FLEET NATIONAL BANK MELLON BANK, N.A. BANK OF MONTREAL CIBC INC. DRESDNER BANK AG, NEW YORK BRANCH & GRAND CAYMAN BRANCH as Co-Agents -and-

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EXHIBIT 10.23

EXECUTION COPY
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PENNCORP FINANCIAL GROUP, INC.

_____________________

CREDIT AGREEMENT

Dated as of March 12, 1997

_____________________

THE CHASE MANHATTAN BANK
THE FIRST NATIONAL BANK OF CHICAGO
NATIONSBANK, N.A.

as Managing Agents

FLEET NATIONAL BANK
MELLON BANK, N.A.
BANK OF MONTREAL
CIBC INC.
DRESDNER BANK AG, NEW YORK BRANCH & GRAND CAYMAN BRANCH

as Co-Agents

-and-

THE BANK OF NEW YORK

as Administrative Agent

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TABLE OF CONTENTS

Page
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Section 1. Definitions and Accounting Matters . . . . . . . . . . . . . 1
1.01 Certain Defined Terms . . . . . . . . . . . . . . . . 1
1.02 Accounting Terms and Determinations. . . . . . . . . . 21
1.03 Types of Loans . . . . . . . . . . . . . . . . . . . . 22

Section 2. Commitments. . . . . . . . . . . . . . . . . . . . . . . . . 22
2.01 Loans . . . . . . . . . . . . . . . . . . . . . . . . 22
2.02 Borrowing . . . . . . . . . . . . . . . . . . . . . . 23
2.03 Non-Receipt of Funds from a Bank . . . . . . . . . . . 25
2.04 Changes of Commitments . . . . . . . . . . . . . . . . 26
2.05 Fees . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.06 Lending Offices . . . . . . . . . . . . . . . . . . . 27
2.07 Several Obligations; Remedies
Independent. . . . . . . . . . . . . . . . . . . . 27
2.08 Notes. . . . . . . . . . . . . . . . . . . . . . . . . 27
2.09 Conversions or Continuations of Loans. . . . . . . . 28

Section 3. Payments of Principal and Interest;
Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . 28
3.01 Repayments . . . . . . . . . . . . . . . . . . . . . . 28
3.02 Interest . . . . . . . . . . . . . . . . . . . . . . . 29
3.03 Prepayments. . . . . . . . . . . . . . . . . . . . . . 30

Section 4. Payments; Pro Rata Treatment; Computations;
Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.01 Payments . . . . . . . . . . . . . . . . . . . . . . . 31
4.02 Pro Rata Treatment . . . . . . . . . . . . . . . . . . 31
4.03 Computations. . . . . . . . . . . . . . . . . . . . 32
4.04 Minimum Amounts . . . . . . . . . . . . . . . . . . . 32
4.05 Certain Notices. . . . . . . . . . . . . . . . . . . 32
4.06 Non-Receipt of Funds from the
Company . . . . . . . . . . . . . . . . . . . . . . . 33
4.07 Sharing of Payments, Etc. . . . . . . . . . . . . . . 34
4.08 No Reductions . . . . . . . . . . . . . . . . . . . . 35
4.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 35

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Section 5. Yield Protection and Illegality. . . . . . . . . . . . . . . 36
5.01 Additional Costs, Etc. . . . . . . . . . . . . . . . . 36
5.02 Limitation on Types of Loans . . . . . . . . . . . . . 39
5.03 Illegality . . . . . . . . . . . . . . . . . . . . . . 39
5.04 Treatment of Certain Loans. . . . . . . . . . . . . 40
5.05 Compensation. . . . . . . . . . . . . . . . . . . . 40
5.06 Replacement of Bank . . . . . . . . . . . . . . . . . 41

Section 6. Conditions Precedent. . . . . . . . . . . . . . . . . . . . 41
6.01 Initial Borrowing . . . . . . . . . . . . . . . . . . 41
6.02 All Borrowings . . . . . . . . . . . . . . . . . . . . 44

Section 7. Representations and Warranties. . . . . . . . . . . . . . 44
7.01 Corporate Existence. . . . . . . . . . . . . . . . . . 45
7.02 Financial Condition. . . . . . . . . . . . . . . . . 45
7.03 Litigation. . . . . . . . . . . . . . . . . . . . . 45
7.04 No Breach . . . . . . . . . . . . . . . . . . . . . . 46
7.05 Corporate Action . . . . . . . . . . . . . . . . . . . 46
7.06 Approvals . . . . . . . . . . . . . . . . . . . . . . 46
7.07 Use of Loans . . . . . . . . . . . . . . . . . . . . . 47
7.08 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 47
7.09 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 47
7.10 Investment Company Act. . . . . . . . . . . . . . . 48
7.11 Public Utility Holding Company Act. . . . . . . . . 48
7.12 Environmental Matters. . . . . . . . . . . . . . . . 48
7.13 Subsidiaries, Etc. . . . . . . . . . . . . . . . . . 49
7.14 Material Agreements and Burdensome
Provisions. . . . . . . . . . . . . . . . . . . . 49
7.15 Assets. . . . . . . . . . . . . . . . . . . . . . . 49
7.16 Compliance with Applicable Law. . . . . . . . . . . 50
7.17 Liens. . . . . . . . . . . . . . . . . . . . . . . . . 50
7.18 Tax Sharing Agreements . . . . . . . . . . . . . . . . 50
7.19 No Material Adverse Effect . . . . . . . . . . . . . . 50
7.20 Additional Adverse Facts . . . . . . . . . . . . . . . 50
7.21 Accuracy of Information . . . . . . . . . . . . . . . 51
7.22 Restrictive Covenants . . . . . . . . . . . . . . . . 51
7.23 Security Interest . . . . . . . . . . . . . . . . . . 51

Section 8. Covenants of the Company . . . . . . . . . . . . . . . . . . 51
8.01 Financial Statements. . . . . . . . . . . . . . . . 51
8.02 Communication with Accountants. . . . . . . . . . . 55
8.03 Litigation. . . . . . . . . . . . . . . . . . . . . 56
8.04 Corporate Existence, Etc. . . . . . . . . . . . . . 56
8.05 Insurance. . . . . . . . . . . . . . . . . . . . . . 57
8.06 Prohibition of Fundamental Changes. . . . . . . . . 57
8.07 Limitation on Liens. . . . . . . . . . . . . . . . . 58
8.08 Indebtedness. . . . . . . . . . . . . . . . . . . . 59

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8.09 Dividends . . . . . . . . . . . . . . . . . . . . . . 59
8.10 Leverage Ratio . . . . . . . . . . . . . . . . . . . . 60
8.11 Interest Coverage Ratio. . . . . . . . . . . . . . . 60
8.12 Minimum Total Adjusted Capital . . . . . . . . . . . . 60
8.13 Consolidated Net Worth . . . . . . . . . . . . . . . . 60
8.14 Lines of Business . . . . . . . . . . . . . . . . . . 60
8.15 Transactions with Affiliates. . . . . . . . . . . . 61
8.16 Use of Proceeds . . . . . . . . . . . . . . . . . . . 61
8.17 Tax Sharing Agreements . . . . . . . . . . . . . . . . 61
8.18 Modifications of Certain Documents. . . . . . . . . . 61
8.19 Limitation on Restrictive Covenants . . . . . . . . . 62
8.20 Surplus Notes . . . . . . . . . . . . . . . . . . . . 62
8.21 Security . . . . . . . . . . . . . . . . . . . . . . . 62

Section 9. Events of Default . . . . . . . . . . . . . . . . . . . . . 62

Section 10. The Administrative Agent . . . . . . . . . . . . . . . . . . 66
10.01 Appointment, Powers and Immunities . . . . . . . . . 66
10.02 Reliance by the Administrative Agent . . . . . . . . 66
10.03 Defaults . . . . . . . . . . . . . . . . . . . . . . 67
10.04 Rights as a Bank . . . . . . . . . . . . . . . . . . 67
10.05 Indemnification . . . . . . . . . . . . . . . . . . . 67
10.06 Non-Reliance on Administrative Agent and Other Banks 68
10.07 Failure to Act . . . . . . . . . . . . . . . . . . . 68
10.08 Resignation of the Administrative Agent . . . . . . . 68
10.09 Execution and Amendment of Loan Documents on Behalf
of the Banks . . . . . . . . . . . . . . . . . . . . 69
10.10 Consents under Loan Documents . . . . . . . . . . . . 69

Section 11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 69
11.01 Waiver . . . . . . . . . . . . . . . . . . . . . . . 69
11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . 69
11.03 Expenses, Etc. . . . . . . . . . . . . . . . . . . . 70
11.04 Amendments, Etc. . . . . . . . . . . . . . . . . . . 71
11.05 Successors and Assigns . . . . . . . . . . . . . . . 72
11.06 Assignments and Participations . . . . . . . . . . . 72
11.07 Survival . . . . . . . . . . . . . . . . . . . . . . 74
11.08 Captions . . . . . . . . . . . . . . . . . . . . . . 74
11.09 Counterparts . . . . . . . . . . . . . . . . . . . . 74
11.10 Governing Law; Submission to Jurisdiction . . . . . . 74
11.11 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . 75
11.12 Confidentiality . . . . . . . . . . . . . . . . . . . 75
11.13 Amounts Payable Due Upon Request for Payment . . . . 76
11.14 Remedies of the Essence . . . . . . . . . . . . . . . 76
11.15 Rights Cumulative . . . . . . . . . . . . . . . . . . 76
11.16 LIMITATION OF LIABILITY . . . . . . . . . . . . . . . 76
11.17 Reference Banks . . . . . . . . . . . . . . . . . . . 76

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11.18 Schedules . . . . . . . . . . . . . . . . . . . . . . 77
11.19 Severability of Provisions . . . . . . . . . . . . . 77
11.20 Entire Agreement . . . . . . . . . . . . . . . . . . 77

Schedule 2.02(b)(i) - Request for Bid Rate Loans
Schedule 2.02(b)(ii) - Form of Bid Rate Loan Offer
Schedule 7.03 - Litigation
Schedule 7.04 - Consents and Approvals
Schedule 7.08(a) - ERISA Obligations, Non-Compliances and Liabilities
Schedule 7.08(b) - Unrecognized Retiree Welfare Liabilities
Schedule 7.12 - Environmental Matters
Schedule 7.13 - Subsidiaries and Investments
Schedule 7.14 - Material Agreements
Schedule 7.21 - Restrictive Covenants
Schedule 8.07 - Liens
Schedule 8.08 - Existing Indebtedness

EXHIBIT A - Form of RC Note
EXHIBIT B - Form of Bid Rate Note
EXHIBIT C - Form of Confidentiality Agreement

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CREDIT AGREEMENT (the "Agreement") dated as of March 12, 1997,
among: PENNCORP FINANCIAL GROUP, INC., a corporation duly organized and
validly existing under the laws of the State of Delaware, each of the Banks
that is a signatory hereto, THE CHASE MANHATTAN BANK, THE FIRST NATIONAL BANK
OF CHICAGO and NATIONSBANK, N.A., as Managing Agents, FLEET NATIONAL BANK,
MELLON BANK, N.A., BANK OF MONTREAL, CIBC INC. and DRESDNER BANK AG, NEW YORK
BRANCH & GRAND CAYMAN BRANCH, as Co-Agents, and THE BANK OF NEW YORK, as
Administrative Agent.

WHEREAS, the Company has requested that the Banks make revolving
credit loans to it from time to time in an aggregate principal amount at any
one time outstanding not exceeding $450,000,000, to be used for general
corporate purposes, including, but not limited to, the refinancing of existing
Indebtedness (as hereinafter defined) of the Company and the acquisition, to
the extent permitted by the terms of this Agreement, of Washington National and
Southwestern (each as defined herein), and the Banks are prepared to make such
loans upon the terms hereof.

NOW, THEREFORE, the parties hereto agree as follows:

Section 1. Definitions and Accounting Matters.

1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):

"Adjusted Surplus" shall mean, for any Insurance Company, on any
date, the sum (determined in accordance with SAP) of the following amounts: (a)
the Surplus for such Insurance Company on such date and (b) the aggregate of
the AVR for such Insurance Company and each of its Subsidiaries on such date
and (c) the aggregate principal amount of all surplus debentures or surplus
notes included as liabilities on the Statutory Statements of such Insurance
Company, if any, as at the last day of the fiscal quarter of such Insurance
Company ending on or most recently ended prior to such date.

"Administrative Agent" shall mean BNY, as administrative agent
for the Banks under the Loan Documents, and any successor Administrative Agent
appointed pursuant to Section 10.08.

"Affiliate" shall mean, for any Person, (a) any other Person
which directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member of
the immediate family (including parents, spouse and children) of such
individual and any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is controlled by
any such member or trust and (b) any officer or director of such Person. As
used in this
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definition, "control" (including, with its correlative meanings, "controlled
by" and "under common control with") shall mean possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise), provided that, in any event, any Person
which owns directly or indirectly 10% or more of the securities having ordinary
voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person. Notwithstanding the
foregoing, the Company and its Wholly-Owned Subsidiaries shall not be deemed to
be Affiliates of each other.

"Agreement Date" shall mean the date first written above.

"Applicable Insurance Regulatory Authority" shall mean, for any
Insurance Company, the insurance commission or similar administrative authority
or agency of the State or Province, as the case may be, in which such Insurance
Company is domiciled.

"Applicable Law" shall mean, anything in Section 11.10 to the
contrary notwithstanding, (a) all applicable common law and principles of
equity and (b) all applicable provisions of all (i) constitutions, statutes,
rules, regulations and orders of governmental bodies, (ii) all authorizations,
consents, approvals, licenses, or exemptions from or of, all registrations or
filings with and all reports or notices to, any governmental unit, and (c)
orders, decisions, judgments and decrees of all courts (whether at law or in
equity or admiralty) and binding orders, decisions, judgments and decrees of
all arbitrators, provided that for the purposes of Section 8.09(ii)(B), no
order of any governmental body or order, decision, judgment or decree of any
court or arbitrator shall constitute Applicable Law unless (A) either (x) the
time to appeal, seek review or rehearing, or petition for certiorari has
expired and no timely-filed appeal or petition for review, rehearing, remand or
certiorari is pending or (y) any appeal taken or petition for certiorari filed
has been resolved by the highest court to which the order, decision, judgment
or decree could be appealed or from which review, rehearing or certiorari could
be sought and (B) in either case, such final order, decision, judgment or
decree shall not have been reversed, discharged, satisfied, stayed, annulled or
rescinded within 60 days of the entry thereof.

"Applicable Lending Office" shall mean (i) for each Bank and for
each type of Loan, the "Lending Office" of such Bank (or of an affiliate of
such Bank) designated for such type of Loan on the signature pages hereof or,
in the case of a Bank that becomes a Bank pursuant to an assignment, the office
of such Bank set forth in the notice of assignment given to the Company or (ii)
such other office of such Bank (or of an affiliate of such Bank) as such Bank
may from time to time specify to the Administrative Agent and the Company as
the office by which its Loans of such type are to be made and maintained.
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"Applicable Margin" shall mean, for any day, the percentage set
forth below based on the Tier with the highest debt rating applicable on such
day, as follows:

Tier Applicable Margin
---- -----------------

Tier I 0.200%
Tier II 0.225%
Tier III 0.250%
Tier IV 0.300%
Tier V 0.500%
Tier VI 0.700%;

"AVR" shall mean, for any Insurance Company, on any date, the sum
of (a) the asset valuation reserve (determined in accordance with SAP) of such
Insurance Company (which amount is shown, in the case of U.S.-domiciled
Insurance Companies, on the most recent annual Statutory Statement of each
Insurance Company at page 3, line 24.1, column 1) and (b) the interest
maintenance reserve (determined in accordance with SAP) of such Insurance
Company (which amount is shown, in the case of U.S.-domiciled Insurance
Companies, on the most recent annual Statutory Statement of each Insurance
Company at page 3, line 11.4, column 1), in each case as at the last day of the
fiscal quarter ending on or most recently ended prior to such date, or any
similar asset valuation reserve and interest maintenance reserve substituted
for AVR pursuant to Applicable Law from time to time in accordance with SAP, or
any other direct allocation of Surplus made in accordance with SAP.

"Bank" means (a) BNY, in its capacity as a Bank, and each Person
listed on the signature pages hereof following BNY and (b) any Person (other
than the Borrower or any of its Affiliates) that becomes, after the Agreement
Date, a Bank pursuant to the provisions of Section 11.06, including as a result
of the Borrower's election under Section 5.06.

"Bankruptcy Code" shall mean Title 11 of the United States Code
or any successor statutes, as such title or statutes may be amended from time
to time.

"Base Rate" shall mean, for any day, a rate per annum equal to
the higher of (a) the Federal Funds Rate in effect on such day plus 1/2 of 1%
per annum and (b) the Prime Rate in effect on such day. Each change in any
interest rate provided for herein based upon the Base Rate resulting from a
change in the Base Rate shall take effect at the time of such change in the
Base Rate.

"Base Rate Loans" shall mean RC Loans which bear interest at
rates based upon the Base Rate.

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"Best" shall mean A.M. Best & Company.

"Bid Rate Loan" shall mean a loan provided for by Section
2.01(b).

"Bid Rate Note" shall mean a promissory note in the form of
Exhibit B.

"BNY" shall mean The Bank of New York.

"Business Day" shall mean any day on which commercial banks are
not authorized or required to close in New York City, N.Y. and, if such day
relates to a borrowing of, a payment or prepayment of principal of or interest
on, or a Conversion of or into, or an Interest Period for, a Eurodollar Loan or
a notice by the Company with respect to any such borrowing, payment,
prepayment, Conversion or Interest Period, which is also a day on which
dealings in Dollar deposits are carried out in the London interbank market and
on which commercial banks are open for domestic and international business
(including dealings in Dollar deposits) in London, England.

"Capital Lease Obligations" shall mean, for any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board) and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).

"Certificate of Incorporation" shall mean the Second Restated
Certificate of Incorporation of the Company.

"Change of Control", with respect to the Company, shall be deemed
to have occurred if at any time (i) Messrs. Stone and ▇▇▇▇▇▇ (or any
replacement for any thereof reasonably acceptable to the Majority Banks) shall
cease to be members of the Board of Directors of the Company, (ii) the majority
of the Board of Directors of the Company consists of individuals other than
Incumbent Directors or (iii) any Person, or group of Persons acting together,
shall at any time have or acquire beneficial ownership of, or the right to
exercise voting power with respect to, 20% or more of the Common Stock of the
Company outstanding at such time, provided that no change of control shall be
deemed to have occurred under this clause (iii) upon the acquisition by any
Person, or group of Persons acting together, of the beneficial ownership of, or
the right to exercise voting power with respect to, not more than 25% of the
Common Stock of the Company outstanding at such time so long as such Person or
group of Persons (A) has acquired and holds such ownership or such right in the
ordinary course of his or its business and not with the purpose or the effect
of changing or influencing the control of the Company and not in connection
with, or as a participant in, any transaction having such purpose or effect and
(B) has filed (and remains eligible to file) a Schedule 13G with the Securities
and Exchange Commission pursuant to Rule 13d-1 promulgated by the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934, and
such filing remains effective.

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"Charges" shall mean all Federal, State, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC)
taxes, levies, assessments, charges, liens, claims, encumbrances upon or
relating to (a) the Company's employees, payroll, income or gross receipts
(excluding any premium taxes on gross receipts), (b) the Company's ownership or
use of any of their respective assets, or (c) any other aspect of the Company's
business, in each case including any and all interest and penalties.

"Closing Date" shall mean the date on which the initial Loan is
made under this Agreement.

"Co-Agents" shall mean Fleet National Bank, Mellon Bank, N.A.,
Bank of Montreal, CIBC Inc. and Dresdner Bank AG, New York Branch & Grand
Cayman Branch.

"Code" shall mean the Internal Revenue Code of 1986, as amended
and in effect on the Agreement Date, and any and all final and temporary
Treasury regulations issued thereunder that are in effect on the Agreement
Date.

"Collateral" shall mean (i) the Pledged Securities, (ii) all cash
and marketable securities of the Company and (iii) all notes (including Surplus
Notes) and receivables payable to the Company and each other holder of a
Surplus Note by a Surplus Note Company, in each case, whether owned on or
acquired after the Security Date.

"Commitment" shall mean (i) the amount set opposite each Bank's
name on the signature pages hereof under the caption "Commitment" or, in the
case of a Bank that becomes a Bank pursuant to an assignment, the amount of the
assignor's Commitment assigned to such Bank (in either case as the same may be
terminated or reduced at any time or from time to time pursuant to Section
2.04, canceled pursuant to Section 9 or increased or reduced at any time or
from time to time pursuant to assignments made in accordance with Section
11.06) or (ii) as the context may require, the obligation of each Bank to make
RC Loans in an aggregate unpaid principal amount not exceeding such amount.
The original aggregate amount of the Commitments is $450,000,000.

"Common Stock" shall mean (i) the shares of common stock of the
Company issued and outstanding on the Agreement Date, having the terms and
conditions set forth in the Certificate of Incorporation, (ii) any share of
common stock of the Company issued thereafter and (iii) any security
convertible into, or exchangeable for, or any option, warrant or other right to
acquire, any share of common stock of the Company.

"Company" shall mean PennCorp Financial Group, Inc., a Delaware
corporation.

