------------------
inventions, discoveries or trade secrets, whether patentable or not, made or
found by Executive in the scope of his employment with the Company constitute
property of the Company and that any rights therein now held or hereafter
acquired by Executive individually or in any capacity are hereby transferred and
assigned to the Company, and agrees to execute and deliver any confirmatory
assignments, documents or instruments of any nature necessary to carry out the
intent of this paragraph when requested by the Company without further
compensation therefor, whether or not Executive is at the time employed by the
Company.  Provided, however, notwithstanding the foregoing, Executive shall not
be required to assign his rights in any invention which qualifies fully under
the provisions of Section 2870(a) of the California Labor Code, which provides,
in pertinent part, that the requirement to assign "shall not apply to any
invention that the employee developed entirely on his or her own time without
using employer's equipment, supplies, facilities or trade secret information
except for those inventions that either:

               i.   Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer; or

               ii.  Result from any work performed by the employee for the
employer."

     Executive understands that he bears the full burden of proving to the
Company that an invention qualifies fully under Section 2870(a). By signing this
Agreement, Executive acknowledges receipt of a copy of this Agreement and of
written notification of the provisions of Section 2870.

                                       6
<PAGE>

          5.   COMPLIANCE WITH SECURITIES LAWS.
               -------------------------------

          Executive acknowledges that, the Company is a publicly reporting
company, and that the Company and Executive are subject to the provisions of
Sections 10(b), 16(a) and 16(b) of the Securities Exchange Act of 1934 (the
"Exchange Act").  Executive acknowledges that Section 16(a) of the Exchange Act
requires Executive to report the ownership or transfer of his stock or other
securities in the Company to the Securities and Exchange Commission and that
Sections 10(b) and 16(b) can prohibit Executive from selling or transferring his
stock or securities in the Company.  Executive agrees that he will comply with
the Company's policies, as stated from time to time in writing, relating to
selling or transferring his stock or securities in the Company.

          6.   COMPENSATION.
               ------------

          (a)  SALARY.  During the Term of this Agreement, the Company shall pay
               ------
to Executive a base salary of One Hundred Fifty Thousand Dollars ($150,000) per
year.  Executive's annual salary shall be reviewed periodically by the Company
for the purpose of determining whether Executive's salary shall be increased.
In no event shall this review take place less frequently than annually.
Executive shall be entitled to receive such bonuses as the Company may, in its
discretion, award of up to thirty percent (30%) of Executive's base salary.

          (b)  EMPLOYEE BENEFIT PLANS.  Except as otherwise herein provided,
               ----------------------
Executive shall be entitled, during the specified period of this Agreement, to
participate in any retirement, pension, profit-sharing, insurance, or other
plans which may now be in effect or which may be adopted by the Company,
including, without limitation, all such benefits generally available to the
Company's other senior executive employees.

          (c)  STOCK OPTIONS.  Within thirty (30) days after the date of this
               -------------
Agreement, the Company will prepare and deliver to Executive, a stock option
agreement which shall provide the following:  (i) Executive shall be granted
incentive options, pursuant to the 1994 Variflex Stock Plan, to purchase an
aggregate of fifty thousand (50,000) shares of the Company's common stock at a
price per share equal to the closing price of the Company's common stock as
listed by NASDAQ as of the end of the first business day immediately preceding
the option grant date; (ii) the option grant date shall be the Commencement
Date; (iii) options to purchase shall vest over a five year period according to
the vesting schedule in the stock option agreement, so long as Executive
continues his employment with the Company; (iv) options shall expire five years
following the applicable vesting date, except that vested options shall
terminate earlier in certain circumstances and unvested options shall terminate
upon termination of Executive's employment; (v) Executive shall be entitled to
pay for the stock in cash or in stock of the Company with a fair market value
equal to the exercise price; and (vi) stock issued pursuant to this plan shall
be restricted stock, although the Company shall reserve the right to issue
registered shares if it so decides.  Executive agrees to be bound by the terms
of the stock option agreement as adopted, and the provisions of this paragraph
shall be limited by and subject to the terms of that agreement.

          7.   REIMBURSEMENT OF BUSINESS EXPENSES.  The Company shall promptly
               ----------------------------------
reimburse Executive for all reasonable business expenses incurred by Executive
in connection

                                       7
<PAGE>

with the business of the Company. However, each such expenditure shall be
reimbursable only if Executive furnishes to the Company such records and other
documentary evidence as are required by the policies adopted from time to time
by the Company for reimbursement of expenses.

          8.   ANNUAL VACATION; PLACE OF PERFORMANCE.
               -------------------------------------

          (a)  VACATION. Executive shall be entitled to three (3) weeks vacation
               --------
time each year without loss of compensation. The Executive shall be entitled to
such period of vacation immediately upon effectiveness of this Agreement, and
such vacation need not be taken in consecutive periods. If Executive does not
take all such vacation time in any given calendar year, such unused time shall
carry over to the next year during the Term. Executive shall also be entitled to
all paid holidays provided by the Company to its other senior executive
employees.

          (b)  PLACE OF PERFORMANCE.  In connection with his employment by the
               --------------------
Company pursuant to this Agreement, the Executive shall be based at the
principal executive office of the Company in Southern California, except for
travel reasonably required for the Company business.

          9.   TERMINATION BY COMPANY FOR CAUSE.  The Company reserves the right
               --------------------------------
to terminate Executive and Executive's employment hereunder for cause. For
purposes of this Agreement, the term "cause" shall be deemed to exist if the
Company, acting in good faith based upon the information then known to the
Company, determines that Executive has engaged in or committed: willful
misconduct; gross negligence; theft, fraud or other illegal conduct; refusal or
unwillingness to perform his duties; sexual harassment; conduct which reflects
adversely upon, or making any remarks disparaging of, the Company, its Board,
officers, directors, advisors or employees or its affiliates or subsidiaries;
insubordination; any willful act that is likely to and which does in fact have
the effect of injuring the reputation, business or a business relationship of
the Company; violation of any fiduciary duty; violation of any duty of loyalty;
and breach of any term of this Agreement. The Company may terminate this
Agreement after Executive has received written notice of a proposed termination
for cause and Executive has had an opportunity to be heard before at least a
majority of the Board of Directors With the exception of the covenants included
in paragraphs 4 and 5 above, upon such termination the obligations of Executive
and the Company under this Agreement shall immediately cease. Such termination
shall be without prejudice to any other remedy to which the Company may be
entitled either at law, in equity, or under this Agreement. If Executive's
employment is terminated pursuant to this paragraph, the Company shall pay to
Executive, within two (2) business days of such termination, any deferred or
unpaid compensation and benefits to which Executive has earned and vested and is
otherwise entitled at the time of such termination.

          10.  TERMINATION WITHOUT CAUSE.
               -------------------------

          (a)  BY COMPANY.  The Company shall have the right to terminate this
               ----------
Agreement and Executive's employment hereunder without cause at any time.  If
the Company terminates Executive without cause prior to the six-month
anniversary of the Commencement Date, Executive shall not be entitled to any
severance benefit.  If the Company terminates Executive without cause on or
after the six-month anniversary of the Commencement Date, Executive shall

                                       8
<PAGE>

be entitled to a severance benefit equal to six (6) months of his then base
salary; provided, however, that if such termination occurs as a result of a
"change in ownership," Executive shall instead be entitled to a severance
benefit equal to twelve (12) months of his then base salary (for purposes of
this Section 10(a), a "change in ownership" shall mean an individual, group or
entity, other than REMY Capital Partners IV, L.P., Mark S. Siegel, Kenneth
Berns, Raymond H. Losi, Raymond H. Losi II, Eileen Losi, or Barbara Losi, or any
of their respective affiliates, acquiring beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of
the shares of the then outstanding common stock of the Company). Notwithstanding
the preceding sentence, Executive shall not be entitled to any severance benefit
if (i) this Agreement is terminated by the Company pursuant to paragraph 2(b)
above, or (ii) this Agreement is terminated by Executive pursuant to paragraph
2(b) above or paragraph 10(b) below, or (iii) this Agreement and Executive's
employment hereunder is terminated for cause pursuant to paragraph 9 above, or
(iv) Executive's employment is terminated by reason of the death or disability
of Executive as provided in paragraph 11 below. The severance payment shall be
subject to applicable tax withholding and shall be paid in a lump sum within ten
(10) business days following the effective date of the event giving rise to
Executive's being terminated without cause.

          (b)  BY EXECUTIVE.  Executive shall have the right to terminate this
               ------------
Agreement and Executive's employment hereunder without cause at any time upon at
least sixty (60) days advance written notice to the Company.  If Executive fails
for any reason to give the Company at least sixty (60) days advance written
notice of termination of his employment with the Company, such failure shall
constitute a breach of this Agreement by Executive.

          (c)  BY EXECUTIVE FOR GOOD REASON

               The parties agree that if the Executive is "constructively
discharged", as such term is defined below, Executive shall have the right to
terminate his employment and such termination shall be considered a termination
of the Executive by the Company pursuant to Section 10(a) of the agreement.
"Constructively discharged" shall mean any of the following: (i) there is a
reduction by the Company in Executives Base Salary, (ii) the Company requires
Executive to relocate his principal place of employment outside the counties of
Los Angeles and Ventura, or (iii) there is a material diminution in Executives
reporting responsibilities or title.

          11.  TERMINATION UPON DEATH OR DISABILITY.
               ------------------------------------

          (a)  DEATH.  Executive's employment shall terminate upon the death of
               -----
Executive.  Upon such termination, the obligations of Executive and the Company
under this Agreement shall immediately cease.

          (b)  DISABILITY. The Company reserves the right to terminate
               ----------
Executive's employment upon ten (10) days written notice ("Disability
Termination Notice") if, for a period of sixty (60) days, Executive is prevented
from discharging his duties under this Agreement due to any physical or mental
disability. With the exception of the covenants included in paragraphs 4 and 5
above, upon such termination the obligations of Executive and the Company under
this Agreement shall immediately cease. If the Executive shall not agree with a
determination to terminate his employment because of disability, he must send a
written notice

                                       9
<PAGE>

of objection ("Disability Objection Notice") to the Company within ten (10) days
after the date of the Disability Termination Notice. If for any reason Executive
fails or neglects to send a Disability Objection Notice within such ten (10) day
period, Executive shall be deemed to have waived his right to object to his
termination for disability. If Executive does send a Disability Objection Notice
to the Company within said ten (10) day period, then the question of the
Executive's disability within the meaning of this Agreement shall be subject to
the certification of a qualified medical doctor agreed to by the Company and the
Executive. If a qualified medical doctor cannot be mutually agreed upon within
ten (10) days following the date of the Disability Objection Notice, each party
shall nominate a medical doctor by written notice to each other within fifteen
(15) days after the date of the Disability Objection Notice and those two
doctors shall select a third doctor within twenty (20) days after the date of
the Disability Objection Notice, who shall make the final determination as to
disability and send a reasonably detailed written report of such determination
to the Company and Executive not later than the forty-fifth (45th) day following
the date of the Disability Objection Notice. If Executive sends a Disability
Objection Notice within the time period specified herein, then during the period
from the date of such Notice until the earlier of the date of the written report
of the third medical doctor setting forth his determination or the forty-fifth
(45th) day following the date of the Disability Objection Notice, Executive
shall continue to receive full compensation and other benefits called for
hereunder.

          12.  MISCELLANEOUS.
               -------------

          (a)  PREPARATION OF AGREEMENT.  It is acknowledged by each party that
               ------------------------
such party either had separate and independent advice of counsel or the
opportunity to avail itself or himself of same.  In light of these facts it is
acknowledged that no party shall be construed to be solely responsible for the
drafting hereof, and therefore any ambiguity shall not be construed against any
party as the alleged draftsman of this Agreement.

          (b)  COOPERATION.  Each party agrees, without further consideration,
               -----------
to cooperate and diligently perform any further acts, deeds and things and to
execute and deliver any documents that may from time to time be reasonably
necessary or otherwise reasonably required to consummate, evidence, confirm
and/or carry out the intent and provisions of this Agreement, all without undue
delay or expense.

          (c)  INTERPRETATION.
               --------------

               (1)   Entire Agreement/No Collateral Representations.  Each party
                     ----------------------------------------------
expressly acknowledges and agrees that this Agreement, including all exhibits
attached hereto:  (1) is the final, complete and exclusive statement of the
agreement of the parties with respect to the subject matter hereof; (2)
supersedes any prior to contemporaneous agreements, promises, assurances,
guarantees, representations, understandings, conduct, proposals, conditions,
commitments, acts, course of dealing, warranties, interpretations or terms of
any kind, oral or written (collectively and severally, the "Prior Agreements"),
and that any such Prior Agreements are of no force or effect except as expressly
set forth herein; and (3) may not be varied, supplemented or contradicted by
evidence of Prior Agreements, or by evidence of subsequent oral agreements.  Any
agreement hereafter made shall be ineffective to modify, supplement or discharge
the terms

                                       10
<PAGE>

of this Agreement, in whole or in part, unless such agreement is in writing and
signed by the party against whom enforcement of the modification or supplement
is sought.

          (2) Waiver.  No breach of any agreement or provision herein contained,
              ------
or of any obligation under this Agreement, may be waived, nor shall any
extension of time for performance of any obligations or acts be deemed an
extension of time for performance of any other obligations or acts contained
herein, except by written instrument signed by the party to be charged or as
otherwise expressly authorized herein.  No waiver of any breach of any agreement
or provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof, or a waiver or relinquishment of any other agreement
or provision or right or power herein contained.

          (3) Remedies Cumulative.  The remedies of each party under this
              -------------------
Agreement are cumulative and shall not exclude any other remedies to which such
party may be lawfully entitled.

          (4) Severability.  If any term or provision of this Agreement or the
              ------------
application thereof to any person or circumstance shall, to any extent, be
determined to be invalid, illegal or unenforceable under present or future laws
effective during the Term of this Agreement, then and, in that event:  (A) the
performance of the offending term or provision (but only to the extent its
application is invalid, illegal or unenforceable) shall be excused as if it had
never been incorporated into this Agreement, and, in lieu of such excused
provision, there shall be added a provision as similar in terms and amount to
such excused provision as may be possible and be legal, valid and enforceable,
and (B) the remaining part of this Agreement (including the application of the
offending term or provision to persons or circumstances other than those as to
which it is held invalid, illegal or unenforceable) shall not be affected
thereby and shall continue in full force and effect to the fullest extent
provided by law.

          (5) Time is of the Essence.  It is expressly understood and agreed
              ----------------------
that time of performance is strictly of the essence with respect to each and
every term, condition, obligation and provision hereof and that the failure to
timely perform any of the terms, conditions, obligations or provisions hereof by
any party shall constitute a material breach and a noncurable (but waivable)
default under this Agreement by the party so failing to perform.

          (6) No Third Party Beneficiary.  Notwithstanding anything else herein
              --------------------------
to the contrary, the parties specifically disavow any desire or intention to
create any third party beneficiary obligations, and specifically declare that no
person or entity, other than as set forth in this Agreement, shall have any
rights hereunder or any right of enforcement hereof.

          (7) No Reliance Upon Prior Representation.  The parties acknowledge
              -------------------------------------
that no other party has made any oral representation or promise which would
induce them prior to executing this Agreement to change their position to their
detriment, partially perform, or part with value in reliance upon such
representation or promise; the parties acknowledge that they have taken such
action at their own risk; and the parties represent that they have not so
changed their position, performed or parted with value prior to the time of
their execution of this Agreement.

                                       11
<PAGE>

          (8)  Headings; References; Incorporation; Gender.  The headings used
               -------------------------------------------
in this Agreement are for convenience and reference purposes only, and shall not
be used in construing or interpreting the scope or intent of this Agreement or
any provision hereof. References to this Agreement shall include all amendments
or renewals thereof. All cross-references in this Agreement, unless specifically
directed to another agreement or document, shall be construed only to refer to
provisions within this Agreement, and shall not be construed to be referenced to
the overall transaction or to any other agreement or document. Any exhibit
referenced in this Agreement shall be construed to be incorporated in this
Agreement. As used in this Agreement, each gender shall be deemed to include the
other gender, including neutral genders or genders appropriate for entities, if
applicable, and the singular shall be deemed to include the plural, and vice
versa, as the context requires.

      (d) ENFORCEMENT.
          -----------

          (1)  Applicable Law.  This Agreement and the rights and remedies of
               --------------
each party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles thereof) of the State of California, as if this
Agreement were made, and as if its obligations are to be performed, wholly
within the State of California.

          (2)  Arbitration.  Subject to paragraph 12(d)(3), any controversy or
               -----------
claim arising out of or relating to this Agreement, its enforcement or
interpretation, or because of an alleged breach, default, or misrepresentation
in connection with any of its provisions, shall be submitted to arbitration, to
be held in Los Angeles County, California in accordance with California Civil
Procedure Code Sections 1282-1284.2.  In the event either party institutes
arbitration under this Agreement, the prevailing party, as determined by the
arbitrator, in any such litigation shall be entitled, in addition to all other
relief, to reasonable attorneys' fees relating to such arbitration.  The
nonprevailing party shall be responsible for all costs of the arbitration,
including but not limited to, the arbitration fees and court reporter fees.
Either party may enforce this paragraph in a court of law.

          (3)  Consent to Specific Performance and Injunctive Relief and Waiver
               ----------------------------------------------------------------
of Bond or Security.  Each party acknowledges that the Company may, as a result
-------------------
of Executive's breach of the covenants and obligations included in paragraph 4
of this Agreement, sustain immediate and long-term substantial and irreparable
injury and damage which cannot be reasonably or adequately compensated by
damages at law.  Notwithstanding paragraph, 12(d)(2), each party agrees that in
the event of Executive's breach or threatened breach of the covenants and
obligations included in paragraph 4, pending any decision on the merits by an
arbitrator, the Company shall be entitled to obtain injunctive relief from a
court of law without proof of any actual damages that have been or may be caused
to the Company by such breach or threatened breach and without the posting of
bond or other security in connection therewith.  Executive waives the claim or
defense that the Company has an adequate, remedy at law and Excessive shall not
allege or otherwise assert the legal position that any such remedy at law
exists.  Each party agrees and acknowledges:  (1) that the terms of this
paragraph are fair, reasonable and necessary to protect the legitimate interests
of the other party; (2) that this waiver is a material inducement to the other
party to enter into the transaction contemplated hereby; (3) that the other

                                       12
<PAGE>

party has already relied upon this waiver in entering into this agreement; and
(4) that each party will continue to rely on this wavier in their future
dealings.  Each party warrants and represents that such party has reviewed this
provision with such party's legal counsel or has been afforded an ample
opportunity to do so, and that such party has knowingly and voluntarily waived
its rights.

          (4) Consent to Jurisdiction; Service of Process.  Any action or
              -------------------------------------------
proceeding brought by either party seeking to enforce the provisions of
paragraph 12(d)(2) or by the Company seeking injunctive relief under paragraph
12(d)(3) pending a decision on the merits by the arbitrator shall be filed in
and heard and litigated solely before the state courts of California located
within the County of Los Angeles.  Each party generally and unconditionally
accepts the exclusive jurisdiction of such courts and to venue therein, consents
to the service of process in any such action or proceeding by certified or
registered mailing of the summons and complaint in accordance with the notice
provisions of this Agreement, and waives any defense or right to object to venue
in said courts based upon the doctrine of "Forum Non Conveniens".

     (e)  NO ASSIGNMENT OF RIGHTS OR DELEGATION OF DUTIES BY EXECUTIVE.
          ------------------------------------------------------------
Executive's rights and benefits under this Agreement are personal to him and
therefore (i) no such right or benefit shall be subject to voluntary or
involuntary alienation, assignment or transfer; and (ii) Executive may not
delegate his duties or obligations hereunder.  This Agreement will be binding
upon and inure to the benefit of the Company and any successor to the Company by
merger, consolidation, reorganization, sale of all or substantially all of the
assets or otherwise (and such successor shall thereafter be deemed the "the
Company" for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.

     (f)  NOTICES.  Unless otherwise specifically provided in this Agreement,
          -------
all notices, demands, requests, consents, approvals or other communications
(collectively and severally called "Notices") required or permitted to be given
hereunder, or which are given with respect to this Agreement, shall be in
writing, and shall be given by: (A) personal delivery (which form of Notice
shall be deemed to have been given upon delivery), (B) by telegraph or by
private airborne/overnight delivery service (which forms of Notice shall be
deemed to have been given upon confirmed delivery by the delivery agency), (C)
by facsimile transmission (which forms of Notice shall be deemed delivered upon
receipt by the sending party of a confirmation of transmission issued by
sender's facsimile machine), or (D) by mailing in the United States mail by
registered or certified mail, return receipt requested, postage prepaid (which
forms of Notice shall be deemed to have been given upon the fifth (5th) business
day following the date mailed). Each party, and their respective counsel, hereby
agree that any such Notice may be given hereunder by such party's Counsel and
such counsel may communicate directly with all principals, as required to comply
with the foregoing notice provisions. Notices shall be addressed to the address
hereinabove set forth in the introductory paragraph of this Agreement, or to
such other address as the receiving party shall have specified most recently by
like Notice, with a copy to the other parties hereto. Any Notice given to the
estate of a party shall be sufficient if addressed to the party as provided in
this subparagraph.

     (g)  COUNTERPARTS.  This Agreement may be executed in counterparts, each of
          ------------
which shall be deemed an original, and all of which together shall constitute
one and the same

                                       13
<PAGE>

instrument, binding on all parties hereto. Any signature page of this Agreement
may be detached from any counterpart of this Agreement and reattached to any
other counterpart of this Agreement identical in form hereto by having attached
to it one or more additional signature pages.

          (h) EXECUTION BY ALL PARTIES REQUIRED TO BE BINDING:  ELECTRONICALLY
              ----------------------------------------------------------------
TRANSMITTED DOCUMENTS.  This Agreement shall not be construed to be an offer and
---------------------
shall have no force and effect until this Agreement is fully executed by all
parties hereto.  If a copy or counterpart of this Agreement is originally
executed and such copy or counterpart is thereafter transmitted electronically
by facsimile or similar device, such facsimile document shall for all purposes
be treated as if manually signed by the party whose facsimile signature appears.

          (i) NO OBLIGATION TO MITIGATE.  Absent a breach of this Agreement by
              -------------------------
Executive, the Executive is under no obligation to mitigate the amount of any
payment provided for hereunder by seeking other employment or otherwise.