"Company Action Level Risk Based Capital" shall have the meaning
ascribed thereto in the Model Act.

"Consolidated Subsidiary" shall mean, as to any Person, each
subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which shall be (or should have been)
consolidated with the financial statements of such Person in accordance with
GAAP.

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"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.09 of a Eurodollar Loan from one Interest
Period to the next Interest Period.

"Contract" shall mean (i) any agreement (whether bilateral or
unilateral or executory or non-executory and whether a Person entitled to
rights thereunder is so entitled directly or as a third-party beneficiary),
including an indenture, lease or license, (ii) any deed or other instrument of
conveyance, (iii) any certificate of incorporation or charter and (iv) any by-
law.

"Convert", "Conversion" and "Converted" shall refer to conversion
pursuant to Section 2.09 of Base Rate Loans into Eurodollar Loans or of
Eurodollar Loans into Base Rate Loans or Eurodollar Loans of another type,
which may be accompanied by the transfer by a Bank (at its sole discretion) of
a Loan from one Applicable Lending Office to another.

"D&P" shall mean Duff & ▇▇▇▇▇▇ Credit Rating Co.

"D&P Senior Debt Rating" shall mean (a) if the Company's long-
term unsecured senior debt is rated by D&P, the rating given by D&P to such
long-term unsecured senior debt and (b) if no such long-term unsecured senior
debt is rated by D&P, (i) the implied long-term unsecured senior debt rating
given by D&P to the Company or (ii) if such implied rating is not given by D&P,
the next higher rating above the rating given by D&P to the Subordinated Notes
(it being understood that AAA+ is the highest rating given by D&P).

"Default" shall mean an Event of Default or an event which with
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.

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

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

"ERISA Affiliate" shall mean any corporation or trade or business
which is a member of the same controlled group of corporations (within the
meaning of section 414(b) of the Code) as the Company or is under common
control (within the meaning of section 414(c), (m) or (o) of the Code) with the
Company.

"Eurodollar Base Rate" shall mean, with respect to any Eurodollar
Loan for any Interest Period therefor, the arithmetic mean, as determined by
the Administrative Agent, of the rate per annum (rounded upwards, if necessary,
to the nearest 1/16 of 1%) quoted by each Reference Bank at approximately 11:00
a.m. London time (or as soon thereafter as practicable) on the date two
Business Days prior to the first day of such Interest Period for the offering
by such Reference Bank to leading banks in the London interbank market of
Dollar deposits having a term comparable to such Interest Period and in an
amount comparable to the principal amount of the Eurodollar Loan to be made by
such Reference Bank for such Interest Period. If any Reference Bank is not
participating in any Eurodollar Loan during any Interest Period therefor, the
Eurodollar Base Rate for such Loan for such

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12
Interest Period shall be determined by reference to the amount of the Loan
which such Reference Bank would have made or had outstanding had it been
participating in such Loan during such Interest Period. If any Reference Bank
does not timely furnish such information for determination of any Eurodollar
Base Rate, the Administrative Agent shall determine such Eurodollar Base Rate
on the basis of information timely furnished by the remaining Reference Banks.

"Eurodollar Loans" shall mean RC Loans the interest rates on
which are determined on the basis of rates referred to in the definition of
"Eurodollar Base Rate" in this Section 1.01.

"Eurodollar Rate" shall mean, for any Eurodollar Loan for any
Interest Period therefor, a rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by the Administrative Agent to be equal to
the Eurodollar Base Rate for such Loan for such Interest Period divided by the
remainder of 1 minus the Reserve Requirement for such Loan for such Interest
Period.

"Event of Default" shall have the meaning assigned to such term
in Section 9.

"Excluded Tax" shall mean and include (a) any tax imposed upon or
measured by the net income or net revenues of a Bank or the Administrative
Agent, as the case may be, by the jurisdiction under the laws of which such
Bank or the Administrative Agent, as the case may be, is organized or doing
business, or any political subdivision thereof, and any tax imposed upon or
measured by the net income or net revenues of such Bank or the Administrative
Agent as the case may be, by the jurisdiction in which the Applicable Lending
Office of such Bank or the Administrative Agent, is located, or any political
subdivision thereof; (b) any tax (or portion thereof) that would not have been
imposed if the only connection between a Bank or the Administrative Agent, as
the case may be, and the jurisdiction imposing such tax were the activities of
such Bank or the Administrative Agent pursuant to or in respect of this
Agreement and any related documents, including, without limitation, entering
into, lending money, or extending credit pursuant to, receiving payments under,
or enforcing this Agreement or any related documents, and the activities of
such Bank or the Administrative Agent pursuant to or in respect of this
Agreement or any related documents and (c) any withholding tax collected or
enforced by any governmental authority (including, without limitation, any
withholding tax imposed under Section 1441 et seq. of the Code) empowered to
collect or enforce such tax with respect to any payments to the Banks or the
Administrative Agent, as the case may be, provided, however, that any such
withholding tax will not constitute an Excluded Tax unless (A) a reasonable
request has been made to the Bank or the Administrative Agent by the Company or
the Administrative Agent, as appropriate, to provide a Certificate of Exemption
to the Company or the Administrative Agent and (B) in the event that a
Certificate of Exemption is provided by the Bank or the Administrative Agent,
within fifteen (15) days of such request, the Company reasonably complies with
such Certificate of Exemption; and provided, further, that (i) the definition
of Excluded Tax shall not include any increase in the amount or rate of such
withholding tax resulting from any change in the applicable law or regulations
imposing such withholding tax that take effect after the Agreement Date; (ii)
such Excluded Taxes shall not include any tax payable by the Administrative
Agent or any Bank as a result of payments made by the

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13
Company (whether to a taxing authority or to the Administrative Agent or such
Bank) pursuant to Section 4.09; and (iii) any dispute between or among any or
all of the Company, the Administrative Agent and the Banks as to the amount of
any such Excluded Tax payable pursuant hereto shall be resolved by the Majority
Banks in their sole discretion, subject to the determination of the amount of
any such Excluded Tax by the applicable taxing authority, provided, however,
that this clause (iii) shall not apply to the definition of an Excluded Tax.

"Existing Credit Agreement" shall mean the Credit Agreement,
dated as of May 22, 1996, among the Company, the lenders signatory thereto and
BNY, as administrative agent.

"Existing Indebtedness" shall mean any Indebtedness of any
Subsidiary outstanding on the Agreement Date to the extent set forth on
Schedule 8.08.

"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is
to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (b) if such rate is not
so published for any day, the Federal Funds Rate for such day shall be the
average of quotations per such day on such transactions received by BNY from
three Federal funds brokers of recognized standing selected by such Bank.

"Financial Officer" means a senior financial officer having a
title of, and performing duties at a level, no less than vice president or a
chief financial officer.

"Foreign Bank" shall mean any Bank organized under the laws of a
jurisdiction other than the United States or any state or other political
subdivision thereof.

"GAAP" shall mean generally accepted accounting principles
applied on a basis consistent with those which, in accordance with the last
sentence of Section 1.02(a), are (except as otherwise expressly stated herein)
to be used in making the calculations for purposes of determining compliance
with the terms of this Agreement.

"Guarantee" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock of any corporation, or an agreement to purchase, sell or lease (as
lessee or lessor) property, products, materials, supplies or services primarily
for the purpose of enabling a debtor to make payment of his, her or its
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank to open a letter of credit for the benefit
of another Person, but excluding endorsements for collection or

-8-
14
deposit in the ordinary course of business. The terms "Guarantee" and
"Guaranteed" used as a verb shall have a correlative meaning.

"Income from Subsidiaries" shall mean, with respect to the
Company for any period, the sum of the amounts (determined in accordance with
GAAP for such period) of the Company's interest income from subsidiaries and
its equity in undistributed earnings of subsidiaries, as shown on the most
recent statements of earnings for such period for PennCorp Financial Group,
Inc. (Parent Company Only).

"Incumbent Director" shall mean (i) any member of the Board of
Directors of the Company as of the Agreement Date and (ii) any individual
becoming a member of the Board of Directors of the Company after the Agreement
Date whose election or nomination for election was supported by 75% of the
members of the Board of Directors of the Company who then comprised the
Incumbent Directors.

"Indebtedness" shall mean, for any Person (in each case, whether
such obligation is with full or limited recourse but excluding any obligations
constituting reinsurance): (a) Indebtedness created, issued or incurred by
such Person for borrowed money (whether by loan or the issuance and sale of
debt securities, including surplus debentures or notes whether or not
characterized as liabilities for the purposes of GAAP or SAP); (b) obligations
of such Person to pay the deferred purchase or acquisition price of property or
services if the deferred purchase price is due more than 90 days from the date
the obligation is incurred or is evidenced by a note or similar written
instrument, other than (i) amounts due to brokers relating to securities
transactions entered into in the ordinary course of business, (ii) trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered and (iii) amounts due under
long-term contracts entered into by the Company or any of its Subsidiaries in
the ordinary course of business for the outsourcing of operational services;
(c) Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
a Lien on the property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) any obligation of
such Person evidenced by a bond, debenture, note or other similar instrument;
(e) any Mandatorily Redeemable Stock of such Person owned by any Person other
than such Person or a Wholly-Owned Subsidiary of such Person that has no
Indebtedness other than the Loans and Indebtedness owing to the Company or
another such Subsidiary (the amount of such Mandatorily Redeemable Stock to be
determined for this purpose as the amount payable upon redemption of such
Mandatorily Redeemable Stock); (f) any obligation of such Person to purchase
securities or other property that arises out of or in connection with the sale
of the same or substantially similar securities or property (excluding Mortgage
Rolls having a duration of less than 35 days); (g) any non-contingent
obligation of such Person to reimburse any other Person in respect of amounts
paid under a letter of credit or other Guarantee issued by such other Person to
the extent that such reimbursement obligation remains outstanding after it
becomes non-contingent; (h) Capital Lease Obligations of such Person; (i)
Indebtedness of others Guaranteed by such Person; and (j) any obligation with
respect to an interest rate or currency swap or similar obligation obligating
such Person to make payments, whether periodically or upon the happening of a
contingency, except that

-9-
15
if any agreement relating to such obligation provides for the netting of
amounts payable by and to such Person thereunder or if any such agreement
provides for the simultaneous payment of amounts by and to such Person, then in
each such case, the amount of such obligation shall be the net amount thereof.
The amount of any Indebtedness secured by a Lien on any property or assets
owned or held by a Person which is nonrecourse to that Person shall be equal to
the lesser of (x) the outstanding principal amount of the Indebtedness or (y)
the fair market value of the property or asset encumbered, as determined by
such Person in good faith.

"Indenture" shall mean the Indenture, dated as of December 23,
1993, between the Company and BNY, as trustee, pursuant to which the
Subordinated Notes were issued.

"Information" shall mean data, certificates, reports, statements
(including financial statements), opinions of counsel delivered to the
Administrative Agent and the Banks pursuant to the provisions of the Loan
Documents, documents and other information, in each case delivered by the
Company (or, in the case of any such being delivered in writing by any third
party at the request of the Company) to the Administrative Agent or any Bank.

"Insurance Company" shall mean any Subsidiary of the Company
which is engaged primarily in the underwriting of insurance.

"Interest Coverage Ratio" shall mean, as of any date,

A + B
-----
C + D

where

A is equal to the earnings of the Insurance Companies
(determined on a consolidated basis, without duplication, in
accordance with SAP and (x) for the purposes of the covenant set
forth in Section 8.11(a), before adjustment for capital gains or
losses (as such amount is shown, in the case of U.S.-domiciled
Insurance Companies, on the most recent Statutory Statement of
each Insurance Company at page 4, line 29, column 1 or wherever
such reference is then being made) and (y) for purposes of the
covenant set forth in Section 8.11(b), after adjustment for
capital gains or losses (as such amount is shown, in the case of
U.S.-domiciled Insurance Companies, on the most recent Statutory
Statement of each Insurance Company at page 4, line 33, column 1
or wherever such reference is then being made)) for the period of
four full consecutive fiscal quarters ending on or most recently
ended prior to such date, plus, to the extent deducted from
earnings in accordance with SAP, all interest payments under the
Surplus Notes made by the Surplus Note Companies during such
period, minus, to the extent not already deducted in calculating
such earnings, the aggregate amount of taxes paid in cash by the
Insurance Companies during such period.

B is equal to the amount of Net Income of the Company
(before Interest Expense, taxes, depreciation, amortization,
Income from Subsidiaries and other

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16
non-cash charges) and its non-Insurance Company Subsidiaries for
the period of four full consecutive fiscal quarters immediately
following such date, as such amount is reasonably estimated by
the Company, provided that such estimated amount shall not be
greater than 100% of the actual amount of such Net Income (before
interest, taxes, depreciation, amortization, Income from
Subsidiaries and other non-cash charges) received by the Company
and its non-Insurance Company Subsidiaries for the period of four
full consecutive fiscal quarters immediately preceding such date.

C is equal to the amount of estimated Charges payable by
the Company for the period of four full consecutive fiscal
quarters immediately following such date; and

D is equal to the amounts payable by the Company in
respect of Interest Expense for borrowed money of the Company for
the period of four full consecutive fiscal quarters immediately
following such date.

"Interest Expense" shall mean, for the Company, for any period,
the sum (determined in accordance with GAAP) of the following: (a) all
interest in respect of Indebtedness accrued or capitalized during such period
or, in the case of any future period, which would accrue or be capitalized
during such period (whether or not actually paid during such period) and (b)
the net amounts payable (or minus the net amounts receivable) under Interest
Rate Protection Agreements accrued during such period (whether or not actually
paid or received during such period). In determining Interest Expense for
purposes of the definition of Interest Coverage Ratio, interest for any period
shall be deemed to accrue on an amount of Indebtedness equal to the aggregate
Indebtedness outstanding on the last day of the immediately preceding fiscal
quarter, as if such amount were outstanding during the period for which
Interest Expense is being determined, after giving effect to any scheduled
repayments, and interest on a floating rate basis for any current or future
period shall be deemed to accrue at a rate per annum equal to the higher of (i)
the rate of interest in effect on the last day of the immediately preceding
fiscal quarter or (ii) the average rate of interest in effect during the
immediately preceding fiscal quarter.

"Interest Period" shall mean (a) with respect to any Bid Rate
Loan, a period commencing on the date of the making of such Loan and ending on
the maturity date specified therefor in accordance with Section 2.02(b) and (b)
with respect to any Eurodollar Loan, each period commencing on the date such
Eurodollar Loan is made or Converted from a Base Rate Loan or a Eurodollar Loan
of another type or the last day of the next preceding Interest Period for such
Eurodollar Loan and ending on the numerically corresponding day in the first,
second, third, or sixth calendar month thereafter, as the Company may select as
provided in Section 4.05, except that each Interest Period which commences on
the last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar
month. Notwithstanding the foregoing: (a) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, in the case of an Interest Period for Eurodollar
Loans, if such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day) and (b) no Interest Period
for any Eurodollar

-11-
17
Loan shall have a duration of less than one month and, if the Interest Period
for any Eurodollar Loan would otherwise be a shorter period, such Loans shall
not be available hereunder.

"Interest Rate Protection Agreement" shall mean any interest rate
swap, cap or collar agreement or similar arrangement between any Person and a
financial institution providing for the transfer or mitigation of interest rate
risks either generally or under specific contingencies.

"Investment" in any Person shall mean: (a) the acquisition
(whether for cash, property, services or securities or otherwise) of any
capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities of such Person; and (b) any deposit with, or
advance, loan or other extension of credit to, such Person or Guarantee of, or
other contingent obligation with respect to, Indebtedness or other Liability of
such Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person, excluding in each case receivables arising out of
Reinsurance Transactions. The amount of any Investment held by each Insurance
Company shall be the "admitted assets" amount (determined in accordance with
SAP, and which amount is shown, in the case of U.S.-domiciled Insurance
Companies, on the most recent annual Statutory Statement of such Insurance
Company at page 2, line 25, column 4 or wherever such reference is then being
made).

"IRIS Tests" shall mean the ratios and other financial
measurements developed by the NAIC under its Insurance Regulatory Information
System, or in lieu thereof, any successor thereto, replacement thereof or
substitute implemented by the NAIC.

"Knightsbridge Companies" shall mean each of Knightsbridge
Capital Fund I, L.P., Knightsbridge Capital, L.L.C., Knightsbridge Management,
L.L.C., Knightsbridge Consultants, L.L.C. and their respective Subsidiaries.

"▇▇▇▇▇▇▇▇ ▇▇▇▇ Life" shall mean ▇▇▇▇▇▇▇▇ ▇▇▇▇ Life Compania De
Seguros De Vida S.A.

"Leverage Ratio" shall mean, at any time, the ratio of (a) the
aggregate outstanding principal amount of all Indebtedness of the Company and
its Consolidated Subsidiaries at such time determined on a consolidated basis
to (b) the sum of (i) the aggregate outstanding principal amount of such
Indebtedness at such time and (ii) Net Worth of the Company and its
Consolidated Subsidiaries at such time.

"Liability" of any Person shall mean (in each case, whether with
full or limited recourse) any indebtedness, liability, obligation, covenant or
duty of or binding upon, or any term or condition to be observed by or binding
upon, such Person or any of its assets, of any kind, nature or description,
direct or indirect, absolute or contingent, due or not due, contractual or
tortious, liquidated or unliquidated, whether arising under any Contract,
Applicable Law, or otherwise, whether now existing or hereafter arising, and
whether for the payment of money or the performance or non-performance of any
act.

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18
"Lien" shall mean, with respect to any Property or asset (or any
income or profits therefrom) of any Person (in each case whether the same is
consensual or nonconsensual or arises by Contract, operation of law, legal
process or otherwise), (i) any mortgage, lien, pledge, Charge, attachment, levy
or other security interest or encumbrance of any kind thereupon or in respect
thereof or (ii) any other arrangement, express or implied, under which the same
is subordinated, transferred, sequestered or otherwise identified so as to
subject the same to, or make the same available for, the payment or performance
of any Liability in priority to the payment of the ordinary, unsecured
creditors of such Person. For the purposes of this Agreement, a Person shall
be deemed to own subject to a Lien any asset that it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.

"Loan Documents" shall mean (i) this Agreement and the Notes and,
from and after the execution and delivery thereof by each Securing Party, the
Security Agreements and (ii) all other agreements, documents and instruments
with, for the benefit of or in favor of the Administrative Agent or any Bank,
relating to, arising out of, delivered pursuant to or in any way connected with
(A) any agreement, document or instrument referred to in clause (i) or (B) any
of the transactions contemplated by any agreement, document or instrument
referred to in clause (i).

"Loans" shall mean RC Loans and Bid Rate Loans provided for by
Section 2.01.

"Majority Banks" shall mean Banks having at least 51% of the
aggregate amount of the Commitments; provided that, if the Commitments shall
have terminated, Majority Banks shall mean Banks holding at least 51% of the
aggregate unpaid principal amount of the Loans.

"Managing Agents" shall mean The Chase Manhattan Bank, The First
National Bank of Chicago and NationsBank, N.A.

"Mandatorily Redeemable Stock" shall mean, with respect to any
Person, any share of such Person's capital stock to the extent that it is (i)
redeemable, payable or required to be purchased or otherwise retired or
extinguished, or convertible into any Indebtedness or other Liability of such
Person prior to the Maturity Date other than solely at the option of such
Person (unless by its terms, such capital stock may not be redeemed, paid,
required to be purchased or otherwise retired or extinguished, or converted
into any Indebtedness or other Liability of such Person until after payment in
full of all amounts payable hereunder) or (ii) convertible into stock of the
type described in clause (i).

"Margin Stock" shall mean margin stock within the meaning of
Regulations U and X.

"Market Capitalization" shall mean, as of any date, without
duplication, the sum of (x) the product of the average share price of the
common stock of the Company on such date multiplied by the number of shares
(other than treasury shares) of such common stock issued and outstanding on
such date, (y) for each issuance or series of Preferred Stock (including

-13-
19
mandatorily redeemable preferred stock) of the Company, the product of the
average share price of such issuance or series of Preferred Stock multiplied by
the number of shares (other than treasury shares) of such issuance or series of
Preferred Stock outstanding on such date and (z) the aggregate book value of
all indebtedness for borrowed money of the Company and its Subsidiaries as of
such date. For purposes of this definition, the "average share price" of any
capital stock of the Company as of any date shall mean the average of the
highest and lowest trading prices of such capital stock on such date, or if
such capital stock was not traded on such date, on the most recent date on
which such capital stock was traded.

"Material Lien" shall mean any Lien on any Property of the
Company or its Subsidiaries (or any income or profits therefrom) having a book
value of $1,000,000 or more.

"Maturity Date" shall mean the date which is the fifth
anniversary of the Agreement Date.

"Maximum Permissible Rate" shall mean, with respect to interest
payable on any amount, the rate of interest on such amount that, if exceeded,
could, under Applicable Law, result in (i) civil or criminal penalties being
imposed on the payee or (ii) the payee's being unable to enforce payment of
(or, if collected, to retain) all or any part of such amount or the interest
payable thereon.

"Model Act" shall mean the Risk-Based Capital for Life and/or
Health Insurers Model Act and the rules, regulations and procedures prescribed
from time to time by the NAIC with respect thereto, in each case as amended,
modified or supplemented from time to time by the NAIC.

"Mortgage Roll" shall mean a transaction in which a financial
institution or insurance company sells a mortgage-backed security to a dealer
and simultaneously agrees to repurchase an essentially similar security at a
predetermined price on a designated future date.

"Multiemployer Plan" shall mean a multiemployer plan defined as
such in section 3(37) of ERISA to which the Company or any ERISA Affiliate is
obligated to make, or has made or has been obligated to make within the
preceding six years, contributions and which is covered by Title IV of ERISA.

"NAIC" shall mean the National Association of Insurance
Commissioners or any successor thereto.

"Net Income" shall mean, for any Person, for any period, the
consolidated net income of such Person and its Consolidated Subsidiaries,
determined in accordance with GAAP for such period.

"Net Worth" shall mean, for the Company and its Consolidated
Subsidiaries, on any date, the sum (determined on a consolidated basis without
duplication in accordance with GAAP) of the following:

-14-
20
(a) total shareholders' equity, plus

(b) to the extent not included in total shareholders'
equity, Preferred Stock other than Mandatorily Redeemable Stock,

each as reflected on the most recent consolidated balance sheet of the Company
and its Consolidated Subsidiaries prepared in accordance with GAAP, provided
that, for purposes of calculating "Net Worth", there shall be excluded from
total shareholders' equity unrealized gains and losses on securities available
for sale as reflected on such consolidated balance sheet.

"Notes" shall mean the RC Notes and Bid Rate Notes provided for
by Section 2.08.

"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.

"PennCorp Services" shall mean PennCorp Financial Services, Inc.,
a Delaware corporation and a direct Wholly-Owned Subsidiary of the Company.

"Permitted Restrictive Covenant" shall mean (i) any covenant or
restriction contained in any Loan Document, (ii) any covenant or restriction
binding upon any Person at the time such Person becomes a Subsidiary of the
Company if the same is not created in contemplation thereof, (iii) any covenant
or restriction of the type contained in Section 8.07 that is contained in any
Contract evidencing or providing for the creation of or concerning purchase
money Indebtedness; provided, however, that any such covenant or restriction
shall be limited in effect to the property in respect of which such purchase
money Indebtedness was incurred, (iv) any covenant or restriction in effect on
the Agreement Date, or (v) any covenant or restriction that (A) is not more
burdensome than an existing Permitted Restrictive Covenant that is a Permitted
Restrictive Covenant by virtue of clause (ii), (iii), (iv) or (v), (B) is
contained in a Contract constituting a renewal, extension or replacement of the
Contract in which such existing Permitted Restrictive Covenant is contained and
(C) is binding only on the Person or Persons bound by such existing Permitted
Restrictive Covenant.

"Person" shall mean any individual, sole proprietorship,
corporation, partnership, limited liability company, trust, unincorporated
organization, voluntary association, joint venture, mutual company, joint stock
company, estate, union, employee organization, government or any agency or
political subdivision thereof and, for the purpose of the definition of "ERISA
Affiliate," any trade or business.

"PIC" shall mean Professional Insurance Corporation, a Florida
corporation, which for the purposes of this Agreement shall be deemed to be a
Wholly-Owned Subsidiary of the Company.

"Plan" shall mean an employee benefit or other plan established
or maintained by the Company, any of its Subsidiaries or any ERISA Affiliate
and which is covered by Title IV of ERISA, other than a Multiemployer Plan.

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21
"Pledged Securities" shall mean the capital stock of each direct
Subsidiary of the Company.

"Post-Default Rate" shall mean, for any day, a rate per annum
equal to 2% above the Base Rate.

"Preferred Stock" shall mean (a) any class of shares of the
Company ranking prior to at least one other class of capital stock of the
Company as to the payment of dividends or the distribution of assets upon any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and (b) any securities convertible into, or exchangeable for, or options,
warrants or other rights to acquire any shares referred to in clause (a).

"Prime Rate" shall mean the prime commercial lending rate of The
Bank of New York, as publicly announced to be in effect from time to time. The
Prime Rate shall be adjusted automatically on the effective date of any change
in such prime commercial lending rate. The Prime Rate is not necessarily The
Bank of New York's lowest rate of interest.

"Principal Office" shall mean the principal office of the
Administrative Agent and BNY, presently located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇.

"Property" shall mean property of all kinds, whether real,
personal or mixed, tangible or intangible (including, without limitation, all
rights relating thereto), and whether owned on, or acquired on or after, the
Agreement Date.

"Quarterly Dates" shall mean the first Business Day of January,
April, July and October in each year.

"RC Borrowing" shall mean a borrowing resulting in the making of
RC Loans hereunder.

"RC Loan" shall mean a revolving credit loan provided for by
Section 2.01(a).

"RC Note" shall mean a promissory note in the form of Exhibit A.

"Reference Banks" shall mean BNY, The Chase Manhattan Bank, The
First National Bank of Chicago and NationsBank, N.A. (or the Applicable Lending
Office of any of them).

"Regulations D, U and X" shall mean, respectively, Regulations D,
U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be amended or supplemented from time to time.

"Regulatory Change" shall mean with respect to any Bank, any law,
regulation, interpretation, directive, request or guideline (whether or not
having the force of law and whether or not the failure to comply therewith
would be unlawful), whether Federal, State or foreign, or any change therein or
in the administration or enforcement thereof, that becomes effective or is
implemented or first required or expected to be complied with after the

-16-
22
Agreement Date, whether the same is (i) the result of an enactment by a
government or any agency or political subdivision thereof, a determination of a
court or regulatory authority, or otherwise or (ii) enacted, adopted, issued or
proposed before or after the Agreement Date, including any such that imposes,
increases or modifies any tax, reserve requirement, insurance charge, special
deposit requirement, assessment or capital adequacy requirement, but excluding
any such that imposes, increases or modifies any income or franchise tax
imposed upon a Bank by any jurisdiction (or any political subdivision thereof)
in which such Bank or any of its Applicable Lending Offices is located.

"Reinsurance Agreement" shall mean any agreement, contract,
treaty or other arrangement (other than Reinsurance Transactions) whereby other
insurers assume insurance from any Insurance Company.

"Reinsurance Transactions" shall mean all transactions
consummated by any Insurance Company after the Agreement Date with any Person
other than another Insurance Company involving the reinsurance of any insurance
policy then in force, other than reinsurance entered into in the ordinary
course of business.

"Reserve Requirement" shall mean, for any Interest Period for any
Eurodollar Loan, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement shall
include any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against (a) any category of liabilities which
includes deposits by reference to which the Eurodollar Base Rate is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.01 or (b) any category of extensions of credit or other assets which
includes Eurodollar Loans. The Eurodollar Rate shall be adjusted automatically
on and as of the effective date of any change in the applicable Reserve
Requirement.

"S&P" shall mean Standard & Poor's Ratings Group.

"S&P Senior Debt Rating" shall mean (a) if the Company's long-
term unsecured senior debt is rated by S&P, the rating given by S&P to such
long-term unsecured senior debt and (b) if no such long-term unsecured senior
debt is rated by S&P, the implied long-term unsecured senior debt rating given
by S&P to the Company.

"Safe Drivers Agency Limited" shall mean Safe Drivers Agency
Limited, an English corporation and a Subsidiary of the Company.

"SAP" shall mean, for any Insurance Company, the statutory
accounting procedures or practices prescribed or permitted by the Applicable
Insurance Regulatory Authority applied on a basis consistent with those which,
in accordance with the last sentence of Section 1.02(a), are to be used in
making the calculations for purposes of determining compliance with certain
terms of this Agreement.

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23
"Securing Parties" shall have the meaning ascribed to such term
in Section 8.19.

"Securities Act" shall mean the Securities Act of 1933, as
amended (or any successor statute), and the rules and regulations promulgated
thereunder.

"Security Agreements" shall have the meaning ascribed to such
term in Section 8.19.

"Security Date" shall have the meaning ascribed to such term in
Section 8.19.

"Security Interest" shall mean the Liens created, or purported to
be created, by the Security Agreements.

"Significant Subsidiary" shall mean, at any date: any Subsidiary
which at the time of determination (i) constitutes a "significant subsidiary"
as defined in Rule 1-02 of Regulation S-X promulgated by the Securities and
Exchange Commission as in effect on the Agreement Date, or (ii) in the case of
any Subsidiaries which are Insurance Companies, has Adjusted Surplus (without
giving effect to any operating loss occurring within the period of 12
consecutive months ending on the date of the Company's most recent quarterly
consolidated balance sheet) which, as of the date of the Company's most recent
quarterly consolidated balance sheet, constituted at least 10% of the aggregate
Adjusted Surplus, without duplication, of all Subsidiaries which are Insurance
Companies as adjusted to eliminate equity investments in Subsidiaries which are
Insurance Companies; each as reflected on the most recent quarterly balance
sheet of the Subsidiaries which are Insurance Companies, as computed in
accordance with SAP.

"Southwestern" shall mean Southwestern Financial Corporation, a
Delaware corporation.

"Southwestern Credit Agreement" shall mean the Credit Agreement,
dated as of December 13, 1995, by and among Southwestern, the financial
institutions signatory thereto and The First National Bank of Chicago, First
Union National Bank of North Carolina, and Internationale Nederlanden (U.S.)
Capital Corporation, as arrangers.

"Southwestern Indenture" shall mean the Indenture, dated as of
December 14, 1995, between the Southwestern and U.S. Trust Company of Texas,
N.A., as trustee, pursuant to which the Southwestern Subordinated Notes were
issued.

"Southwestern Subordinated Notes" shall mean the Convertible
Subordinated Reset Notes due 2005 representing Indebtedness of Southwestern
issued pursuant to the Southwestern Indenture in the aggregate original
principal amount of $40,000,000.

"Statutory Statement" shall mean, for any Insurance Company, for
any fiscal year of such Insurance Company, the most recent annual statement
required to be filed with the Applicable Insurance Regulatory Authority and,
for any fiscal quarter of such Insurance Company, the quarterly statement
required by Section 8.01(c), which quarterly statement shall be prepared in
accordance with statutory accounting practices.

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24
"Subordinated Notes" shall mean the 9.25% Senior Subordinated
Notes due 2003 representing Indebtedness of the Company issued pursuant to the
Indenture in the aggregate original principal amount of $150,000,000.

"Subsidiary" shall mean, for any Person, any other Person (i)
securities of which having ordinary voting power to elect a majority of the
board of directors (or other Persons having similar functions) (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) are at the time, directly or indirectly, owned or controlled
by such Person, or by one or more of its Subsidiaries, or by such Person and
one or more of its Subsidiaries, or (ii) other ownership interests of which
ordinarily constituting a majority voting interest, including any partnership
in which such Person and/or one or more Subsidiaries of such Person shall have
an interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% are, at the time, owned or controlled,
directly or indirectly, by such Person, it being understood that none of the
Knightsbridge Companies shall be a Subsidiary of the Company. "Wholly-Owned
Subsidiary" shall mean (a) any such corporation of which all of such shares,
other than directors' qualifying shares, are so owned or controlled, directly
or indirectly and (b) any such partnership in which such Person and its
Affiliates shall have 100% of such interests, provided that for the purposes of
this Agreement, PIC shall be deemed to be a Wholly-Owned Subsidiary of the
Company.

"Surplus" shall mean, for any Insurance Company, on any date, the
amount (determined in accordance with SAP) of such Insurance Company's surplus
(which amount is shown, in the case of U.S.-domiciled Insurance Companies, at
the Agreement Date on the most recent Statutory Statement of each Insurance
Company at page 3, line 37, column 1) as at the last day of the fiscal quarter
of such Insurance Company ending on or most recently ended prior to such date.

"Surplus Note" shall mean any surplus promissory note issued by
an Insurance Company to the Company or any Subsidiary of the Company none of
the ownership interests in which is either directly or indirectly owned by an
Insurance Company.

"Surplus Note Company" shall mean each payor under a Surplus
Note.

"Tax" shall mean any federal, state or foreign income, profits,
franchise, sales, use, occupation, property, excise, payroll, withholding,
employment, estimated and other taxes, levies, imposts, duties, licenses and
registration fees and charges of any nature whatsoever imposed upon a Person or
upon its assets, revenues, income or profits, including interest, penalties and
other additions to such items, but does not include any Excluded Tax.

"Tier" shall mean any of Tier I, Tier II, Tier III, Tier IV, Tier
V and Tier VI.

"Tier I" shall apply for so long as the Company's S&P Senior Debt
Rating is A- or better or the Company's D&P Senior Debt Rating is A- or better.

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25
"Tier II" shall apply for so long as the Company's S&P Senior
Debt Rating is BBB+ or the Company's D&P Senior Debt Rating is BBB+.

"Tier III" shall apply for so long as the Company's S&P Senior
Debt Rating is BBB or the Company's D&P Senior Debt Rating is BBB.

"Tier IV" shall apply for so long as the Company's S&P Senior
Debt Rating is BBB- or the Company's D&P Senior Debt Rating is BBB-.

"Tier V" shall apply for so long as the Company's S&P Senior Debt
Rating is BB+ or the Company's D&P Senior Debt Rating is BB+.

"Tier VI" shall apply for so long as the Company's S&P Senior
Debt Rating is less than BB+ and the Company's D&P Senior Debt Rating is less
than BB+ and for so long as the Company's Indebtedness is not rated by either
or both of S&P and D&P.

"Total Adjusted Capital" shall have the meaning ascribed thereto
in the Model Act.

"Unrecognized Retiree Welfare Liability" shall mean, with respect
to plans, agreements or arrangements sponsored or maintained by the Company or
its Affiliates that provide retiree medical benefits or other postretirement
benefits other than pensions, the amount of the transition obligation,
determined in accordance with Paragraph 110 of Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" (SFAS No. 106), that has not been recognized as
an expense in the consolidated financial statements of the Company and its
Affiliates.

"Washington National" shall mean Washington National Corporation,
a Delaware corporation.

1.02 Accounting Terms and Determinations.

(a) Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all financial statements
and certificates and reports as to financial matters required to be delivered
to the Banks hereunder shall (unless otherwise disclosed to the Banks in
writing at the time of delivery thereof in the manner described in subsection
(b) below) be prepared, in accordance with (in the case of the Company and its
Subsidiaries on a consolidated basis) generally accepted accounting principles
or (in the case of the Insurance Companies) statutory accounting practices, as
the case may be, applied on a basis consistent with that used in the
preparation of the latest corresponding financial statements furnished to the
Banks hereunder (which, for the first financial statements furnished pursuant
to Section 8.01, shall mean the financial statements referred to in Section
7.02). If any changes in accounting principles from those in effect on the
Agreement Date are adopted which result in a change in the method of
calculation of any of the financial covenants, standards or terms in this
Agreement, the parties agree to enter into negotiations to determine whether
such provisions require amendment and, if so, the terms of such amendment so as
to equitably reflect such changes. Until a resolution thereof is reached, all
calculations made for the purposes of determining compliance with the terms of
this

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Agreement shall (except as otherwise expressly provided herein) be made by
application of (in the case of the Company and its Subsidiaries on a
consolidated basis) generally accepted accounting principles or (in the case of
the Insurance Companies) statutory accounting practices, as the case may be,
applied on a basis consistent with that used in the preparation of the annual
or quarterly financial statements furnished to the Banks pursuant to Section
8.01 unless (i) the Company shall have objected to determining such compliance
on such basis at the time of delivery of such financial statements or (ii) the
Majority Banks shall so object in writing within 30 days after delivery of such
financial statements, in either of which events such calculations shall be made
on a basis consistent with those used in the preparation of the latest
financial statements as to which such objection shall not have been made
(which, if objection is made in respect of the first financial statements
delivered under Section 8.01, shall mean the financial statements referred to
in Section 7.02).

(b) To the extent not otherwise provided in the annual or
quarterly financial statements delivered pursuant to Section 8.01 or in the
notes attached thereto, the Company shall deliver to the Banks at the same time
as the delivery of any annual or quarterly financial statement under Section
8.01 a description in reasonable detail of any material variation between the
application of accounting principles or practices employed in the preparation
of such statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as
to which no objection has been made in accordance with the last sentence of
subsection (a) above, and reasonable estimates of the difference between such
statements arising as a consequence thereof.

(c) To enable the ready and consistent determination of
compliance with the covenants set forth in Section 8, the Company will not
change the last day of its fiscal year from December 31 of each year, or the
last days of the first three fiscal quarters in each of its fiscal years from
March 31, June 30 and September 30 of each year, respectively.

1.03 Types of Loans. Loans hereunder are distinguished by
"type". The "type" of a Loan refers to whether such Loan is a Bid Rate Loan,
an RC Loan, a Base Rate Loan or a Eurodollar Loan, each of which constitutes a
"type" of Loan. Each Eurodollar Loan or Bid Rate Loan having an Interest
Period different from that of any other Eurodollar Loan or Bid Rate Loan, as
the case may be, shall also be a different "type" of Loan.

Section 2. Commitments.

2.01 Loans.

(a) RC Loans. Upon the terms and subject to the conditions of
this Agreement, each Bank severally and not jointly agrees to make, at any time
and from time to time during the period from the Agreement Date to, but not
including, the Maturity Date, one or more RC Loans to the Company in an
aggregate unpaid principal amount, together with the aggregate amount of such
Bank's pro rata shares (determined in accordance with Section 2.02(b)(vii)) of
all Bid Rate Loans then outstanding, not exceeding such Bank's Commitment at
such time. Subject to the terms and conditions of this Agreement, the RC Loans
may, at the option of the Company, be made as Base Rate or Eurodollar Loans, or
any combination

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thereof, and the Company may Convert RC Loans of one type into RC Loans of
another type or Continue Eurodollar Loans (as provided in Section 2.09);
provided that no more than 10 Eurodollar Loans may be outstanding from each
Bank at any one time. Subject to the conditions set forth in Section 6 and to
the other terms and conditions of this Agreement, the Company may borrow and
reborrow RC Loans under Section 2.02 and prepay RC Loans under Section 3.03(a).

(b) Bid Rate Loans. Upon the terms and subject to the
conditions of this Agreement, in response to each request for Bid Rate Loans,
each Bank may, but shall not be obligated to, submit one or more offers to make
Bid Rate Loans as provided in Section 2.02(b); provided that the aggregate
unpaid principal amount of all Bid Rate Loans and all RC Loans shall not exceed
at any time the aggregate amount of the Commitments at such time.

2.02 Borrowing.

(a) RC Loans. The Company shall give the Administrative Agent
(which shall promptly notify the Banks) notice of each RC Borrowing hereunder
as provided in Section 4.05. Not later than 1:00 p.m. (New York City time) on
the date specified for the RC Borrowing hereunder, each Bank shall make
available the amount of the RC Loan to be made by it on such date to the
Administrative Agent in immediately available funds. The amount so received by
the Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Company not later than 2:00 p.m. (New York
City time) on the date specified for the RC Borrowing, by depositing the same,
in immediately available funds, in an account of the Company maintained with
BNY at its Principal Office designated by the Company.

(b) Bid Rate Loans. With respect to Bid Rate Loans:

(i) (A) The Company shall give the Administrative Agent
a request (which shall be irrevocable) for Bid Rate Loans no later than
10:00 a.m. (New York time) on the Business Day prior to the requested
date for the making of the requested Bid Rate Loans.

(B) Each such request shall be submitted in the
form of Schedule 2.02(b)(i) and shall specify (1) the requested date for
the making of the requested Bid Rate Loans, (2) the aggregate principal
amount of each of the requested Bid Rate Loans and (3) the maturity
dates (each of which shall be a Business Day (x) no earlier than 7 days
and no later than 180 days after the requested date for the making of
the requested Bid Rate Loans and (y) no later than the Maturity Date) of
the requested Bid Rate Loans.

(C) Upon receipt of a timely request for Bid Rate
Loans on a Business Day, the Administrative Agent shall notify each Bank
of the contents thereof no later than 3:00 p.m. (New York time) on such
Business Day.

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(ii) (A) Each Bank may, in its sole and absolute
discretion, submit one or more offers to make each type of requested Bid
Rate Loan in response to a request for Bid Rate Loans. Offers shall be
irrevocable (but Loans to be made pursuant thereto shall be subject to
Section 6), except with the written consent of the Administrative Agent
given on the written instructions of the Company, and may not be
modified, except to correct a manifest error that has not been
reasonably relied upon by the Company.

(B) Offers shall (1) be submitted in the form of
Schedule 2.02(b)(ii), (2) identify the Bank making such offer, (3)
identify the request for Bid Rate Loans to which such offer relates, (4)
specify the rate of interest per annum that such Bank is willing to
offer in response to such request, (5) specify the principal amount, or
the maximum and minimum (subject to the second to last sentence of
Section 2.02(b)(iii)(A)) principal amounts, of the requested types of
Bid Rate Loans such Bank is willing to make at such rates, which
amounts, singly or in the aggregate, may exceed such Bank's Commitment
at such time and (6) be submitted by telecopier, to the Administrative
Agent no later than 10:00 a.m. (New York time) on the requested date for
the making of the requested Bid Rate Loans, except that offers for
requested Bid Rate Loans submitted by the Administrative Agent (or any
Affiliate of the Administrative Agent), in its capacity as a Bank, may,
and may only, be submitted to the Company not later than one half hour
prior to the deadline applicable to the other Banks. No offer submitted
by a Bank may contain qualifying, conditional or similar language or
contain proposed terms other than those specified in this paragraph
(ii).