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

                              COMPANY:

                              VARIFLEX, INC., a Delaware corporation

                              By:  /s/ Steven L. Muellner
                                   ___________________________________
                              Name:   Steven L. Muellner
                              Title:  President

                              EXECUTIVE:

                              /s/ Petar Katurich
                              _______________________________________
                              Petar Katurich

                                       14Exhibit 4.1
                                                                     -----------

                                                                 EXECUTION COPY

                         UAC SECURITIZATION CORPORATION
                                     Seller

                          UNION ACCEPTANCE CORPORATION
                                    Servicer

                                       and

                 FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
                                  Owner Trustee

                         TRUST AND SERVICING AGREEMENT,

                            Dated as of March 1, 2002

                            UACSC 2002-A Owner Trust

<PAGE>

TABLE OF CONTENTS
                                                                            Page

ARTICLE I  Creation of Trust...................................................5

SECTION 1.01. Name.............................................................5
SECTION 1.02. Office...........................................................5
SECTION 1.03.  Purposes and Powers.............................................5
SECTION 1.04. Appointment of Owner Trustee.....................................6
SECTION 1.05. Initial Capital Contribution of Trust Estate.....................6
SECTION 1.06. Declaration of Trust.............................................6
SECTION 1.07. Title to Trust Property..........................................7
SECTION 1.08. Situs of Trust...................................................7

ARTICLE II  Definitions........................................................7

SECTION 2.01.  Definitions.....................................................7
SECTION 2.02.  Usage of Terms.................................................18
SECTION 2.03.  Closing Date and Record Date...................................18
SECTION 2.04.  Section References.............................................18

ARTICLE III  Conveyance of Receivables........................................19

ARTICLE IV  Acceptance by Trustee.............................................20

ARTICLE V  Information Delivered to the Rating Agencies.......................20

ARTICLE VI  Agent for Service.................................................21

ARTICLE VII  The Receivables..................................................21

SECTION 7.01.  Representations and Warranties of Seller.......................21
SECTION 7.02.  Repurchase Upon Breach.........................................22
SECTION 7.03.  Custody of Receivable Files....................................23
SECTION 7.04.  Duties of Servicer as Custodian................................23
SECTION 7.05.  Instructions; Authority to Act.................................24
SECTION 7.06.  Custodian's Indemnification....................................24
SECTION 7.07.  Effective Period and Termination...............................24

ARTICLE VIII  Administration and Servicing of Receivables.....................25

SECTION 8.01.  Duties of Servicer.............................................25
SECTION 8.02.  Collection of Receivable Payments..............................25
SECTION 8.03.  Realization Upon Receivables...................................26
SECTION 8.04.  Physical Damage Insurance......................................26
SECTION 8.05.  Maintenance of Security Interests in Financed Vehicles.........27
SECTION 8.06.  Covenants of Servicer..........................................27
SECTION 8.07.  Purchase of Receivables Upon Breach............................27
SECTION 8.08.  Servicing Fee..................................................27
SECTION 8.09.  Servicer's Certificate.........................................28
SECTION 8.10.  Annual Statement as to Compliance; Notice of Default...........28
SECTION 8.11.  Annual Independent Certified Public Accountant's Report........29
SECTION 8.12.  Access to Certain Documentation and Information
                 Regarding Receivables........................................29
SECTION 8.13.  Servicer Expenses..............................................30
SECTION 8.14.  Reports to Noteholders.........................................30

ARTICLE IX  Collections; Distributions to Noteholders and Certificateholder...30

SECTION 9.01.  Collection Account.............................................30
SECTION 9.02.  Collections....................................................30
SECTION 9.03.  Purchase Amounts...............................................31
SECTION 9.04.  Application of Funds...........................................31
SECTION 9.05.  Advances.......................................................33
SECTION 9.06.  Net Deposits...................................................33
SECTION 9.07.  No Segregation of Moneys; No Interest..........................33
SECTION 9.08.  Accounting and Reports to the Certificateholder, the
                 Internal Revenue Service and Others..........................33
SECTION 9.09.  Payahead Account...............................................35

ARTICLE X  Intentionally Blank................................................35

ARTICLE XI  The Certificate...................................................35

SECTION 11.01.  The Certificate...............................................35
SECTION 11.02.  Authentication of Certificate.................................35
SECTION 11.03.  Registration of Transfer and Exchange of Certificate..........35
SECTION 11.04.  Mutilated, Destroyed, Lost, or Stolen Certificates............36

ARTICLE XII  The Seller.......................................................37

SECTION 12.01.  Representations and Undertakings of Seller....................37
SECTION 12.02.  Liability of Seller; Indemnities..............................39
SECTION 12.03.  Merger or Consolidation of, or Assumption of the
                  Obligations of Seller.......................................40
SECTION 12.04.  Limitation on Liability of Seller and Others..................41

ARTICLE XIII  The Servicer....................................................41

SECTION 13.01.  Representations of Servicer...................................41
SECTION 13.02.  Indemnities of Servicer.......................................42
SECTION 13.03.  Merger or Consolidation of, or Assumption of the
                  Obligations of Servicer.....................................44
SECTION 13.04.  Limitation on Liability of Servicer and Others................44
SECTION 13.05.  Servicer Not to Resign........................................45
SECTION 13.06.  Delegation of Duties..........................................45

ARTICLE XIV  Servicer Default.................................................45

SECTION 14.01.  Events of Servicer Default....................................45
SECTION 14.02.  Appointment of Successor......................................47
SECTION 14.03.  Notice of Events of Servicer Default..........................48
SECTION 14.04.  Waiver of Past Defaults.......................................48

ARTICLE XV  The Owner Trustee.................................................48

SECTION 15.01.  Duties of Owner Trustee.......................................48
SECTION 15.02.  Owner Trustee's Certificate...................................51
SECTION 15.03.  Trust's Assignment of Purchased Receivables...................51
SECTION 15.04.  Certain Matters Affecting the Owner Trustee...................51
SECTION 15.05.  Owner Trustee Not Liable for Certificate or Receivables.......53
SECTION 15.06.  Owner Trustee May Own Notes...................................54
SECTION 15.07.  Owner Trustee's and Indenture Trustee's Fees and
                  Expenses; Indemnification...................................54
SECTION 15.08.  Eligibility Requirements for Owner Trustee....................55
SECTION 15.09.  Resignation or Removal of Owner Trustee.......................55
SECTION 15.10.  Successor Owner Trustee.......................................56
SECTION 15.11.  Merger or Consolidation of Owner Trustee......................56
SECTION 15.12.  Appointment of Co-Trustee or Separate Owner Trustee...........57
SECTION 15.13.  Representations and Warranties of Owner Trustee...............58
SECTION 15.14.  Certain Litigation Matters....................................58

ARTICLE XVI  Termination......................................................59

SECTION 16.01.  Termination of the Trust......................................59
SECTION 16.02.  Optional Disposition of All Receivables.......................60

ARTICLE XVII  Miscellaneous Provisions........................................60

SECTION 17.01.  Amendment.....................................................60
SECTION 17.02.  Protection of Title to Trust..................................62
SECTION 17.03.  Limitation on Rights of Certificateholder.....................64
SECTION 17.04.  Governing Law.................................................64
SECTION 17.05.  Notices.......................................................64
SECTION 17.06.  Severability of Provisions....................................65
SECTION 17.07.  Assignment....................................................65
SECTION 17.08.  Certificate Nonassessable and Fully Paid......................65
SECTION 17.09.  Nonpetition Covenant.........................................65
SECTION 17.10.  Counterparts..................................................65
SECTION 17.11.  Third Party Beneficiary.......................................66

EXHIBIT 1       -  Owner Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 2       -  Owner Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 3       -  Servicer's Certificate
EXHIBIT 4       -  Form of Certificate of Trust
EXHIBIT 5       -  Form of Certificate

SCHEDULE A      -  Schedule of Receivables
SCHEDULE B      -  Location of Receivables

<PAGE>

     This TRUST AND SERVICING AGREEMENT, dated as of March 1, 2002, is made with
respect  to  the   formation  of  the  UACSC  2002-A  Owner  Trust,   among  UAC
SECURITIZATION CORPORATION, a Delaware corporation, as depositor (the "Seller"),
UNION  ACCEPTANCE  CORPORATION,   an  Indiana  corporation,   as  servicer  (the
"Servicer"),  and FIRST UNION TRUST COMPANY,  NATIONAL  ASSOCIATION,  a national
banking  corporation  with its  principal  place  of  business  in the  State of
Delaware, as owner trustee (in such capacity the "Owner Trustee").

     WITNESSETH  THAT:  In  consideration  of the  premises  and  of the  mutual
agreements herein contained, the parties hereto agree as follows:

                                    ARTICLE I

                               Creation of Trust

     Upon the execution of this  Agreement by the parties  hereto and the prompt
filing thereafter of the Certificate of Trust in the State of Delaware, there is
hereby created the UACSC 2002-A Owner Trust.

     SECTION  1.01.  Name.  The Trust  created  hereby  shall be known as "UACSC
2002-A Owner  Trust",  in which name the Owner  Trustee may conduct the business
and affairs of the Trust,  make and execute  contracts and other  instruments on
behalf of the Trust and sue and be sued on behalf of the Trust.  The Trust shall
constitute  a  business  trust  within the  meaning  of  Section  3801(a) of the
Delaware  Business Trust Act for which the Owner Trustee has filed a certificate
of trust  with the  Secretary  of State of the  State of  Delaware  pursuant  to
Section 3810(a) of the Delaware Business Trust Act.

     SECTION 1.02. Office. The office of the Trust shall be in care of the Owner
Trustee at its  Corporate  Trust  Office or at such  other  address as the Owner
Trustee may designate by written notice to the Certificateholder,  the Servicer,
the Seller, the Insurer and the Indenture Trustee.

     SECTION 1.03. Purposes and Powers. The purpose of the Trust is to engage in
the following activities:

          (i) to issue the Notes  pursuant to the Indenture and the  Certificate
     pursuant  to this  Agreement  and to sell or  transfer  the  Notes  and the
     Certificate in one or more transactions;

          (ii) with the  proceeds of the sale of the Notes and the  Certificate,
     to purchase the Receivables pursuant to this Agreement;

          (iii) to assign,  grant,  transfer,  pledge,  mortgage  and convey the
     Trust estate  pursuant to the Indenture and to hold,  manage and distribute
     to the  Certificateholder  pursuant  to the  terms  of this  Agreement  any
     portion of the Trust estate  released from the Lien of, and remitted to the
     Trust pursuant to, the Indenture;

          (iv) to enter  into and  perform  its  obligations  under the  related
     documents to which it is to be a party;

          (v) to engage in those activities, including entering into agreements,
     that are  necessary,  suitable or convenient to accomplish the foregoing or
     are incidental thereto or connected therewith; and

          (vi) subject to compliance  with the related  documents,  to engage in
     such other activities as may be required in connection with conservation of
     the Trust estate and the making of distributions to the  Certificateholder,
     the Noteholders and the others specified in this Agreement.

     The Trust is hereby authorized to engage in the foregoing  activities.  The
     Trust shall not engage in any activity  other than in  connection  with the
     foregoing  or other than as  required  or  authorized  by the terms of this
     Agreement or the other Basic Documents.

     SECTION 1.04.  Appointment of Owner Trustee. The Seller hereby appoints the
Owner Trustee as trustee of the Trust  effective as of the date hereof,  to have
all the rights,  powers and duties set forth herein and in the Delaware Business
Trust Act.

     SECTION 1.05.  Initial  Capital  Contribution  of Trust Estate.  The Seller
hereby sells, assigns, transfers,  conveys and sets over to the Trust, as of the
date hereof,  the Trust estate.  The Owner Trustee on behalf of the Trust hereby
acknowledges  receipt in trust from the Seller,  as of the date  hereof,  of the
foregoing  contribution,  which shall  constitute the initial Trust estate.  The
Seller shall pay the  organizational  expenses of the Trust as they may arise or
shall,  upon the  request of the Owner  Trustee,  promptly  reimburse  the Owner
Trustee for any such expenses paid by the Owner Trustee.

     SECTION 1.06.  Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Trust  estate in trust upon and subject to the  conditions  set
forth  herein for the use and benefit of the  Certificateholder,  subject to the
obligations of the Trust under the other related documents.  It is the intention
of the  parties  hereto  that the Trust  constitute  a business  trust under the
Delaware  Business  Trust Act and that this  Agreement  constitute the governing
instrument of such Trust. Furthermore, it is the intention of the parties hereto
that, solely for federal,  state and local income and franchise tax purposes (i)
so long as there is a sole Certificateholder,  the Trust shall be disregarded as
a separate  entity,  with the assets of the Trust being treated as the assets of
such sole  Certificateholder,  and the Notes being non-recourse debt of the sole
Certificateholder,  and (ii) if there is more  than one  Certificateholder,  the
Trust  shall be treated  as a  partnership,  with the assets of the  partnership
being  the  Trust   estate,   the   partners  of  the   partnership   being  the
Certificateholders and the Notes being non-recourse debt of the partnership. The
Trust shall not elect to be treated as an association under Treasury Regulations
Section  301.7701-3(a) for federal income tax purposes.  The parties agree that,
unless   otherwise   required  by   appropriate   tax   authorities,   the  sole
Certificateholder or the Administrator on behalf of the Trust will file or cause
to be  filed  annual  or  other  necessary  returns,  reports  and  other  forms
consistent  with the  characterization  of the Trust as  provided  in the second
preceding sentence for such tax purposes.  The Owner Trustee,  the Seller as the
initial  Certificateholder and each successor  Certificateholder (as a condition
to acquiring its Certificate)  agree to disregard the trust as a separate entity
(if there is one  Certificateholder)  or to treat it as a partnership  (if there
are two or more  Certificateholders)  and to treat the Notes as indebtedness for
purposes of federal, state, and local income or franchise taxes.

     SECTION  1.07.  Title to Trust  Property.  Legal  title to all of the Trust
estate  shall be vested at all times in the  Trust as a  separate  legal  entity
except where  applicable law in any  jurisdiction  requires title to any part of
the Trust  estate to be vested in a trustee  or  trustees,  in which  case title
shall be  deemed  to be  vested in the  Owner  Trustee,  a  co-trustee  and/or a
separate trustee, as the case may be.

     SECTION 1.08. Situs of Trust. The Trust will be located and administered in
the State of Delaware.  Any bank  accounts  maintained  by the Owner  Trustee on
behalf of the Trust shall be located in the State of  Delaware.  The Trust shall
not have any employees in any state other than Delaware; provided, however, that
nothing  herein  shall  restrict  or  prohibit  the Owner  Trustee  from  having
employees  within or without the State of Delaware.  Payments,  if any,  will be
received by the Trust only in Delaware,  and  payments,  if any, will be made by
the  Trust  only from  Delaware.  The only  office  of the Trust  will be at the
Corporate Trust Office in Delaware.

                                   ARTICLE II

                                  Definitions

     SECTION  2.01.  Definitions.  Capitalized  terms  which  are  used  in this
Agreement  but are not defined  herein shall have the  meanings  provided in the
Indenture.  Whenever used in this  Agreement,  the following  words and phrases,
unless the context otherwise requires, shall have the following meanings:

     "Accrued  Interest" means all interest accrued on the Receivables  prior to
the opening of business on the day following the Cutoff Date.

     "Administration  Agreement" means the Administration  Agreement dated as of
March 1, 2002,  between the Trust and the  Administrator and acknowledged by the
Indenture Trustee.

     "Administrator" means the Administrator under the Administration Agreement,
which is initially UAC, and its successors and assigns thereunder.

     "Advance"  means,  with  respect  to a  Receivable  and with  respect  to a
Collection  Period, the amount that the Servicer is required to advance pursuant
to Section 9.05.

     "Agreement"  means  this  Trust and  Servicing  Agreement  executed  by the
Seller,  the Servicer and the Owner Trustee,  and all amendments and supplements
thereto.

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

     "Approved  Rating" means a short-term rating of Prime-1 by Moody's and A-l+
by Standard & Poor's.

     "Available Funds" means the amount defined as such in Section 9.04(a)(i).

     "Available Spread Amount" means, on any Payment Date, the amount on deposit
in the Spread Account, including any income or gain from any investment of funds
in the Spread  Account,  net of any losses from such  investment  before  giving
effect to deposits into or  withdrawals  from the Spread Account on such Payment
Date pursuant to Article IX of the Indenture.

     "Basic Documents" has the meaning provided in the Indenture.

     "Business  Day" means,  unless  otherwise  specified,  any day other than a
Saturday,  a  Sunday  or a day on  which  banking  institutions  in  Wilmington,
Delaware,  Chicago,  Illinois  or New York,  New York (or, if the  Servicer  has
provided  prior  written  notice to each of the  Owner  Trustee,  the  Indenture
Trustee and the  Insurer  that such day is not a Business  Day, in Little  Rock,
Arkansas or  Indianapolis,  Indiana)  shall be  authorized  or obligated by law,
executive order, or governmental decree to be closed.

     "Certificate"  means a  certificate  executed  on  behalf  of the Trust and
authenticated by the Owner Trustee  substantially in the form attached hereto as
Exhibit 5, which represents ownership of a 100% interest in the Trust.

     "Certificate  of  Trust"  means  the  Certificate  of Trust of the Trust in
substantially the form of Exhibit 4 hereto.

     "Certificate  Register" means the register  maintained by the Owner Trustee
pursuant to Section 11.03.

     "Certificateholder"  or  "Holder"  means  the  Person  in  whose  name  the
Certificate shall be registered in the Certificate Register.

     "Closing Date" means March 18, 2002.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Collected  Interest" on a  Receivable,  as of the last day of a Collection
Period,  means the portion of all payments received by the Servicer allocable to
interest relating to such Collection Period.

     "Collection Account" means the account designated as such,  established and
maintained pursuant to Section 9.01.

     "Collection  Period"  means  each  calendar  month,  until the Trust  shall
terminate pursuant to Article XVI.

     "Consolidated  Net Income"  means,  for any period,  the  consolidated  net
income of UAC and its subsidiaries  determined in accordance with GAAP and, with
respect to  Consolidated  Net Income for any fiscal  year,  as reported in UAC's
audited consolidated financial statements.

     "Consolidated  Tangible  Net  Worth"  means  the  excess,  if  any,  of the
consolidated   assets  of  UAC  and  its  subsidiaries   over  the  consolidated
liabilities  of UAC  and  its  subsidiaries  less  any  goodwill,  trade  names,
trademarks,   patents,   unamortized  debt  discount  and  expense,   and  other
intangibles,  except that dealer premium rebates and excess  servicing shall not
be so deducted, determined in accordance with GAAP.

     "Contract Rate" means,  with respect to a Receivable,  the contract rate of
interest on such Receivable, exclusive of prepaid finance charges.

     "Corporate Trust Office" means the office of the Owner Trustee at which its
corporate trust business shall, at any particular time, be  administered,  which
office at the date of the  execution of this  Agreement is located at One Rodney
Square, Suite 102, 920 King Street,  Wilmington, DE 19801, Attention:  Corporate
Trust  Administration,  Telecopy  (302) 888-7544 or at such other address as the
Owner   Trustee   may   designate   from   time  to  time  by   notice   to  the
Certificateholder, the Seller, the Servicer and the Indenture Trustee.

     "Cutoff Date" means February 28, 2002.

     "Dealer"  means the  seller  of a  Financed  Vehicle,  who  originated  and
assigned the related Receivable to UAC, UAC Finance  Corporation or PAC under an
existing agreement with UAC, UAC Finance  Corporation or PAC or who arranged for
a loan from UAC or PAC to the purchaser of a Financed  Vehicle under an existing
agreement with UAC or PAC.

     "Defaulted Receivable" means, for any Collection Period, a Receivable as to
which  the  earliest  to occur of any of the  following  has  occurred:  (i) any
payment, or part thereof, in excess of $10.00 was delinquent 120 days or more as
of the last  day of such  Collection  Period,  (ii) the  Financed  Vehicle  that
secures  the  Receivable  has  been  repossessed,  or  (iii)  the  Servicer  has
determined  that  the  Receivable  is   uncollectible  in  accordance  with  the
Servicer's  customary  practices  on or before  the last day of such  Collection
Period;  provided,  however,  that "Defaulted  Receivable" shall not include any
Receivable  that is to be  repurchased  pursuant  to Section  7.02 or  purchased
pursuant to Section 8.07; provided further,  that any Advances made with respect
to a Receivable shall not be considered in the  determination of the delinquency
status of such Receivable.

     "Delaware  Business  Trust Act" means the Delaware  Business  Trust Act, 12
Del. C.ss.3801 et seq.

     "Determination Date" means, for each Collection Period, the second Business
Day prior to the related Payment Date.

     "Eligible  Bank"  means  any  depository   institution  with  trust  powers
(including  the Owner Trustee and the Indenture  Trustee),  organized  under the
laws of the  United  States  or any  State  having  a net  worth  in  excess  of
$50,000,000,  the deposits of which are insured to the full extent  permitted by
law  by  the  Federal  Deposit  Insurance  Corporation,   which  is  subject  to
supervision and examination by Federal or State  authorities and which (i) has a
long-term  unsecured  debt  rating  of at least  Baa3  from  Moody's  or (ii) is
approved by each Rating Agency.

     "Eligible Investment" means any of the following:

          (i) direct obligations of, and obligations the full and timely payment
     of  principal  and  interest  on which is fully  guaranteed  by, the United
     States of America, the Federal National Mortgage Association, or any agency
     or instrumentality of the United States of America the obligations of which
     are backed by the full faith and credit of the United States of America;

          (ii) (A) demand and time  deposits  in,  certificates  of deposits of,
     bankers'  acceptances  issued by, or federal  funds sold by any  depository
     institution or trust company  (including  the Owner Trustee,  the Indenture
     Trustee  or any of their  agents,  acting  in their  respective  commercial
     capacities)  incorporated  under the laws of the United  States of America,
     any State  thereof or the  District of  Columbia or any foreign  depository
     institution  with a branch or agency  licensed under the laws of the United
     States of America or any State,  in each case  subject to  supervision  and
     examination  by Federal  and/or  State  banking  authorities  and having an
     Approved  Rating at the time of such  investment or contractual  commitment
     providing  for such  investment  or (B) any other demand or time deposit or
     certificate  of  deposit  which is fully  insured  by the  Federal  Deposit
     Insurance Corporation;

          (iii)  repurchase   obligations  with  respect  to  (A)  any  security
     described  in  clause  (i)  above  or (B)  any  other  security  issued  or
     guaranteed by an agency or instrumentality of the United States of America,
     in either case entered into with a depository  institution or trust company
     (acting as principal) described in clause (ii) (A) above;

          (iv)  short-term  securities  bearing  interest  or sold at a discount
     issued by any corporation  incorporated under the laws of the United States
     of America or any State the short-term unsecured  obligations of which have
     an Approved Rating at the time of such investment;  provided, however, that
     securities  issued  by any  particular  corporation  will  not be  Eligible
     Investments  to the  extent  that  investment  therein  will cause the then
     outstanding  principal amount of securities  issued by such corporation and
     held as part of the corpus of the Trust to exceed  10% of  amounts  held in
     the Collection Account;

          (v)  commercial  paper  having an Approved  Rating at the time of such
     investment;

          (vi) a guaranteed  investment contract issued by any insurance company
     or other  corporation  with an Approved Rating and acceptable to the Rating
     Agencies and the Insurer (so long as no Insurer Default shall have occurred
     and be  continuing  and the Policy shall be in effect),  provided  that the
     Owner Trustee or the Indenture  Trustee shall have received  written notice
     from the Rating Agencies to the effect that the investment of funds in such
     a contract  will not result in the reduction or withdrawal of any rating on
     the Notes;

          (vii)  interests  in any money  market  fund having a rating of Aaa by
     Moody's or AAAm by Standard & Poor's  (including  the money market funds of
     the  Owner   Trustee  and  the  Indenture   Trustee  in  their   commercial
     capacities); and

          (viii)  any other  investment  approved  in  advance in writing by the
     Rating Agencies and the Insurer.

     "Event of Servicer Default" means an event specified in Section 14.01.

     "Financed  Vehicle"  means a new or used  automobile,  light  truck or van,
together with all accessions thereto,  securing an Obligor's  indebtedness under
the respective Receivable.

     "GAAP" means  generally  accepted  accounting  principles  set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial  Accounting  Standards Board, or in such other statements that are
described  in  Statement  on Auditing  Standards  No. 69 "The Meaning of Present
Fairly in  Conformity  With  Generally  Accepted  Accounting  Principles  in the
Independent Auditor's Report" that are applicable to the circumstances as of the
date of determination, applied on a consistent basis.

     "Holder" -- see "Certificateholder."

     "Indenture"  means the  Indenture  dated as of March 1, 2002,  between  the
Trust and the Indenture Trustee, which provides for the issuance of the Notes.

     "Indenture  Trustee" means BNY Midwest Trust Company,  an Illinois  banking
corporation,  in its role as  Indenture  Trustee  under the  Indenture,  and its
permitted successors and assigns.

     "Indenture  Trustee  Office" means the office of the  Indenture  Trustee at
which  its  business  as  Indenture   Trustee  under  the  Indenture   shall  be
administered,  which office is presently located at 2 North LaSalle Street, 10th
Floor,  Chicago,  Illinois 60602,  Attention:  Corporate  Trust  Administration,
Telecopy  (312)  827-8562 or at such other address as the Indenture  Trustee may
designate from time to time by notice to the Owner Trustee, the Servicer and the
Noteholders.

     "Insolvency  Event" with respect to a party means (i) the entry of a decree
or order by a court or agency or supervisory  authority  having  jurisdiction in
the premises for the appointment of a trustee-in-bankruptcy  or similar official
for such party in any insolvency,  readjustment  of debt,  marshalling of assets
and liabilities, or similar proceedings, or for the winding up or liquidation of
their  respective  affairs,  and the  continuance  of any such  decree  or order
unstayed and in effect for a period of 60 consecutive  days; or (ii) the consent
by such party to the appointment of a trustee-in-bankruptcy  or similar official
in any insolvency,  readjustment of debt, marshalling of assets and liabilities,
or  similar  proceedings  of or  relating  to such  party or of or  relating  to
substantially  all of its  property;  or (iii) such party shall admit in writing
its inability to pay its debts  generally as they become due, file a petition to
take advantage of any applicable  insolvency or reorganization  statute, make an
assignment for the benefit of its creditors,  or voluntarily  suspend payment of
its obligations.

     "Insurance  Agreement"  means the  Insurance and  Reimbursement  Agreement,
dated  as of the  Closing  Date,  among  the  Seller,  UAC  individually  and as
Servicer,  the  Warehouse  Subsidiaries  and the  Insurer  pursuant to which the
Insurer shall issue the Policy.

     "Insurer" means MBIA Insurance Corporation,  a New York domiciled insurance
company.

     "Insurer Default" has the meaning specified in the Indenture.

     "Interest  Advance Amount" with respect to a simple interest  Receivable as
to which  an  Advance  is  required  to be made on the last day of a  Collection
Period,  shall mean an amount  equal to 30 days of interest  upon the  Principal
Balance of such  Receivable as of such date;  and, with respect to a Precomputed
Receivable  as to which an Advance is  required  to be made on the last day of a
Collection  Period,  shall mean an amount  equal to that portion of the earliest
delinquent  Scheduled  Payment  allocable  to interest  (using the  actuarial or
constant yield method).