(C) No later than 10:30 a.m. (New York time) on
the requested date for the making of the requested Bid Rate Loans, the
Administrative Agent shall notify the Company of the contents of (i) all
offers received by the Administrative Agent on or prior to 10:00 a.m.
(New York time) on such day from the other Banks and (ii) any offer
submitted by the Administrative Agent, in its capacity as a Bank, on
such day not later than one half hour prior to the deadline applicable
to the other Banks.

(iii) (A) Not later than 11:00 a.m. (New York time) on
the requested date for the making of the requested Bid Rate Loans, the
Company shall notify the Administrative Agent (which notice shall be
irrevocable except, with respect to notices that have not yet been
reasonably relied upon by any Bank, in the case of manifest error) of
the offers, if any, of which it has received notice from the
Administrative Agent that the Company is accepting. Each offer that the
Company has not notified the Administrative Agent by such time that it
is accepting shall be deemed to have been rejected. The Company may
accept or reject any offer in whole or in part; provided that (1) the
aggregate principal amount of offers accepted with respect to each
requested type of Bid Rate Loan may not exceed the principal amount
specified for such type in the request therefor, (2) the aggregate
principal amount of any offer by any Bank accepted with respect to a
requested type of Bid Rate Loan may not exceed the maximum, nor be less
than the minimum (except in the circumstance described in the following
sentence), aggregate principal amount thereof specified in such Bank's
offer with respect to such type of Bid Rate Loan and (3) offers may be
accepted only on the basis of ascending rates of interest. If identical
offers are made by two or more Banks

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with respect to the same type of requested Bid Rate Loans for a greater
aggregate principal amount than the amount accepted by the Company, the
principal amount accepted shall be allocated by the Administrative Agent
among such Banks as nearly as possible (but in such multiples as the
Administrative Agent may deem appropriate) in proportion to the
aggregate principal amount of such offers. Such determination by the
Administrative Agent shall be conclusive in the absence of manifest
error.

(B) Upon receipt of any notice from the Company
accepting any offer or offers, the Administrative Agent shall promptly
notify each of the Banks that also submitted offers in response to the
applicable request whether its offers were accepted or rejected and, if
any of such Bank's offers were accepted, shall identify such offers and
the respective amounts thereof accepted.

(iv) (A) Not later than 1:00 p.m. (New York time) on the
date for the making of the requested Bid Rate Loans, each Bank shall
make the amount of the Bid Rate Loan or Loans to be made by such Bank
available to the Administrative Agent, in Dollars in funds immediately
available to the Administrative Agent at its Principal Office.

(B) Unless otherwise specified in the applicable
request, Bid Rate Loans shall be disbursed by the Administrative Agent
not later than 3:00 p.m. (New York time) on the date specified therefor
and shall be applied as follows in the following order: first, to repay
Bid Rate Loans maturing or matured as of such date, second, to prepay RC
Loans with respect to which a notice of prepayment shall have been duly
given in accordance with Section 3.03 and third, by credit to an account
of the Company at the Administrative Agent's Principal Office or in such
other manner as may have been specified to and as shall be acceptable to
the Administrative Agent, in each case in Dollars in funds immediately
available to the Company or the appropriate Bank, as the case may be.

(v) If (A)(1) the Company shall, on the requested day for
the making of the requested Bid Rate Loans, fail to accept offers, in an
aggregate amount sufficient to repay a Bid Rate Loan or Loans maturing
or matured as of such day, or (2) if bids submitted in response to a
request for Bid Rate Loans are in an aggregate amount insufficient to
pay a Bid Rate Loan or Loans maturing or matured as of the requested day
for the making of such requested Bid Rate Loans and (B) Bid Rate Loans
maturing on such day shall not otherwise be repaid on such day, the
Company shall, unless it provides written notice to the Administrative
Agent to the contrary by 11:00 a.m. (New York time) on such day, be
deemed to have duly requested Base Rate Loans to be made on such date in
an amount sufficient to repay the balance of such maturing and matured
Bid Rate Loan or Loans.

(vi) The parties may, by agreement among the Company, the
Administrative Agent and each of the Banks, adopt in writing alternative
procedures (including alternative time schedules) for requesting,
offering and consummating Bid Rate Loans.

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(vii) Each Bid Rate Loan shall be deemed a utilization of
the Commitment of each Bank in an amount equal to such Bank's pro rata
share (determined in accordance with its Commitment) of the aggregate
outstanding amounts of Bid Rate Loans, whether or not such Bank shall
have made any Bid Rate Loan, and notwithstanding the amount of any Bid
Rate Loan made by such Bank.

2.03 Non-Receipt of Funds from a Bank. Unless the
Administrative Agent shall have received notice from a Bank prior to 12:00 noon
(New York City time) on the requested date for the making of any Loans that
such Bank will not make available to the Administrative Agent the Loans
requested to be made by such Bank on such date, the Administrative Agent may
assume that such Bank has made such Loans available to the Administrative Agent
on such date in accordance with Section 2.02 and the Administrative Agent in
its sole discretion may, in reliance upon such assumption, make available to
the Company on such date a corresponding amount on behalf of such Bank. If and
to the extent such Bank shall not have so made available to the Administrative
Agent the Loans requested to be made by such Bank on such date and the
Administrative Agent shall have so made available to the Company a
corresponding amount on behalf of such Bank, such Bank shall, on demand, pay to
the Administrative Agent such corresponding amount together with interest
thereon, for each day from the date such amount shall have been so made
available by the Administrative Agent to the Company until the date such amount
shall have been repaid to the Administrative Agent, at the Federal Funds Rate
until (and including) the third Business Day after demand is made and
thereafter at the Base Rate. If such Bank does not pay such corresponding
amount promptly upon the Administrative Agent's demand therefor, the
Administrative Agent shall promptly notify the Company and the Company shall
immediately repay such corresponding amount to the Administrative Agent
together with accrued interest thereon (but without premium, penalty or
compensation payable pursuant to Section 5.05).

2.04 Changes of Commitments. The Company shall have the right
to terminate or reduce the aggregate amount of the Commitments at any time or
from time to time, provided that: (i) the Company shall give notice of each
such termination or reduction as provided in Section 4.05, (ii) each partial
reduction shall be in an aggregate principal amount of at least $3,000,000 and
in integral multiples of $1,000,000 in excess thereof and (iii) the Company may
not reduce the Commitments to an amount less than the aggregate amount of Loans
outstanding.

2.05 Fees. The Company shall pay to the Administrative Agent
for the pro rata account of each Bank, a non-refundable facility fee on the
daily amount of such Bank's Commitment (whether or not used) for each day from
the Agreement Date through the Maturity Date at a rate per annum corresponding
to the Tier with the highest debt rating applicable on such day, as set forth
below:

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Tier Facility Fee
---- ------------

Tier I 0.100%
Tier II 0.125%
Tier III 0.125%
Tier IV 0.175%
Tier V 0.250%
Tier VI 0.300%;

provided that if two Tiers would be applicable on any day and (i) such Tiers
are more than one Tier apart or (ii) Tier VI is one of the applicable Tiers as
a result of the Company's Indebtedness not being rated by one of D&P and S&P,
the applicable rate per annum for such day shall be the rate per annum set
forth above for the Tier that is one Tier below the higher of such two Tiers
(it being understood that Tier I is the highest Tier). Such facility fee shall
be payable in arrears on each Quarterly Date, on the Maturity Date and (without
duplication) on the date of any reduction or termination of such Commitment (to
the extent accrued and unpaid on the amount of the reduction).

2.06 Lending Offices. Each type of Loan made by each Bank shall
be made and maintained at such Bank's Applicable Lending Office for Loans of
such type.

2.07 Several Obligations; Remedies Independent. The failure of
any Bank to make the Loan to be made by it on the date specified therefor shall
not relieve any other Bank of its obligation to make its Loan on such date, but
neither any Bank nor the Administrative Agent shall be responsible for the
failure of any other Bank to make the Loan to be made by such other Bank.
Subject to the last paragraph of Section 9, the amounts payable by the Company
at any time hereunder and under the Notes to each Bank shall be a separate and
independent debt and each Bank shall be entitled to protect and enforce its
rights arising out of this Agreement and the Notes held by it, and it shall not
be necessary for any other Bank or the Administrative Agent to consent to, or
be joined as an additional party in, any proceedings for such purposes.

2.08 Notes.

(a) The RC Loans and Bid Rate Loans made by each Bank and the
Company's obligation to repay such Loans with interest in accordance with this
Agreement shall be evidenced by this Agreement, the records of such Bank and
promissory notes of the Company in substantially the form of Exhibit A and
Exhibit B hereto, respectively, each dated the Closing Date of the initial Loan
hereunder and otherwise duly completed. The type (and amount thereof),
interest rate and Interest Period (if applicable) of each RC Loan and Bid Rate
Loan, made by each Bank to the Company, and each payment made on account of the
principal thereof, shall be recorded by such Bank on its books and, prior to
any transfer of the applicable Note held by it, endorsed by such Bank on the
schedule attached to such Note or any continuation thereof, but failure to do
so shall not affect the rights or obligations of such Bank or the Company under
this Agreement. The records of each Bank shall be prima facie evidence of such
Bank's Loans and accrued interest thereon and of all payments made in respect
thereof, absent manifest error.

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(b) No Bank shall be entitled to have its Notes subdivided, by
exchange for promissory notes of lesser denominations or otherwise, except in
connection with a permitted assignment of all or any portion of such Bank's
Commitment, Loans and Notes pursuant to Section 11.06(b) or Section 11.06(c).

2.09 Conversions or Continuations of Loans. (a) Subject to
Section 4.04, the Company shall have the right to Convert all or part of the
principal amount of RC Loans of one type into RC Loans of another type or
Continue Eurodollar Loans, at any time or from time to time, provided that (i)
the Company shall give the Administrative Agent notice of each such Conversion
or Continuation as provided in Section 4.05 and (ii) Eurodollar Loans may be
Converted only on the last day of an Interest Period therefor.

(b) Notwithstanding anything to the contrary contained in
paragraph (a) of this Section 2.09, during a Default, the Administrative Agent
may notify the Company that RC Loans may only be Converted into or Continued as
RC Loans of certain specified types and, from and including the third Business
Day following the Company's receipt of such notice, until no Default shall
continue to exist, RC Loans may not be Converted into or Continued as RC Loans
of any type other than one or more of such specified types.

(c) RC Loans may not be converted into Bid Rate Loans and Bid
Rate Loans may not be converted into RC Loans or continued from one Interest
Period to another Interest Period.

Section 3. Payments of Principal and Interest; Prepayments.

3.01 Repayments.

(a) Subject to Section 3.01(b), the RC Loans made by a Bank
outstanding on the Maturity Date shall mature and become due and payable, and
shall be repaid in full by the Company, on the Maturity Date. Such repayment
shall be in an amount equal to the amount of such Bank's RC Loans then
outstanding, together with accrued and unpaid interest thereon and all other
debts, obligations and liabilities of the Company to such Bank and, if such
Bank is BNY, to the Administrative Agent, under or arising out of the Loan
Documents and outstanding on the Maturity Date.

(b) Bid Rate Loans shall mature and become due and payable, and
shall be repaid in full by the Company, on the earlier of (i) the respective
maturity dates thereof specified in accordance with Section 2.02(b)(i)(B) and
(ii) the Maturity Date.

(c) On the date of any termination of all of the Commitments
pursuant to Section 2.04, the Company shall repay all outstanding Loans,
together with accrued and unpaid interest thereon, and all other outstanding
debts, obligations and liabilities owing by the Company to the Banks and the
Administrative Agent under or arising out of the Loan Documents.

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3.02 Interest.

(a) RC Loans. The Company hereby promises to pay to the
Administrative Agent for account of each Bank interest on the unpaid principal
amount of each RC Loan made by such Bank for the period from and including the
funding date of such RC Loan to but excluding the date on which such RC Loan
shall be paid in full, at the following rates per annum:

(i) during any period such RC Loan is a Base Rate Loan,
the Base Rate (as in effect from time to time); and

(ii) during any period such RC Loan is a Eurodollar Loan,
for each Interest Period relating thereto, the Eurodollar Rate for such
Eurodollar Loan for such Interest Period plus the Applicable Margin.

(b) Bid Rate Loans. Each Bid Rate Loan shall bear interest on
the outstanding principal amount thereof at the rate determined in accordance
with Section 2.02(b).

(c) Notwithstanding the foregoing, the Company hereby promises
to pay to the Administrative Agent, for the account of each Bank, interest to
the maximum extent permitted by Applicable Law at the applicable Post-Default
Rate on any payment of principal of or interest on any Loan or Note or of any
other amount owing under this Agreement, that shall not be paid in full when
due (whether at stated maturity, by reason of notice of prepayment or
acceleration or otherwise), (i) in the case of any such amounts whose due date
is specified in the document providing for the payment of such amounts, for the
period from and including the due date thereof to but excluding the date on
which the same is paid in full (whether before or after judgment) and (ii) in
all other cases, for the period from and including the third Business Day
following the Company's receipt of notice from the Administrative Agent that
any such amounts are due and payable, to but excluding the date on which the
same is paid in full (whether before or after judgment).

(d) Accrued interest on each Loan shall be payable (i) in the
case of a Base Rate Loan, quarterly in arrears on the Quarterly Dates, (ii) in
the case of a Eurodollar Loan, on the last day of each Interest Period therefor
and, if such Interest Period is longer than three months, at three-month
intervals following the first day of such Interest Period, (iii) in the case of
a Bid Rate Loan on the last day of such Loan's Interest Period, and, if such
Interest Period is longer than 90 days, on the date which is 90 days after the
first day of such Interest Period and (iv) in the case of any Loan, when such
Loan shall be due (whether at maturity, by reason of notice of prepayment or
acceleration or otherwise) or Converted to a Loan of another type (but only on
the principal amount so due or Converted), except that interest payable at the
Post-Default Rate shall be payable from time to time on demand. Promptly after
the determination of any interest rate provided for herein or any change
therein, the Administrative Agent shall give notice thereof to the Banks to
which such interest is payable and to the Company, provided that the failure by
the Administrative Agent to give such notice shall not affect the Company's
obligations hereunder.

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(e) Nothing contained in the Loan Documents shall require the
Company at any time to pay interest at a rate exceeding the Maximum Permissible
Rate. If interest payable by the Company on any date would exceed the Maximum
Permissible Rate, such interest payment shall automatically be reduced to such
maximum permitted amount (the "Maximum Rate"). Notwithstanding the foregoing,
if for any period of time interest payable pursuant to the Loan Documents or
any letter, agreement or other document providing for the payment of fees or
other amounts by the Company to the Administrative Agent or the Banks in
connection with the Loan Documents, is calculated at the Maximum Rate rather
than the applicable rate under this Agreement, and thereafter such applicable
rate becomes less than the Maximum Rate, the rate of interest payable on such
amounts shall remain at the Maximum Rate until each Bank shall have received
the amount of interest which such Bank would have received during such period
had the rate of interest not been limited to the Maximum Rate during such
period. Any interest actually received for any period in excess of such
maximum amount permitted for such period shall be deemed to have been applied
as a prepayment of the Loans.

3.03 Prepayments.

(a) Optional Prepayments. Subject to Sections 4.04 and 4.05,
upon notice to the Administrative Agent, the Company may, at any time and from
time to time, prepay the RC Loans in whole or in part. Amounts to be prepaid
pursuant to this Section 3.03(a) shall irrevocably be due and payable on the
date specified in the applicable notice of prepayment and shall be applied to
RC Loans in accordance with the instructions of the Company set forth in the
applicable notice of prepayment. Bid Rate Loans may not be prepaid in whole or
in part.

(b) Payments Required Upon Prepayments. Each prepayment of RC
Loans made pursuant to this Section 3.03 shall be without premium or penalty,
except that (i) any prepayment of Eurodollar Loans shall be subject to the
provisions of Section 5.05 and (ii) accrued but unpaid interest shall be
payable on the amount prepaid in accordance with Section 3.02.

Section 4. Payments; Pro Rata Treatment; Computations; Etc.

4.01 Payments.

(a) Except to the extent otherwise provided herein, all
payments of principal, interest and fees to be made by the Company under this
Agreement and the Notes and any other amounts payable by the Company to the
Administrative Agent and the Banks under the Loan Documents shall be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent at account number 803-3297-689
maintained by the Administrative Agent with BNY at its Principal Office, or at
such other address as the Administrative Agent may designate by notice to the
Company not later than 1:00 p.m. (New York City time) on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day).

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(b) Any Bank for whose account any such payment is to be made,
may (but shall not be obligated to) debit the amount of any such payment which
is not made by the Company by such time to any ordinary deposit account of the
Company with such Bank (with notice to the Company) with the Company remaining
liable for any deficiency, and the Company hereby expressly so authorizes the
Administrative Agent and each Bank.

(c) The Company shall, at the time of making each payment under
this Agreement or any Note for the account of any Bank, specify to the
Administrative Agent (which will so notify such Bank) the Loans or other
amounts payable by the Company hereunder to which such payment is to be applied
(and in the event that the Company fails to so specify, or if an Event of
Default has occurred and is continuing, such Bank may apply such payment
received by it from the Administrative Agent to such amounts then due and owing
to such Bank hereunder as such Bank may determine), but in all cases such
payments shall be applied to avoid, to the extent reasonably possible, charges
under Section 5.05.

(d) Except as otherwise specifically provided in this
Agreement, each payment received by the Administrative Agent under this
Agreement, any Note or any other Loan Document for account of any Bank shall be
paid by the Administrative Agent promptly to such Bank, in immediately
available funds.

(e) If the due date of any payment under this Agreement, any
Note or any other Loan Document would otherwise fall on a day which is not a
Business Day, such date shall be the next succeeding Business Day unless, in
the case of a payment of the principal of Eurodollar Loans, such extension
would cause payment to be made in the next calendar month, in which case such
date shall be the next preceding Business Day. If the date on which any
payment hereunder, under any Note or under any of the other Loan Documents is
due is extended (whether by operation of any Loan Document or any Note,
Applicable Law or otherwise) such payment shall bear interest for such extended
time at the rate of interest applicable hereunder.

4.02 Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each borrowing from the Banks under Section 2.01(a) shall
be made from the Banks, each payment of facility fees under Section 2.05 shall
be made for account of the Banks, and each termination or reduction of the
amount of the Commitments under Section 2.04 shall be applied to the
Commitments of the Banks, pro rata according to the amounts of their respective
Commitments; (b) the making, Conversion and Continuation of RC Loans of a
particular type (other than Conversions provided for by Section 5.04) shall be
made pro rata among the Banks according to the amounts of their respective
Commitments and the then current Interest Period for each RC Loan of such type
shall be coterminous; (c) each payment or prepayment of principal of RC Loans
by the Company shall be made for account of the Banks pro rata in accordance
with the respective unpaid principal amounts of the RC Loans held by the Banks;
and (d) each payment of interest on RC Loans by the Company shall be made for
account of the Banks pro rata in accordance with the amounts of interest due
and payable to the respective Banks.

4.03 Computations. Interest on Base Rate Loans calculated on
the basis of the Federal Funds Rate, interest on Eurodollar Loans, interest on
Bid Rate Loans, and fees set

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forth herein shall be computed on the basis of a year of 360 days and actual
days elapsed (including the first day but excluding the last day) occurring in
the period for which payable and interest on Base Rate Loans calculated on the
basis of the Prime Rate shall be computed on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.

4.04 Minimum Amounts. Except for borrowings, Conversions,
Continuations or prepayments made pursuant to Sections 5.04, each borrowing,
Conversion, Continuation and prepayment of principal of RC Loans shall be in an
aggregate principal amount of at least $3,000,000 (or in the case of a
prepayment of principal of RC Loans, any lesser amount equal to the amount of
RC Loans or the amount of RC Loans of a specified type outstanding or, in the
case of each borrowing, in any lesser amount equal to the unused Commitments)
and in integral multiples of $1,000,000 in excess thereof (Conversions or
prepayments of or into RC Loans of different types or, in the case of
Eurodollar Loans, having different Interest Periods at the same time hereunder
to be deemed separate borrowings, Conversions and prepayments for purposes of
the foregoing, one for each type or Interest Period). Anything in this
Agreement to the contrary notwithstanding, the aggregate principal amount of
Eurodollar Loans of each type having the same Interest Period shall be greater
than or equal to the lesser of (i) $3,000,000 and (ii) the aggregate amount of
the Commitments available at such time and, if any Eurodollar Loans would
otherwise be in a lesser principal amount for any period, such Eurodollar Loans
shall be Converted to Base Rate Loans at the beginning of such period.