     "Interest  Shortfall" means, as to any simple interest Receivable as of the
last day of any Collection Period, the amount, if any, by which (a) interest due
on such  Receivable  exceeds  (b) the  Collected  Interest  on such  Receivable.
"Interest Shortfall" with respect to a Precomputed Receivable as of the last day
of any Collection  Period means the amount,  if any, by which the portion of the
Scheduled Payment due during such Collection Period allocable to interest (using
the actuarial or constant yield method)  exceeds the Collected  Interest on such
Receivable  (computed  using the same method except that the amount of Collected
Interest in respect of  Precomputed  Receivables  shall be  increased  by giving
effect to the withdrawal for the related Payment Date of any previously received
Scheduled  Payments in respect of such Receivable  from the Payahead  Account in
accordance with Sections 8.02(b) hereof and Section 9.09 of the Indenture).

     "Lien"  means  a  security  interest,  lien,  charge,  pledge,  equity,  or
encumbrance of any kind other than tax liens,  mechanics'  liens,  and any liens
which  attach to the  respective  Receivable  or  related  Financed  Vehicle  by
operation of law.

     "Liquidation  Proceeds"  means the monies  collected from whatever  source,
including insurance proceeds,  on Defaulted  Receivables,  net of the sum of any
amounts expended by the Servicer for the account of the Obligor plus any amounts
required by law to be  remitted  to the  Obligor.  "Liquidation  Proceeds"  with
respect to a Payment  Date  means such  monies  collected  during the  preceding
Collection Period. In no event shall Liquidation Proceeds be less than zero.

     "Monthly Interest" has the meaning specified in the Indenture.

     "Monthly Principal" has the meaning specified in the Indenture.

     "Monthly  Servicing Fee" means, (i) for the first Payment Date, the product
of the following: the (a) monthly Servicing Rate (b) the number of days from and
including the Closing Date to the end of the first Collection  Period,  assuming
each month is a 30-day  month,  divided by 30 and (c) the Original  Pool Balance
and (ii) for any subsequent Payment Date, the product of (a) the Pool Balance as
of the beginning of the related  Collection Period and (b) the monthly Servicing
Rate.

     "Moody's" means Moody's Investors Service, Inc.

     "Notes" has the meaning specified in the Indenture.

     "Noteholders" has the meaning specified in the Indenture.

     "Obligor" on a Receivable  means the purchaser or the  co-purchasers of the
Financed Vehicle or any other Person who owes payments under the Receivable. The
phrase  "payment made on behalf of an Obligor" shall mean all payments made with
respect to a Receivable except payments made by UAC, the Seller or the Servicer.

     "Officers'  Certificate"  means  a  certificate  signed  by any  two of the
chairman of the board,  the president,  any vice chairman of the board, any vice
president,  the treasurer, or the controller of UAC, the Seller or the Servicer,
as the case may be; provided that no individual shall sign in a dual capacity.

     "Opinion of Counsel" means a written opinion of counsel, who may be counsel
to the Seller  and/or  Servicer,  which counsel shall be acceptable to the Owner
Trustee.

     "Optional  Disposition Price" means the amount specified as such in Section
16.02.

     "Original Pool Balance" means $300,028,790.39.

     "Outstanding Advances" as of any date, with respect to a Receivable,  means
the total amount of Advances made on such  Receivable for which the Servicer has
not been reimbursed.

     "Owner Trustee" means First Union Trust Company,  National  Association,  a
national  banking  association with its principal place of business in the State
of Delaware,  acting not in its individual  capacity but solely as trustee under
this Agreement and its successors or any corporation resulting from or surviving
any merger or  consolidation to which it or its successors may be a party or any
successor trustee at the time serving as successor trustee hereunder.

     "Owner Trustee's Certificate" means a certificate completed and executed by
the  Owner  Trustee  by  a  Responsible   Officer  pursuant  to  Section  15.02,
substantially  in the form of, in the case of an assignment  to UAC,  Exhibit 1,
and in the case of an assignment to the Servicer, Exhibit 2.

     "PAC" means Performance Acceptance  Corporation,  a subsidiary of UAC which
was  merged  into UAC,  and/or  UAC doing  business  as  Performance  Acceptance
Corporation.

     "Payahead" on a Precomputed Receivable means the amount, as of the close of
business on the last day of a Collection  Period,  computed in  accordance  with
Section 8.02(b) with respect to such Receivable.

     "Payahead  Account" means the account  designated as such,  established and
maintained pursuant to Section 9.09.

     "Payahead  Balance" on a  Precomputed  Receivable  means the sum, as of the
close of business on the last day of a Collection  Period, of all Payaheads made
by or on behalf of the Obligor with respect to such Precomputed  Receivable,  as
reduced by applications of previous  Payaheads with respect to such  Precomputed
Receivable, pursuant to Sections 8.02(b) and 9.09 hereof and Section 9.09 of the
Indenture.

     "Payment Date" means, for each Collection  Period,  the eighth calendar day
of the month following the end of the related  Collection Period or, if such day
is not a Business Day, the first Business Day  thereafter.  In addition,  if the
Class A-1 Notes are still  outstanding  after the March 2003 Payment  Date,  the
Class A-1 Notes will be payable in full on April 4, 2003. The first Payment Date
shall be April 8, 2002.

     "Person" means any  individual,  corporation,  estate,  partnership,  joint
venture,  association,  joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.

     "Policy" means the irrevocable Financial Guaranty Insurance Policy dated as
of the  Closing  Date  issued by the  Insurer to the  Indenture  Trustee for the
benefit of the Noteholders as required under the Indenture.

     "Pool Balance" as of any date means the aggregate  Principal Balance of the
Receivables as of such date; provided, however, that for purposes of determining
Monthly  Principal,  the  Principal  Balance  of  a  Defaulted  Receivable  or a
Purchased  Receivable  (if actually  purchased by the Servicer or repurchased by
UAC) shall be deemed to be zero on and after the close of  business  on the last
day of the  Collection  Period  in which  the  Receivable  becomes  a  Defaulted
Receivable or a Purchased Receivable that is actually purchased or repurchased.

     "Precomputed  Receivable" means any Receivable under which the portion of a
payment  allocable to earned  interest  (which may be referred to in the related
contract as an add-on  finance  charge) and the portion  allocable to the Amount
Financed is  determined  according to the sum of periodic  balances,  the sum of
monthly balances, the rule of 78's or any equivalent method.

     "Prepayment  Charges," as used in the  Agreement,  shall be  interpreted to
include,  without  limitation,  in the case of a Precomputed  Receivable that is
prepaid in full, the difference between the Principal Balance of such Receivable
(plus accrued  interest to the date of prepayment) and the Principal  Balance of
such  Receivable  computed in  accordance  with the method  provided  for in the
contract governing such Receivable, such as the rule of 78's.

     "Principal  Balance" of a simple  interest  Receivable,  as of the close of
business on the last day of a Collection Period, means the Amount Financed minus
that portion of all payments received on or before the close of business on such
last day  allocable to principal of such  Receivable.  "Principal  Balance" with
respect to a Precomputed  Receivable,  as of the close of business on the Cutoff
Date, means the gross principal balance of such Receivable on the records of the
Servicer,  net of unearned or accrued interest reflected therein,  and as of the
close of business on the last day of a Collection  Period,  means the  Principal
Balance as of the  Cutoff  Date minus  that  portion of all  Scheduled  Payments
received with respect to such  Receivable in respect of such  Collection  Period
and all prior Collection Periods allocable to principal of such Receivable using
the actuarial or constant yield method.

     "Purchase  Agreement"  means the UAFCC Purchase  Agreement  dated as of the
date hereof by and among the Seller, UAC and UAFCC, as amended,  supplemented or
modified from time to time,  pursuant to which the Seller purchases  Receivables
which have been or shall be transferred to the Trust.

     "Purchase  Amount" of any  Receivable,  as of the close of  business on the
last day of any  Collection  Period,  means the  amount  equal to the sum of the
Principal  Balance of such Receivable  plus any unpaid interest  accrued and due
during or prior to such Collection Period on such Receivable.

     "Purchased  Receivable"  means  a  Receivable  purchased  by  the  Servicer
pursuant to Section  8.07 or  repurchased  by UAC  pursuant to Section  7.02 not
later than the respective dates required thereby.

     "Rating  Agency"  means  each of  Moody's  and  Standard & Poor's and their
successors and assigns.

     "Rating Agency Condition" has the meaning specified in the Indenture.

     "Receivable"  means any simple interest or pre-computed  (add-on)  interest
installment  sales contract or  installment  loan and security  agreement  which
shall appear on Schedule A to the Agreement.

     "Receivable Files" means the documents specified in Section 7.03.

     "Receivables"  means the  Receivables  conveyed to the Trust by the Seller,
listed as of the Cutoff Date in Schedule A hereto.

     "Record Date" has the meaning specified in the Indenture.

     "Responsible  Officer" means,  when used with respect to the Owner Trustee,
any officer  within the Corporate  Trust Office (or any  successor  group of the
Owner Trustee) including any managing director,  vice president,  assistant vice
president,  assistant treasurer, assistant secretary or any other officer of the
Owner Trustee customarily performing functions similar to those performed by the
persons  who at the time shall be such  officers,  respectively,  or to whom any
corporate  trust matter is referred  because of his knowledge of and familiarity
with the particular subject.

     "Scheduled  Payment"  on a  Receivable  means that  portion of the  payment
required  to be made by the  Obligor  during the  respective  Collection  Period
sufficient  to amortize  the  Principal  Balance and to provide  interest at the
Contract Rate.

     "Secured Parties" means each of the Indenture Trustee,  the Noteholders and
the Insurer pursuant to the Indenture.

     "Seller" means UAC Securitization  Corporation, a Delaware corporation,  in
its capacity as the seller of the  Receivables  under this  Agreement,  and each
successor to UAC  Securitization  Corporation (in the same capacity) pursuant to
Section 12.03.

     "Servicer" means Union Acceptance Corporation,  an Indiana corporation,  in
its  capacity as the  servicer of the  Receivables  and each  successor to Union
Acceptance  Corporation  (in the same  capacity)  pursuant  to Section  13.03 or
14.02.

     "Servicer's  Certificate" means a certificate  completed and executed by an
officer of the Servicer pursuant to Section 8.09.

     "Servicing  Rate" means 1.00% per annum,  payable monthly at one-twelfth of
the annual rate,  subject to  adjustment  with  respect to a successor  Servicer
pursuant to Section 14.02.

     "Spread  Account"  means the account  designated as such,  established  and
maintained pursuant to the Indenture.

     "Standard & Poor's" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc.

     "State"  means (i) any state of the  United  States of  America or (ii) the
District of Columbia.

     "Stated Final Payment Date" means September 8, 2009.

     "Successor  Servicing  Fee" shall  mean,  for each  Payment  Date,  the fee
payable  pursuant  to Section  9.04(a)(ii)  of the  Indenture  to the  successor
Servicer  appointed  pursuant to Section 14.02 of this  Agreement,  in an amount
equal to the greater of (i) the Monthly  Servicing Fee and (ii) an amount not to
exceed  110%  of  the  then-current   "market-rate"  fee  for  servicing  assets
comparable to the Receivables, which rate shall be determined by averaging three
servicing  bids obtained by the Insurer from third party  servicers  selected by
the Insurer,  to the extent that such bids are available  from three third party
servicers acceptable to the Insurer in its sole discretion.

     "Transition  Costs" shall mean  reasonable  costs and  expenses  (including
attorneys'  fees)  incurred  by or payable by the  predecessor  Servicer  to the
successor  Servicer in connection with the transfer of servicing (whether due to
termination,  resignation  or  otherwise)  from the  Servicer to such  successor
Servicer,   including,  without  limitation,  costs  and  expenses  incurred  in
connection with transferring the Receivable Files and amending this Agreement to
reflect  the  transfer of  servicing,  which shall be approved in writing by the
Insurer;  provided,  however, that in no event shall the Transition Costs exceed
$200,000 without the prior written consent of the Insurer.

     "Trigger Event" means any of the events  identified as such in Section 6.01
of the Insurance Agreement.

     "Trust" means the Delaware  business  trust created by the  Agreement,  the
estate of which shall generally  comprise the Pledged Assets,  as defined in the
Indenture.

     "UAC" means Union Acceptance Corporation,  an Indiana corporation,  and its
successors and assigns, other than in its capacity as Servicer.

     "UAC  Finance  Corporation"  means  UAC  Finance  Corporation,  an  Indiana
corporation, and its successors and assigns.

     "UAFCC"  means  UAFC  Corporation,  a  Delaware  corporation  (F/K/A  Union
Acceptance Funding Corporation), and its successors and assigns.

     "UCC"  means the  Uniform  Commercial  Code as in effect in the  respective
jurisdiction.

     "Warehouse Subsidiaries" means UAFCC.

     SECTION 2.02. Usage of Terms.  With respect to all terms in this Agreement,
the singular  includes the plural and the plural the singular;  words  importing
any  gender  include  the other  genders;  references  to  "electronic"  include
printing,  typing, lithography and other means of reproducing words in a visible
form;  references to agreements and other  contractual  instruments  include all
subsequent amendments thereto or changes therein entered into in accordance with
their  respective  terms and not  prohibited  by this  Agreement;  references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."

     SECTION 2.03.  Closing Date and Record Date.  All  references to the Record
Date  prior to the first  Record  Date in the life of the Trust  shall be to the
Closing Date.

     SECTION 2.04. Section References.  All section references in this Agreement
shall be to Sections in this Agreement unless otherwise specified.

                                   ARTICLE III

                           Conveyance of Receivables

     In  consideration  of the  Trust's  issuance  of,  and the Owner  Trustee's
delivery to the Seller of, the  Certificate  and the  proceeds to be realized by
the Trust from the issuance of the Notes pursuant to the  Indenture,  the Seller
does hereby sell,  transfer,  assign, and otherwise convey to the Trust, without
recourse (subject to the obligations herein):

          (i)  all  right,  title,  and  interest  of the  Seller  in and to the
     Receivables listed in Schedule A hereto;

          (ii) the  security  interests  in the  Financed  Vehicles  granted  by
     Obligors pursuant to the Receivables;

          (iii) any Liquidation Proceeds 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 related to the Receivables;

          (iv) funds deposited in the Collection Account;

          (v) the  interest  of the  Seller in any  proceeds  from  recourse  to
     Dealers relating to the Receivables;

          (vi)  all  documents   contained  in  the  Receivable  Files  for  the
     Receivables;

          (vii) all monies paid and all monies due,  including Accrued Interest,
     as of and after the Cutoff Date,  with respect to the  Receivables  held by
     the Servicer or Seller (but  excluding  Accrued  Interest paid prior to the
     Closing Date);

          (viii) the rights of the Seller pursuant to the Purchase Agreements to
     require  UAC to  repurchase  any  Receivables  as to which there has been a
     breach of the representations and warranties contained therein;

          (ix) the benefits of the Policy; and

          (x) all proceeds of the foregoing.

     The Seller does hereby further assign,  convey, pledge and grant a security
interest  in (i) any and all other  right,  title and  interest,  including  any
beneficial  interest the Seller may have in the Collection  Account,  the Spread
Account and the funds  deposited  therein,  and (ii) any  proceeds of any of the
foregoing, to the Owner Trustee and for the benefit of the Noteholders to secure
amounts  payable to  Noteholders as provided  under this  Agreement.  The Seller
acknowledges  that all of the foregoing  shall  constitute the "Pledged  Assets"
pursuant to the terms of the  Indenture  and the Seller  hereby  consents to the
pledge of all of such  assets to the  Indenture  Trustee  for the benefit of the
Secured Parties pursuant to the Indenture.

     The Seller does not convey to the Trust any interest in any contracts  with
Dealers  related to any "dealer  reserve" or any rights to the  recapture of any
dealer reserve.

                                   ARTICLE IV

                             Acceptance by Trustee

     The  Owner   Trustee  does  hereby  accept  on  behalf  of  the  Trust  all
consideration  conveyed by the Seller pursuant to Article III, and declares that
the Owner Trustee shall hold such consideration upon the trusts herein set forth
for the  benefit of all present  and future  Certificateholders,  subject to the
terms and provisions of this Agreement.

                                    ARTICLE V

                  Information Delivered to the Rating Agencies

          (a) The Servicer hereby expresses its intention to deliver promptly to
each Rating Agency (i) a copy of each Servicer's Certificate that it delivers to
the Owner  Trustee,  the Indenture  Trustee and the Insurer  pursuant to Section
8.09, (ii) a copy of each annual Officers'  Certificate as to compliance and any
notice of default that it delivers to the Indenture Trustee or the Owner Trustee
pursuant  to  Section  8.10,  (iii)  delinquency  and loss  information  for the
Receivables,  the  amount  of any  draws on the  Policy,  written  notice of any
merger, consolidation,  or other succession of the Servicer, pursuant to Section
13.03, or the Seller,  pursuant to Section 12.03,  (iv) a copy of each amendment
to this Agreement and (v) any Opinion of Counsel  delivered to the Owner Trustee
pursuant to Section 17.02(i).

          (b) The Owner  Trustee  hereby  expresses  its  intention  to  deliver
promptly  to each  Rating  Agency  (i) a copy of each  annual  certified  public
accountant's report received by the Owner Trustee pursuant to Section 8.11, (ii)
a copy of each  amendment  to this  Agreement  and (iii) a copy of the notice of
termination  of the Trust  provided  to the Owner  Trustee  pursuant  to Section
16.01.

          (c) For  purposes of delivery  pursuant to  paragraphs  (a) and (b) of
this Article V, the addresses for the Rating Agencies are:

              Structured Finance/Asset Backed Surveillance Group
              Standard & Poor's Ratings Services, a division of The
                McGraw-Hill Companies, Inc.
              55 Water Street, 40th Floor
              New York, New York 10041-0003

              Moody's Investors Service, Inc.
              Attention:  ABS Monitoring Department
              4th Floor
              99 Church Street
              New York, New York 10007

          (d) The  provisions  of  this  Article  V  are  included  herein  for
convenience  of  reference  only and shall not be  construed  to be  contractual
undertakings or obligations. The failure of the Servicer or the Owner Trustee to
comply with any or all of the  provisions of this Article V shall not constitute
an Event of Servicer  Default or a default of any kind under this  Agreement  or
make any remedy available to any Person.

                                   ARTICLE VI

                               Agent for Service

     The  agent  for  service  for the  Seller  shall be The  Corporation  Trust
Company, 1209 Orange Street, Wilmington, Delaware 19801.

     The agent for  service  for the  Servicer  shall be The  Corporation  Trust
Company, 1209 Orange Street, Wilmington, Delaware 19801.

     A copy of any  service  of  process  served on the  Seller or the  Servicer
hereunder  shall also be sent to the parties to receive notices on behalf of the
Seller or Servicer, as the case may be, under Section 17.05 of this Agreement.

                                   ARTICLE VII

                                The Receivables

     SECTION 7.01. Representations and Warranties of Seller. Pursuant to Article
III,  the  Seller  has  assigned  to the Trust the  benefit  of,  and its rights
respecting,  the  representations  and  warranties  made  to the  Seller  in the
Purchase Agreements as to the Receivables on which the Trust relies in accepting
the  Receivables,  issuing the  Certificate  and  executing and  delivering  the
Indenture.  The Seller  agrees  that the  representations  shall also be for the
benefit of the Secured Parties.  Such representations and warranties speak as of
the  execution  and delivery of the Purchase  Agreements,  but shall survive the
sale, transfer, and assignment of the Receivables to the Trust.

     (a) The Seller  hereby  represents  and  warrants  to the Trust that it has
entered  into the  Purchase  Agreements  with UAC and the  applicable  Warehouse
Subsidiaries,   that  UAC  and  the   Warehouse   Subsidiaries   have  made  the
representations and warranties set forth therein,  that such representations and
warranties  run to and are for the benefit of the Seller,  and that  pursuant to
Article III of this  Agreement  the Seller has  transferred  and assigned to the
Trust all rights of the  Seller to cause UAC under the  Purchase  Agreements  to
repurchase  Receivables  in the  event of a breach of such  representations  and
warranties.

     (b) It is the  intention  of the Seller  that,  other than for  Federal and
applicable  state and local income and franchise tax purposes,  the transfer and
assignment  herein  contemplated,  taken  as a whole,  constitute  a sale of the
Receivables from the Seller to the Trust and that the beneficial interest in and
title to the Receivables not be part of the receivership  estate in the event of
the  appointment  of a  receiver  for the  Seller.  In the event that a court of
competent  jurisdiction  were to  conclude  that  the  transfer  of  Receivables
constitutes a grant of a security interest rather than a sale of Receivables and
the proceeds  thereof,  this Agreement and the transactions  provided for herein
are  sufficient  to  constitute  a grant by the  Seller  to the Trust of a valid
security interest in the Receivables and the proceeds thereof. No Receivable has
been sold,  transferred,  assigned, or pledged by the Seller to any Person other
than  the  Trust.  Immediately  prior  to the  transfer  and  assignment  herein
contemplated,  the Seller had good and marketable  title to each Receivable free
and clear of all liens, and,  immediately upon the transfer  thereof,  the Trust
(for the benefit of the  Certificateholder  and the Secured Parties  pursuant to
the Indenture) shall have good and marketable title to each Receivable, free and
clear  of all  liens  and  rights  of  others,  except  for  the  rights  of the
Certificateholder and the Insurer; and the transfer has been perfected under the
UCC.  On  or  prior  to  the  Closing  Date,  all  filings  (including,  without
limitation, UCC filings) necessary in any jurisdiction to give the Trust a first
priority perfected ownership interest in the Receivables shall have been made.

     (c) None of the Receivables  constitute  "electronic chattel paper" (within
the meaning of Section 4.102(a)(31) of the UCC).

     SECTION 7.02. Repurchase Upon Breach. The Seller, UAC, the Servicer, or the
Owner  Trustee,  as the case may be, shall  inform the  Indenture  Trustee,  the
Insurer and the other parties  promptly,  in writing,  upon the discovery of any
breach  of  the  representations  and  warranties   contained  in  the  Purchase
Agreements.  This  obligation  shall not constitute an obligation on the part of
the Owner  Trustee to actively  seek to discover any such  breaches.  Unless the
breach shall have been cured by the second Record Date  following the discovery,
UAC, pursuant to its obligations under the Purchase Agreements, shall repurchase
any Receivable materially and adversely affected by the breach as of such Record
Date (or, at UAC's option,  the first Record Date following the  discovery).  In
consideration  of the purchase of the  Receivable,  UAC shall remit the Purchase
Amount,  in the manner  specified in Section 9.03.  The sole remedy of the Owner
Trustee,  the Trust,  or the  Indenture  Trustee with respect to a breach of the
representations  and warranties  referred to in Section 7.01 shall be to require
UAC to  repurchase  Receivables  pursuant to the  Purchase  Agreements  and this
Section 7.02.

     SECTION 7.03.  Custody of Receivable  Files.  To assure uniform  quality in
servicing the Receivables and to reduce  administrative  costs, the Trust,  upon
the  execution  and delivery of the  Agreement,  hereby  revocably  appoints the
Servicer,  and the Servicer hereby accepts such appointment,  for the benefit of
the  Trust  and the  Indenture  Trustee,  to act as the  agent  of the  Trust as
custodian  of  the  following   documents  or   instruments   which  are  hereby
constructively  delivered  to the Trust  with  respect to each  Receivable,  and
which, except for item (i) below, may be in microfiche or electronic form:

          (i) The original of the Receivable.

          (ii) The original credit application fully executed by the Obligor.

          (iii) The original  certificate  of title or such  documents  that the
     Seller or Servicer  shall keep on file,  in  accordance  with its customary
     procedures,  evidencing the security interest of the Seller in the Financed
     Vehicle;  provided  that  such  documents  shall  not be in  electronic  or
     microfiche  form  unless  permitted  by the laws of the state in which such
     Financed Vehicle is registered.

          (iv) Any and all other documents that the Servicer or the Seller shall
     keep on file, in accordance  with its customary  procedures,  relating to a
     Receivable, an Obligor, or a Financed Vehicle.

     SECTION 7.04. Duties of Servicer as Custodian.