4.05 Certain Notices. Notices by the Company to the
Administrative Agent of terminations or reductions of the Commitments, of
borrowings, Conversions, Continuations and prepayments of RC Loans, and of the
type of RC Loans and of the duration of Interest Periods shall be irrevocable
and shall be effective only if received by the Administrative Agent not later
than noon New York time on the number of Business Days specified below prior to
the date of the relevant termination, reduction, borrowing, Conversion,
Continuation or prepayment or prior to the first day of the relevant Interest
Period:

Number of Business
Days' Prior Notice
------------------

Termination or reduction
of the Commitments 3

Borrowing or prepayment of,
or Conversions into,
Base Rate Loans 1

Borrowing or prepayment of,
Conversions into, Continuations
of, or duration of Interest
Period for, Eurodollar Loans 3

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Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or prepayment shall specify the RC Loans to be
borrowed, Converted, Continued or prepaid and the amount (subject to Section
4.04) and type of each RC Loan to be borrowed, Converted, Continued or prepaid
and the date of borrowing, Conversion, Continuation or prepayment (which shall
be a Business Day). Each such notice of the duration of an Interest Period
shall specify the RC Loans to which such Interest Period is to relate. The
Administrative Agent shall promptly notify the Banks of the contents of each
such notice. In the event that the Company fails to select the type of RC
Loan, or the duration of any Interest Period, for any Eurodollar Loan within
the time period and otherwise as provided in this Section 4.05, such RC Loan
(if outstanding as a Eurodollar Loan) will be automatically Converted into a
Base Rate Loan on the last day of the then current Interest Period for such RC
Loan or (if outstanding as a Base Rate Loan) will remain as, or (if not then
outstanding) will be made as, a Base Rate Loan.

4.06 Non-Receipt of Funds from the Company. Unless the
Administrative Agent shall have received notice from the Company prior to the
date on which any payment is due to the Banks under the Loan Documents that the
Company will not make such payment in full, the Administrative Agent may assume
that the Company has made such payment in full to the Administrative Agent on
such date and the Administrative Agent in its sole discretion may, in reliance
upon such assumption, cause to be distributed to each Bank on such due date a
corresponding amount with respect to the amount then due such Bank. If and to
the extent the Company shall not have so made such payment in full to the
Administrative Agent and the Administrative Agent shall have so distributed to
any Bank a corresponding amount, such Bank shall, on demand, repay to the
Administrative Agent the amount so distributed together with interest thereon,
for each day from the date such amount is distributed to such Bank until the
date such Bank repays such amount to the Administrative Agent, at the Federal
Funds Rate until (and including) the third Business Day after demand is made
and thereafter at the Base Rate.

4.07 Sharing of Payments, Etc.

(a) The Administrative Agent and each Bank are hereby authorized
by the Company, at any time and from time to time, without notice, (a) during
any Event of Default, to set-off against, and to appropriate and apply to the
payment of, the Liabilities of the Company under the Loan Documents (whether
owing to such Person or to any other Person that is the Administrative Agent or
a Bank and whether matured or unmatured, fixed or contingent or liquidated or
unliquidated) any and all Liabilities owing by such Person or any of its
Affiliates to the Company (whether payable in Dollars or any other currency,
whether matured or unmatured and, in the case of Liabilities that are deposits,
whether general or special, time or demand and however evidenced and whether
maintained at a branch or office located within or without the United States),
with the Company remaining liable for any deficiency and (b) during any Event
of Default, to suspend the payment and performance of such Liabilities owing by
such Person or its Affiliates and, in the case of Liabilities that are
deposits, to return as unpaid for insufficient funds any and all checks and
other items drawn against such deposits.

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(b) (i) Each Bank agrees that, if, for any reason, including as
a result of (A) the exercise of any right of counterclaim, set-off, banker's
lien or similar right, (B) its claim in any applicable bankruptcy, insolvency
or other similar law being deemed secured by a debt owed by it to the Company,
including but not limited to a claim deemed secured under Section 506 of the
Bankruptcy Code or under any similar section of any other law, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or readjustment of debts, or (C) the allocation of payments by the
Administrative Agent or the Company in a manner contrary to the provisions of
Section 4.02, such Bank shall receive payment of a proportion of the aggregate
amount due and payable to it hereunder as principal, interest or facility fees
that is greater than the proportion received by any other Bank in respect of
the aggregate of such amounts due and payable to such other Bank hereunder,
then the Bank receiving such proportionately greater payment shall purchase
participations (which it shall be deemed to have done simultaneously upon the
receipt of such payment) in the rights of the other Banks hereunder so that all
such recoveries with respect to such amounts due and payable hereunder (net of
costs of collection) shall be pro rata; provided, however, that no such
participation shall be deemed to have been so purchased in any Bid Rate Loans
of any of the other Banks; and provided further that if all or part of such
proportionately greater payment received by the purchasing Bank is thereafter
recovered by or on behalf of the Company from such Bank, such purchases shall
be rescinded and the purchase prices paid for such participations shall be
returned to such Bank to the extent of such recovery, but without interest
(unless the purchasing Bank is required to pay interest on the amount recovered
to the Person recovering such amount, in which case the selling Bank shall be
required to pay interest at a like rate).

(c) The Company expressly consents to the foregoing arrangements
and agrees that any holder of a participation in any rights hereunder so
purchased or acquired pursuant to Section 4.07(b) shall, with respect to such
participation, be entitled to all of the rights of a Bank under Sections
4.07(a), 5.01 and 11.03, and the definition of "Applicable Margin" in Section
1.01 and may exercise all rights of set-off, bankers' lien, counterclaim or
similar rights with respect to such participation as fully as if such Bank were
a direct holder of Loans in the amount of such participation.

(d) Nothing contained herein shall require any Bank to exercise
any such right or shall affect the right of any Bank to exercise, and retain
the benefits of exercising, any such right with respect to any other
Indebtedness or obligation of the Company.

(e) If, under any applicable bankruptcy, insolvency or other
similar law, any Bank receives a secured claim in lieu of a set-off to which
this Section 4.07 applies, such Bank shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner consistent with the
rights of the Banks entitled under this Section 4.07 to share in the benefits
of any recovery on such secured claim.

4.08 No Reductions. All payments due to the Administrative
Agent or any Bank under the Loan Documents, and all other terms, conditions,
covenants and agreements to be observed and performed by the Company
thereunder, shall be made, observed or performed by the Company without any
reduction or deduction whatsoever, including any reduction or deduction for any
set-off, recoupment, counterclaim (whether sounding in tort, contract or

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otherwise) or Tax, except for any withholding or deduction for Taxes required
to be withheld or deducted under Applicable Law.

4.09 Taxes. (a) Except as otherwise provided herein, if any
Tax is required to be withheld or deducted from, or is otherwise payable by the
Company in connection with, any payment due to the Administrative Agent or any
Bank under the Loan Documents, the Company (i) shall, if required, withhold or
deduct the amount of such Tax from such payment and, in any case, pay such Tax
to the appropriate taxing authority in accordance with Applicable Law and (ii)
shall pay to the Administrative Agent or such Bank, as applicable, (A) such
additional amounts as may be necessary so that the net amount received by the
Administrative Agent or such Bank with respect to such payment, after
withholding or deducting all Taxes required to be withheld or deducted, is
equal to the full amount payable under the Loan Documents and (B) an amount
equal to all Taxes payable by the Administrative Agent or such Bank as a result
of payments made by the Company (whether to a taxing authority or to the
Administrative Agent or such Bank) pursuant to this Section 4.09. If any Tax
is withheld or deducted from, or is otherwise payable by the Company in
connection with, any payment due to the Administrative Agent or any Bank under
the Loan Documents, the Company shall, within 30 days after the date of such
payment, furnish to the Administrative Agent or such Bank, as applicable, the
original or a certified copy of a receipt for such Tax from the applicable
taxing authority.

(b) Each Foreign Bank as to which payments to be made under this
Agreement or under the Notes are exempt from United States withholding tax or
are subject to United States withholding tax at a reduced rate under an
applicable statute or tax treaty shall, no later than thirty (30) days after
executing this Agreement, provide to the Company and the Administrative Agent
(1) a properly completed and executed Internal Revenue Service Form 4224 or
Form 1001 or other applicable form, certificate or document prescribed by the
Internal Revenue Service of the United States certifying as to such Foreign
Bank's entitlement to such exemption or reduced withholding rate with respect
to payments to be made to such Foreign Bank under this Agreement and under the
Notes (a "Certificate of Exemption") or (2) a letter from any such Foreign Bank
stating that it is not entitled to any such exemption or reduced rate of
withholding (a "Letter of Non-Exemption"). Prior to becoming a Bank under this
Agreement and within thirty (30) days after a reasonable written request of the
Company or Administrative Agent from time to time thereafter, each Foreign Bank
that becomes a Bank under this Agreement after the Agreement Date shall provide
a Certificate of Exemption or Letter of Non-Exemption to the Company and
Administrative Agent.

(c) If a Foreign Bank is entitled to an exemption from United
States withholding tax with respect to payments to be made to such Foreign Bank
under this Agreement or the Notes (or to a reduced rate of withholding) and
does not provide a Certificate of Exemption to the Company and Administrative
Agent within the time period set forth in the preceding paragraph, then the
Company shall withhold Taxes from payments to such Foreign Bank at the
applicable statutory rates and, notwithstanding any provisions to the contrary
in Section 4.09(a), shall not be required to pay any additional amounts as a
result of such withholding; provided, however, that all such withholding shall
cease upon delivery by such Foreign Bank of a Certificate of Exemption to the
Company and the Administrative Agent.

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(d) Before making any demand for an additional payment under
Section 4.09(a), each Bank shall use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
Applicable Lending Office if such designation would avoid the need for or
reduce the amount of any payments that the Company must make under Section
4.09(a) and would not, in the sole opinion of such Bank, be disadvantageous to
such Bank, except that such Bank shall have no obligation to designate an
Applicable Lending Office located in the United States of America; provided,
however, that if such Bank shall not designate a different lending office as
provided above, the Company may, on ten (10) Business Days' prior written
notice to the Administrative Agent and such Bank, cause such Bank to (and such
Bank shall, upon payment in full by the assignee Bank of all amounts
outstanding in respect of such Bank's Loan, including accrued interest thereon,
all amounts payable pursuant to Section 5.05 and all other amounts due and
payable to such Bank hereunder) assign (against payment of principal, accrued
and unpaid interest and other amounts due to such Bank) all of its rights and
obligations under this Agreement and related documents to a bank or other
entity selected by the Company and approved by the Administrative Agent, which
approval shall not be unreasonably withheld.

Section 5. Yield Protection and Illegality.

5.01 Additional Costs, Etc.

(a) The Company shall pay directly to the Administrative Agent
for the account of each Bank from time to time such amounts as such Bank may
determine in good faith to be necessary to compensate it for any costs which
such Bank determines are attributable to its making or maintaining any
Eurodollar Loans or Bid Rate Loans or its obligation to make any Eurodollar
Loans or Bid Rate Loans hereunder, or any reduction in any amount receivable by
such Bank hereunder in respect of any of such Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which:

(i) changes the basis of taxation of any amounts payable
to such Bank under this Agreement or its Notes in respect of any of such
Loans (other than taxes imposed on or measured by the overall net income
of such Bank or of its Applicable Lending Office for any of such Loans
by the jurisdiction in which such Bank has its principal office or such
Applicable Lending Office); or

(ii) imposes or modifies any reserve, special deposit or
similar requirements (other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Bank (including any of such Loans or any deposits
referred to in the definition of "Eurodollar Base Rate" in Section
1.01), or any commitment of such Bank (including the Commitment of such
Bank hereunder); or

(iii) imposes any other condition affecting this
Agreement or either of its Notes (or any of such extensions of credit or
liabilities) or its Commitment.

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If any Bank requests compensation from the Company under this Section 5.01(a),
the Company may, by notice to the Administrative Agent (who shall promptly send
a copy of such notice to such Bank), suspend the obligation of such Bank to
make or Continue Loans of the type with respect to which such compensation is
requested, or to Convert RC Loans of any other type into RC Loans of such type,
until the Regulatory Change giving rise to such request ceases to be in effect
(in which case the provisions of Section 5.04 shall be applicable).

(b) Without limiting the effect of the provisions of paragraph
(a) of this Section 5.01, in the event that, by reason of any Regulatory
Change, any Bank either (i) incurs Additional Costs based on or measured by the
excess above a specified level of the amount of a category of deposits or other
liabilities of such Bank which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in this Agreement
or a category of extensions of credit or other assets of such Bank which
includes Eurodollar Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets which it may hold, then, if such
Bank so elects by notice to the Company (with a copy to the Administrative
Agent), the obligation of such Bank to make or Continue, or to Convert RC Loans
of any other type into, RC Loans of such type hereunder shall be suspended
until such Regulatory Change ceases to be in effect (in which case the
provisions of Section 5.04 shall be applicable).

(c) A Bank's Bid Rate Loans of any type shall bear interest at
the Base Rate commencing, in the case of clause (i) below, on the last day such
Bank may lawfully continue to maintain Bid Rate Loans of that type, and in the
case of clause (ii) below, on the day determined by such Bank to be the last
Business Day before the effective date of the applicable restriction, if:

(i) at any time such Bank determines in good faith that any
Regulatory Change enacted after the date of the making of such Bid Rate
Loans makes it unlawful for such Bank or its Applicable Lending Office
to maintain any Bid Rate Loan of that type, or to comply with its
obligations hereunder in respect thereof; or

(ii) such Bank determines in good faith that, by reason of any
Regulatory Change enacted after the date of the making of such Bid Rate
Loans, such Bank or its Applicable Lending Office is restricted,
directly or indirectly, in the amount that it may hold of (A) a category
of liabilities that includes deposits by reference to which, or on the
basis of which, the interest rate applicable to Bid Rate Loans of that
type is directly or indirectly determined, or (B) the category of assets
that includes Bid Rate Loans of that type.

Each Bank shall notify the Company and the Administrative Agent of the
existence or occurrence or any condition or circumstance specified in clauses
(c)(i) and (c)(ii) above applicable to such Bank's Bid Rate Loans as promptly
as practicable, but in any event not later than the earlier of (i) the date
that is 60 days after such Bank obtains actual knowledge of such condition or
circumstance and (ii) the date that is 10 days after such Bank decides that its
Bid Rate Loans shall bear interest at the Base Rate as provided in this Section
5.01(c) in connection with such condition or circumstance; provided that such
Bank's Bid Rate Loans

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shall bear interest at the Base Rate as provided in this Section 5.01(c)
notwithstanding the failure of such Bank to give any such notice.

(d) Without limiting the effect of the foregoing provisions of
this Section 5.01 (but without duplication), the Company shall pay directly to
the Administrative Agent for the account of each Bank from time to time on
request such amounts as such Bank may determine to be necessary to compensate
such Bank for any costs which it determines are attributable to the maintenance
by such Bank (or any Applicable Lending Office), pursuant to any law or
regulation or any interpretation, directive or guideline (whether or not having
the force of law and whether or not the failure to comply therewith would be
unlawful) of any court or governmental or monetary authority following any
Regulatory Change, of capital in respect of its Commitment or Loans (such
compensation to include, without limitation, an amount equal to any reduction
of the rate of return on assets or equity of such Bank (or any Applicable
Lending Office) to a level below that which such Bank (or any Applicable
Lending Office) could have achieved but for such law, regulation,
interpretation, directive or guideline).

(e) Each Bank will notify the Company through the
Administrative Agent of any event occurring after the Agreement Date of this
Agreement that will entitle such Bank to compensation under paragraph (a) or
(d) of this Section 5.01 as promptly as practicable, but in any event within 60
days after such Bank obtains actual knowledge thereof; provided, however, that
if any Bank fails to give such notice within 60 days after it obtains actual
knowledge of such an event, such Bank shall, with respect to compensation
payable pursuant to this Section 5.01 in respect of any costs resulting from
such event, only be entitled to payment under this Section 5.01 for costs
incurred from and after the date 60 days prior to the date that such Bank does
give such notice; and provided, further, that each Bank will designate a
different Applicable Lending Office for the Loans of such Bank affected by such
event if such designation will avoid the need for, or reduce the amount of,
such compensation, will be consistent with the internal policy of such Bank and
applicable legal and regulatory restrictions and will not, in the sole opinion
of such Bank, be disadvantageous to such Bank, except that such Bank shall have
no obligation to designate an Applicable Lending Office located in the United
States of America. Each Bank will furnish to the Company through the
Administrative Agent a certificate, signed by an officer with knowledge of and
responsibility for such matters, and setting out in reasonable detail the
basis, calculation and amount of each request by such Bank for compensation
under paragraph (a) or (d) of this Section 5.01. Determinations and
allocations by any Bank for purposes of this Section 5.01 of the effect of any
Regulatory Change pursuant to paragraph (a), (b), (c) or (d) of this Section
5.01, on its costs or rate of return of maintaining Loans or its obligation to
make Loans, or on amounts receivable by it in respect of Loans, and of the
amounts required to compensate such Bank under this Section 5.01, shall be
conclusive, provided that such determinations and allocations are made on a
reasonable basis.

(f) If circumstances set forth in this Section 5.01 subsequently
change so that any affected Bank shall determine that it is no longer so
affected, such Bank will promptly notify the Company and the Administrative
Agent, upon receipt of such notice, the obligations of

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such Bank to make or Continue Eurodollar Loans as, or to Convert RC Loans of
any type into, Eurodollar Loans shall be reinstated.

5.02 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any
Eurodollar Base Rate for any Interest Period:

(a) the Administrative Agent determines in good faith, which
determination shall be conclusive, that quotations of interest rates for
the relevant deposits referred to in the definition of "Eurodollar Base
Rate" in Section 1.01 are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining rates of
interest for Eurodollar Loans as provided herein; or

(b) the Majority Banks determine in good faith, which
determination shall be conclusive, and notify the Administrative Agent
that the relevant rates of interest referred to in the definition of
"Eurodollar Base Rate" in Section 1.01 upon the basis of which the rate
of interest for Eurodollar Loans for such Interest Period is to be
determined are not likely adequately to cover the cost to such Banks of
making or maintaining such type of RC Loans for such Interest Period;

then the Administrative Agent shall give the Company and each Bank prompt
notice thereof, and so long as such condition remains in effect, the Banks
shall be under no obligation to make additional RC Loans of such type, to
Continue RC Loans of such type or to Convert RC Loans of any other type into RC
Loans of such type and the Company shall, on the last day(s) of the then
current Interest Period(s) for the outstanding RC Loans of such type, either
prepay such RC Loans or Convert such RC Loans into another type of RC Loan in
accordance with Section 2.09.

5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain Eurodollar Loans
hereunder, then such Bank shall promptly notify the Company thereof (with a
copy to the Administrative Agent) and such Bank's obligation to make or
Continue, or to Convert RC Loans of any other type into, Eurodollar Loans shall
be suspended until such time as such Bank may again make and maintain
Eurodollar Loans (in which case the provisions of Section 5.04 shall be
applicable).

5.04 Treatment of Certain Loans. If the obligation of any Bank
to make or Continue, or to Convert RC Loans of any other type into, Eurodollar
Loans shall be suspended pursuant to Section 5.01 or 5.03, such Bank's
Eurodollar Loans shall be automatically Converted into Base Rate Loans on the
last day(s) of the then current Interest Period(s) for such Eurodollar Loans
(or, in the case of a Conversion required by Section 5.01(b) or 5.03, on such
earlier date as such Bank may specify to the Company with a copy to the
Administrative Agent), provided that if any Conversion is made at the request
of a Bank that is not otherwise required pursuant to the terms of this
Agreement and that is not (as such Bank shall, in its sole discretion,
determine) necessary as the result of any Regulatory Change, no prepayment fee
or premium shall be payable hereunder and no compensation pursuant to Section
5.05 shall be payable, and, unless and until such Bank

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gives notice as provided below that the circumstances specified in Section 5.01
or 5.03 which gave rise to such Conversion no longer exist:

(a) to the extent that such Bank's Eurodollar Loans have been so
Converted, all payments and prepayments of principal which would
otherwise be applied to such Bank's Eurodollar Loans shall be applied
instead to its Base Rate Loans; and

(b) all Loans which would otherwise be made or Continued by such
Bank as Eurodollar Loans shall be made or Continued instead as Base Rate
Loans and all Loans of such Bank which would otherwise be Converted into
Eurodollar Loans shall remain as Base Rate Loans.

If such Bank gives notice to the Company (with a copy to the Administrative
Agent) that the circumstances specified in Section 5.01 or 5.03 which gave rise
to the Conversion of such Bank's Eurodollar Loans pursuant to this Section 5.04
no longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans are outstanding, such Bank's
Base Rate Loans shall be automatically Converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding Eurodollar Loans, to
the extent necessary so that, after giving effect thereto, all RC Loans held by
the Banks holding Eurodollar Loans and by such Bank are held pro rata (as to
principal amounts, types and Interest Periods) in accordance with their
respective Commitments.

5.05 Compensation. The Company shall pay to the Administrative
Agent for account of each Bank, upon the request of such Bank through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost or expense
which such Bank determines is attributable to:

(a) any payment, prepayment or Conversion of a Eurodollar Loan
or Bid Rate Loan made by such Bank for any reason (including, without
limitation, the acceleration of the Loans pursuant to Section 9) on a
date other than the last day of the Interest Period for such Loan
(except as provided in Section 2.03 or 5.04); or

(b) any failure by the Company for any reason (including,
without limitation, the failure of any of the conditions precedent
specified in Section 6 to be satisfied) to borrow or to Convert a
Eurodollar Loan or a Bid Rate Loan from such Bank or to make any payment
of principal thereof or interest thereon on the due date for such
borrowing, conversion or payment.

Without limiting the effect of the preceding sentence, (i) such compensation
shall include an amount equal to the excess, if any, of (x) the amount of
interest which otherwise would have accrued on the principal amount so paid,
prepaid or Converted or not borrowed for the period from the date of such
payment, prepayment, Conversion or failure to borrow to the last day of the
then current Interest Period for such Loan (if such Loan is a Eurodollar Loan)
(or, in the case of a failure to borrow, the Interest Period for such Loan
which would have commenced on the date specified for such borrowing) at the
applicable rate of interest for such Loan provided for herein over (y) the
interest component of the amount such Bank would have bid in the London
interbank market (if such Loan is a Eurodollar Loan) for

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45
Dollar deposits of leading banks in amounts comparable to such principal amount
and with maturities comparable to such period (as reasonably determined by such
Bank) and (ii) such Bank shall use reasonable efforts to avoid the need for, or
reduce the amount of, such compensation in excess of the amount referred to in
the foregoing clause (i).

5.06 Replacement of Bank. If (i) the Company becomes obligated
to pay additional amounts described in Sections 4.09, 5.01, 5.02 or 5.03 as a
result of any condition described in such Sections and payment of such amount
is demanded by any Bank or any Person who purchases a participation as set
forth in Section 11.06(e), (ii) any Loan of any Bank becomes subject to the
actions specified in Section 5.04 or (iii) any Bank fails to fulfill its
obligations under this Agreement to make any Loan, then unless a Default shall
have occurred and be continuing or such Bank or such participant has
theretofore taken steps that will promptly remove or cure the conditions
creating the cause for such obligation to pay such additional amounts, or has
revoked such election, as the case may be, the Company may, on ten Business
Days' prior written notice to the Administrative Agent, who shall promptly send
a copy of such notice to each Bank, cause such Bank or such participant to (and
such Bank or such participant shall, upon payment in full of all amounts
outstanding in respect of such Bank's Loans or such participant's
participation, as appropriate, including accrued interest thereon, all amounts
payable pursuant to Section 5.05, and all other amounts due and payable to such
Bank or such participant hereunder) assign pursuant to Section 11.06 all of its
rights and obligations under this Agreement to a Bank or other entity selected
by the Company and reasonably acceptable to the Administrative Agent.

Section 6. Conditions Precedent.

6.01 Initial Borrowing. The obligation of each Bank to make its
initial Loan hereunder is subject to the following conditions precedent, each
of which shall have been fulfilled to the satisfaction of such Bank:

(a) Corporate Action. (i) The Administrative Agent shall have
received, with a copy for each Bank, copies, certified by the Secretary
of State of the applicable jurisdiction as of a recent date, of (A) the
Certificate of Incorporation of the Company, and (B) good standing
certificates issued by the respective jurisdictions of organization of
the Company and each Significant Subsidiary, and

(ii) the Administrative Agent shall have received, with a
copy for each Bank, copies, certified by a senior officer of the Company
as of the Closing Date, of (A) the By-Laws of the Company and (B) all
corporate action taken by the Company approving each of the Loan
Documents, the transactions contemplated hereby and thereby and each
borrowing hereunder (including, without limitation, a certificate
setting forth the resolutions of the Board of Directors of the Company
adopted in respect of the transactions contemplated by such Loan
Documents).

(b) Incumbency. The Administrative Agent shall have received,
with a copy for each Bank, a certificate of a senior officer of the
Company dated the Closing Date and addressed to the Administrative Agent
and each Bank, in respect of each of the officers

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46
(i) who is authorized to sign on its behalf the Loan Documents and (ii)
who will, until replaced by another officer or officers duly authorized
for that purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in connection with
such Loan Documents and the transactions contemplated thereby (and the
Administrative Agent and each Bank may conclusively rely on such
certificate until it receives notice in writing from the Company to the
contrary).

(c) Officer's Certificate. The Administrative Agent shall have
received, with a signed copy for each Bank, a certificate of a senior
officer of the Company dated the Closing Date and addressed to the
Administrative Agent and each Bank, to the effect set forth in clauses
(b) and (c) of Section 6.02.

(d) Opinion of Counsel to the Company. The Administrative Agent
shall have received, with a signed copy for each Bank, (i) an opinion of
Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel to the Company, addressed to the
Administrative Agent and each Bank and (ii) an opinion of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, counsel to the Company, addressed to the Administrative Agent
and each Bank, in each case dated the Closing Date and addressing such
matters as requested by, and in form and substance acceptable to, the
Banks.

(e) Notes. The Administrative Agent shall have received the
Notes, duly completed and executed.

(f) Regulatory Matters. The Administrative Agent shall have
received, with a signed copy for each Bank, a certificate of a senior
officer of the Company, dated the Closing Date and addressed to the
Administrative Agent and each Bank, confirming that the Company and its
Subsidiaries have received all required authorizations and consents from
all Applicable Insurance Regulatory Authorities in connection with the
execution, delivery and performance in accordance with their respective
terms by the Company of each of the Loan Documents to which it is a
party and the consummation of the transactions contemplated hereby and
thereby.

(g) Insurance. The Administrative Agent shall have received,
with a signed copy for each Bank, a certificate of a senior officer of
the Company, dated the Closing Date and addressed to the Administrative
Agent and the Banks (i) having attached thereto a list of all the
material insurance policies maintained by the Company and its
Subsidiaries and (ii) confirming (A) that each such policy is in full
force and effect on and as of such date and (B) that the list accurately
reflects the coverage and amount of each such policy.

(h) No Material Adverse Effect. The Administrative Agent shall
have received, with a signed copy for each Bank, a certificate of a
senior officer of the Company dated the Closing Date and addressed to
the Administrative Agent and each Bank stating that the consummation of
the transactions described herein and in the other Loan Documents shall
not have a material adverse effect on the consolidated financial
condition, operations or business of the Company and its Subsidiaries,
taken as a whole, or on the

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47
legal, valid, binding or enforceable nature of the Loan Documents or the
ability of the Company to perform its obligations thereunder.

(i) Other Documents. Such other documents, including such other
required authentications, consents, approvals, licenses or exemptions
from or of, or registrations or filings with, or reports or notices to,
any governmental or regulatory authority or agency, as the
Administrative Agent or counsel to the Administrative Agent may
reasonably request.

(j) Fees and Expenses. The Company shall have (i) paid when due
all fees required to have been paid, on or prior to the Closing Date, to
the Administrative Agent and each Bank hereunder, under any of the other
Loan Documents or under any other document, agreement or letter referred
to herein or therein or relating hereto or thereto and (ii) paid the
then estimated amount of all reasonable costs and expenses of the
Administrative Agent (including but not limited to, the reasonable fees,
costs and expenses of Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to
the Administrative Agent, and of any accountants and any other
consultants engaged by it in such capacities) incurred in connection
with the negotiation, execution and delivery of the Loan Documents and
with the preparation, negotiation and closing of the transactions
contemplated hereby and thereby.

(k) Existing Credit Agreement. Arrangements satisfactory to the
Administrative Agent shall have been made for the payment in full of all
amounts owing by the Company under, and the termination of the
commitments under, the Existing Credit Agreement.

6.02 All Borrowings. The obligation of each Bank to make each
Loan requested to be made by it, including the initial Loan, is subject to the
determination of such Bank that each of the following conditions precedent have
been fulfilled:

(a) the Administrative Agent shall have received a notice of
borrowing with respect to such Loan complying with the requirements of
Sections 2.02 and 4.05.

(b) each of the representations and warranties made by the
Company in Section 7, and by the Company in each of the other Loan
Documents, shall be true, complete and correct at and as of the time
such Loan is to be made with the same force and effect as if made at and
as of such time (except to the extent that any such representation or
warranty expressly relates to a specific earlier date), both with and
without giving effect to such Loan and all other Loans to be made at
such time, to the other transactions contemplated thereby and to the
application of the proceeds thereof;

(c) no Default shall have occurred and be continuing at the time
such Loan is to be made or would result from the making of such Loan and
all other Loans to be made at such time, from the other transactions
contemplated hereby or from the application of the proceeds thereof;

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48
(d) following the funding of the requested Loan, the aggregate
principal amount of Loans outstanding hereunder shall not exceed the
limitations set forth in Section 2.01;

(e) such Loan will not contravene any Applicable Law; and

(f) if, following the funding of the requested Loan, the
aggregate amount of all Loans outstanding hereunder would exceed
$300,000,000, then, upon the application of the proceeds of such Loan,
each of the following shall have occurred:

(i) Southwestern and each of its Subsidiaries shall have
become not less than 80%-owned and controlled Subsidiaries of the
Company;

(ii) arrangements satisfactory to the Administrative
Agent shall have been made for the payment in full of all amounts
owing by Southwestern under, and the termination of the
commitments under, the Southwestern Credit Agreement; and

(iii) since September 30, 1996, there shall have been no
material adverse change in the consolidated financial condition,
operations or business of Southwestern and its Subsidiaries,
taken as a whole, from that set forth in the consolidated balance
sheet of Southwestern and its Subsidiaries as at that date
heretofore furnished to the Banks.

The notice of borrowing by the Company hereunder shall constitute a
certification by the Company that the conditions specified in clauses (b), (c)
and (d) have been fulfilled (both as of the date of such notice and as of the
time of such borrowing).

Section 7. Representations and Warranties. The Company
represents and warrants to the Banks that

7.01 Corporate Existence. Each of the Company and its
Significant Subsidiaries (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation;
(b) has all requisite corporate power, and has all material governmental
licenses, authorization, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted; and (c) is
qualified to do business and in good standing as a foreign corporation in all
jurisdictions in which the character of its assets or the nature of the
business conducted by it makes such qualification necessary and where failure
to so qualify has had or could reasonably be expected to have a material
adverse effect on the consolidated financial condition, operations or business
of the Company and its Subsidiaries, taken as a whole or on the legal, valid,
binding or enforceable nature of the Loan Documents or the ability of the
Company to perform its obligations thereunder.

7.02 Financial Condition. (a) The audited consolidated balance
sheets of the Company and its Subsidiaries as of December 31, 1995, and the
unaudited consolidated balance sheets of the Company and its Subsidiaries as of
September 30, 1996, in each case heretofore furnished to each of the Banks, are
each complete and correct in all material

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49
respects and fairly present the consolidated financial condition of the Company
and its Subsidiaries as at said respective dates, and the consolidated results
of operations, retained earnings and, as applicable, changes in financial
position or cash flows of the Company and its Subsidiaries for the respective
periods to which such statements relate, all in accordance with generally
accepted accounting principles. Neither the Company nor any of its
Subsidiaries had on said respective dates any material liability, contingent or
otherwise, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments except as
referred to or reflected or provided for in said consolidated balance sheets as
at said respective dates. Since December 31, 1995 and since September 30,
1996, there has been no material adverse change in the consolidated financial
condition, operations or business of the Company and its Subsidiaries, taken as
a whole, from that set forth in the respective consolidated balance sheets as
at said dates.

(b) The Statutory Statements (including the notes thereto) of
each Insurance Company for the year ended at December 31, 1995 and for the
nine-month period ended at September 30, 1996, in each case prepared in
accordance with statutory accounting practices and filed with the Applicable
Insurance Regulatory Authority, fairly present the financial condition of such
Insurance Company as at said dates and its results of operations for the fiscal
year ended at December 31, 1995 and for the nine-month period ended September
30, 1996, respectively, in accordance with statutory accounting practices as
required or prescribed by any Applicable Insurance Regulatory Authority. Since
December 31, 1995 and since September 30, 1996, there has been no material
adverse change in the financial condition, operations or business of the
Insurance Companies, taken as a whole, from that set forth in the respective
Statutory Statements as at said dates.

7.03 Litigation. Except as set forth on Schedule 7.03, there
are no legal or arbitral proceedings or any proceedings by or before any
governmental or regulatory authority or agency, now pending or threatened (nor,
to the knowledge of the Company and its Significant Subsidiaries, is there any
basis therefor) against or, to the best knowledge of the Company, in any other
way relating to or affecting, the Company or any of its Significant
Subsidiaries, any of their respective businesses or properties or any of the
Loan Documents which could reasonably be expected to have a material adverse
effect on the consolidated financial condition, operations or business of the
Company and its Subsidiaries, taken as a whole or on the legal, valid, binding
or enforceable nature of the Loan Documents or the ability of the Company to
perform its obligations thereunder.

7.04 No Breach. Except for any consents listed on Schedule
7.04, none of the execution, delivery and performance in accordance with their
respective terms by the Company of the Loan Documents, each borrowing
hereunder, the consummation of the transactions contemplated herein and therein
or compliance with the terms and provisions hereof and thereof does or (absent
any change in any Applicable Law or applicable Contract) will violate, conflict
with, result in a breach of, require any consent under, constitute a default
under, or result in or require the creation or imposition of any Lien (other
than the Security Interest) upon, any of the Property of the Company or any of
its Subsidiaries under (i) any Contract to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or any
of their respective properties or assets may be bound or (ii) any Applicable
Law, except for any such consent made or obtained on or prior to the

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50
Closing Date on which the initial Loan is made hereunder, or the lack of which,
singly or in the aggregate, could not reasonably be expected to have a material
adverse effect on the consolidated financial condition, operations or business
of the Company and its Subsidiaries, taken as a whole or on the legal, valid,
binding or enforceable nature of the Loan Documents or the ability of the
Company to perform its obligations thereunder.

7.05 Corporate Action. The Company has all necessary corporate
power and authority to execute, deliver and perform its obligations under each
of the Loan Documents and to borrow hereunder in the amount of the unused
Commitments; the execution, delivery and performance by the Company of each of
the Loan Documents and each borrowing hereunder in the amount of the unused
Commitments have been duly authorized by all necessary corporate action on its
part, including any necessary stockholder action; and this Agreement has been
duly and validly executed and delivered by the Company and constitutes, and
each of the other Loan Documents when delivered (in the case of the Notes, for
value) will have been duly and validly executed and delivered by the Company
and will constitute, its legal, valid and binding obligation, enforceable in
accordance with their terms.

7.06 Approvals. The execution, delivery and performance in
accordance with their respective terms by the Company of each of the Loan
Documents and each borrowing hereunder, whether or not in the amount of the
unused Commitments do not and (absent any change in any Applicable Law or
applicable Contract) will not require any authorization, consent, approval,
license or exemption from or of, any registration or filing with, or any report
or notice to, any governmental or regulatory authority or agency, other than
(i) those that, as of the Closing Date, have been made or obtained, as
appropriate, are final and not subject to review on appeal or to collateral
attack, are in full force and effect and are listed on Schedule 7.04 and copies
of which have been supplied to the Banks and (ii) all UCC and other filings and
recordings in respect of creation and perfection of the Security Interest
required by Section 8.19.

7.07 Use of Loans. Neither the Company nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock and no part of the proceeds of
any Loan hereunder will be used to buy or carry any Margin Stock. If requested
by the Administrative Agent (or by any Bank through the Administrative Agent),
the Company will furnish to the Administrative Agent, with a copy for each
Bank, a statement to the foregoing effect in conformity with the requirements
of FR Form U-1 referred to in Regulation U.

7.08 ERISA. (a) As of the Agreement Date and except as
disclosed on Schedule 7.08(a), the Company and the ERISA Affiliates have
fulfilled their respective obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the
Code, and have not incurred any Liability to the PBGC or any Plan or
Multiemployer Plan (other than to make contributions in the ordinary course of
business).

(b) As of the Agreement Date and except as disclosed on Schedule
7.08(b), neither the Company nor any of its Affiliates who are included in the
Company's consolidated

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51
financial statements sponsor or maintain a plan, agreement or arrangement which
could give rise to an Unrecognized Retiree Welfare Liability.

7.09 Taxes. (a) Except as disclosed to the Banks through the
Administrative Agent in writing prior to the Agreement Date, all material
United States Federal, state, local and foreign tax reports, estimates and
returns ("Returns") that are required to be filed by or on behalf of each of
the Company, each Insurance Company, PennCorp Services and their respective
Subsidiaries have been timely filed when due, all such Returns are true,
correct and complete in all material respects, and all Taxes, fees or other
charges due pursuant to such Returns or pursuant to any assessment received in
respect of such returns have been paid. The charges, accruals and reserves on
the books of each of the Company, each Insurance Company, PennCorp Services and
their respective Subsidiaries as of the Agreement Date in respect of all Taxes
and other governmental charges for which any Subsidiary of the Company may be
liable are, in the opinion of the Company, adequate. Except as disclosed to
the Banks through the Administrative Agent in writing prior to the Agreement
Date, no material audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or Returns of
PennCorp Services, each Insurance Company, the Company and their respective
Subsidiaries, nor has any of the above taxpayers waived any applicable statute
of limitations with respect to any Taxes or Returns.

(b) Neither the Company nor any of its non-Insurance Company
Subsidiaries is a corporation exempt from taxation under section 501 of the
Code, a life insurance company subject to taxation under section 801(a) of the
Code, a foreign corporation (other than Safe Drivers Agency Limited, PennCorp
Life Insurance Company and ▇▇▇▇▇▇▇▇ ▇▇▇▇ Life), a corporation with respect to
which an election under section 936 of the Code is in effect, a regulated
investment company or a real estate investment trust subject to tax under
subchapter M of chapter 1 of the Code or a DISC (as defined in section 992(a)
(1) of the Code).

(c) Each of the Subsidiaries which is an Insurance Company
(other than PennCorp Life Insurance Company and ▇▇▇▇▇▇▇▇ ▇▇▇▇ Life) is a life
insurance company subject to taxation under section 801(a) of the Code. No
Insurance Company is a corporation exempt from taxation under section 501 of
the Code, a foreign corporation (other than PennCorp Life Insurance Company and
▇▇▇▇▇▇▇▇ ▇▇▇▇ Life), a corporation with respect to which an election under
section 936 of the Code is in effect, a regulated investment company or a real
estate investment trust subject to tax under subchapter M of chapter 1 of the
Code or a DISC (as defined in section 992(a) (1) of the Code).

(d) To the best knowledge of the Company and its Significant
Subsidiaries, since December 31, 1995 and since September 30, 1996, there has
been no change in the financial condition, operations or business of the
Company or any of its Subsidiaries, in any Applicable Law that applies or could
reasonably be expected to apply to the Company or any of its Subsidiaries, or
in any other fact or circumstance relating to or affecting the Company or any
of its Subsidiaries which has had, or could reasonably be expected to have a
material adverse effect on the position, status or Liability of the Company and
its Subsidiaries, collectively, or the Company and the Significant Subsidiaries
individually, with respect to Tax matters, on the consolidated financial
condition, operations or business of the Company

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52
and its Subsidiaries taken as a whole to the extent any thereof relate to Tax
matters affecting the Company and its Subsidiaries taken as a whole, on the
amount of any Tax payable by the Company or any of its Subsidiaries or the
timing of the payment of any such Tax, or, to the extent that they may be
affected by changes relating to Tax matters, on the legal, valid, binding and
enforceable nature of the Loan Documents or the ability of the Company to
perform its obligations thereunder.

7.10 Investment Company Act. The Company is not an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.

7.11 Public Utility Holding Company Act. The Company is not a
"holding company", or an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

7.12 Environmental Matters. Except as disclosed in Schedule
7.12 and except for any environmental investigation, study, audit, test, review
or other analysis which has not resulted and could not reasonably be expected
to result in the imposition of any material Liability on the Company or its
Subsidiaries, there have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or which are in the possession of
the Company or any of its Subsidiaries in relation to any property or facility
now or previously owned or leased by the Company or any of its Subsidiaries
which have not been made available to the Banks through the Administrative
Agent.

7.13 Subsidiaries, Etc. Set forth on Schedule 7.13 is a
complete and correct list, as of the Agreement Date, of all Subsidiaries of the
Company (and the respective jurisdiction of incorporation of each such
Subsidiary) and of all Investments held by the Company or any of its
Subsidiaries (including the percentage ownership represented by such
Investment) in any Affiliate and of all controlling interests held by the
Company or any of its Subsidiaries in any joint venture or any partnership. As
of the Agreement Date, the Company owns, free and clear of Liens, warrants,
options or rights of others of any kind whatsoever, all outstanding shares of
such Subsidiaries, other than directors' qualifying shares (and each such
Subsidiary owns, free and clear of Liens, warrants, options or rights of others
of any kind whatsoever, all shares of its Subsidiaries listed on Schedule 7.13
as owned by such Subsidiary (other than directors' qualifying shares)) and all
such shares are duly authorized, validly issued, fully paid and non-assessable
and the Company (or the respective Subsidiary) also owns, free and clear of
Liens, warrants, options or rights of others of any kind whatsoever, all such
Investments except as disclosed on Schedule 7.13 and except for Liens permitted
by Section 8.07. From and after the Agreement Date, the Company or another
Subsidiary, as the case may be, has the unrestricted right to vote and to
receive dividends and distributions payable on or with respect to all shares
listed on Schedule 7.13 as owned by the Company or such Subsidiary. Except as
set forth on Schedule 7.13, no Subsidiary of the Company or any of its
Subsidiaries has issued any securities convertible into shares of its capital
stock.

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53
7.14 Material Agreements and Burdensome Provisions. Except as
disclosed on Schedule 7.14:

(a) neither the Company nor any of its Significant Subsidiaries
is a party to or bound by any Contract, subject to any corporate restriction or
bound by any Applicable Law that has had or could reasonably be expected to
have a material adverse effect on the consolidated financial condition,
operations or business of the Company and its Subsidiaries, taken as a whole or
on the legal, valid, binding or enforceable nature of the Loan Documents or the
ability of the Company to perform its obligations thereunder; and

(b) neither the Company nor any of its Significant Subsidiaries
is in default under any Contract in any manner that could materially and
adversely affect the consolidated financial condition, operations or business
of the Company and its Subsidiaries, taken as a whole, or the legal, valid,
binding or enforceable nature of the Loan Documents, or the ability of the
Company to perform its obligations thereunder.