     (a) Safekeeping. The Servicer, in its capacity as custodian, shall hold the
Receivable  Files on behalf of the Trust for the use and  benefit  of the Trust,
and maintain such accurate and complete accounts,  records, and computer systems
pertaining to each Receivable File as shall enable the Trust to comply with this
Agreement  and the other Basic  Documents to which it is a party.  In performing
its duties as custodian the Servicer shall act with reasonable  care, using that
degree of skill and attention  that the Servicer  exercises  with respect to the
receivable  files relating to all  comparable  automobile  receivables  that the
Servicer  services  for  itself.  The  Servicer  shall  conduct,  or cause to be
conducted,  periodic  audits  of the  Receivable  Files  held by it  under  this
Agreement, and of the related accounts, records, and computer systems, in such a
manner as shall enable the Trust to verify the accuracy of the Servicer's record
keeping.  The  Servicer  shall  promptly  report  to the Owner  Trustee  and the
Indenture  Trustee  any  failure  on its part to hold the  Receivable  Files and
maintain its  accounts,  records,  and computer  systems as herein  provided and
promptly take appropriate action to remedy any such failure; provided,  however,
notwithstanding  anything to the contrary in Section 7.03 or this Section  7.04,
the  Servicer  shall not be  required to possess the  originals  of  Receivables
representing in the aggregate less than 2% of the Original Pool Balance until 30
days following the Closing Date.

     (b) Maintenance of and Access to Records.  The Servicer shall maintain each
Receivable File at one of its offices specified in Schedule B to this Agreement,
or at such  other  office as shall be  specified  to the Owner  Trustee  and the
Indenture Trustee by prior written notice.  The Servicer shall make available to
the  Owner  Trustee  and  the  Indenture   Trustee  and  their  duly  authorized
representatives,  attorneys, or auditors a list of locations of the Receivables,
the Receivable  Files, and the related accounts,  records,  and computer systems
maintained by the Servicer at such times as the Owner Trustee shall instruct.

     (c) Release of Documents.  Upon  instruction  from the Owner  Trustee,  the
Servicer  shall release any document in a Receivable  File to the Owner Trustee,
the Owner Trustee's agent, or the Owner Trustee's designee,  as the case may be,
at  such  place  or  places  as the  Owner  Trustee  may  designate,  as soon as
practicable.

     SECTION 7.05. Instructions;  Authority to Act. The Servicer shall be deemed
to have received proper  instructions  with respect to the Receivable Files upon
its receipt of written instructions signed by a Responsible Officer of the Owner
Trustee on behalf of the Trust.

     SECTION 7.06. Custodian's  Indemnification.  The Servicer,  shall indemnify
the Trust, the Owner Trustee and the Indenture Trustee (which shall include, for
purposes of this Section 7.06, their directors,  officers, employees and agents)
for  any  and  all  liabilities,   obligations,  losses,  compensatory  damages,
payments,  costs,  or  expenses of any kind  whatsoever  that may be imposed on,
incurred,  or asserted  against the Trust,  the Owner  Trustee or the  Indenture
Trustee as the result of any improper act or omission in any way relating to the
maintenance  and custody by the  Servicer  of the  Receivable  Files;  provided,
however,  that the  Servicer  shall not be liable  for any  portion  of any such
amount resulting from the willful  misfeasance,  bad faith, or negligence of the
Owner  Trustee or the  Indenture  Trustee.  This  indemnity  shall  survive  the
termination  of this  Agreement  and the  resignation  or  removal  of the Owner
Trustee or the Indenture Trustee.

     SECTION 7.07. Effective Period and Termination.  The Servicer's appointment
as custodian shall become  effective as of the Cutoff Date and shall continue in
full force and effect until  terminated  pursuant to this Section  7.07.  If the
Servicer shall resign in accordance  with the provisions of this Agreement or if
all of the rights and  obligations  of the Servicer  shall have been  terminated
under  Section  14.01,  the  appointment  of the  Servicer as  custodian  may be
terminated  by the Trust  with the  consent  of the  Indenture  Trustee  and the
Insurer (so long as the Insurer is not in default of its  obligations  under the
Policy).  In addition,  the Trust may terminate the  Servicer's  appointment  as
custodian with cause at any time upon written  notification  to the Servicer and
the Indenture  Trustee.  As soon as  practicable  after any  termination of such
appointment,  the Servicer shall deliver the  Receivable  Files to the Indenture
Trustee or the  Trust's  agent at such  place or places as the Owner  Trustee on
behalf of the Trust, with the consent of the Insurer and the Indenture  Trustee,
may reasonably designate.

                                  ARTICLE VIII

                  Administration and Servicing of Receivables

     SECTION  8.01.  Duties of Servicer.  The  Servicer,  for the benefit of the
Trust and the Secured  Parties,  shall  manage,  service,  administer,  and make
collections on the Receivables  with reasonable care, using that degree of skill
and  attention  that the  Servicer  exercises  with  respect  to all  comparable
automobile  receivables that it services for itself. The Servicer's duties shall
include  collection  and  posting  of all  payments,  making  Advances  (in  the
Servicer's sole discretion),  responding to inquiries of Obligors or of federal,
state  or  local  governmental  authorities  with  respect  to the  Receivables,
investigating delinquencies, sending payment coupons to Obligors, accounting for
collections,  and furnishing  monthly and annual statements to the Owner Trustee
and the  Indenture  Trustee with respect to  distributions.  The Servicer  shall
follow its customary  standards,  policies,  and  procedures  in performing  its
duties as  Servicer.  Without  limiting the  generality  of the  foregoing,  the
Servicer is  authorized  and  empowered by the Trust to execute and deliver,  on
behalf of itself, the Trust, the Owner Trustee,  the Indenture Trustee or any of
them, any and all  instruments of satisfaction  or  cancellation,  or partial or
full release or discharge, and all other comparable instruments, with respect to
such Receivables or to the Financed Vehicles  securing such Receivables.  If the
Servicer  shall  commence  a legal  proceeding  to  enforce  a  Receivable  or a
Defaulted  Receivable,  the Trust and the Indenture  Trustee shall  thereupon be
deemed to have  automatically  assigned,  solely for the purpose of  collection,
such  Receivable  to the Servicer.  The Owner Trustee and the Indenture  Trustee
shall execute any documents  prepared by the Servicer and delivered to the Trust
for execution  that are necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.

     SECTION 8.02.  Collection of Receivable  Payments.  (a) The Servicer  shall
make  reasonable  efforts to collect all payments called for under the terms and
provisions  of the  Receivables  as and when the same shall become due and shall
follow such  collection  procedures as it follows with respect to all comparable
automobile  receivables that it services for itself. If payments are extended in
the ordinary course of the Servicer's collection  procedures,  and, as a result,
any Receivable  would be outstanding at the Stated Final Payment Date,  then the
Servicer shall be obligated to purchase such Receivable pursuant to Section 8.07
(unless such Receivable is otherwise being purchased  pursuant to Section 16.02)
as of the last day of the  Collection  Period  immediately  preceding the Stated
Final Payment Date.  The Servicer may in its  discretion  waive any late payment
charge or any other fees that it is entitled to retain under  Section  8.08,  or
other fee (to the extent consistent with its credit and collection  policy) that
may be collected in the ordinary course of servicing a Receivable.

     (b)  All  allocations  of  payments  with  respect  to  a   simple-interest
Receivable to principal and interest and  determinations of periodic charges and
the like  shall be made using the simple  interest  method,  based on either the
actual number of days elapsed and the actual number of days in the calendar year
or on the basis of a thirty-day  month and a 360-day calendar year, as specified
in the related  installment  sales  contract or  installment  loan and  security
agreement.  Each payment on a simple interest  Receivable shall be applied first
to the amount of  interest  accrued on such  Receivable  to the date of receipt;
second,  to principal due on such  Receivable;  third,  to late charges or other
fees,  if any,  accrued on such  Receivable;  and last,  to reduce the remaining
principal amount  outstanding on such Receivable.  Payments made by or on behalf
of an Obligor on a Precomputed  Receivable  including  any Payaheads  previously
made  and  added  to the  Payahead  Balance  with  respect  to such  Precomputed
Receivable  shall be applied  first to  overdue  Scheduled  Payments  (including
reduction of Outstanding Advances as provided in Section 9.05). Next, any excess
shall be applied to the  Scheduled  Payment and any  remaining  excess  shall be
added to the Payahead  Balance,  and shall be applied to prepay the  Precomputed
Receivable,  but only if such Payahead Balance shall be sufficient to prepay the
Receivable  in  full.  Otherwise,  any  such  remaining  excess  payments  shall
constitute a Payahead and shall increase the Payahead Balance.

     SECTION 8.03. Realization Upon Receivables.  (a) On behalf of the Trust and
the Secured Parties the Servicer shall use its best efforts, consistent with its
customary servicing procedures,  to repossess or otherwise convert the ownership
of the Financed  Vehicle  securing any Receivable as to which the Servicer shall
have  determined that eventual  payment in full is unlikely.  The Servicer shall
follow  such  customary  and usual  practices  and  procedures  as it shall deem
necessary or advisable in its  servicing of  automobile  receivables,  which may
include  reasonable  efforts to realize upon any recourse to Dealers and selling
the  Financed  Vehicle  at  public  or  private  sale.  In any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in  connection  with the repair or the  repossession  of such  Financed  Vehicle
unless it shall determine in its discretion that such repair and/or repossession
will increase the Liquidation  Proceeds.  After  appropriate  disposition of the
Financed  Vehicle,  the  Servicer  shall  also  take such  measures  as it deems
reasonable and appropriate to realize value in respect of any deficiency balance
of the Receivable  including pursuit of action on behalf of the Trust and/or the
Secured Parties against the Obligor with respect to such deficiency.

     (b) Unless  otherwise  stated in this Agreement,  the Servicer shall either
purchase  or  liquidate  each  Financed  Vehicle  that has not  previously  been
liquidated  and that secures,  or  previously  secured,  a Defaulted  Receivable
either  (i) by the end of the  Collection  Period  preceding  the  Stated  Final
Payment  Date or (ii) if  earlier,  by the end of the  ninth  Collection  Period
following the Collection  Period during which such Receivable became a Defaulted
Receivable.  Any purchase of a Financed Vehicle by the Servicer shall be made at
a price equal to the fair market value of the Financed  Vehicle as determined by
the Servicer in accordance with the Servicer's normal servicing standards.

     SECTION 8.04. Physical Damage Insurance.  The Servicer,  in accordance with
its customary  servicing  procedures and underwriting  standards,  shall require
that each  Obligor  shall  have  obtained  and shall  maintain  physical  damage
insurance covering the Financed Vehicle.

     SECTION 8.05.  Maintenance of Security Interests in Financed Vehicles.  The
Servicer shall, in accordance with its customary servicing procedures, take such
steps as are  necessary  to ensure  that  perfection  of the  security  interest
created by each  Receivable in the related  Financed  Vehicle has been obtained,
and to maintain such security interest. The Trust hereby authorizes the Servicer
to take such steps as are  necessary to  re-perfect  such  security  interest on
behalf of the Trust in the event of the relocation of a Financed  Vehicle or for
any other reason. Without limiting the foregoing, in the event that the Servicer
consigns a  repossessed  Financed  Vehicle to an affiliate for  liquidation,  it
shall take such  measures  as are  necessary  or  appropriate  to  maintain  the
security  interest in the Financed  Vehicle in the hands of the consignee  until
such Financed Vehicle is liquidated,  including appropriate  precautionary UCC-1
filings.  In addition,  UAC and/or such affiliate  will notify such  affiliate's
creditors,  if any, of such consignee affiliate  arrangements described above on
or before such arrangements are made.

     SECTION  8.06.  Covenants of Servicer.  The Servicer  shall not release the
Financed Vehicle  securing any Receivable from the security  interest granted by
such  Receivable  in whole or in part  except in the event of payment in full by
the Obligor thereunder or repossession, nor shall the Servicer impair the rights
of the  Certificateholder  or the Secured Parties in the Receivables,  nor shall
the Servicer  change the amount of the  Scheduled  Payment under a Receivable or
change the Amount  Financed  under a Receivable or reduce the Contract Rate of a
Receivable  (except  if  so  ordered  by a  bankruptcy  court  in  a  proceeding
concerning the Obligor or otherwise mandated by law).

     SECTION  8.07.  Purchase of  Receivables  Upon Breach.  The  Servicer,  the
Indenture  Trustee or the Owner  Trustee  shall  inform the other  party and the
Indenture  Trustee and the Insurer promptly,  in writing,  upon the discovery of
(i) any breach by the Servicer of its obligations under Section 8.06 or (ii) the
existence of the  Servicer's  obligation  to purchase a  Receivable  pursuant to
Section 8.02(a).  This obligation shall not constitute an obligation on the part
of the Owner Trustee or the  Indenture  Trustee to discover any such breaches or
circumstances. Unless the breach under Section 8.06 shall have been cured by the
second Record Date  following the  discovery,  the Servicer  shall  purchase any
Receivable  materially and adversely affected by such breach as of such day (or,
at  the  Servicer's  election,  as  of  the  first  Record  Date  following  the
discovery). In consideration of the purchase of a Receivable pursuant to Section
8.02(a) or as a result of a breach of Section 8.06, the Servicer shall remit the
Purchase  Amount with  respect to such  Receivable  in the manner  specified  in
Section 9.03.  The sole remedy of the Owner Trustee,  the Trust,  or the Secured
Parties  with  respect to a breach  pursuant to Section  8.06 or the grant of an
extension  which  triggers an obligation of the Servicer  under Section  8.02(a)
shall be to require  the  Servicer  to  purchase  Receivables  pursuant  to this
Section 8.07, except as provided in Section 13.02.

     SECTION 8.08.  Servicing  Fee. The  servicing  fee for a Collection  Period
shall equal the Monthly  Servicing  Fee (except  that in the case of a successor
Servicer, the servicing fee shall equal such amount as is arranged in accordance
with Section  14.02(c)).  The Servicer shall be entitled to retain from payments
of interest on the Receivables  collected  during a Collection  Period an amount
equal  to the  Monthly  Servicing  Fee  due  the  Servicer  in  respect  of such
Collection  Period and need not deposit such amount in the  Collection  Account.
The  Servicer  shall also be  entitled  to retain,  and need not  deposit in the
Collection Account, all late fees, Prepayment Charges, other administrative fees
or similar  charges  allowed by applicable law with respect to  Receivables,  if
any, collected (from whatever source) on the Receivables.  The Monthly Servicing
Fee will be paid  only  out of the  funds of the  Trust  and not from the  Owner
Trustee's own funds.  So long as UAC is the Servicer,  if the Servicer  fails to
pay the fees and expenses of the Owner Trustee or the Indenture Trustee pursuant
to Section  15.07  hereof or pursuant to the  Indenture,  the Owner  Trustee and
Indenture  Trustee  shall be  entitled  to receive  such amount from the Monthly
Servicing  Fee prior to payment  thereof to the Servicer and the Servicer  shall
not retain from collections  that portion of the Monthly  Servicing Fee equal to
any fees of the Owner Trustee and Indenture Trustee that are due and payable and
any unpaid amount that the Servicer has received notice is due the Owner Trustee
or the Indenture Trustee as reimbursement for expenses.

     SECTION 8.09. Servicer's  Certificate.  On or before the Determination Date
following  each  Collection  Period,  the  Servicer  shall  deliver to the Owner
Trustee,  the  Indenture  Trustee and the Insurer a  Servicer's  Certificate  in
substantially  the form of Exhibit 3 attached hereto  containing all information
necessary to make the  distributions  pursuant to Section 9.04 of the  Indenture
(so long as the Notes remain  outstanding)  for the Collection  Period preceding
the date of such Servicer's  Certificate  and all information  necessary for the
Indenture Trustee to send statements to the Noteholders and the Owner Trustee to
send statements to the Certificateholder,  including (A) the amount of aggregate
collections  on the  Receivables,  (B)  the  aggregate  Purchase  Amount  of the
Receivables  repurchased by UAC and purchased by the Servicer,  (C) with respect
to Precomputed  Receivables  the net deposit from the Collection  Account to the
Payahead  Account  or the  net  withdrawal  from  the  Payahead  Account  to the
Collection Account required for the Collection Period in accordance with Section
9.09 of the Indenture, and in the case of a net withdrawal, the Monthly Interest
and Monthly Principal reported on such Servicer's  Certificate shall reflect the
portions of such withdrawal  allocable to interest and principal,  respectively,
in accordance with this Agreement,  (D) the amount, if any, to be withdrawn from
the Spread  Account  and the  amount,  if any,  to be drawn on the  Policy,  (E)
information  respecting (i) delinquent  Receivables  that are 30, 60 and 90 days
past due, and (ii) the number of repossessions  of Financed  Vehicles during the
preceding  Collection  Period,  number  of  unliquidated   repossessed  Financed
Vehicles, gross and net losses on the Receivables, and recoveries on charged off
Receivables;  and (F) each other item  listed in Section  9.04 of the  Indenture
reasonably requested by a Rating Agency, the Indenture Trustee or the Insurer in
order to monitor the performance of the  Receivables.  Receivables  purchased by
UAC as of the last day of such Collection  Period shall be identified by the UAC
account  number with respect to such  Receivable  (as specified in Schedule A to
this Agreement).

     SECTION 8.10. Annual Statement as to Compliance; Notice of Default. (a) The
Servicer  shall  deliver to the Owner  Trustee,  the  Indenture  Trustee and the
Insurer,  on or before  April 30 of each year,  beginning  on the first April 30
that is at least six months after the Closing  Date,  an Officers'  Certificate,
dated as of December 31 of the preceding year,  stating that (i) a review of the
activities of the Servicer during the preceding  12-month period (or in the case
of the initial  Officer's  Certificate,  the period from the Closing Date to and
including the date of such Officer's  Certificate) and of its performance  under
this  Agreement has been made under such officer's  supervision  and (ii) to the
best of such  officer's  knowledge,  based  on such  review,  the  Servicer  has
fulfilled all its obligations under this Agreement  throughout such year, or, if
there has been a default in the fulfillment of any such  obligation,  specifying
each such  default  known to such officer and the nature and status  thereof.  A
copy of such  certificate  and the report  referred  to in  Section  8.11 may be
obtained by any  Certificateholder at its own expense by a request in writing to
the Owner Trustee addressed to the Corporate Trust Office.

     (b) The  Servicer  shall  deliver  to a  Responsible  Officer  of the Owner
Trustee,  the Indenture Trustee and the Insurer,  promptly after having obtained
knowledge  thereof,  but in no event  later  than 5  Business  Days  thereafter,
written notice in an Officers' Certificate of any event which with the giving of
notice or lapse of time,  or both,  would  become an Event of  Servicer  Default
under Section 14.01. The Seller or UAC shall deliver to a Responsible Officer of
the Owner Trustee, the Indenture Trustee and the Insurer,  promptly after having
obtained  knowledge  thereof,  but  in no  event  later  than  5  Business  Days
thereafter,  written notice in an Officers'  Certificate of any event which with
the  giving  of  notice  or lapse of time,  or both,  would  become  an Event of
Servicer Default under clause (ii) of Section 14.01.

     SECTION 8.11. Annual Independent  Certified Public Accountant's Report. The
Servicer shall cause a firm of independent certified public accountants, who may
also render other services to the Servicer, to deliver to the Owner Trustee, the
Indenture  Trustee  and the  Insurer  on or  before  September  30 of each  year
concerning  the 12-month  period  ended June 30 of such year (or shorter  period
since the date of this Agreement), beginning on the first September 30 following
the first June 30 after the Closing  Date,  a report  addressed  to the Board of
Directors  of the  Servicer  to the  effect  that  such  firm has  reviewed  the
servicing of the  Receivables  by the Servicer and that such review (1) included
tests relating to new or used automobile, van and light truck loans serviced for
others in accordance  with the  requirements of the Uniform Single Audit Program
for  Mortgage  Bankers,  to the  extent  the  procedures  in  such  program  are
applicable  to the servicing  obligations  set forth in the  Agreement,  and (2)
except as described  in the report,  disclosed  no  exceptions  or errors in the
records  relating to  automobile,  van or light truck loans  serviced for others
that, in the firm's opinion,  paragraph four of such program  requires such firm
to report.

     The report will also indicate that the firm is  independent of the Servicer
within the meaning of the Code of Professional  Ethics of the American Institute
of Certified Public Accountants.

     SECTION 8.12.  Access to Certain  Documentation  and Information  Regarding
Receivables.  The Servicer shall provide to the Owner Trustee, Indenture Trustee
and the Insurer access to the Receivable  Files in such cases where such parties
shall  be  required  by  applicable  statutes  or  regulations  to  review  such
documentation. Access shall be afforded without charge, but only upon reasonable
request and during the normal  business hours at the  respective  offices of the
Servicer. Nothing in this Section shall affect the obligation of the Servicer to
observe any applicable law prohibiting  disclosure of information  regarding the
Obligors,  and the failure of the Servicer to provide access to information as a
result of such obligation shall not constitute a breach of this Section 8.12.

     SECTION 8.13. Servicer Expenses.  The Servicer shall be required to pay all
expenses incurred by it in connection with its activities  hereunder,  including
fees  and  disbursements  of  independent  accountants,  taxes  imposed  on  the
Servicer,  and expenses incurred in connection with regular payments and reports
to Noteholders.

     SECTION 8.14.  Reports to  Noteholders.  The Owner Trustee shall provide to
any  Noteholder  who so requests in writing  (addressed to the  Corporate  Trust
Office)  a copy  of any  certificate  described  in  Section  8.09,  the  annual
statement  described in Section 8.10, or the annual report  described in Section
8.11. The Owner Trustee may require the requesting party to pay a reasonable sum
to cover the cost of the Owner Trustee complying with such request.

                                   ARTICLE IX

        Collections; Distributions to Noteholders and Certificateholder

     SECTION 9.01. Collection Account. The Seller shall establish the Collection
Account as a segregated  trust account in the name of the Indenture  Trustee for
the benefit of the Secured Parties with the Indenture  Trustee (at the Indenture
Trustee  Office)  or  another  Eligible  Bank.  The  Servicer  shall  direct the
Indenture  Trustee to invest the amounts in the  Collection  Account in Eligible
Investments  that  mature  not  later  than the  Business  Day prior to the next
succeeding Payment Date and to hold such Eligible  Investments to maturity.  The
Servicer  shall  instruct the  Indenture  Trustee (or its  custodian) to and the
Indenture Trustee (or its custodian) shall at all times (i) maintain  possession
of any negotiable  instruments  or securities  evidencing  Eligible  Investments
until the time of sale or maturity and each certificated  security or negotiable
instrument  evidencing an Eligible  Investment  shall be endorsed in blank or to
the  Indenture  Trustee  (or its  custodian)  or  registered  in the name of the
Indenture  Trustee (or its  custodian)  and (ii) cause any  Eligible  Investment
represented  by an  uncertificated  security to be registered in the name of the
Indenture Trustee (or its custodian).

     SECTION 9.02.  Collections.  (a) The Servicer shall remit to the Collection
Account all payments by or on behalf of the Obligors on the  Receivables and all
Liquidation  Proceeds,  both as collected  during the  Collection  Period net of
Monthly  Servicing  Fees and  administrative  fees allowed to be retained by the
Servicer  pursuant  to Section  8.08 and net of charge  backs  (attributable  to
errors in posting,  returned checks, or rights of offset for amounts that should
not have been paid or that must be refunded as the result of a successful  claim
or defense under  bankruptcy or similar laws) not later than the second Business
Day  following  the  Business  Day on which such  amounts  are  received  by the
Servicer.  Notwithstanding  the  foregoing,  for so long as (a) UAC  remains the
Servicer, (b) no Event of Servicer Default shall have occurred and be continuing
and (c)(1)  UAC  maintains  a  short-term  rating of at least A-1 by  Standard &
Poor's and P-l by Moody's (and for five Business  Days  following a reduction in
either such rating) or (2) prior to ceasing daily remittances, the Rating Agency
Condition  shall have been satisfied (and any conditions or limitations  imposed
by the Rating Agencies in connection  therewith are complied with) and the prior
written consent of the Insurer (not to be unreasonably withheld) shall have been
obtained, the Servicer may remit all such payments and Liquidation Proceeds with
respect to any Collection  Period to the  Collection  Account on a less frequent
basis, but in no event later than the Determination  Date immediately  preceding
each  Payment  Date.  The Servicer  shall remit any  Advances  with respect to a
Collection Period to the Collection Account on or before the Determination Date.

     (b) The Servicer,  the Owner Trustee and/or Indenture Trustee shall deposit
in the Collection Account any funds received by such parties in respect of funds
drawn under the Policy from the Insurer.

     (c) If the  Available  Funds for a  Payment  Date are  insufficient  to pay
current and past due Insurance  Premiums or the aggregate amount of unreimbursed
draws  under the  Policy  plus  accrued  interest  thereon to the  Insurer,  the
Servicer  shall  notify  the Owner  Trustee  and the  Indenture  Trustee of such
deficiency,  and the  Available  Spread  Amount,  if any, then on deposit in the
Spread  Account shall be available to cover such  deficiency in accordance  with
Section 9.04(a) or 5.06(a) of the Indenture, as applicable.