7.15 Assets. Each of the Company and its Subsidiaries owns and
has good title to (or, if subject to a lease, has or will have valid leasehold
interest in) all of its properties and assets, free and clear of all Liens or
other encumbrances of any nature other than Liens expressly permitted by
Section 8.07, except where such failure to have good title or a valid leasehold
interest has not had or could not reasonably be expected to have a material
adverse effect on the consolidated financial condition, operations or business
of the Company and its Subsidiaries, taken as a whole or on the legal, valid,
binding or enforceable nature of the Loan Documents, or the ability of the
Company to perform its obligations thereunder.

7.16 Compliance with Applicable Law. Except as disclosed to the
Banks through the Administrative Agent in writing, each of the Company and its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its respective business and
the ownership of its property (including, without limitation, applicable
statutes, regulations, orders and restrictions relating to environmental
standards and controls), except such non-compliance as has not had and could
not reasonably be expected to have, in the aggregate, a material adverse effect
on the consolidated financial condition, operations or business of the Company
and its Subsidiaries, taken as a whole or on the legal, valid, binding or
enforceable nature of the Loan Documents or the ability of the Company to
perform its obligations thereunder.

7.17 Liens. (a) Schedule 8.07 lists, as of the Agreement Date,
all of the Material Liens on Property of the Company or its Subsidiaries (or
any income or profits therefrom).

(b) The book value of all Liens on Property of the Company or
its Subsidiaries (or any income or profits therefrom) which are not Material
Liens does not exceed $10,000,000.

7.18 No Material Adverse Effect. The consummation of the
transactions described herein and in the other Loan Documents has not had and
could not reasonably be expected to have a material adverse effect on the
consolidated financial condition, operations or business of the Company and its
Subsidiaries, taken as a whole or on the legal, valid, binding or

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enforceable nature of the Loan Documents or the ability of the Company to
perform its obligations thereunder.

7.19 Additional Adverse Facts. Except as disclosed to the Banks
through the Administrative Agent in writing on or prior to the Agreement Date
or as disclosed in the notes to the financial statements submitted by the
Company to the Banks on or prior to the Agreement Date, no fact or circumstance
is known to the Company, as of the Agreement Date, that, either alone or in
conjunction with all other such facts and circumstances, has had or could
reasonably be expected to have (so far as the Company and its Subsidiaries can
foresee) a material adverse effect on the consolidated financial condition,
operations or business of the Company and its Subsidiaries taken as a whole or
on the legal, valid, binding or enforceable nature of the Loan Documents or the
ability of the Company to perform its obligations thereunder.

7.20 Accuracy of Information. All Information furnished to the
Administrative Agent and each Bank by or on behalf of the Company prior to the
Agreement Date in connection with or pursuant to the Loan Documents and the
relationships established thereunder, at the time the same was so furnished,
but in the case of Information dated as of a prior date, as of such date, (i)
in the case of any Information prepared in the ordinary course of business, was
complete and correct in all material respects in the light of the purpose for
which the same was prepared, and, in the case of any Information the
preparation of which was requested by any Bank, was complete and correct in all
material respects to the extent necessary to give such Bank true and accurate
knowledge of the subject matter thereof, (ii) did not contain any untrue
statement of a material fact, and (iii) did not omit to state a material fact
necessary in order to make the statements contained therein not misleading in
the light of the circumstances under which they were made.

7.21 Restrictive Covenants. Except for Liens permitted under
Section 8.07, except for Permitted Restrictive Covenants existing on the
Agreement Date and except as disclosed on Schedule 7.21 or on any notice from
the Company to the Administrative Agent entitled "Schedule 7.21 Update"
(provided that such Schedule 7.21 Update shall only include Permitted
Restrictive Covenants) and except for consensual agreements entered into with
any Applicable Insurance Regulatory Authority, neither the Company nor any of
its Subsidiaries is a party to or bound by any consensual agreement (a)
limiting the ability (whether by covenant, event of default, subordination or
otherwise) of any Subsidiary to (i) pay dividends or make any other
distributions on shares of its capital stock held by the Company or any other
Subsidiary, (ii) pay any obligation owed to the Company or any other
Subsidiary, (iii) make any loans or advances to or investments in the Company
or in any other Subsidiary, (iv) transfer any of its property or assets to the
Company or any other Subsidiary, or (b) creating any Lien upon the property or
assets of the Company or any of its Subsidiaries whether now owned or hereafter
acquired or upon any income or profits therefrom.

7.22 Security Interest. When the Administrative Agent has taken
possession on behalf of the Banks of the certificates representing the Pledged
Securities and the other instruments and documents as the Majority Banks shall
have requested pursuant to Section 8.19 and appropriate UCC financing
statements have been filed, the security interest created by the Security
Agreements, when executed and delivered, will constitute a fully perfected

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and first priority security interest in all right, title and interest of the
Securing Parties in the Collateral.

Section 8. Covenants of the Company. The Company agrees that,
so long as any of the Commitments are in effect and until payment in full of
all Loans hereunder, all interest thereon and all other amounts payable by the
Company hereunder:

8.01 Financial Statements. The Company shall deliver to the
Administrative Agent with a copy for each of the Banks:

(a) as soon as available and in any event within 45 days after
the end of each of the first three quarterly fiscal periods of each
fiscal year of the Company, unaudited consolidated statements of income,
retained earnings and changes in financial position (or statement of
cash flow, as the case may be) of the Company and its Subsidiaries,
together with unaudited statements of income and cash flow of the
Company, for such period and for the period from the beginning of the
respective fiscal year to the end of such period, setting forth in each
case in comparative form the corresponding consolidated figures and
figures of the Company as at the end of the corresponding period in the
preceding fiscal year of the Company, and the related unaudited
consolidated balance sheet of the Company and its Subsidiaries and
balance sheet of the Company as at the end of such period, setting forth
in comparative form the corresponding consolidated figures and figures
of the Company for the preceding fiscal year of the Company, accompanied
by a certificate of a Financial Officer of the Company stating that said
financial statements fairly present in all material respects the
consolidated financial condition and results of operations, as the case
may be, of the Company and its Subsidiaries, and, in the case of the
financial statements of the Company, the financial condition and results
of operations, as the case may be, of the Company, all in accordance
with generally accepted accounting principles, consistently applied, as
at the end of, and for, such period (subject only to normal year-end
audit adjustments);

(b) as soon as available and in any event within 90 days after
the end of each fiscal year of the Company, (i) audited consolidated
statements of income, retained earnings and changes in financial
position (or statement of cash flow, as the case may be) of the Company
and its Subsidiaries, together with unaudited statements of income and
cash flow of the Company, for such year and the related audited
consolidated balance sheet of the Company and its Subsidiaries and
unaudited balance sheet of the Company, each as at the end of such year,
setting forth in each case in comparative form the corresponding
consolidated figures and figures of the Company for the preceding fiscal
year of the Company, (ii) an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall
state that said consolidated financial statements (but not the financial
statements of the Company) fairly present in all material respects the
consolidated financial condition and results of operations of the
Company and its Subsidiaries in accordance with generally accepted
accounting principles, as at the end of, and for, such fiscal year,
accompanied by a certificate of such accountants stating that, in making
the examination necessary for their opinion, they obtained no knowledge,
except as specifically stated, of any Default and (iii) a certificate of
a

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Financial Officer of the Company stating (A) that said financial
statements of the Company (other than the consolidated financial
statements) fairly present in all material respects the financial
condition and results of operations, as the case may be, of the Company
in accordance with generally accepted accounting principles,
consistently applied, as at the end of, and for, such fiscal year and
(B) that, in making the examination necessary for such certificate, such
Financial Officer obtained no knowledge, except as specifically stated,
of any Default;

(c) as soon as available and in any event at the time the
Statutory Statements of the Insurance Companies are filed with the
appropriate regulatory authorities, summary Statutory Statements
(prepared in accordance with statutory accounting practices required or
permitted by the Applicable Insurance Regulatory Authorities) of the
Insurance Companies by group (comparable from fiscal quarter to fiscal
quarter) in form acceptable to the Administrative Agent for each fiscal
quarter, accompanied by a certificate of a Financial Officer of the
Company which certificate shall state that such financial statements
present the financial condition of such Insurance Companies in
accordance with statutory accounting practices required or permitted by
the Applicable Insurance Regulatory Authorities;

(d) as soon as available and in any event at the time the same
are filed with the appropriate regulatory authorities, the unaudited and
audited annual Statutory Statement of such Insurance Company (prepared
in accordance with statutory accounting practices required or permitted
by the Applicable Insurance Regulatory Authority) for such year and as
filed with the Insurance Department of the applicable State, accompanied
by (i) a certificate of a treasurer or senior financial officer of such
Insurance Company stating that said Statutory Statement presents the
financial condition of such Insurance Company in accordance with
statutory accounting practices required or permitted by the Applicable
Insurance Regulatory Authority and (ii) a certificate of the valuation
actuary of such Insurance Company, affirming the adequacy of reserves
taken by such Insurance Company in respect of future policyholder
benefits as at the end of such fiscal year;

(e) concurrently with the filing thereof, copies of all
registration statements and regular periodic reports, if any, which the
Company shall have filed with the Securities and Exchange Commission (or
any successor thereto);

(f) promptly upon the mailing thereof to the shareholders of the
Company generally and to the extent not previously provided to the
Administrative Agent and the Banks, copies of all financial statements,
reports and proxy statements so mailed;

(g) promptly after the Company knows or has reason to know that
any Default or Event of Default has occurred, a notice describing such
Default in reasonable detail and stating that it is a "Notice of
Default", and together with such notice or as soon thereafter as
possible, a description of the action that the Company has taken and
proposes to take with respect thereto;

(h) as soon as received by the Company or any Subsidiary, (i) a
copy of the final report to each Insurance Company from NAIC for each
fiscal year as to such Insurance

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Company's compliance or noncompliance with each of the IRIS Tests and
(ii) a copy of Best's rating analysis for such Insurance Company for
such fiscal year;

(i) as soon as received, a copy of any notice of termination or
cancellation of any Reinsurance Agreement or arrangement (other than
those entered in the ordinary course of business) to which any of the
Insurance Companies is a party to the extent such termination or
cancellation could reasonably be expected to have a material adverse
effect on the consolidated financial condition, operations or business
of the Company and its Subsidiaries, taken as a whole or on the legal,
valid, binding or enforceable nature of the Loan Documents or the
ability of the Company to perform its obligations thereunder;

(j) copies of all material reports, filings and other materials
sent to governmental authorities (including any Applicable Insurance
Regulatory Authority) by the Company or any of the Insurance Companies
not later than seven (7) days after such filings are made, including,
without limitation, filings which seek approval of governmental
authorities (including any Applicable Insurance Regulatory Authority)
with respect to transactions among any of the Insurance Companies or any
of their respective Affiliates;

(k) immediately, notice of actual or threatened suspension,
termination or revocation of any license (including, without limitation,
any license or certificate of authority from any Applicable Insurance
Regulatory Authority), permit or authorization to transact insurance and
reinsurance business of the Company or any Significant Subsidiary by any
governmental authority (including any Applicable Insurance Regulatory
Authority), including any request by any governmental authority, which
commits the Company or such Significant Subsidiary to take or refrain
from taking any action or which otherwise affects the authority of the
Company or such Significant Subsidiary to conduct its business, except
where any such suspension, termination or revocation, singly or in the
aggregate, has not had and could not in the aggregate reasonably be
expected to have a material adverse effect on the consolidated financial
condition, operations or business of the Company and its Subsidiaries,
taken as a whole or on the legal, valid, binding or enforceable nature
of the Loan Documents or the ability of the Company to perform its
obligations thereunder;

(l) as soon as possible, and in any event within ten days after
the Company knows or has reason to know that any of the events or
conditions specified below with respect to any Plan or Multiemployer
Plan have occurred or exist, a statement signed by a Financial Officer
of the Company setting forth details respecting such event or condition
and the action, if any, which the Company or its ERISA Affiliate
proposes to take with respect thereto (and a copy of any report or
notice required to be filed with or given to PBGC by the Company or an
ERISA Affiliate with respect to such event or condition):

(i) any reportable event, as defined in section 4043(c)
of ERISA, with respect to a Plan, as to which PBGC has not by
regulation waived the requirement of section 4043(a) of ERISA
that it be notified within 30 days of the occurrence of such
event;

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(ii) the filing under section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan;

(iii) the institution by PBGC of proceedings under
section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the receipt by the
Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan;

(iv) the complete or partial withdrawal by the Company
or any ERISA Affiliate under section 4201 or 4204 of ERISA from a
Multiemployer Plan, or the receipt by the Company or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to section 4241 or 4245 of
ERISA or that it intends to terminate or has terminated under
section 4041A of ERISA;

(v) the institution of a proceeding by a "fiduciary"
(within the meaning of Section 3(21) of ERISA) of any
Multiemployer Plan against the Company or any ERISA Affiliate to
enforce section 515 of ERISA, which proceeding is not dismissed
within 30 days; and

(vi) the increase of benefits under any existing plan,
agreement or arrangement, or the establishment of or contribution
to any new plan, agreement or arrangement, in each case by the
Company or any of its Affiliates who are included in the Company's
consolidated financial statements, and which in each case would
have the effect of increasing the Unrecognized Retiree Welfare
Liability in a manner reasonably expected to result in a material
Liability; and

(m) from time to time such other information regarding the
business, affairs or financial condition of the Company or any of its
Subsidiaries (including, without limitation, any Plan or Multiemployer
Plan and any reports or other information required to be filed under
ERISA) as the Administrative Agent or any Bank may reasonably request.

The Company will furnish to the Administrative Agent, with a copy for each
Bank, at the time it furnishes each set of financial statements pursuant to
paragraph (a) or (b) above, a certificate of a Financial Officer of the Company
(i) to the effect that no Default has occurred and is continuing (or, if any
Default has occurred and is continuing, describing the same in reasonable
detail and describing the action that the Company has taken and proposes to
take with respect thereto) and (ii) setting forth in reasonable detail the
computations necessary to determine whether the Company is in compliance with
Sections 8.08 through 8.13 (inclusive) as of the end of the respective
quarterly fiscal period or fiscal year.

8.02 Communication with Accountants. The Company authorizes the
Administrative Agent (on behalf of the Banks) to communicate directly with its
independent certified public accountants with respect to matters concerning the
Company and its Subsidiaries with respect to which they have been hired by the
Company, after written notice

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to the Company and providing the Company with the opportunity to be present
(either physically or by telephone) during any such interaction and authorizes
those accountants to disclose to the Banks through the Administrative Agent
(subject to the foregoing) any and all financial statements and other
supporting financial documents and schedules, including copies of any
management letter with respect to the business, financial condition, and other
affairs of the Company and any of its Subsidiaries; provided, however, that the
Administrative Agent shall not be required to notify the Company prior to any
discussions with such accountants or provide for the Company to participate in
such meetings after the occurrence and during the continuance of an Event of
Default.

8.03 Litigation. The Company will promptly give the
Administrative Agent with a copy for each Bank notice of all pending or overtly
threatened legal or arbitral proceedings, and of all pending or overtly
threatened proceedings by or before any governmental or regulatory authority or
agency, and any material development in respect of such legal or other
proceedings, affecting the Company or any of its Significant Subsidiaries,
except proceedings or developments which could not reasonably be expected to
have a material adverse effect on the consolidated financial condition,
operations or business of the Company and its Subsidiaries, taken as a whole or
on the legal, valid, binding or enforceable nature of the Loan Documents or the
ability of the Company to perform its obligations thereunder.

8.04 Corporate Existence, Etc. The Company will, and will cause
each of its Significant Subsidiaries to: (a) preserve and maintain its
corporate existence and all of its material rights, privileges, licenses,
permits and franchises (provided that nothing in this Section 8.04 shall
prohibit any transaction expressly permitted under Section 8.06), unless, in
the reasonable business judgment of the Company or such Subsidiary, as the case
may be, it is in its best economic interest not to preserve and maintain such
rights or franchises and such failure to preserve and maintain such rights or
franchises could not reasonably be expected to have a material adverse effect
on the consolidated financial condition, operations or business of the Company
and its Subsidiaries, taken as a whole or on the legal, valid, binding or
enforceable nature of the Loan Documents or the ability of the Company to
perform its obligations thereunder; (b) comply with Applicable Law (including
any Applicable Law relating to any employee benefit plan) if failure to comply
with such requirements could reasonably be expected to have a material adverse
effect on the consolidated financial condition, operations or business of the
Company and its Subsidiaries, taken as a whole or on the legal, valid, binding
or enforceable nature of the Loan Documents or the ability of the Company to
perform its obligations thereunder; (c) pay and discharge when due all material
taxes, assessments and governmental charges or levies imposed on it or on its
income or profits or on any of its Property, except for any such tax,
assessment, charge or levy the payment of which is being contested in good
faith and by proper proceedings and against which adequate reserves are being
maintained; provided that the Company and each of its Subsidiaries shall have
the right to pay any such obligation and in good faith contest, by proper legal
actions or proceedings, the validity or amount of such claims; (d) take all
actions, and obtain all authorizations, consents, approvals, licenses and
exemptions from or of, make all registrations or filings with, or reports or
notices to, any governmental unit, required so that the obligations of the
Company and its Significant Subsidiaries under the Loan Documents will at all
times be legal, valid, binding and enforceable in accordance with their
respective terms; (e) maintain all of its material

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Properties used or useful in its business in good working order and condition,
ordinary wear and tear excepted; (f) keep adequate records and books of account
in which complete entries will be made in accordance with generally accepted
accounting principles or statutory accounting practices, as the case may be,
reflecting all of its financial transactions; and (g) upon reasonable notice,
permit representatives of the Administrative Agent or, after the occurrence and
during the continuance of a Default and provided that all Banks wishing to take
any of the actions set forth in this clause (g) use reasonable efforts to take
such actions collectively, as arranged by the Administrative Agent, any Bank,
during normal business hours, to examine, copy and make extracts from its books
and records, to inspect its Properties, and to discuss its business and affairs
with its officers, all to the extent reasonably requested by the Administrative
Agent or such Bank (as the case may be).

8.05 Insurance. The Company will, and will cause each of its
Significant Subsidiaries to, keep insured by financially sound and reputable
insurers all property of a character usually insured by corporations engaged in
the same or similar business similarly situated against loss or damage of the
kinds and in the amounts customarily insured against by such corporations and
carry such other insurance as is usually carried by such corporations.

8.06 Prohibition of Fundamental Changes. The Company will not,
nor will it permit any of its Significant Subsidiaries to, enter into any
transaction of merger, consolidation or amalgamation (other than as a form of
acquisition permitted by the immediately succeeding sentence or as a form of
disposition permitted by the second immediately succeeding sentence), or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution). The Company will not, and will not permit any of its
Subsidiaries to, acquire (including by way of merger, consolidation or
amalgamation) any business or Property from, or capital stock (other than the
common stock or common stock equivalents of the Company) of, or be a party to
any acquisition of, any Person except for (i) purchases or acquisitions of any
Person or any property of any Person provided that the aggregate purchase price
of any such purchase or acquisition, or group of related purchases or
acquisitions, shall not exceed 30% of the Net Worth of the Company and its
Consolidated Subsidiaries immediately prior to such purchase or acquisition and
(ii) the acquisition by the Company of Washington National for an aggregate
purchase price of approximately $400,000,000; provided that such purchase price
shall not include cash consideration in excess of $150,000,000; provided,
further, that no Event of Default shall have occurred and be continuing both
immediately before and immediately after the consummation of such acquisition.
The Company will not, and will not permit any of its Subsidiaries to, convey,
sell, lease, transfer or otherwise dispose of (including by way of merger,
consolidation or amalgamation), in one transaction or a series of transactions,
any part of its business or Properties, whether now owned or hereafter acquired
(including, without limitation, receivables and leasehold interests); provided
that the Company and its Subsidiaries may sell or dispose of any Property in
the ordinary course of business and the following:

(a) any Subsidiary of the Company may be transferred to or
merged or consolidated with or into the Company or any Wholly-Owned
Subsidiary of the Company so long as

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(i) the Company or such Wholly-Owned Subsidiary is the
continuing or surviving corporation in the case of a merger;

(ii) no Subsidiary that is an Insurance Company shall be
merged or consolidated with or into any Subsidiary that is not an
Insurance Company; and

(iii) no Subsidiary shall be transferred to or merged or
consolidated with or into any other Subsidiary if such transfer, merger
or consolidation would materially adversely affect the ability of the
Company to obtain cash, whether through dividend payments, payments on
the Surplus Notes or otherwise, from its Subsidiaries; and

(b) the Company or any Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its Property (upon voluntary
liquidation or otherwise and whether through Reinsurance Agreements or
otherwise) to any other Person solely to the extent that the fair market
value of the Property so disposed of, together with the aggregate fair
market value of all other Property of the Company or any Subsidiary
disposed of within the previous 12 months (or, if shorter, the period
from the Agreement Date to the date of such disposition), shall not
exceed 15% of the Market Capitalization of the Company determined as of
the day before the announcement of such disposition.