     SECTION 9.03. Purchase Amounts.  (a) Not later than the Determination Date,
the Servicer, UAC or the Owner Trustee shall remit to the Collection Account the
aggregate  Purchase Amount for such Collection  Period pursuant to Sections 7.02
and 8.07 and (b) not later than 11:00 a.m.  (New York City time) on the  related
Payment Date, the Servicer  shall remit to the Collection  Account the aggregate
Optional  Disposition  Price for  Receivables  on such Payment Date  pursuant to
Section 16.02.

     SECTION 9.04.  Application of Funds.  (a) On each  Determination  Date, the
Servicer shall  determine (i) the amount of payments on all  Receivables and all
Liquidation  Proceeds  received  during such  Collection  Period,  the amount of
Advances for such  Collection  Period,  the Purchase  Amount for all Receivables
purchased or repurchased with respect to such Collection  Period which have been
deposited  in the  Collection  Account  (excluding  amounts  required to be paid
pursuant to Sections  7.02,  8.07, and 9.05 but not so paid) after giving effect
to the net transfer from the Collection  Account to the Payahead Account or from
the Payahead  Account to the  Collection  Account as provided in Section 9.09 of
the Indenture (the "Available Funds"), and (ii) the amount of funds necessary to
make the distributions required pursuant to Sections 9.04(a) (i) through (xi) of
the  Indenture,  inclusive,  on the next Payment Date.  The Servicer  shall by a
Servicer's  Certificate  on or before the  Determination  Date  notify the Owner
Trustee and the  Indenture  Trustee of such amounts by telecopy to the Corporate
Trust Office and the  Indenture  Trustee  Office or to such numbers as the Owner
Trustee or Indenture Trustee may from time to time provide, followed promptly by
mailing such notice to the Owner  Trustee and the  Indenture  Trustee and to the
Insurer.

     (b) Reserved.

     (c) On any Payment Date on which there are not sufficient  Available  Funds
to make the  distributions  required  pursuant to  Sections  9.04(a) (i) through
(viii) of the  Indenture,  the  Indenture  Trustee  may, or the  Servicer on its
behalf shall,  withdraw from the Spread Account,  to the extent of the Available
Spread  Amount,  an amount equal to such  deficiency  and promptly  deposit such
amount in the  Collection  Account.  If such  deficiency  exceeds the  Available
Spread  Amount,  the Servicer shall  simultaneously  and in the same manner also
notify the Owner Trustee, the Indenture Trustee and the Insurer of the amount of
such excess deficiency.

     (d) On each  Payment  Date,  the  Owner  Trustee  shall  distribute  to the
Certificateholder the amount of funds on deposit in the Spread Account in excess
of the Required  Spread Amount,  if any, for such Payment Date, as received from
the  Indenture  Trustee  pursuant to Section  10.02(e) of the  Indenture on such
Payment  Date,  after  application  in accordance  with Section  10.02(e) of the
Indenture  of such excess to pay any  outstanding  amounts  owing to the Insurer
pursuant to the Insurance Agreement.

     (e)  On  each  Payment   Date,   the  Owner   Trustee  shall  send  to  the
Certificateholder  the  Servicer's  Report  provided to the Owner Trustee by the
Servicer for such Payment Date.

     (f) In the event that any withholding tax is imposed on the Trust's payment
(or allocations of income) to the  Certificateholder,  such tax shall reduce the
amount otherwise  distributable to the Certificateholder in accordance with this
Section 9.04. The Owner Trustee is hereby authorized and directed to retain from
amounts otherwise  distributable to the  Certificateholder  sufficient funds for
the payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Owner Trustee from  contesting any such tax in appropriate
proceedings,  and withholding  payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to a  Certificateholder  shall be treated  as cash  distributed  to such
Certificateholder  at the time it is withheld by the Trust to be remitted to the
appropriate taxing authority.  If there is a possibility that withholding tax is
payable with respect to a distribution, the Owner Trustee in its sole discretion
may (but unless  otherwise  required by law shall not be obligated  to) withhold
such  amounts  in  accordance  with  this  paragraph  (f).  Upon  request,   any
Certificateholder  shall provide its federal employer  identification  number or
any other  information or tax forms the Owner Trustee or the  Administrator  may
reasonably request. In the event that a Certificateholder  wishes to apply for a
refund of any such withholding tax, the Owner Trustee shall reasonably cooperate
with   such   Certificateholder   in   making   such   claim  so  long  as  such
Certificateholder  agrees to reimburse the Owner  Trustee for any  out-of-pocket
expenses incurred.

     (g)  Distributions  required  to be  made to the  Certificateholder  on any
Payment  Date shall be made to each  Certificateholder  of record on the related
Record Date either by wire transfer,  in  immediately  available  funds,  to the
account of such  Certificateholder  at a bank or other entity having appropriate
facilities therefor, or by check mailed to such Certificateholder at the address
of such Certificateholder appearing in the Certificate Register.

     SECTION 9.05.  Advances.  (a) As of the last day of the initial  Collection
Period, the Servicer shall advance funds equal to the excess, if any, of Monthly
Interest due in respect of the initial  Collection  Period,  over the  Collected
Interest  for  such  Collection  Period;  and  (b) as of the  last  day of  each
subsequent  Collection Period, the Servicer shall advance funds in the amount of
the  Interest  Advance  Amount  (or such  other  amount  as the  Servicer  shall
reasonably  determine  to cover an  Interest  Shortfall)  with  respect  to each
Receivable  that is delinquent  for more than 30 days, in each such case, to the
extent that the Servicer,  in its sole  discretion,  determines that the Advance
will be recoverable  from payments by or on behalf of the Obligor,  the Purchase
Amount, or Liquidation  Proceeds.  With respect to each Receivable,  the Advance
paid  pursuant  to  this  Section  9.05  shall  increase  Outstanding  Advances.
Outstanding  Advances shall be reduced by subsequent payments by or on behalf of
the Obligor,  collections of Liquidation  Proceeds,  or payments of the Purchase
Amount.  The  Servicer  shall remit any  Advances  with  respect to a Collection
Period to the Collection Account by the related Determination Date.

     If the Servicer shall determine that an Outstanding Advance with respect to
any Receivable  shall not be recoverable,  the Servicer shall be reimbursed from
any collections made on other Receivables in the Trust, and Outstanding Advances
with respect to such Receivable shall be reduced accordingly.

     SECTION 9.06. Net Deposits.  For so long as Union Acceptance Corporation is
the Servicer,  Union Acceptance  Corporation (in whatever capacity) may make the
remittances with respect to any Payment Date pursuant to Section 9.02 above, net
of amounts to be  distributed to itself or its delegee under Section 13.06 (also
in whatever  capacity),  if it determines pursuant to Section 9.02 that there is
no  deficiency  in  Available  Funds for such  Payment  Date.  Nonetheless,  the
Servicer shall account for all of the above described amounts as if such amounts
were deposited and distributed.

     SECTION 9.07. No  Segregation  of Moneys;  No Interest.  Subject to Section
9.04,  moneys received by the Owner Trustee  hereunder need not be segregated in
any manner  except to the extent  required by law or this  Agreement  and may be
deposited  under such general  conditions  as may be  prescribed by law, and the
Owner Trustee shall not be liable for any interest thereon.

     SECTION 9.08. Accounting and Reports to the Certificateholder, the Internal
Revenue   Service  and  Others.   The  Owner   Trustee   shall  deliver  to  the
Certificateholder,  as may be  required  by the  Code  and  applicable  Treasury
Regulations, or as may be requested by such Certificateholder, such information,
reports or  statements  as may be necessary to enable the  Certificateholder  to
prepare its federal and state  income tax returns.  Consistent  with the Trust's
characterization  for tax purposes as a disregarded entity so long as the Seller
or any other Person is the sole beneficial owner of the Trust, no federal income
tax  return  shall be filed on behalf of the Trust  unless  either (i) the Owner
Trustee  shall  receive  an  Opinion  of  Counsel  that,  based on a  change  in
applicable law occurring after the date hereof,  or as a result of a transfer by
a selling Certificateholder permitted by Section 11.03, the Code requires such a
filing or (ii) the Internal  Revenue  Service shall  determine that the Trust is
required  to file such a return.  In the event that  there  shall be two or more
beneficial owners of the Trust (including the treatment of any class of Notes as
a beneficial  ownership in the Trust  pursuant to a final  determination  of the
Internal  Revenue  Service  or a court),  the Owner  Trustee  shall  inform  the
Indenture Trustee in writing of such event, (x) the Administrator,  on behalf of
the  Trust  shall  prepare  or  shall  cause  to be  prepared  federal  and,  if
applicable,  state or local  partnership tax returns required to be filed by the
Trust (using the calendar year or its fiscal year, or such other taxable year as
may be  required  by the Code) and shall  remit  such  returns to the Seller for
signature (or if the Seller no longer owns the Certificate, to the Seller to the
extent its tax  liability is affected  thereby and  otherwise  to the  successor
Certificateholder owning the largest percentage interest in the Certificates) at
least (5) days before such returns are due to be filed, and (y) capital accounts
shall be maintained for each  beneficial  owner in accordance  with the Treasury
Regulations  under Section 704(b) of the Code  reflecting  each such  beneficial
owner's share of the income, gains,  deductions,  and losses of the Trust and/or
guaranteed  payments made by the Trust and  contributions  to, and distributions
from, the Trust. The Seller (or such successor Certificateholder, as applicable)
shall promptly sign such returns and deliver such returns after signature to the
Administrator,  on behalf of the  Trust and such  returns  shall be filed by the
Administrator,  on behalf of the Trust with the appropriate tax authorities.  In
the event that a "tax  matters  partner"  (within  the  meaning of Code  Section
6231(a)(7)) is required to be appointed with respect to the Trust, the Seller is
hereby  designated  as tax  matters  partner  or,  if  the  Seller  is  not  the
Certificateholder,  the  Seller to the  extent  its tax  liability  is  affected
thereby  and  otherwise  the  successor  Certificateholder  owning  the  largest
percentage  interest in the  Certificates,  shall be  designated  as tax matters
partner.  In no event shall the Owner Trustee,  the  Administrator or the Seller
(or  such  designee   Certificateholder,   as  applicable)  be  liable  for  any
liabilities,  costs or expenses of the Trust or the  Noteholders  arising out of
the  application  of any tax law,  including  federal,  state,  foreign or local
income or excise taxes or any other tax imposed on or measured by income (or any
interest,  penalty or addition with respect thereto or arising from a failure to
comply therewith) except for any such liability, cost or expense attributable to
any act or omission by the Owner Trustee,  the  Administrator  or the Seller (or
such designee Certificateholder as applicable), as the case may be, in breach of
its obligations under this Agreement.  Unless otherwise instructed by a majority
in  interest  of  the  Certificateholders,   none  of  the  Owner  Trustee,  the
Administrator,  or the Seller shall elect, or shall cause an election to be made
on behalf of the Trust,  under (i) Section 1278 of the Code to accrue its market
discount income currently or (ii) Section 754 of the Code.

     SECTION 9.09.  Payahead Account.  The Servicer shall establish the Payahead
Account in the name of the Trust on behalf of the Obligors  and the  Noteholders
as their interests may appear.  The Servicer shall maintain the Payahead Account
pursuant to Section 9.09 of the Indenture.

                                    ARTICLE X

                              Intentionally Blank

                                   ARTICLE XI

                                The Certificate

     SECTION 11.01. The Certificate. The Certificate shall be issued in the form
of one or more  certificates  and shall  initially be issued to the Seller.  The
Certificate  shall be  executed  on behalf  of the Trust by manual or  facsimile
signature of a Responsible  Officer of the Owner Trustee. A Certificate  bearing
the manual or facsimile  signatures  of  individuals  who were, at the time when
such  signatures  shall have been  affixed,  authorized to sign on behalf of the
Trust,  shall be a valid and binding  obligation  of the Trust,  notwithstanding
that such individuals or any of them shall have ceased to be so authorized prior
to the  authentication  and  delivery of such  Certificate  or did not hold such
offices at the date of such Certificate.

     SECTION 11.02. Authentication of Certificate. The Owner Trustee shall cause
the  Certificate  to be  executed  on behalf  of the  Trust,  authenticated  and
delivered to or upon the written order of the Seller,  signed by its chairman of
the board,  its president,  or any vice  president,  without  further  corporate
action by the Seller, in authorized  denominations,  pursuant to this Agreement.
No Certificate shall entitle its holder to any benefit under this Agreement,  or
shall be valid for any purpose,  unless there shall appear on such Certificate a
certificate  of  authentication,  substantially  as set  forth  in the  form  of
Certificate  attached as Exhibit 5 to this Agreement,  executed by a Responsible
Officer of the Owner  Trustee by manual  signature;  such  authentication  shall
constitute  conclusive  evidence  that  such  Certificate  shall  have been duly
authenticated and delivered hereunder.  Each Certificate shall be dated the date
of its authentication.

     SECTION 11.03.  Registration of Transfer and Exchange of  Certificate.  The
Owner Trustee shall keep or cause to be kept, at the Corporate  Trust Office,  a
Certificate Register in which, subject to such reasonable  regulations as it may
prescribe,  the Owner Trustee shall provide for the registration of Certificates
and of transfers  and  exchanges  of  Certificates  subject to the  restrictions
provided herein.

     Upon  surrender  for  registration  of transfer of any  Certificate  at the
Corporate  Trust  Office,  the Owner Trustee shall  execute,  authenticate,  and
deliver,  in the name of the designated  transferee or transferees,  one or more
new  Certificates in authorized  denominations  of a like aggregate amount dated
the  date of  authentication  by the  Owner  Trustee,  provided,  however,  that
registration  of transfer of a  Certificate  may not be effected  unless (A) the
Owner Trustee receives an Opinion of Counsel,  satisfactory to it, to the effect
that  (i) such  transfer  may be made in  reliance  upon an  exemption  from the
registration  requirements  of the Securities Act of 1933, as amended,  and (ii)
such transfer  will not  adversely  affect the tax treatment of the Trust or the
Notes;  (B) the Insurer has consented to such transfer and (C) the Rating Agency
Condition shall have been satisfied with respect to such transfer.

     Every Certificate  presented or surrendered for registration of transfer or
exchange  shall be  accompanied  by a written  instrument  of  transfer  in form
satisfactory  to the Owner  Trustee duly  executed by the Holder or his attorney
duly authorized in writing.  Each  Certificate  surrendered for  registration of
transfer and exchange shall be canceled and subsequently  destroyed by the Owner
Trustee.

     The  Seller,  as  the  initial   Certificateholder,   and  each  subsequent
Certificateholder by its acceptance of its Certificate,  represents and warrants
to the  Trust,  the  Owner  Trustee  and the  Secured  Parties  that it is not a
"Benefit  Plan" (as such  term is  defined  in the  Employee  Retirement  Income
Security  Act of 1974,  as  amended)  or a person  who is not a  "United  States
person"  within the  meaning of  Section  7701(a)(30)  of the Code and agrees to
indemnify and hold harmless the Trust, the Owner Trustee and the Secured Parties
in respect of any tax,  loss,  liability or expense  incurred as a result of the
breach of such representation and warranty by such Certificateholder.

     No  service  charge  shall  be made for any  registration  of  transfer  or
exchange of a  Certificate,  but the Owner Trustee may require  payment of a sum
sufficient  to cover  any tax or  governmental  charge  that may be  imposed  in
connection with any transfer or exchange of a Certificate.

     SECTION 11.04. Mutilated,  Destroyed, Lost, or Stolen Certificates.  If (a)
any mutilated  Certificate shall be surrendered to the Owner Trustee,  or if the
Owner Trustee shall receive  evidence to its  satisfaction  of the  destruction,
loss, or theft of any  Certificate and (b) there shall be delivered to the Owner
Trustee such security or indemnity as may be required by it to save it harmless,
then in the absence of notice that such Certificate  shall have been acquired by
a bona fide  purchaser,  the Owner  Trustee on behalf of the Trust shall execute
and the Owner Trustee shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost, or stolen Certificate, a new Certificate
of like tenor and  denomination.  In  connection  with the  issuance  of any new
Certificate  under this Section 11.04, the Owner Trustee may require the payment
of a sum  sufficient to cover any tax or other  governmental  charge that may be
imposed in connection  therewith.  Any duplicate  Certificate issued pursuant to
this  Section  11.04 shall  constitute  conclusive  evidence of ownership in the
Trust, as if originally  issued,  whether or not the lost,  stolen, or destroyed
Certificate shall be found at any time.

                                   ARTICLE XII

                                   The Seller

     SECTION 12.01.  Representations  and Undertakings of Seller. (a) The Seller
makes the following  representations  on which the Trust relies in accepting the
Receivables and executing and authenticating the Certificate and undertaking its
obligations under the Indenture.  The Seller agrees that the representations and
undertakings  shall also be for the benefit of the Owner Trustee and the Secured
Parties.  The  representations  speak as of the  execution  and delivery of this
Agreement and shall survive the sale of the Receivables to the Trust.

                    (i) Organization and Good Standing. The Seller has been duly
          organized and is validly  existing as a  corporation  in good standing
          under the laws of the State of Delaware,  with power and  authority to
          own its properties and to conduct its business as such  properties are
          currently owned and such business is presently  conducted,  and had at
          all relevant  times,  and has,  power,  authority,  and legal right to
          acquire and own the Receivables.

                    (ii) Due  Qualification.  The Seller is duly qualified to do
          business as a foreign  corporation  in good  standing and has obtained
          all necessary licenses and approvals in all jurisdictions in which the
          ownership or lease of property or the conduct of its business requires
          such qualifications.

                    (iii)  Power and  Authority.  The  Seller  has the power and
          authority to execute and deliver this  Agreement  and to carry out its
          terms;  the Seller has full power and authority to sell and assign the
          property to be sold and assigned to and  deposited  with the Trust and
          has duly  authorized  such  sale and  assignment  to the  Trust by all
          necessary   corporate  action;  and  the  execution,   delivery,   and
          performance of the Agreement has been duly authorized by the Seller by
          all necessary corporate action.

                    (iv)  Valid  Sale;  Binding   Obligations.   This  Agreement
          evidences a valid sale,  transfer,  and assignment of the Receivables,
          enforceable  against creditors of and purchasers from the Seller;  and
          evidences  a  legal,  valid,  and  binding  obligation  of the  Seller
          enforceable in accordance with its terms.

                    (v) No  Violation.  The  consummation  of  the  transactions
          contemplated  by the Agreement and the fulfillment of the terms hereof
          do not  conflict  with,  result in any  breach of any of the terms and
          provisions  of, nor  constitute  (with or  without  notice or lapse of
          time) a default  under,  the charter or by-laws of the Seller,  or any
          indenture,  agreement,  or other  instrument  to which the Seller is a
          party or by which it shall be bound;  nor  result in the  creation  or
          imposition  of any Lien  upon any of its  properties  pursuant  to the
          terms of any such indenture,  agreement,  or other  instrument  (other
          than  this  Agreement);  nor  violate  any law or,  to the best of the
          Seller's knowledge,  any order, rule, or regulation  applicable to the
          Seller  of any  court  or of any  federal  or State  regulatory  body,
          administrative  agency, or other governmental  instrumentality  having
          jurisdiction over the Seller or its properties.

                    (vi)  No   Proceedings.   There   are  no   proceedings   or
          investigations   pending,   or,  to  the  Seller's   best   knowledge,
          threatened,  before any court, regulatory body, administrative agency,
          or other  governmental  instrumentality  having  jurisdiction over the
          Seller  or its  properties:  (A)  asserting  the  invalidity  of  this
          Agreement,  (B)  seeking to  prevent  the  consummation  of any of the
          transactions   contemplated  by  this   Agreement,   (C)  seeking  any
          determination or ruling that might materially and adversely affect the
          performance by the Seller of its obligations under, or the validity or
          enforceability of, this Agreement, or (D) which might adversely affect
          the federal income tax attributes of the Trust.

     (b)  The Seller further covenants that, prior to termination of the Trust:

                    (i) It  will  not  engage  at any  time in any  business  or
          business  activity other than such  activities  expressly set forth in
          its Certificate of Incorporation  delivered to the Insurer on or prior
          to  the  Closing  Date,   and  will  not  amend  its   Certificate  of
          Incorporation without the prior written consent of the Insurer.

                    (ii) It will not, without the consent of the Insurer (not to
          be unreasonably withheld), sell, assign, pledge or otherwise transfer,
          in  whole,  or in  part  or in any  series  of  related  or  unrelated
          transactions  any  of  its  right,  title  or  interest  in or to  the
          Certificate.

                    (iii) It will not:

                              (A) Fail to do all things  necessary  to  maintain
               its corporate existence separate and apart from UAC and any other
               Person, including,  without limitation,  holding regular meetings
               of its  stockholders  and  board  of  directors  and  maintaining
               appropriate  corporate  books and  records  (including  a current
               minute book);

                              (B) Suffer any  limitation on the authority of its
               own directors and officers to conduct its business and affairs in
               accordance with their independent  business judgment or authorize
               or suffer any Person other than its own officers and directors to
               customarily  delegated  to others  under  powers of attorney  for
               which  a   corporation's   own  officers  and   directors   would
               customarily be responsible;

                              (C) Fail to (I) maintain or cause to be maintained
               by an agent of the Seller  under the  Seller's  control  physical
               possession   of  all  its  books  and  records,   (II)   maintain
               capitalization  adequate for the conduct of its  business,  (III)
               account for and manage all its liabilities  separately from those
               of any other  Person,  including  payment  by it of all  payroll,
               administrative  expenses and taxes,  if any, from its own assets,
               (IV)  segregate  and identify  separately  all of its assets from
               those of any other  Person,  (V) to the extent any such  payments
               are made,  pay its  employees,  officers  and agents for services
               performed  for the  Seller or (VI)  maintain  a  separate  office
               address with a separate telephone number from those of UAC or any
               other affiliate thereof; or

                              (D) Except as may be provided  in this  Agreement,
               or a similar agreement relating to other securitizations in which
               the Seller has similar rights and/or  obligations,  commingle its
               funds with those of UAC or any affiliate thereof or use its funds
               for other than the Seller's uses.

     SECTION 12.02. Liability of Seller; Indemnities. The Seller shall be liable
in  accordance  herewith  only to the  extent  of the  obligations  specifically
undertaken by the Seller under this Agreement.

                    (i) The Seller shall indemnify,  defend,  and hold harmless,
          the  Owner  Trustee  in  its  individual  and  trust  capacities,  the
          Indenture Trustee, their respective officers, directors, employees and
          agents,  the Trust and the Noteholders from and against any taxes that
          may at any time be asserted  against such parties with respect to, and
          as of the date of,  the sale of the  Receivables  to the  Trust or the
          issuance and original sale of the Certificate and the Notes, including
          any sales, gross receipts, general corporation, tangible or intangible
          personal  property,  privilege,  or license taxes (but, in the case of
          the Trust,  not including any taxes asserted with respect to ownership
          of the  Receivables  or federal or other income  taxes  arising out of
          distributions  on the Certificate or the Notes) and costs and expenses
          in defending against the same.

                    (ii) The Seller shall indemnify,  defend, and hold harmless,
          the  Owner  Trustee  (in its  individual  and trust  capacities),  the
          Indenture Trustee, their officers, directors, employees and agents and
          the Trust from and against any loss, liability, or expense incurred by
          reason  of  (a)  the  Seller's  willful  misfeasance,  bad  faith,  or
          negligence in the performance of its duties under this  Agreement,  or
          by reason of reckless  disregard of its  obligations  and duties under
          this  Agreement  and (b) the  Seller's  violation  of federal or State
          securities laws in connection with the registration of the sale of the
          Certificate.

     Indemnification under this Section 12.02 shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation.  Neither the
Seller nor any of the persons  indemnified  under this Section 12.02 will in any
event be  entitled  to make any claim upon the Trust  estate for the  payment or
reimbursement of any losses,  liabilities,  taxes, costs, expenses or fees under
this Section 12.02. If the Seller shall have made any indemnity  payments to the
Owner Trustee,  the Indenture  Trustee or the Trust pursuant to this Section and
the Owner Trustee,  the Indenture  Trustee or the Trust thereafter shall collect
any of such amounts from others, the Owner Trustee, the Indenture Trustee or the
Trust,  as the case may be,  shall  repay such  amounts to the  Seller,  without
interest.  This indemnification  shall survive the termination of this Agreement
and the  resignation  or removal of the Owner Trustee or the Indenture  Trustee.
Notwithstanding  the  foregoing,  any amounts  Seller shall pay pursuant to this
Section 12.02 shall be paid solely from funds available for  distribution to the
Certificateholder in accordance with Section 10.02(e) of the Indenture and shall
in any case be nonrecourse to the Seller and to the Seller's  assets and, to the
extent funds are not so  available  to pay any amounts  when due and owing,  the
claims relating  thereto shall not constitute a claim (as defined in Section 101
of Title 11 of the United States  Bankruptcy  Code) against the Seller but shall
continue to accrue.  Each party  hereto  agrees that the payment of any claim of
any such party  pursuant  to this  Section  12.02 shall be  subordinated  to the
payment  in  full  of  all  outstanding   interest  and  principal  due  to  the
Noteholders. The payment of any claim pursuant to this Section 12.02 shall in no
event be construed as a "fee" of the  Indenture  Trustee or the Owner Trustee as
such term is used in Section 5.06(a)(ii) of the Indenture.

     SECTION 12.03. Merger or Consolidation of, or Assumption of the Obligations
of Seller.  Any Person (a) into which the Seller may be merged or  consolidated,
(b) which may result from any merger or  consolidation to which the Seller shall
be a  party,  or (c)  which  may  succeed  to all  or  substantially  all of the
properties  and  assets of the  Seller's  business,  which  Person in any of the
foregoing cases executes an agreement of assumption to perform every  obligation
of the  Seller  under  this  Agreement,  shall be the  successor  to the  Seller
hereunder  without the execution or filing of any document or any further act by
any of the parties to this Agreement;  provided,  however,  that (i) immediately
after giving  effect to such  transaction,  no  representation  or warranty made
pursuant  to  Section  7.01 shall have been  breached  and no Event of  Servicer
Default, and no event that, after notice or lapse of time, or both, would become
an Event of Servicer  Default  shall have happened and be  continuing,  (ii) the
Seller shall have  delivered to the Owner Trustee and the  Indenture  Trustee an
Officers'  Certificate  and  an  Opinion  of  Counsel  each  stating  that  such
consolidation,  merger,  or succession and such  agreement of assumption  comply
with this Section 12.03 and that all conditions precedent,  if any, provided for
in this Agreement relating to such transaction have been complied with and (iii)
the Seller shall have  delivered an Opinion of Counsel to the Owner  Trustee and
the Indenture  Trustee  either (A) stating that, in the opinion of such counsel,
all financing statements and continuation statements and amendments thereto have
been executed or duly  authorized and filed that are necessary fully to preserve
and  protect  the  interest  of the  Trust  and  the  Indenture  Trustee  in the
Receivables,  and reciting the details of such filings,  or (B) stating that, in
the opinion of such  counsel,  no such action shall be necessary to preserve and
protect  such  interest.  Notwithstanding  the  foregoing,  the Seller shall not
engage in any merger or consolidation  with any Person,  or a disposition of all
or  substantially  all of its assets without  providing  advance  written notice
thereof to the Owner Trustee,  the Indenture Trustee and the Rating Agencies and
without  obtaining  the  prior  written  consent  of  the  Insurer,  not  to  be
unreasonably withheld.

     SECTION 12.04. Limitation on Liability of Seller and Others. The Seller and
any  director  or  officer or  employee  or agent of the Seller may rely in good
faith on the advice of  counsel  or on any  document  of any kind,  prima  facie
properly  executed and submitted by any Person  respecting  any matters  arising
hereunder. The Seller shall not be under any obligation to appear in, prosecute,
or defend any legal action that shall not be incidental to its obligations under
this  Agreement,  and that in its  opinion  may  involve  it in any  expense  or
liability.

                                  ARTICLE XIII

                                  The Servicer

     SECTION  13.01.   Representations  of  Servicer.  The  Servicer  makes  the
following representations on which the Trust relies in accepting the Receivables
and issuing the  Certificate  and executing and delivering  the  Indenture.  The
Servicer  agrees that the  representations  shall also be for the benefit of the
Owner  Trustee  and the Secured  Parties.  The  representations  speak as of the
execution  and  delivery  of this  Agreement  and shall  survive the sale of the
Receivables  to the  Trust  pursuant  to this  Agreement  and the  pledge to the
Secured Parties pursuant to the Indenture.

                    (i)  Organization  and Good  Standing.  The Servicer is duly
          organized and validly existing as a corporation  under the laws of the
          State of Indiana,  with power and authority to own its  properties and
          to conduct its business as such  properties  are  currently  owned and
          such business is presently  conducted,  and had at all relevant times,
          and has, power, authority,  and legal right to acquire, own, sell, and
          service the Receivables and to hold the Receivable  Files as custodian
          on behalf of the Trust.

                    (ii) Due Qualification. The Servicer is duly qualified to do
          business as a foreign  corporation  in good  standing and has obtained
          all necessary licenses and approvals in all jurisdictions in which the
          ownership  or  lease  of  property  or the  conduct  of  its  business
          (including  the  servicing  of the  Receivables  as  required  by this
          Agreement) requires such qualifications.

                    (iii) Power and  Authority.  The  Servicer has the power and
          authority to execute and deliver this  Agreement  and to carry out its
          terms; and the execution,  delivery, and performance of this Agreement
          has been duly  authorized by the Servicer by all  necessary  corporate
          action.

                    (iv)  Binding  Obligations.  This  Agreement  constitutes  a
          legal,  valid, and binding  obligation of the Servicer  enforceable in
          accordance with its terms,  except as enforceability may be limited by
          bankruptcy,   insolvency,   reorganization,   or  other  similar  laws
          affecting  the  enforcement  of  creditors'  rights in general  and by
          general   principles   of   equity,   regardless   of   whether   such
          enforceability  shall be  considered  in a proceeding  in equity or at
          law.

                    (v) No  Violation.  The  consummation  of  the  transactions
          contemplated by this Agreement and the fulfillment of the terms hereof
          do not  conflict  with,  result in any  breach of any of the terms and
          provisions  of, nor  constitute  (with or  without  notice or lapse of
          time) a default under, the charter or by-laws of the Servicer,  or any
          indenture,  agreement,  or other instrument to which the Servicer is a
          party  or by  which  it is  bound;  nor  result  in  the  creation  or
          imposition  of any Lien  upon any of its  properties  pursuant  to the
          terms of any such indenture,  agreement,  or other  instrument  (other
          than  this  Agreement);  nor  violate  any law or,  to the best of the
          Servicer's knowledge, any order, rule, or regulation applicable to the
          Servicer  of any court or of any  federal  or State  regulatory  body,
          administrative  agency, or other governmental  instrumentality  having
          jurisdiction over the Servicer or its properties.

                    (vi)  No   Proceedings.   There   are  no   proceedings   or
          investigations  pending, or, to the Servicer's knowledge,  threatened,
          before any court,  regulatory body,  administrative  agency,  or other
          governmental  instrumentality having jurisdiction over the Servicer or
          its properties:  (A) asserting the invalidity of this  Agreement,  (B)
          seeking  to  prevent  the  consummation  of any  of  the  transactions
          contemplated  by this  Agreement,  (C)  seeking any  determination  or
          ruling that might  materially and adversely  affect the performance by
          the   Servicer  of  its   obligations   under,   or  the  validity  or
          enforceability of, this Agreement, or (D) which might adversely affect
          the federal income tax attributes of the Trust.

          SECTION 13.02.  Indemnities of Servicer.  The Servicer shall be liable
in  accordance  herewith  only to the  extent  of the  obligations  specifically
undertaken by the Servicer under this Agreement.

                    (i) The Servicer shall defend,  indemnify, and hold harmless
          the  Owner  Trustee  (in its  individual  and trust  capacities),  the
          Indenture  Trustee,  and  their  officers,  directors,  employees  and
          agents, the Trust, the  Certificateholder and the Noteholders from and
          against any and all costs,  expenses,  losses,  damages,  claims,  and
          liabilities,  arising out of or resulting from the use, ownership,  or
          operation  by the  Servicer  or any  affiliate  thereof  of a Financed
          Vehicle.

                    (ii) The Servicer shall indemnify,  defend and hold harmless
          the  Owner  Trustee  (in its  individual  and trust  capacities),  the
          Indenture Trustee, their officers, directors, employees and agents and
          the Trust from and  against any taxes that may at any time be asserted
          against such parties  with  respect to the  transactions  contemplated
          herein,  including,  without  limitation,  any sales,  gross receipts,
          general   corporation,   tangible  or  intangible  personal  property,
          privilege,  or  license  taxes  (but,  in the case of the  Trust,  not
          including  any taxes  asserted with respect to, and as of the date of,
          the sale of the  Receivables to the Trust or the issuance and original
          sale of the  Certificate,  the  Notes,  or  asserted  with  respect to
          ownership of the Receivables, or federal or other income taxes arising
          out of  distributions  on the  Certificate or the Notes) and costs and
          expenses in defending against the same.

                    (iii)  The  Servicer  shall  indemnify,   defend,  and  hold
          harmless the Owner Trustee (in its individual  and trust  capacities),
          the  Indenture  Trustee,  the  Insurer,  their  officers,   directors,
          employees  and  agents,  the  Trust,  the  Certificateholder  and  the
          Noteholders  from and  against  any and all costs,  expenses,  losses,
          claims,  actions,  suits,  damages, and liabilities to the extent that
          such cost, expense, loss, claim, damage, or liability arose out of, or
          was  imposed  upon  such  parties  through,  the  negligence,  willful
          misfeasance,  or bad faith of the Servicer in the  performance  of its
          duties under this Agreement, or by reason of reckless disregard of its
          obligations  and duties under this  Agreement.  This  indemnity  shall
          survive  the  termination  of  this  Agreement  or the  Trust  and the
          resignation or removal of the Owner Trustee.

                    (iv) The Servicer shall indemnify, defend, and hold harmless
          the  Owner  Trustee  (in its  individual  and trust  capacities),  the
          Indenture Trustee, their respective officers, directors, employees and
          agents and the Trust from and  against  all costs,  expenses,  losses,
          claims,  damages,  and  liabilities  arising  out  of or  incurred  in
          connection with the acceptance or performance of the trusts and duties
          herein  contained  and  contained  in  the  Indenture  and  the  Basic
          Documents,  except to the extent that such cost, expense, loss, claim,
          damage or liability: (a) shall be due to the willful misfeasance,  bad
          faith,  or negligence  of the Owner Trustee or the Indenture  Trustee;
          (b)  relates  to any tax other  than the taxes  with  respect to which
          either the Seller or Servicer shall be required to indemnify the Owner
          Trustee or the Indenture  Trustee;  (c) shall arise from the breach of
          any of the  representations  or  warranties  of the Owner  Trustee set
          forth  in  Section  15.13 or by the  Indenture  Trustee  set  forth in
          Section 6.13 of the Indenture; (d) shall be one as to which the Seller
          is required to indemnify the Owner  Trustee or the  Indenture  Trustee
          under the Agreement and the Seller has paid such indemnity  claim;  or
          (e)  shall  arise  out  of or  be  incurred  in  connection  with  the
          acceptance  or  performance  by the  Owner  Trustee  of the  duties of
          successor Servicer.

                    (v) The Servicer agrees to pay to the Indenture Trustee from
          time to time such  compensation  as the  Servicer  or  Issuer  and the
          Indenture  Trustee have agreed to in writing.  Subject to Section 6.07
          of the  Indenture,  the  Servicer  agrees to reimburse  the  Indenture
          Trustee upon its request for all  reasonable  expenses,  disbursements
          and advances  incurred or made by the Indenture  Trustee in accordance
          with any  provision  of the  Indenture  or any of the Basic  Documents
          (including the compensation and the expenses and  disbursements of its
          agents, counsel, experts and accountants).

          Indemnification under this Section 13.02 shall include reasonable fees
and expenses of counsel and expenses of  litigation.  If the Servicer shall have
made  any  indemnity  payments  pursuant  to  this  Section  and  the  recipient
thereafter  collects  any of such  amounts  from  others,  the  recipient  shall
promptly   repay  such  amounts  to  the  Servicer,   without   interest.   This
indemnification  shall survive the termination of this Agreement and the removal
of the Servicer.

         SECTION 13.03. Merger or Consolidation of, or Assumption of the
Obligations of Servicer. Any Person (a) into which the Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Servicer shall be a party, or (c) which may succeed to all or substantially all
of the properties and assets of the Servicer's indirect automobile financing and
receivables servicing business, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Servicer
hereunder, shall be the successor to the Servicer under this Agreement without
further act on the part of any of the parties to this Agreement; provided,
however, that (i) immediately after giving effect to such transaction, no Event
of Servicer Default, and no event which, after notice or lapse of time, or both,
would become an Event of Servicer Default shall have happened and be continuing,
(ii) the Servicer shall have delivered to the Owner Trustee and the Indenture
Trustee an Officers' Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of assumption comply
with this Section 13.03 and that all conditions precedent provided for in this
Agreement relating to such transaction have been complied with and (iii) the
Servicer shall have delivered an Opinion of Counsel to the Owner Trustee and its
Indenture Trustee either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been executed or duly authorized and filed that are necessary fully to preserve
and protect the interest of the Trust and the Secured Parties in the
Receivables, and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interest. Notwithstanding the foregoing, the Servicer shall not
engage in any merger or consolidation in which it is not the surviving
corporation without providing advance written notice thereof to the Owner
Trustee and the Indenture Trustee and without obtaining the prior written
consent of the Insurer, not to be unreasonably withheld.

          SECTION 13.04. Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of the  directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust, the Indenture  Trustee,  the
Certificateholder  or the Noteholders,  except as provided under this Agreement,
for any action taken or for refraining from the taking of any action pursuant to
this  Agreement;  provided,  however,  that this provision shall not protect the
Servicer  or any such person  against  any  liability  that would  otherwise  be
imposed  by reason of  willful  misfeasance,  bad faith,  or  negligence  in the
performance  of duties or by reason of reckless  disregard  of  obligations  and
duties  under  this  Agreement.  The  Servicer  and any  director  or officer or
employee or agent of the  Servicer may rely in good faith on any document of any
kind prima facie  properly  executed and submitted by any Person  respecting any
matters arising under this Agreement.

          Except as provided in this Agreement,  the Servicer shall not be under
any  obligation to appear in,  prosecute,  or defend any legal action that shall
not be incidental to its duties to service the  Receivables  in accordance  with
this Agreement  (collection  actions with respect to Defaulted  Receivables  are
understood  to  be  incidental   to  the   Servicer's   duties  to  service  the
Receivables),  and  that  in  its  opinion  may  involve  it in any  expense  or
liability.

          SECTION 13.05.  Servicer Not to Resign.  The Servicer shall not resign
from its obligations and duties under this Agreement  except upon  determination
that  the  performance  of its  duties  shall no  longer  be  permissible  under
applicable law or otherwise with the consent of the Owner Trustee, the Indenture
Trustee and the  Insurer.  Any  determination  described  above  permitting  the
resignation  of the Servicer shall be evidenced by an Opinion of Counsel to such
effect  delivered  to the  Owner  Trustee.  No  such  resignation  shall  become
effective until the Indenture Trustee or a successor servicer shall have assumed
the  responsibilities and obligations of the Servicer in accordance with Section
14.02.

          SECTION  13.06.  Delegation  of Duties.  Except as provided in Section
13.03  hereof,  it is  understood  and  agreed by the  parties  hereto  that the
Servicer or the Seller may at any time delegate any duties  including  duties as
custodian to any Person  willing to accept such  delegation  and to perform such
duties  (including  any  affiliate  of the  Servicer)  in  accordance  with  the
customary  procedures of the Servicer.  In connection with such delegation,  the
Servicer or the Seller may assign rights to the delegee or direct the payment to
the  delegee of  benefits  or amounts  otherwise  inuring to the  benefit of, or
payable to, the Seller or the Servicer hereunder.  Any such delegation shall not
relieve  the  Servicer  or  the  Seller  of  their   respective   liability  and
responsibility  with  respect  to  such  duties,  and  shall  not  constitute  a
resignation  within Section 13.05 hereof. The Servicer shall give written notice
to the Rating Agencies, the Owner Trustee, the Indenture Trustee and the Insurer
of any such delegation.

                                   ARTICLE XIV

                                Servicer Default

          SECTION 14.01. Events of Servicer Default. If any one of the following
events ("Events of Servicer Default") shall occur and be continuing:

                    (i) Any  failure  by the  Servicer  or UAC to deliver to the
          Collection  Account (or to the Indenture  Trustee for  distribution to
          the  Noteholders)  any proceeds or payment required to be so delivered
          under the  terms of the  Indenture,  this  Agreement  or the  Purchase
          Agreements  or any failure by the  Servicer to deliver any  Servicer's
          Certificate  pursuant  to Section  8.09 that,  in either  case,  shall
          continue  unremedied  for a period  of two  Business  Days  (A)  after
          written  notice from the Owner Trustee,  the Indenture  Trustee or the
          Insurer (so long as the  Insurer is not in default of its  obligations
          under the Policy) or by the holders of Notes  evidencing not less than
          25% of the aggregate  outstanding  balance of the Notes is received by
          the  Servicer  or UAC as  specified  in this  Agreement  or (B)  after
          discovery by an officer of the Servicer; or

                    (ii) Failure on the part of the Servicer,  the Seller or UAC
          duly to  observe  or to  perform  in any  material  respect  any other
          covenants or  agreements  of the  Servicer,  the Seller or UAC, as the
          case may be, set forth in this  Agreement or the Purchase  Agreements,
          which failure shall (a) materially and adversely  affect the rights of
          the   Certificateholder  or  the  Secured  Parties  and  (b)  continue
          unremedied  for a period of 60 days  after  the date on which  written
          notice of such failure,  requiring the same to be remedied, shall have
          been given to the Servicer,  UAC or the Seller, as the case may be, by
          the Owner  Trustee,  the Indenture  Trustee or the Insurer (so long as
          the Insurer is not in default of its obligations  under the Policy) or
          by the holders of Notes  evidencing not less than 25% of the aggregate
          outstanding balance of the Notes; or

                    (iii) The occurrence of an Insolvency  Event with respect to
          the Servicer;

then, and in each and every case, so long as an Event of Servicer  Default shall
not have been remedied, the Insurer (so long as the Insurer is not in default of
its obligations  under the Policy),  or the Indenture Trustee (upon direction to
do so by the holders of Notes  evidencing  not less than 25% of the  outstanding
principal  balance of the Notes if the Insurer is in default  under the Policy),
by notice then given in writing to the Servicer may, terminate all of the rights
and obligations of the Servicer under this Agreement.  In addition, if a Trigger
Event (as defined in the Insurance  Agreement) shall have occurred,  the Insurer
may (A) require that the Indenture  Trustee or the  Administrator,  on behalf of
the Owner Trustee, deliver a notice of termination to the Servicer and appoint a
successor Servicer  designated by the Insurer in such notice pursuant to Section
14.02; (B) require that the Indenture Trustee or the Administrator, on behalf of
the Owner Trustee, amend certificates of title relating to the Financed Vehicles
and take other  actions to  identify  the  Indenture  Trustee  (on behalf of the
Secured Parties) as the new secured party on such  certificates of title; (C) as
provided in the  Insurance  Agreement,  require  that the  Servicer or successor
Servicer  or  the  Indenture   Trustee  instruct  Obligors  in  respect  of  the
Receivables to remit payment on the Receivable  directly to the Owner Trustee or
a separate account established exclusively for the Trust; and (D) as provided in
the  Insurance  Agreement,  compel  transfer by the Servicer of all  Receivables
Files and, if applicable,  certain rights in respect of servicing systems assets
to the Insurer or to the successor  Servicer  designated  by the Insurer.  On or
after the receipt by the  Servicer of such written  notice,  all  authority  and
power  of the  Servicer  under  this  Agreement,  whether  with  respect  to the
Certificate,  the Notes or the Receivables or otherwise,  shall, without further
action,  pass  to and be  vested  in the  Indenture  Trustee  (except  that  the
Indenture  Trustee  may but  shall not be  required  to make  Advances)  or such
successor Servicer as may be appointed under Section 14.02 pursuant to and under
this Section 14.01;  and, without  limitation,  the Indenture  Trustee is hereby
authorized  and empowered to execute and deliver,  on behalf of the  predecessor
Servicer,  as  attorney-in-fact  or  otherwise,  any and all documents and other
instruments,  and to do or  accomplish  all other  acts or things  necessary  or
appropriate  to effect the  purposes of such notice of  termination,  whether to
complete the transfer and endorsement of the Receivables and related  documents,
or  otherwise.  The  predecessor  Servicer  shall  cooperate  with the successor
Servicer  and  the  Indenture  Trustee  in  effecting  the  termination  of  the
responsibilities  and rights of the  predecessor  Servicer under this Agreement,
including the transfer to the successor  Servicer of electronic  records related
to the Receivables in such form as the successor Servicer may reasonably request
and the transfer to the successor  Servicer for administration by it of all cash
amounts that shall at the time be held by the predecessor  Servicer for deposit,
or shall  thereafter be received with respect to a  Receivable.  All  Transition
Costs shall be paid by the predecessor  Servicer upon presentation of reasonable
documentation of such costs and expenses.

          SECTION  14.02.  Appointment  of  Successor.  (a) Upon the  Servicer's
receipt of notice of  termination  pursuant to Section  14.01 or the  Servicer's
resignation  in accordance  with the terms of this  Agreement,  the  predecessor
Servicer  shall  continue  to  perform  its  functions  as  Servicer  under this
Agreement,  in the case of  termination,  only until the date  specified in such
termination  notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until the later of
(x) the date 45 days from the  delivery to the Owner  Trustee and the  Indenture
Trustee of written notice of such  resignation (or written  confirmation of such
notice) in  accordance  with the terms of this  Agreement  and (y) the date upon
which the  predecessor  Servicer  shall  become  unable to act as  Servicer,  as
specified in the notice of resignation and accompanying  Opinion of Counsel.  In
the event of the Servicer's resignation or termination hereunder,  the Indenture
Trustee shall appoint a successor  Servicer,  which successor  Servicer shall be
reasonably  acceptable  to the Insurer (so long as the Insurer is not in default
of its obligations under the Policy and the Policy shall be in effect),  and the
successor  Servicer shall accept its appointment by a written assumption in form
acceptable to the Owner Trustee and the Indenture  Trustee.  In the event that a
successor  Servicer  has not been  appointed  at the time  when the  predecessor
Servicer has ceased to act as Servicer in  accordance  with this Section  14.02,
the Indenture  Trustee without further action shall  automatically  be appointed
the successor Servicer.  Notwithstanding the above, the Indenture Trustee shall,
if it shall be legally  unable,  or if it is  unwilling so to act,  appoint,  or
petition a court of competent jurisdiction to appoint, any established financial
institution,  having a net worth of not less than  $50,000,000 and whose regular
business shall include the servicing of automobile receivables, as the successor
to the Servicer under this Agreement and which financial  institution is, in the
case of appointment by the Owner Trustee,  reasonably  acceptable to the Insurer
and the Indenture Trustee.

          (b) Upon appointment, the successor Servicer shall be the successor in
all  respects  to the  predecessor  Servicer  and  shall be  subject  to all the
responsibilities,  duties, and liabilities  arising thereafter  relating thereto
placed on the  predecessor  Servicer,  and shall be  entitled  to the  Successor
Servicing Fee and all of the rights granted to the predecessor  Servicer, by the
terms and  provisions  of this  Agreement.  The  predecessor  Servicer  shall be
entitled to be reimbursed for Outstanding Advances.

          (c) In connection  with such  appointment,  the Indenture  Trustee may
make such arrangements for the successor Servicer out of payments on Receivables
in accordance with Section 9.04 of the Indenture. The Indenture Trustee and such
successor  Servicer shall take such action,  consistent with this Agreement,  as
shall be necessary to effectuate any such succession.

          SECTION 14.03.  Notice of Events of Servicer Default.  Upon any notice
of an Event of Servicer  Default or upon any termination of, or appointment of a
successor to, the Servicer pursuant to this Article XIV, the Owner Trustee shall
give  prompt  written  notice  thereof to the  Certificateholder  at the address
appearing  in the  Certificate  Register,  to the Insurer  and to the  Indenture
Trustee for further notice thereof to the Noteholders.

          SECTION 14.04.  Waiver of Past  Defaults.  The Insurer (so long as the
Insurer is not in default of its obligations  under the Policy) or the Indenture
Trustee (if the  Insurer is in default  under the Policy)  upon  direction  from
holders  of Notes  evidencing  not less  than 51% of the  outstanding  principal
balance of the Notes may waive any default by the Servicer in the performance of
its obligations  hereunder and/or its  consequences,  except a default in making
any required  deposits to or payments from the Collection  Account in accordance
with this  Agreement;  provided,  that no waiver of any default or  provision of
this Agreement shall become effective without the consent of the Insurer (unless
the Insurer is in default of its  obligations  under the Policy).  Upon any such
waiver of a past default,  such default  shall cease to exist,  and any Event of
Servicer  Default  arising  therefrom  shall be deemed to have been remedied for
every purpose of this  Agreement.  No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.

                                   ARTICLE XV

                               The Owner Trustee

          SECTION 15.01. Duties of Owner Trustee. The Owner Trustee,  both prior
to and after the occurrence of an Event of Servicer Default,  shall undertake to
perform such duties and only such duties as are  specifically  set forth in this
Agreement.  If an Event of Servicer  Default  shall have  occurred and shall not
have been cured and, in the case of an Event of Servicer  Default  described  in
clause (i) of Section 14.01, the Owner Trustee has received notice of such Event
of Servicer  Default,  the Owner Trustee  shall  exercise such of the rights and
powers vested in it by this Agreement, and shall 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 own affairs.

          The Owner Trustee  shall execute and deliver,  on behalf of the Trust,
each  Basic  Document  to  which  the  Trust  is a party  and all  certificates,
instruments and agreements contemplated thereby. The Owner Trustee shall execute
and  authenticate  the  Certificates in accordance with this Agreement and shall
execute the Notes in accordance with the Indenture.

          It shall be the duty of the Owner Trustee to discharge (or cause to be
discharged) all its responsibilities pursuant to the terms of this Agreement and
to administer the Trust in the interest of the Certificateholder, subject to and
in accordance  with the provisions of this Agreement and the other  documents to
which the Trust is a party.  Without  limiting the foregoing,  the Owner Trustee
shall,  upon  written  direction of the  Certificateholder  and on behalf of the
Trust,  file and prove any claim or claims that may exist on behalf of the Trust
against the Seller in connection with any claims paying  procedure as part of an
insolvency or a receivership  proceeding  involving the Seller.  Notwithstanding
the foregoing,  the Owner Trustee shall be deemed to have  discharged its duties
and responsibilities  hereunder and under the other documents to which the Trust
is a party to the extent  the  Administrator  has  agreed in the  Administration
Agreement to perform any act or to discharge  any duty of the Trust or the Owner
Trustee hereunder or under any other document to which the Trust is a party, and
the Owner  Trustee  shall not be held  liable for the  default or failure of the
Administrator to carry out its obligations under the  Administration  Agreement.
Except as expressly provided in the documents to which the Trust is a party, the
Owner Trustee shall have no  obligation  to  administer,  service or collect the
Receivables or to maintain,  monitor or otherwise  supervise the administration,
servicing or collection of the Receivables.

          The Owner  Trustee,  upon  receipt of all  resolutions,  certificates,
statements,  opinions, reports, documents, orders or other instruments furnished
to the  Owner  Trustee  that  shall be  specifically  required  to be  furnished
pursuant to any  provision of this  Agreement,  shall  examine them to determine
whether they conform to the requirements of this Agreement.

          No provision of this Agreement shall be construed to relieve the Owner
Trustee from liability for its own negligent  action,  its own negligent failure
to act, or its own bad faith; provided, however, that:

                    (i) Prior to the occurrence of an Event of Servicer Default,
          and after the curing of all such Events of Servicer  Default  that may
          have occurred,  the duties and  obligations of the Owner Trustee shall
          be determined solely by the express provisions of this Agreement,  the
          Owner Trustee shall not be liable except for the  performance  of such
          duties  and  obligations  as shall be  specifically  set forth in this
          Agreement, no implied covenants or obligations shall be read into this
          Agreement  against the Owner  Trustee and, in the absence of bad faith
          on the part of the Owner Trustee, or manifest error, the Owner Trustee
          may  conclusively  rely  on  the  truth  of  the  statements  and  the
          correctness of the opinions  expressed in any certificates or opinions
          furnished to the Owner Trustee and conforming to the  requirements  of
          this Agreement;

                    (ii) The Owner  Trustee  shall not be liable for an error of
          judgment made in good faith by a Responsible Officer,  unless it shall
          be  proved  that the  Owner  Trustee  shall  have  been  negligent  in
          ascertaining the pertinent facts;

                    (iii) The Owner  Trustee 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  the
          Certificateholder   relating  to  the  time,   method,  and  place  of
          conducting  any  proceeding  for any  remedy  available  to the  Owner
          Trustee,  or exercising  any trust or power  conferred  upon the Owner
          Trustee, under this Agreement;

                    (iv) The Owner Trustee  shall not be charged with  knowledge
          of any failure by the Servicer to comply with the  obligations  of the
          Servicer  referred to in clauses (i) or (ii) of Section  14.01,  or of
          any failure by the Seller to comply with the obligations of the Seller
          referred  to in clause  (ii) of Section  14.01,  unless a  Responsible
          Officer of the Owner Trustee  receives  written notice of such failure
          (it being understood that knowledge of the Servicer or the Servicer as
          custodian,  in its  capacity  as agent for the Owner  Trustee,  is not
          attributable to the Owner Trustee) from the Servicer or the Seller, as
          the case may be; and

                    (v)  Without  limiting  the  generality  of this  Section or
          Section 15.04,  the Owner Trustee shall have no duty (A) to see to any
          recording,  filing,  or depositing of this  Agreement or any agreement
          referred  to  therein  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   rerecording,   refiling  or
          redepositing  of any  thereof,  (B) to  see  to any  insurance  of the
          Financed  Vehicles  or  Obligors  or to  effect or  maintain  any such
          insurance,  (C) 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 Trust,  (D) to confirm or verify the contents of any reports or
          certificates  of the Servicer  delivered to the Trust pursuant to this
          Agreement believed by the Owner Trustee to be genuine and to have been
          signed or presented by the proper party or parties,  or (E) to inspect
          the  Financed  Vehicles at any time or  ascertain or inquire as to the
          performance  or  observance  of any of the Seller's or the  Servicer's
          representations,  warranties or covenants or the Servicer's duties and
          obligations as Servicer and as custodian of the Receivable Files under
          this Agreement.

          The  Owner  Trustee  shall not be  required  to expend or risk its own
funds or otherwise  incur  financial  liability in the performance of any of its
duties  hereunder,  or in the exercise of any of its rights or powers,  if there
shall be  reasonable  ground for  believing  that the repayment of such funds or
adequate  indemnity  against  such risk or  liability  shall  not be  reasonably
assured to it, and none of the provisions  contained in this Agreement  shall in
any event require the Owner Trustee to perform, or be responsible for the manner
of performance  of, any of the  obligations of the Servicer under this Agreement
except during such time, if any, as the Owner Trustee shall be the successor to,
and be vested with the rights,  duties,  powers, and privileges of, the Servicer
in accordance  with the terms of this  Agreement.  Except for actions  expressly
authorized by this Agreement,  the Owner Trustee shall take no action reasonably
likely to impair the security interests created or existing under any Receivable
or to impair the value of any Receivable.

          SECTION  15.02.  Owner  Trustee's  Certificate.   On  or  as  soon  as
practicable  after each Payment Date on which  Receivables shall be (i) assigned
to UAC  pursuant  to Section  7.02 or deemed to be  assigned  to the Seller as a
result of the application of Available Funds in respect of Defaulted Receivables
pursuant to Sections 9.04 and 9.05 or (ii) assigned to the Servicer  pursuant to
Section 8.07 or to the Servicer or any other Person  designated  by the Servicer
pursuant to Section 16.02,  the Owner Trustee shall,  at the written  request of
the Servicer, execute an Owner Trustee's Certificate,  substantially in the form
of,  in the case of an  assignment  to UAC,  Exhibit  1,  or,  in the case of an
assignment to the Servicer, Exhibit 2, based on the information contained in the
Servicer's  Certificate for the related Collection Period,  amounts deposited to
the  Collection  Account,  and  notices  received  pursuant  to this  Agreement,
identifying  the  Receivables  repurchased  or deemed to be  repurchased  by UAC
pursuant  to Section  7.02 or 9.02 or  purchased  by the  Servicer  pursuant  to
Section  8.07 or the  Servicer or any other  Person  designated  by the Servicer
pursuant to Section 16.02 during such Collection  Period, and shall deliver such
Owner Trustee's Certificate, accompanied by a copy of the Servicer's Certificate
for such  Collection  Period to UAC or the  Servicer,  as the case may be with a
copy to the  Indenture  Trustee.  The Owner  Trustee's  Certificate  shall be an
assignment pursuant to Section 15.03.

          SECTION  15.03.  Trust's  Assignment  of Purchased  Receivables.  With
respect to each  Receivable  repurchased  by UAC  pursuant to Section  7.02,  or
deemed to be so repurchased  pursuant to Section 8.02, purchased by the Servicer
pursuant to Section 8.07 or the Servicer or any other Person  designated  by the
Servicer  pursuant to Section 16.02, the Trust shall assign,  as of the last day
of the  Collection  Period  during  which  such  Receivable  became a  Defaulted
Receivable or became subject to repurchase by UAC or purchase by the Servicer or
such other Person,  without recourse,  representation,  or warranty, to UAC, the
Servicer or such other Person (as the case may be) all the Trust's right, title,
and interest in and to such Receivables, and all security and documents relating
thereto,  such assignment being an assignment outright and not for security.  If
in any enforcement  suit or legal  proceeding it shall be held that the Servicer
may not enforce a Receivable  on the ground that it shall not be a real party in
interest  or a holder  entitled  to enforce the  Receivable,  the Owner  Trustee
shall,  at the  Servicer's  expense,  take such steps as the Owner Trustee deems
necessary to enforce the Receivable,  including bringing suit in its name and/or
the name of the Indenture Trustee.

          SECTION 15.04. Certain Matters Affecting the Owner Trustee.  Except as
otherwise provided in Section 15.01:

                    (i) The Owner  Trustee  may rely and shall be  protected  in
          acting  or  refraining  from  acting  upon any  resolution,  Officers'
          Certificate,  Servicer's Certificate,  certificate of auditors, or any
          other certificate,  statement,  instrument,  opinion,  report, notice,
          request,  consent, order, appraisal,  bond, or other paper or document
          believed by it to be genuine and to have been signed or  presented  by
          the proper party or parties.

                    (ii) The Owner  Trustee  may  consult  with  counsel and any
          written  advice  or  Opinion  of  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 written advice or Opinion of Counsel.

                    (iii)  The Owner  Trustee  shall be under no  obligation  to
          exercise any of the rights or powers  vested in it by this  Agreement,
          or  to  institute,  conduct,  or  defend  any  litigation  under  this
          Agreement or in relation to this Agreement,  at the request, order, or
          direction of the Certificateholder  pursuant to the provisions of this
          Agreement,  unless the  Certificateholder  shall  have  offered to the
          Owner Trustee reasonable security or indemnity reasonably satisfactory
          to the Owner Trustee against the costs, expenses, and liabilities that
          may  be  incurred  therein  or  thereby.  Nothing  contained  in  this
          Agreement,   however,   shall   relieve  the  Owner   Trustee  of  the
          obligations, upon the occurrence of an Event of Servicer Default (that
          shall not have been cured),  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 man would  exercise or use under
          the circumstances in the conduct of his own affairs.

                    (iv) The Owner  Trustee  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.

                    (v) Prior to the occurrence of an Event of Servicer  Default
          and after the curing of all Events of Servicer  Default  that may have
          occurred,   the  Owner   Trustee  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 to do so by the Insurer or the Indenture  Trustee
          or holders of Notes  evidencing  not less than 25% of the  outstanding
          principal balance of the Notes; provided, however, that if the payment
          within a reasonable time to the Owner Trustee 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  Owner  Trustee,  not
          reasonably assured to the Owner Trustee by the security afforded to it
          by the  terms  of  this  Agreement,  the  Owner  Trustee  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  Servicer  or,  if paid by the Owner
          Trustee,  shall be reimbursed by the Servicer upon demand.  Nothing in
          this clause (v) shall affect the obligation of the Servicer to observe
          any applicable law prohibiting disclosure of information regarding the
          Obligors.

                    (vi) The Owner  Trustee  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
          Owner  Trustee  shall  not  be  responsible   for  any  misconduct  or
          negligence  solely  attributable  to  the  acts  or  omissions  of the
          Servicer  in  its   capacity  as   Servicer   or   custodian   or  the
          Administrator.

                    (vii) The Owner  Trustee  shall have no duty of  independent
          inquiry,  except as may be  required by Section  15.01,  and the Owner
          Trustee may rely upon the representations and warranties and covenants
          of the  Seller  and the  Servicer  contained  in this  Agreement  with
          respect to the Receivables and the Receivable Files.

          SECTION   15.05.   Owner  Trustee  Not  Liable  for   Certificate   or
Receivables.  The recitals  contained herein and in the Certificate  (other than
the  certificate of  authentication  on the  Certificate)  shall be taken as the
statements  of the  Seller or the  Servicer,  as the case may be,  and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
shall  make  no  representations  as to the  validity  or  sufficiency  of  this
Agreement or of the Certificate (other than the certificate of authentication on
the Certificate),  or of any Receivable or related  document.  The Owner Trustee
shall at no time have any responsibility or liability for or with respect to the
legality,  validity, and enforceability of any security interest in any Financed
Vehicle or any  Receivable,  or the  perfection  and priority of such a security
interest or the maintenance of any such perfection and priority,  or for or with
respect to the  efficacy of the Trust or its ability to generate the payments to
be distributed to the  Certificateholder or the Noteholders under this Agreement
or the Indenture,  including,  without  limitation:  the  existence,  condition,
location,   and   ownership  of  any  Financed   Vehicle;   the   existence  and
enforceability  of any  physical  damage  insurance,  lender's  single  interest
insurance,  or credit life or  disability  and  hospitalization  insurance  with
respect to any  Receivable;  the existence and contents of any Receivable or any
computer  or  other  record  thereof;  the  validity  of the  assignment  of any
Receivable to the Trust or of any intervening  assignment;  the  completeness of
any Receivable; the performance or enforcement of any Receivable; the compliance
by the Seller or the  Servicer  with any warranty or  representation  made under
this Agreement or in any related  document and the accuracy of any such warranty
or  representation  prior to the  Owner  Trustee's  receipt  of  notice or other
discovery of any noncompliance  therewith or any breach thereof;  any investment
of monies by the Servicer or any loss resulting  therefrom (it being  understood
that the Owner Trustee shall remain  responsible  for any Trust property that it
may hold); the acts or omissions of the Seller, the Servicer, or any Obligor; an
action of the Servicer taken in the name of the Owner Trustee;  or any action by
the Owner Trustee taken at the instruction of the Servicer.  Except with respect
to a claim based on the failure of the Owner Trustee to perform its duties under
this Agreement or based on the Owner Trustee's negligence or willful misconduct,
no recourse shall be had for any claim based on any provision of this Agreement,
the  Certificateholder  or the  Noteholders,  or any  Receivable  or  assignment
thereof against the Owner Trustee in its individual capacity,  the Owner Trustee
shall not have any personal  obligation,  liability,  or duty  whatsoever to any
Certificateholder  or the  Noteholders  or any other  Person with respect to any
such claim, and any such claim shall be asserted solely against the Trust or any
indemnitor who shall furnish indemnity as provided in this Agreement.  The Owner
Trustee shall not be deemed to owe any fiduciary duty to the Insurer.  The Owner
Trustee shall not be accountable for the use or application by the Seller of any
of the  Certificate  or  Notes  or of the  proceeds  thereof,  or for the use or
application  of any funds paid to the Seller or the  Servicer  in respect of the
Receivables.

          Notwithstanding the foregoing or any other provision in this Agreement
to the contrary,  the Owner Trustee shall be liable in its  commercial  capacity
for losses attributable to its failure to make payments on Eligible  Investments
issued by the Owner Trustee in its commercial  capacity as principal obligor and
not as Owner Trustee  hereunder,  in accordance with the terms of the agreements
or instruments governing any such Eligible Investments.

          SECTION 15.06.  Owner Trustee May Own Notes.  The Owner Trustee in its
individual  or any other  capacity may become the owner or pledgee of Notes with
the same rights as it would have if it were not the Owner Trustee.

          SECTION  15.07.  Owner  Trustee's  and  Indenture  Trustee's  Fees and
Expenses; Indemnification.  (a) The Servicer shall pay to the Owner Trustee, and
the Owner Trustee shall be entitled to, such  reasonable  compensation  as shall
have been separately  agreed to in writing on or prior to the date hereof (which
shall not be limited by any provision of law in regard to the  compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts created by this Agreement and in the exercise and  performance of any
of the Owner Trustee's powers and duties under this Agreement and the Indenture,
and the Servicer  shall pay or reimburse  the Owner Trustee upon its request for
all reasonable expenses,  disbursements,  and advances (including the reasonable
compensation  and the  expenses  and  disbursements  of its  counsel  and of all
persons not  regularly in its employ)  incurred or made by the Owner  Trustee in
accordance  with any provisions of this Agreement and the Indenture,  except any
such expense,  disbursement,  or advance as may be  attributable  to its willful
misfeasance,  negligence,  or bad faith.  The Servicer shall indemnify the Owner
Trustee (in its individual and trust  capacities)  (which,  for purposes of this
section, shall include its directors,  officers,  employees, and agents) for and
hold it  harmless  against  any loss,  liability,  claim,  action,  suit,  cost,
disbursement,  tax (other than taxes as or resulting from compensation  received
for  its  services  as  Owner  Trustee)  or  expense  incurred  without  willful
misfeasance,  negligence,  or  bad  faith  on  its  part,  arising  out of or in
connection  with the acceptance or  administration  of the Trust,  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 the  Indenture.  The Servicer shall pay the fees and expenses
of the Administrator under the Administration Agreement; provided, however, that
the Servicer shall only be required to pay the  reasonable  fees and expenses of
any  successor  Administrator  or such  other  fees  agreed to in writing by the
Servicer. Additionally, the Seller, pursuant to Section 12.02 and subject to the
limitations  set forth  therein,  and the Servicer,  pursuant to Section  13.02,
respectively, shall indemnify the Owner Trustee with respect to certain matters.
This indemnity shall survive the termination of this Agreement and the Indenture
or the  termination  of the Trust and the  resignation  or  removal of the Owner
Trustee.

          (b) The  Servicer  hereby  agrees  to pay or  reimburse  the  fees and
expenses of the Indenture Trustee as provided in Section 6.07 of the Indenture.

          SECTION 15.08.  Eligibility  Requirements for Owner Trustee. The Owner
Trustee under this Agreement  shall at all times be a corporation  (i) having an
office  in the same  State as the  location  of the  Corporate  Trust  Office as
specified in this Agreement; (ii) organized and doing business under the laws of
such State or the United States of America;  (iii) authorized under such laws to
exercise  corporate  trust  powers;   (iv)  having  a  net  worth  of  at  least
$50,000,000;  (v)  subject to  supervision  or  examination  by federal or State
authorities;  and (vi) the long-term  unsecured  debt of which is rated at least
Baa3 or  which is  approved  by the  Insurer  and each  Rating  Agency.  If such
corporation  shall publish reports of condition at least  annually,  pursuant to
law or to the requirements of the aforesaid  supervising or examining authority,
then for the purpose of this Section 15.08,  the combined capital and surplus of
such  corporation  shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so  published.  In case at any time
the Owner Trustee shall cease to be eligible in accordance  with the  provisions
of this Section 15.08, the Owner Trustee shall resign  immediately in the manner
and with the effect specified in Section 15.09.

          SECTION  15.09.  Resignation  or Removal of Owner  Trustee.  The Owner
Trustee may at any time resign and be discharged  from the trusts hereby created
by giving written notice thereof to the Servicer.  Upon receiving such notice of
resignation,  the Servicer, with the prior written consent of the Insurer, shall
promptly appoint a successor Owner Trustee, by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor  Owner Trustee.  If no successor  Owner Trustee shall have
been so appointed and have accepted  appointment within 30 days after the giving
of such notice of  resignation,  the  resigning  Owner  Trustee may petition any
court  of  competent  jurisdiction  for the  appointment  of a  successor  Owner
Trustee.

          If at any  time the  Owner  Trustee  shall  cease  to be  eligible  in
accordance  with the  provisions of Section 15.08 and shall fail to resign after
written  request  therefor by the Servicer,  or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Owner Trustee or of its property  shall be  appointed,  or any
public  officer  shall take  charge or  control  of the Owner  Trustee or of its
property  or  affairs  for  the  purpose  of  rehabilitation,  conservation,  or
liquidation,  then the Servicer may remove the Owner Trustee. If it shall remove
the Owner Trustee under the authority of the immediately preceding sentence, the
Servicer shall promptly appoint a successor Owner Trustee by written instrument,
in  duplicate,  one copy of which  instrument  shall be  delivered  to the Owner
Trustee so removed and one copy to the successor Owner Trustee.

          Any  resignation or removal of the Owner Trustee and  appointment of a
successor Owner Trustee  pursuant to any of the provisions of this Section 15.09
shall not become  effective  until  acceptance of  appointment  by the successor
Owner Trustee pursuant to Section 15.10.

          SECTION 15.10.  Successor  Owner Trustee.  Any successor Owner Trustee
appointed pursuant to Section 15.09 shall execute,  acknowledge,  and deliver to
the Servicer and to its predecessor  Owner Trustee an instrument  accepting such
appointment  under this  Agreement,  and thereupon the resignation or removal of
the  predecessor  Owner Trustee shall become  effective and such successor Owner
Trustee, without any further act, deed, or conveyance, shall become fully vested
with all the rights,  powers,  duties,  and obligations of its predecessor under
this Agreement,  with like effect as if originally  named as Owner Trustee.  Any
successor  Owner  Trustee  appointed  hereunder  shall file an  amendment to the
Certificate  of Trust with the Delaware  Secretary of State  reflecting the name
and principal  place of business of such successor Owner Trustee in the State of
Delaware.  The  predecessor  Owner Trustee shall deliver to the successor  Owner
Trustee all documents and statements  held by it under this  Agreement;  and the
Servicer  and the  predecessor  Owner  Trustee  shall  execute and deliver  such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties, and obligations.

          No successor  Owner  Trustee shall accept  appointment  as provided in
this Section 15.10 unless at the time of such  acceptance  such successor  Owner
Trustee shall be eligible pursuant to Section 15.08.

          Upon acceptance of appointment by a successor  Owner Trustee  pursuant
to this Section  15.10,  the Servicer shall mail notice of the successor of such
Owner Trustee under this Agreement to the Indenture Trustee and to the Holder of
the  Certificate  at its address as shown in the  Certificate  Register.  If the
Servicer  shall  fail to mail such  notice  within 10 days after  acceptance  of
appointment by the successor  Owner Trustee,  the successor  Owner Trustee shall
cause such notice to be mailed at the expense of the Servicer.

          SECTION  15.11.   Merger  or  Consolidation  of  Owner  Trustee.   Any
corporation  into which the Owner  Trustee  may be merged or  converted  or with
which it may be  consolidated,  or any  corporation  resulting  from any merger,
conversion, or consolidation to which the Owner Trustee shall be a party, or any
corporation  succeeding  to all or  substantially  all  of the  corporate  trust
business  of the Owner  Trustee,  shall be the  successor  of the Owner  Trustee
hereunder,  provided  such  corporation  shall be  eligible  pursuant to Section
15.08,  without the execution or filing of any  instrument or any further act on
the  part  of  any  of the  parties  hereto,  anything  herein  to the  contrary
notwithstanding.

          SECTION  15.12.  Appointment  of Co-Trustee or Separate Owner Trustee.
Notwithstanding  any other  provisions of this  Agreement,  at any time, for the
purpose of meeting any legal  requirements of any jurisdiction in which any part
of the Trust or any  Financed  Vehicle may at the time be located,  the Servicer
and the Owner Trustee  acting jointly shall have the power and shall execute and
deliver all  instruments  to appoint one or more  Persons  approved by the Owner
Trustee  to act as  co-trustee,  jointly  with the Owner  Trustee,  or  separate
trustee or separate  trustees,  of all or any part of the Trust,  and to vest in
such Person, in such capacity and for the benefit of the Certificateholder, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section 15.12, such powers, duties, obligations,  rights, and trusts as the
Servicer and the Owner  Trustee may  consider  necessary  or  desirable.  If the
Servicer  shall not have  joined in such  appointment  within 15 days  after the
receipt by it of a request so to do, or in the case an Event of Servicer Default
shall have  occurred and be  continuing,  the Owner Trustee alone shall have the
power to make such  appointment.  No co-trustee  or separate  trustee under this
Agreement  shall be  required  to meet the terms of  eligibility  as a successor
Owner Trustee  pursuant to Section 15.08 and no notice to the  Certificateholder
of the  appointment  of any  co-trustee  or separate  trustee  shall be required
pursuant to Section 15.10.

          Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:

                    (i) All rights, powers, duties, and obligations conferred or
          imposed upon the Owner Trustee  shall be conferred  upon and exercised
          or  performed  by the  Owner  Trustee  and such  separate  trustee  or
          co-trustee  jointly (it being understood that such separate trustee or
          co-trustee  is not  authorized  to act  separately  without  the Owner
          Trustee joining in such act),  except to the extent that under any law
          of any  jurisdiction  in which  any  particular  act or acts are to be
          performed,  the Owner Trustee shall be  incompetent  or unqualified to
          perform such act or acts, in which event such rights,  powers, duties,
          and  obligations  (including  the holding of title to the Trust or any
          portion  thereof  in any such  jurisdiction)  shall be  exercised  and
          performed singly by such separate trustee or co-trustee, but solely at
          the direction of the Owner Trustee;

                    (ii) No trustee  under this  Agreement  shall be  personally
          liable by reason of any act or  omission  of any other  trustee  under
          this Agreement; and

                    (iii) The Servicer and the Owner Trustee  acting jointly may
          at any time accept the  resignation of or remove any separate  trustee
          or co-trustee.

          Any notice, request, or other writing given to the Owner Trustee shall
be  deemed  to have  been  given  to  each of the  then  separate  trustees  and
co-trustees,  as  effectively  as if  given to each of  them.  Every  instrument
appointing any separate  trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XV. Each separate  trustee and  co-trustee,  upon
its  acceptance  of the trusts  conferred,  shall be vested  with the estates or
property  specified in its  instrument of  appointment,  either jointly with the
Owner  Trustee or  separately,  as may be provided  therein,  subject to all the
provisions of this  Agreement,  specifically  including  every provision of this
Agreement  relating to the conduct of,  affecting the liability of, or affording
protection to, the Owner Trustee.  Each such instrument  shall be filed with the
Owner Trustee and a copy thereof given to the Servicer.

          Any separate  trustee or co-trustee  may at any time appoint the Owner
Trustee,  its agent or  attorney-in-fact  with full power and authority,  to the
extent not  prohibited  by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name.  If any separate  trustee or co-trustee
shall  die,  become  incapable  of acting,  resign,  or be  removed,  all of its
estates, properties, rights, remedies, and trusts shall vest in and be exercised
by the Owner Trustee, to the extent permitted by law, without the appointment of
a new or successor Owner Trustee.

          SECTION 15.13.  Representations  and Warranties of Owner Trustee.  The
Owner Trustee makes the following  representations  and  warranties on which the
Seller, the Certificateholder and the Secured Parties may rely:

                    (i)  Organization  and  Existence.  The Owner  Trustee  is a
          national banking corporation with a principal place of business in the
          State of Delaware and is  authorized  to engage in a banking and trust
          business under such laws.

                    (ii) Power and Authority.  The Owner Trustee has full power,
          authority,  and legal right to  execute,  deliver,  and  perform  this
          Agreement,  and shall have taken all necessary action to authorize the
          execution, delivery, and performance by it of this Agreement.

                    (iii) Duly  Executed.  This Agreement has been duly executed
          and delivered by the Owner Trustee and constitutes  the legal,  valid,
          and binding agreement of the Owner Trustee,  enforceable in accordance
          with its terms,  except as such  enforceability  may be limited by (i)
          bankruptcy,  insolvency,  liquidation,   reorganization,   moratorium,
          conservatorship, receivership or other similar laws now or hereinafter
          in effect relating to the enforcement of creditors' rights in general,
          as such laws  would  apply in the event of a  bankruptcy,  insolvency,
          liquidation, reorganization, moratorium, conservatorship, receivership
          or similar  occurrence  affecting the Owner Trustee,  and (ii) general
          principles of equity  (regardless  of whether such  enforceability  is
          considered in a proceeding in equity or at law) as well as concepts of
          reasonableness, good faith and fair dealing.

          SECTION 15.14. Certain Litigation Matters

          (a)            Promptly after a Responsible  Officer  becomes aware of
                    any action,  proceeding  or  governmental  investigation  to
                    which the Trust is a party or  otherwise  subject that could
                    materially adversely affect the Trust or the Trust estate or
                    the rights or  obligations  of the  Insurer  under the Basic
                    Documents  or any  other  document  delivered  with  respect
                    thereto,  the Owner  Trustee shall  provide  written  notice
                    thereof to the  Insurer.  At such time as the Insurer is the
                    Controlling Party, in respect of any such action, proceeding
                    or investigation  which Union Acceptance  Corporation in its
                    individual  capacity or as the  Administrator  has failed to
                    promptly and diligently defend at its own expense, the Owner
                    Trustee shall,  upon written notice from the Insurer,  allow
                    the Insurer to assume or control the defense of such action,
                    proceeding  or  investigation  on behalf of the  Trust.  The
                    Owner Trustee shall have no duty to defend any action unless
                    it is expressly  required by or directed in accordance  with
                    the terms of the Basic Documents.

          (b)            At such time as the Insurer is the  Controlling  Party,
                    the  Owner  Trustee,  on  behalf  of the  Trust,  shall  not
                    undertake or join any  litigation or agree to any settlement
                    of any  action,  proceeding  or  governmental  investigation
                    (other   than  in   connection   with  the   collection   of
                    Receivables)  that  could  materially  adversely  affect the
                    Trust or the rights or  obligations of the Insurer under the
                    Basic  Documents,  unless the  Insurer  has so  directed  or
                    consented to such action in writing.

                                   ARTICLE XVI

                                  Termination

          SECTION 16.01.  Termination of the Trust.  The respective  obligations
and  responsibilities  of the Seller, the Servicer and the Owner Trustee created
hereby shall  terminate and the Trust created by this  Agreement  shall dissolve
upon (i) written notice to the Owner Trustee from the Servicer at any time after
the disposition of the Trust corpus as of the last day of any Collection  Period
at the direction of the Servicer,  at its option,  pursuant to Section 16.02, or
(ii) the payment to all Noteholders  and the Insurer of all amounts  required to
be paid to them  pursuant to this  Agreement,  the  Indenture  and the Insurance
Agreement  (as set forth in writing by the Insurer) and the  disposition  of all
property  held as part of the Trust;  provided,  however,  that the Trust  shall
terminate  one year and one day  following  the  date of the  occurrence  of (i)
above, if on the date of such occurrence,  UAC's Consolidated Tangible Net Worth
is less than $45,000,000,  plus 50% of UAC's cumulative  Consolidated Net Income
(with no  reduction  for  losses)  from and after  August  31,  1995;  provided,
further,  that in no event shall the trust  created by this  Agreement  continue
beyond the  expiration  of 21 years from the date as of which this  Agreement is
executed.  The Servicer  shall  promptly  notify the Owner Trustee and Indenture
Trustee in writing  of any  prospective  termination  pursuant  to this  Section
16.01. Notwithstanding the foregoing, the Trust shall continue and the Indenture
Trustee shall pursue recovery of any Preference Amounts under the Policy and the
distribution of the same to Noteholders  until the Policy  terminates by its own
terms.

          SECTION 16.02. Optional Disposition of All Receivables. On any Payment
Date (after  giving  effect to any payments to be made on such Payment  Date) on
which the Note  Balances  will be equal to or less than 10% of the Initial  Note
Balances,  the Servicer shall have the option to cause the Owner Trustee to sell
(to the Servicer or any other person  designated  by the Servicer) the corpus of
the Trust at a price (the "Optional Disposition Price") equal to the fair market
value  of the  Receivables,  but  not  less  than  the  sum of (x)  100%  of the
outstanding Note Balances (including any overdue principal or interest thereon),
(y) accrued and unpaid  interest on such amount  computed at a rate equal to the
weighted average interest rate applicable to the Notes then outstanding, and (z)
all amounts due and owing to the Insurer under this Agreement, the Indenture and
the  Insurance  Agreement.  Any such purchase will be effective as of the end of
the Collection  Period which relates to the Payment Date on which the repurchase
occurs.  The proceeds of such sale will be deposited into the Collection Account
for distribution to the Indenture  Trustee (and, to the extent  applicable,  the
Insurer)  on  the  next  succeeding   Payment  Date.  In  connection  with  such
disposition, the Servicer is required to pay any unpaid fees and expenses of the
Owner  Trustee  and the  Indenture  Trustee  that it would  otherwise  have been
entitled to pursuant to this  Agreement.  The  Servicer  shall  notify the Owner
Trustee and the  Indenture  Trustee on or before the  Determination  Date if the
Note  Balances as of the related  Payment Date will be less than or equal to 10%
of the Initial Note  Balances.  The Servicer  shall notify the Owner  Trustee in
writing on or before the Determination  Date if the Servicer intends to exercise
its option to purchase the corpus of the Trust  pursuant to this Section  16.02.
Such price shall be deposited to the Collection Account in immediately available
funds by 11:00 a.m., New York City time, on the Payment Date and, upon notice to
the  Owner  Trustee  of such  deposit,  the Owner  Trustee  shall  transfer  the
Receivables and the Receivable Files to the purchaser, whereupon the Certificate
shall no  longer  evidence  any  right or  interest  in the  Receivables  or any
proceeds thereof.

                                  ARTICLE XVII

                            Miscellaneous Provisions

          SECTION 17.01. Amendment. This Agreement may be amended by the Seller,
the Servicer, the Insurer (so long as an Insurer Default shall not have occurred
and  be  continuing)  and  the  Owner  Trustee,   without  the  consent  of  the
Certificateholder  or the  Noteholders,  to cure any  ambiguity,  to  correct or
supplement any provisions in this Agreement, or to add any other provisions with
respect to matters or questions  arising under this  Agreement that shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of the Certificateholder or the Secured Parties.

          Except as provided in the  foregoing  paragraph,  (i) no  amendment of
this  Agreement  shall be  effective  without the prior  written  consent of the
Insurer  and  the  holders  of 51% of the  outstanding  Note  Balances,  (ii) no
amendment to this  Agreement  shall be  recognized  or be effective  without the
written  consent of the Owner  Trustee  and  receipt by the Owner  Trustee of an
Opinion of Counsel to the effect that such amendment will not cause the Trust to
be treated as an association  taxable as a corporation  or as a  publicly-traded
partnership,  (iii) the Indenture Trustee shall receive a copy of all amendments
to this  Agreement and (iv) no amendment  which  affects the  Indenture  Trustee
shall be effective without the consent of the Indenture Trustee.

          So  long  as an  Insurer  Default  shall  not  have  occurred  and  be
continuing,  the Insurer shall have the right to exercise all rights,  including
voting rights,  which the Noteholders are entitled to exercise  pursuant to this
Agreement,  without any consent of such  Noteholders;  provided,  however,  that
without the consent of each Noteholder  affected thereby,  the Insurer shall not
exercise such rights to amend this Agreement in any manner that would (i) reduce
the  amount  of,  or  delay  the  timing  of,  collections  of  payments  on the
Receivables  or  distributions  which are required to be made on any Note,  (ii)
adversely  affect in any  material  respect the  interests of the Holders of any
Notes,  or  (iii)  alter  the  rights  of any such  Holder  to  consent  to such
amendment.

          Notwithstanding  any provision in this  Agreement to the contrary,  in
the event an Insurer Default shall have occurred and be continuing,  the Insurer
shall not have the right to take any action  under this  Agreement or to control
or direct the actions of the Trust,  the Seller,  the  Indenture  Trustee or the
Owner Trustee pursuant to the terms of this Agreement,  nor shall the consent of
the Insurer be required with respect to any action (or waiver of a right to take
action) to be taken by the Trust, the Seller, the Indenture  Trustee,  the Owner
Trustee or the Noteholders or the Certificateholders; provided, that the consent
of the Insurer  shall be required at all times with respect to any  amendment of
this Agreement.

          Promptly  after the execution of any  amendment or consent,  the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to the  Certificateholder  and the Indenture Trustee for notification to
each of the Noteholders.

          It shall not be necessary for the consent of the  Certificateholder or
the Noteholders pursuant to this Section 17.01 to approve the particular form of
any proposed  amendment or consent,  but it shall be  sufficient if such consent
shall approve the substance  thereof.  The manner of obtaining such consents and
of   evidencing   the   authorization   of   the   execution   thereof   by  the
Certificateholder  shall be subject to such reasonable requirements as the Owner
Trustee may prescribe.

          Promptly  after the execution of any amendment to the  Certificate  of
Trust,  the Owner  Trustee  shall  cause the filing of such  amendment  with the
Secretary of State of the State of Delaware.

          Prior to the  execution  of any  amendment  to this  Agreement  or the
Certificate  of Trust,  the Owner  Trustee shall be entitled to receive and rely
upon an Opinion of Counsel  stating  that the  execution  of such  amendment  is
authorized or permitted by this Agreement and the Opinion of Counsel referred to
in Section  17.02(i)(1).  The Owner  Trustee may, but shall not be obligated to,
enter into any such  amendment  which  affects the Owner  Trustee's  own rights,
duties, or immunities under this Agreement.

          SECTION 17.02. Protection of Title to Trust.

          (a) The Seller shall execute or duly authorize and file such financing
statements  and  cause  to  be  executed  or  duly  authorized  and  filed  such
continuation  statements,  all in  such  manner  and in  such  places  as may be
required by law fully to  preserve,  maintain,  and protect the  interest of the
Trust under this Agreement in the Receivables and in the proceeds  thereof.  The
Seller shall  deliver (or cause to be  delivered)  to the Owner  Trustee and the
Indenture Trustee  file-stamped  copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing.

          (b)  Neither  the  Seller  nor the  Servicer  shall  change  its name,
identity,  or corporate structure in any manner that would, could, or might make
any  financing  statement  or  continuation  statement  filed by the  Seller  in
accordance with paragraph (a) above seriously  misleading  within the meaning of
Section  9-506(b) of the UCC,  unless it shall have given the Owner  Trustee and
the Indenture Trustee at least 60 days' prior written notice thereof.

          (c) The  Seller and the  Servicer  shall  give the Owner  Trustee  and
Indenture  Trustee at least 60 days' prior  written  notice of any change in its
jurisdiction  of  organization  if, as a result of such change,  the  applicable
provisions  of  the  UCC  would  require  the  filing  of any  amendment  of any
previously  filed  financing or  continuation  statement or of any new financing
statement  (in which  case the  Servicer  shall  file or cause to be filed  such
amendment or  continuation  statement  or new  financing  statement).  The Owner
Trustee and the Indenture  Trustee shall be permitted to waive the 60 day notice
period to any shorter  period;  provided that such UCC  financing  statements or
amendments  have been filed on or before the effective  date of any such waiver.
The Servicer shall at all times maintain each office from which it shall service
Receivables,  its  jurisdiction  of  organization  and its  principal  executive
office, within the United States of America.

          (d) The  Servicer  shall  maintain  accounts  and  records  as to each
Receivable  accurately and in sufficient detail to permit (i) the reader thereof
to know at any  time the  status  of such  Receivable,  including  payments  and
recoveries   made  and  payments  owing  (and  the  nature  of  each)  and  (ii)
reconciliation  between  payments  or  recoveries  on (or with  respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.

          (e) The Servicer shall maintain its computer systems so that, from and
after the time of sale  under this  Agreement  of the  Receivables  to the Owner
Trustee, the Servicer's master computer records (including any back-up archives)
that  refer  to a  Receivable  shall  indicate  clearly  with  reference  to the
particular trust that such Receivable is owned by the Owner Trustee.  Indication
of the Owner  Trustee's  ownership  of a  Receivable  shall be  deleted  from or
modified on the Servicer's  computer systems when, and only when, the Receivable
shall have been paid in full, purchased or repurchased.

          (f) If at any time the Seller or the Servicer  shall  propose to sell,
grant a security  interest in, or otherwise  transfer any interest in automobile
receivables to any  prospective  purchaser,  lender,  or other  transferee,  the
Servicer shall give to such prospective  purchaser,  lender, or other transferee
computer  tapes,  records,  or print-outs  (including  any restored from back-up
archives) that, if they shall refer in any manner  whatsoever to any Receivable,
shall  indicate  clearly that such  Receivable has been sold and is owned by the
Trust.

          (g) The Servicer  shall permit the Owner Trustee and its agents at any
time during  normal  business  hours to inspect,  audit,  and make copies of and
abstracts from the Servicer's records regarding any Receivable.

          (h) Upon request,  the Servicer shall furnish to the Owner Trustee and
the Indenture Trustee,  within five Business Days, a list of all Receivables (by
contract  number and name of Obligor)  then held as part of the Trust,  together
with a  reconciliation  of such list to Schedule A to this Agreement,  including
any supplements  thereto, and to each of the Servicer's  Certificates  furnished
before such request indicating removal of Receivables from the Trust.

          (i) The Servicer  shall deliver to the Owner Trustee and the Indenture
Trustee:

                    (1)  promptly  after  the  execution  and  delivery  of this
          Agreement and of each amendment  hereto,  an Opinion of Counsel either
          (a)  stating  that,  in the  opinion of such  counsel,  all  financing
          statements  and  continuation  statements  have been  executed or duly
          authorized and filed that are necessary  fully to preserve and protect
          the interest of the Owner Trustee in the  Receivables and reciting the
          details of such filings or  referring to prior  Opinions of Counsel in
          which such details are given,  or (b) stating  that, in the opinion of
          such  counsel,  no such action  shall be  necessary  to  preserve  and
          protect such interest; and

                    (2) within 90 days after the beginning of each calendar year
          beginning  with the first  calendar  year  beginning  more than  three
          months after the Cutoff Date, an Opinion of Counsel,  dated as of such
          90th day, either (a) stating that, in the opinion of such counsel, all
          financing statements and continuation statements have been executed or
          duly  authorized  and filed that are  necessary  fully to preserve and
          protect the  interest  of the Owner  Trustee in the  Receivables,  and
          reciting the details of such filings or referring to prior Opinions of
          Counsel in which such details are given,  or (b) stating  that, in the
          opinion of such counsel, no such action shall be necessary to preserve
          and protect such interest.  Such Opinion of Counsel shall also specify
          any financing  statements or  continuation  statements or other action
          necessary  (based on the laws in effect and the facts  known as of the
          date of such opinion) to be executed or duly  authorized  and filed on
          or before March 31 of the following  year to preserve and protect such
          interest.

          SECTION 17.03. Limitation on Rights of Certificateholder. The death or
incapacity  of  the  Certificateholder  shall  not  operate  to  terminate  this
Agreement   or  the  Trust,   nor   entitle   such   Certificateholder's   legal
representatives  or  heirs  to claim an  accounting  or to take  any  action  or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations,  and liabilities of the parties to
this Agreement or any of them.

          No Certificateholder  shall have any right to vote (except as provided
in  Section  17.01,  17.03 or  17.07) or in any  manner  otherwise  control  the
operation and management of the Trust, or the obligations of the parties to this
Agreement  except as  expressly  set forth  herein,  nor shall  anything in this
Agreement set forth, or contained in the terms of the Certificate,  be construed
so as to  constitute  the  Certificateholder  from time to time as members of an
association; nor shall any Certificateholder be under any liability to any third
person  by  reason  of any  action  taken  pursuant  to any  provision  of  this
Agreement.

          No  Certificateholder  shall  have any right by virtue or by  availing
itself of any  provisions of this  Agreement to institute any suit,  action,  or
proceeding in equity or at law upon or under or with respect to this  Agreement,
unless such Certificateholder previously shall have given to the Owner Trustee a
written  notice of  default  and of the  continuance  thereof,  as  hereinbefore
provided, and unless also the Certificateholder requests in writing to the Owner
Trustee to institute such action, suit, or proceeding in its own name as Trustee
under this Agreement and shall have offered to the Owner Trustee such reasonable
indemnity as it may require against the costs,  expenses,  and liabilities to be
incurred  therein  or  thereby,  and the Owner  Trustee,  for 30 days  after its
receipt of such notice, request, and offer of indemnity, shall have neglected or
refused to institute any such action, suit, or proceeding and during such 30-day
period no direction inconsistent with such written request has been given to the
Owner Trustee.

          SECTION 17.04.  Governing  Law. This  Agreement  shall be construed in
accordance with the laws of the State of Delaware  applicable to agreements made
and to be performed within the State of Delaware,  and the obligations,  rights,
and  remedies  of the  parties  under  this  Agreement  shall be  determined  in
accordance with such laws.

          SECTION 17.05. Notices. All demands, notices, and communications under
this Agreement shall be in writing,  personally delivered, sent by facsimile to,
sent by courier to or mailed by certified mail,  return receipt  requested,  and
shall be deemed to have been duly given unless otherwise  provided herein,  upon
receipt (a) in the case of the Seller to Leeanne W. Graziani, UAC Securitization
Corporation,  9240 Bonita Beach Road,  Suite  1109-A,  Bonita  Springs,  Florida
34135,  facsimile (941) 948-1855 or at such other address as shall be designated
by the Seller in a written notice to the Servicer or Trustee; (b) in the case of
the  Servicer  to Melanie  S.  Otto,  Union  Acceptance  Corporation,  250 North
Shadeland Avenue, Indianapolis,  Indiana 46219, facsimile (317) 231-7926, (c) in
the case of the Owner Trustee, at the Corporate Trust Office, (d) in the case of
the Insurer,  MBIA  Insurance  Corporation,  113 King Street,  Armonk,  New York
10504,  facsimile  (914)  765-3810,  Attention:  Insured  Portfolio  Management,
Structured Finance and (e) in the case of the Indenture Trustee at the Indenture
Trustee Office.  Unless otherwise  provided herein,  any notice so mailed within
the time  prescribed in this Agreement  shall be  conclusively  presumed to have
been duly  given,  whether or not the  Certificateholder  or  Noteholders  shall
receive such notice.

          SECTION 17.06.  Severability of Provisions.  If any one or more of the
covenants,  agreements,  provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements,  provisions, or
terms  shall be  deemed  severable  from the  remaining  covenants,  agreements,
provisions,  or terms of this  Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.

          SECTION 17.07.  Assignment.  Notwithstanding  anything to the contrary
contained herein, except as provided below or in Sections 12.03 and 13.03 and as
provided in the provisions of this Agreement  concerning the  resignation of the
Servicer,  this  Agreement  may not be  assigned  by the Seller or the  Servicer
without   the   prior   written   consent   of  the   Owner   Trustee   and  the
Certificateholder.

          SECTION  17.08.   Certificate   Nonassessable   and  Fully  Paid.  The
Certificateholder  shall not be personally  liable for obligations of the Trust.
The interests  represented by the  Certificate  shall be  nonassessable  for any
losses  or  expenses  of the  Trust  or for any  reason  whatsoever,  and,  upon
authentication  thereof by the Owner  Trustee  pursuant  to Section  11.02,  the
Certificate shall be deemed fully paid and nonassessable.

          SECTION  17.09.  Nonpetition  Covenants.   Notwithstanding  any  prior
termination  of this  Agreement,  the Servicer,  UAC and the Owner Trustee shall
not,  prior to the date which is one year and one day after the  termination  of
this Agreement with respect to the Trust or the Seller,  acquiesce,  petition or
otherwise  invoke or cause the Trust or the Seller to invoke the  process of any
court or government authority for the purpose of commencing or sustaining a case
against  the  Trust  or the  Seller  under  any  Federal  or  state  bankruptcy,
insolvency  or similar  law or  appointing  a  receiver,  liquidator,  assignee,
trustee,  custodian,  sequestrator or other similar official of the Trust or the
Seller or any  substantial  part of its property,  or ordering the winding up or
liquidation of the affairs of the Trust or the Seller.

          SECTION  17.10.  Counterparts.  For the  purpose of  facilitating  the
execution  of this  Agreement  and for other  purposes,  this  Agreement  may be
executed   simultaneously   in  any  number  of  counterparts,   each  of  which
counterparts  shall be deemed to be an original,  and all of which  counterparts
shall constitute but one and the same instrument.

<PAGE>

          SECTION 17.11. Third Party Beneficiary.  This Agreement shall inure to
the benefit of the  Insurer,  the  Indenture  Trustee and their  successors  and
assigns.

                          [next page is signature page]

<PAGE>

          IN WITNESS  WHEREOF,  the  parties  hereto  have caused this Trust and
Servicing  Agreement to be duly executed by their respective  officers as of the
day and year first above written.

                                 UAC SECURITIZATION CORPORATION,
                                      as Seller

                                 By    /s/ Leeanne W. Graziani
                                       -----------------------------------------
                                 TITLE:   President

                                 UNION ACCEPTANCE CORPORATION,
                                          as Servicer

                                 By    /s/ Melanie S. Otto
                                       -----------------------------------------
                                 TITLE:  Senior Vice President

                                 FIRST UNION TRUST COMPANY,
                                 NATIONAL ASSOCIATION, not in its
                                 individual capacity but solely as Owner
                                 Trustee

                                 By    /s/ Edward L. Truitt, Jr.
                                       -----------------------------------------
                                 TITLE:  Vice President

          Accepted and agreed to as of the day and year first above written.

                                 BNY MIDWEST TRUST COMPANY,
                                 not in its individual capacity but
                                 solely as Indenture Trustee

                                 By    /s/ Cynthia Davis
                                       -----------------------------------------
                                 TITLE:  Assistant Vice President

<PAGE>

                        [SCHEDULES AND EXHIBITS OMITTED]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}]]