8.07 Limitation on Liens. The Company will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its Property, whether now owned or hereafter acquired, except:

(a) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or which are being contested in good
faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Company or such Subsidiary,
as the case may be, in accordance with GAAP or SAP, as the case may be;

(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business;

(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;

(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of property or minor imperfections in title
thereto which are not material in amount, and which, in the aggregate,
do not in any case materially detract from the value of the

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property subject thereto or interfere with the ordinary conduct of the
business of the Company or any of its Subsidiaries;

(f) Liens upon real or tangible personal property acquired in
the ordinary course of business after the Agreement Date (by purchase,
construction or otherwise) by the Company or any of its Subsidiaries,
each of which Liens either (A) existed on such Property before the time
of its acquisition and was not created in anticipation thereof, or (B)
was created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost
(including the cost of construction) of the respective Property;
provided that no such Lien shall extend to or cover any Property of the
Company or such Subsidiary other than the respective Property so
acquired and improvements thereon; and provided, further, that the
principal amount of Indebtedness (other than non-recourse Indebtedness)
secured by any such Lien shall at no time exceed 75% of the fair market
value (as determined in good faith by a Financial Officer of the Company
and certified by such Person to the Administrative Agent, with copy for
each Bank) of the respective property at the time it was acquired (by
purchase, construction or otherwise);

(g) Liens arising out of Reinsurance Transactions not
prohibited by this Agreement;

(h) Material Liens existing on the Agreement Date and listed
on Schedule 8.07 and any Liens existing on the Agreement Date other than
Material Liens;

(i) any extension,renewal or replacement of the foregoing,
provided, however, that the Liens permitted hereunder shall not be
spread to cover any additional Indebtedness or Property (other than a
substitution of like Property); and

(j) the Security Interest.

8.08 Indebtedness. The Company will not permit any of its
Subsidiaries to create, incur or suffer to exist any Indebtedness except:

(a) Indebtedness evidenced by the Surplus Notes and other
Indebtedness of Subsidiaries of the Company to the Company or to another
Subsidiary;

(b) Indebtedness of the Company's Subsidiaries which is incurred
in the ordinary course of operations in an aggregate amount at any time,
together with all Indebtedness of the Company's Subsidiaries outstanding
at such time incurred pursuant to clause (c) of this Section 8.08, up to
but not exceeding an amount equal to 5% of the Net Worth of the Company
and its Consolidated Subsidiaries at such time, and any extension,
renewal or replacement thereof which does not increase the principal
amount of such Indebtedness and which is incurred on terms no less
favorable to the Banks;

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(c) non-recourse (subject to customary exclusions and
qualifications, including those for waste, failure to maintain
insurance, environmental liabilities and other similar exclusions)
purchase money Indebtedness of the Company's Subsidiaries in an
aggregate amount at any time, together with all Indebtedness of the
Company's Subsidiaries outstanding at such time incurred pursuant to
clause (b) of this Section 8.08, up to but not exceeding an amount equal
to 5% of the Net Worth of the Company and its Consolidated Subsidiaries
at such time;

(d) Indebtedness under the Southwestern Subordinated Notes on
terms and conditions satisfactory to the Administrative Agent;

(e) Indebtedness under this Agreement; and

(f) Existing Indebtedness.

8.09 Dividends. The Company shall, to the extent permitted by
Applicable Law, cause each Subsidiary to declare and pay dividends on such
Subsidiary's capital stock or make payments under its Surplus Notes, if any,
such that the aggregate amount received by the Company from dividends or
Surplus Note payments is sufficient to enable the Company to pay (i) the amount
of principal of Indebtedness of the Company, interest in respect of
Indebtedness of the Company accrued or capitalized and Charges of the Company
at the time such amounts are due and payable minus (ii) an amount equal to the
sum of (A) all cash or marketable securities held by the Company at the time of
such declaration, (B) all payments required by Applicable Law or applicable
Contract to be paid by any Subsidiary of the Company to the Company at the time
such amounts are due and payable, including but not limited to payments
required under the tax sharing agreements, (C) the aggregate amount of cash and
marketable securities held by each direct Subsidiary of the Company available
to be paid as dividends to the Company by each such Subsidiary which could be
paid at the time such amounts are due and payable under the Surplus Notes
without obtaining any regulatory approval and (D) to the extent that borrowings
hereunder are used to pay interest in respect of Indebtedness, the amount of
any borrowings that are so used.

8.10 Leverage Ratio. The Company will not permit the Leverage
Ratio to exceed 35% at any time, provided that the Leverage Ratio may increase
to a percentage not in excess of 40% for a period not to exceed 90 consecutive
days occurring within any period of 12 consecutive months so long as such
increase does not result from a loss affecting Net Worth, provided further,
however, that, notwithstanding the foregoing proviso, the Company will not
permit the Leverage Ratio to exceed 35% (i) at any time if the Net Income of
the Company for the period of the two consecutive fiscal quarters immediately
preceding such time is less than zero or (ii) at any time unless (A) prior to
such time the Company shall have consummated the acquisition of Washington
National or (B) the Net Worth of the Company and its Consolidated Subsidiaries
equals or exceeds $1,000,000,000 at such time. For purposes hereof, Net Income
shall be calculated before taxes, realized capital gains and losses and any
non-recurring charges.

8.11 Interest Coverage Ratio. The Company will not permit the
Interest Coverage Ratio as of the last day of each fiscal quarter to be less
than (a) 2.0 to 1.0 where component

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"A" of the definition of Interest Coverage Ratio is determined before
adjustment for capital gains or losses as set forth in such definition and (b)
1.0 to 1.0 where component "A" of the definition of Interest Coverage Ratio is
determined after adjustment for capital gains or losses as set forth in such
definition.

8.12 Minimum Total Adjusted Capital. (a) The Company will not
permit the Total Adjusted Capital of each U.S.-domiciled Insurance Company that
is a Significant Subsidiary at any time to be less than 175% of the Company
Action Level Risk Based Capital for such Insurance Company.

(b) The Company will not permit the Total Adjusted Capital of
each U.S.-domiciled Insurance Company that is not a Significant Subsidiary at
any time to be less than 100% of the Company Action Level Risk Based Capital
for such Insurance Company.

8.13 Consolidated Net Worth. The Company will not permit the
Net Worth of the Company and its Consolidated Subsidiaries at any time to be
less than the greater of (a) $650,000,000 and (b) an amount equal to (i)
$650,000,000, plus (ii) 75% of the aggregate Net Income of the Company (but not
less than zero) for each fiscal quarter ending during the period beginning with
the Agreement Date and ending on the date of determination under this Section
8.13, plus (iii) 75% of the net proceeds of all issuances of capital stock by
the Company after the Agreement Date minus (iv) 100% of the net purchase price
of all repurchases by the Company of its capital stock after the Agreement
Date, provided that the aggregate amount so subtracted (A) in respect of all
such repurchases shall not exceed $100,000,000 and (B) in respect of all such
repurchases made within any period of 12 consecutive months shall not exceed
$50,000,000.

8.14 Lines of Business. Neither the Company nor any of its
Subsidiaries shall (a) engage in any line or lines of business activity other
than the businesses in which they are engaged on the Agreement Date and
businesses reasonably related thereto, (b) expand directly into any new markets
in which they do not currently engage in business, other than into any state in
the United States, any province of Canada or, in connection with providing
insurance to any U.S. military personnel or their families, any other country
in which such personnel are located or (c) expand into product lines which are
substantially different from, or which are not reasonably related and
supplemental to, those in which the Company or its Subsidiaries are presently
engaged.

8.15 Transactions with Affiliates. The Company will not, nor
will it permit any of its Subsidiaries to, directly or indirectly, effect any
transaction with any Affiliate on a basis less favorable than would at the time
be obtainable for a comparable transaction in an arms-length dealing with an
unrelated third party.

8.16 Use of Proceeds. The Company will use the proceeds of the
Loans solely for general corporate purposes, including, but not limited to, the
repayment of all existing Indebtedness of the Company under the Existing Credit
Agreement and, to the extent permitted by the terms of this Agreement, the
acquisition of Washington National and Southwestern. All Loans shall be used
by the Company only for legal and proper corporate

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purposes (duly authorized by its Board of Directors) which are consistent with
all Applicable Laws.

8.17 Modifications of Certain Documents.

(a) The Company shall not enter into or consent to any
amendment, supplement or other modification of the instruments and agreements
governing any Indebtedness that adversely affects the interests of the Banks as
senior creditors with respect to the Subordinated Notes or the interests of the
Banks under this Agreement or any other Loan Document in any respect.

(b) The Company shall not enter into or consent to any
amendment, supplement or other modification of any of the terms of (i) the
Certificate of Incorporation of the Company or (ii) the certificate or articles
of incorporation of any of its Subsidiaries in a manner adverse to the
interests of the Banks hereunder.

8.18 Limitation on Restrictive Covenants. The Company shall
not, and shall not permit any Subsidiary to, directly or indirectly, permit to
exist, at any time, any consensual agreement limiting the ability (whether by
covenant, event of default, subordination or otherwise) of any Subsidiary to
(i) pay dividends or make any other distributions on shares of its capital
stock held by the Company or any other Subsidiary, (ii) pay any obligation owed
to the Company or any other Subsidiary, (iii) make any loans or advances to or
investments in the Company or in any other Subsidiary, (iv) transfer any of its
property or assets to the Company or any other Subsidiary, or (v) create any
Lien upon the property or assets of the Company or any of its Subsidiaries
whether now owned or hereafter acquired or upon any income or profits
therefrom, except that this Section 8.18 shall not apply to Permitted
Restrictive Covenants.

8.19 Security. On the 10th day (the "Security Date") after the
first date upon which the Company's S&P Senior Debt Rating is less than BB+ and
the Company's D&P Senior Debt Rating is less than BB+, the Company shall, and
shall cause each holder of a Surplus Note (the Company and each such holder
being collectively referred to as the "Securing Parties") to, execute and
deliver one or more security agreements, in form and substance satisfactory to
the Majority Banks (collectively, the "Security Agreements"), together with
such other instruments and other documents as the Majority Banks may request,
the possession of which is necessary or appropriate in the determination of the
Majority Banks to create or perfect a security interest in favor of the Banks,
effective on the Security Date, in the Collateral under Applicable Law,
including but not limited to the certificates representing the Pledged
Securities, together with undated stock powers for such certificates duly
executed in blank, duly executed UCC-1 financing statements and an opinion of
counsel for the Securing Parties with respect to the foregoing in form and
substance satisfactory to the Majority Banks; provided that, unless a Default
shall have occurred and be continuing, promptly after the first date upon which
the Company's S&P Senior Debt Rating is BB+ or better or the Company's D&P
Senior Debt Rating is BB+ or better, the Administrative Agent, on behalf of
itself and the Banks, shall, at the Company's expense, execute and deliver to
the Company such instruments of release, UCC termination statements and other
documents (including the certificates representing the Pledged Securities and
the

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stock powers relating thereto) as the Company may reasonably request in order
to release the security interests provided for by this Section 8.19.

8.20 Knightsbridge Companies. The Company shall not, and shall
not permit any Subsidiary to, make at any time any Investment in any of the
Knightsbridge Companies if (a) the fair market value of such Investment and all
other then outstanding Investments, taken together, held by the Company and its
Subsidiaries in the Knightsbridge Companies would exceed 20% of the Net Worth
of the Company and its Consolidated Subsidiaries at such time or (b) in the
case of any Investment by the Company or any of its non-Insurance Company
Subsidiaries, the fair market value of such Investment and all other then
outstanding Investments, taken together, held by the Company and its non-
Insurance Company Subsidiaries in the Knightsbridge Companies would exceed 10%
of the Net Worth of the Company and its Consolidated Subsidiaries at such time;
provided, however, that this Section 8.20 shall not prohibit Investments by the
Company and its Subsidiaries in the Knightsbridge Companies in an aggregate
amount not in excess of $40,000,000 pursuant to the limited partnership
agreement of Knightsbridge Capital Fund I, L.P. in respect of the obligations
of the Company or any of its Subsidiaries (i) as a limited partner of
Knightsbridge Capital Fund I, L.P. or (ii) as a member of the general partner
of Knightsbridge Capital Fund I, L.P.

Section 9. Events of Default. If one or more of the following
events (herein called "Events of Default") shall occur and be continuing,
whatever the reason for such event and whether it shall be voluntary or
involuntary or within or without the control of the Company or any Subsidiary,
or be effected by operation of law or pursuant to any judgment or order of any
court or any order, rule or regulation of any governmental or non-governmental
body:

(a) The Company shall fail to pay any principal of any Loan or
Note when and as due (whether at maturity, by reason of notice of prepayment or
acceleration or otherwise) and in accordance with the terms of this Agreement
and the Notes; or the Company shall fail to pay any interest on any Loan or
Note or any other amount payable to the Administrative Agent or the Banks by it
hereunder, under the other Loan Documents or under any letter, agreement or
other document providing for the payment of fees by the Company to the
Administrative Agent or the Banks in connection with any of the Loan Documents,
when and as due (whether at maturity, by reason of notice of prepayment or
acceleration or otherwise) and in accordance with the terms of such agreement
or documents and such failure shall continue unremedied for three Business
Days; or

(b) The Company or any of its Subsidiaries shall default
(beyond any applicable period of grace) in the payment when due and in
accordance with its terms of any principal of or interest on any of its other
Indebtedness aggregating $10,000,000 or more; or any event specified in any
note, agreement, indenture or other document evidencing or relating to any such
Indebtedness shall occur, if the effect of such event is to permit (with the
giving of notice, the lapse of time or both) any holder or holders thereof (or
a trustee or agent on behalf of such holder or holders) to cause such
Indebtedness to become due, or be prepaid in full (whether by redemption,
purchase or otherwise) prior to its stated maturity, or to cause the maturity
of any such Indebtedness to be accelerated (whether or not automatically); or

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(c) A default shall be continuing under any Contract (other
than a Contract relating to Indebtedness to which clause (b) of this Section 9
is applicable) binding upon the Company or any Subsidiary, except a default
that, together with all other such defaults, has not had and could not
reasonably be expected to have a material adverse effect on the consolidated
financial position, operations or business of the Company and its Subsidiaries
taken as a whole or on the legal, valid, binding or enforceable nature of the
Loan Documents or the ability of the Company to perform its obligations
thereunder; or

(d) Any representation, warranty or certification made or
deemed made by the Company in any Loan Document (or in any modification or
supplement thereto), or any certificate furnished by, at the request of or on
behalf of the Company or any Subsidiary to the Administrative Agent or any Bank
pursuant to the provisions thereof shall prove to have been false or misleading
as of the time made or furnished in any material respect; or

(e) The Company shall default in the performance of any of its
obligations under any of Sections 8.01(g), 8.04(a) (insofar as such Section
requires the preservation of the corporate existence of the Company), 8.04(d),
8.04(g), 8.06 through 8.13 (inclusive), 8.16, 8.17, 8.19 or 8.20; or the
Company shall default in the performance of any of its other obligations in
this Agreement or any other Loan Document and such default shall continue
unremedied for a period of thirty Business Days after notice thereof to the
Company by the Administrative Agent (or by any Bank through the Administrative
Agent); or

(f) The Company or any of its Subsidiaries shall admit in
writing its inability to pay, generally be unable to pay, or generally not be
paying its debts as such debts become due; or

(g) The Company or any of its Subsidiaries shall (i) apply for
or consent to or fail to controvert in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or the like of itself or of all or a substantial part of its
property, domestic or foreign, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary case under the Federal bankruptcy
laws (as now or hereafter in effect), (iv) file a petition seeking to take
advantage of any other law, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or readjustment of debts
or supervision, conservation or rehabilitation, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under such bankruptcy laws or other laws, or
(vi) take any corporate action for the purpose of effecting any of the
foregoing; or

(h) A proceeding or case shall be commenced against the Company
or any of its Subsidiaries, without the application or consent of any of them,
in any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or readjustment
of its debts or supervision, conservation or rehabilitation, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of the
Company or such Subsidiary or of all or any substantial part of the assets,
domestic or foreign, of the Company or any of its Subsidiaries, or (iii) any
other or similar relief in respect of the Company or such Subsidiary under the
federal bankruptcy laws (as now or hereafter in effect) or under any other
laws, domestic or foreign, relating to bankruptcy, insolvency,

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reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed or unstayed, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, for a period of 60 or more days; or an
order granting the relief requested in such case or proceeding against the
Company or such Subsidiary (including an order for relief under such federal
bankruptcy laws) shall be entered; or

(i) A final judgment or judgments or order or orders for the
payment of money in excess of $10,000,000 in the aggregate (net of any
insurance or other indemnification obligations with respect to such liability
owing from a Person reasonably acceptable to the Administrative Agent and which
has provided written confirmation of its obligations reasonably satisfactory to
the Administrative Agent) shall be rendered by a court or courts against the
Company and/or any of its Subsidiaries and either (i) the same shall not be
discharged (or provision shall not be made for such discharge by way of
insurance or otherwise), or a stay of execution thereof shall not be procured,
within 60 days from the date of entry thereof and the Company or the relevant
Subsidiary shall not, within said period of 60 days, or such longer period
during which execution of the same shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal, or (ii)
enforcement proceedings shall have been commenced upon such judgment or order;
or

(j) A judgment or order for other than the payment of money
shall be entered against the Company or any Subsidiary which judgment or order
could, in the reasonable judgment of the Majority Banks, together with all
other such judgments or orders, reasonably be expected to have a material
adverse effect on the consolidated financial position, operations or business
of the Company and its Subsidiaries taken as a whole or on the legal, valid,
binding or enforceable nature of the Loan Documents or the ability of the
Company to perform its obligations thereunder; or

(k) An event or condition specified in Section 8.01(l) shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a result
of such event or condition, together with all other such events or conditions,
the Company or any ERISA Affiliate shall incur or in the reasonable opinion of
the Majority Banks shall be likely to incur a Liability to a Plan, a
Multiemployer Plan or PBGC (or any combination of the foregoing) which is, in
the reasonable determination of the Majority Banks, material in relation to the
consolidated financial condition, operations or business of the Company and its
Subsidiaries, taken as a whole, or the legal, valid and binding nature of the
Loan Documents or on the ability of the Company to perform its obligations
thereunder; or

(l) A Change in Control shall be deemed to have occurred; or

(m) The Company or any of its Affiliates asserts, or the Company
or any of its Affiliates or any other Person institutes any proceedings seeking
to establish, that any provision of the Loan Documents is invalid, not binding
or unenforceable; or

(n) The subordination provisions contained in any of the
instruments and agreements governing the Subordinated Notes shall cease, for
any reason, to be in full force

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and effect, or any Person shall so assert to the Company in writing and the
Company shall not promptly contest such assertion;

THEREUPON: (1) in the case of an Event of Default other than one referred to
in clause (g) or (h) of this Section 9, the Administrative Agent may and, upon
request of the Majority Banks, shall, by notice to the Company, terminate the
Commitments in whole or, from time to time, in part and/or declare in whole or,
from time to time, in part the principal amount then outstanding of, and the
accrued interest on, the Loans and the Notes and all other amounts payable by
the Company hereunder, under the Notes or under any other Loan Document
(including, without limitation, any amounts payable under Section 5.05) to be
forthwith due and payable, whereupon such amounts shall be immediately due and
payable without presentment, demand, protest, notice or other formalities of
any kind (other than the notice provided for in this clause (1)) all of which
are hereby expressly waived by the Company; and (2) in the case of the
occurrence of an Event of Default referred to in clause (g) or (h) of this
Section 9 with respect to the Company, the Commitments shall automatically and
without any notice to the Company terminate and the principal amount then
outstanding of, and the accrued interest on, the Loans and the Notes and all
other amounts payable by the Company hereunder, under the Notes or under any
other Loan Document (including, without limitation, any amounts payable under
Section 5.05) shall automatically and without any notice to the Company become
immediately due and payable without presentment, demand, protest, notice or
other formalities of any kind, all of which are hereby expressly waived by the
Company.

Section 10. The Administrative Agent.

10.01 Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes BNY, and BNY hereby agrees, to act as the
administrative agent for such Bank hereunder and under the other Loan Documents
with such powers as are specifically delegated to the Administrative Agent by
the terms of this Agreement and of the other Loan Documents, together with such
other powers as are reasonably incidental thereto. The Administrative Agent
(which term as used in this sentence and in Section 10.05 and the first
sentence of Section 10.06 shall include reference to its affiliates and to its
own and its affiliates' officers, directors, employees and agents): (a) shall
have no duties or responsibilities except those expressly set forth in this
Agreement and in the other Loan Documents, which duties shall be purely
ministerial, and shall not by reason of this Agreement or any other Loan
Document be a trustee or other fiduciary for any Bank; (b) shall not be
responsible to the Banks for any recitals, statements, representations or
warranties contained in this Agreement or in any other Loan Document, or in any
certificate or other document referred to or provided for in, or received by it
under, this Agreement or any other Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or any certificate or other document referred to or
provided for herein or therein or received by any of them under this Agreement
or any other Loan Document or for any failure by the Company or any other
Person to perform any of its obligations hereunder or thereunder; (c) shall not
be required to initiate or conduct any litigation or collection proceedings
hereunder or under any other Loan Document; (d) shall not be responsible for
any action taken or

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omitted to be taken by it hereunder or under any other Loan Document or under
any other document or instrument referred to or provided for herein or therein
or in connection herewith or therewith, except for their own gross negligence
or willful misconduct and (e) shall not be required under any circumstances to
take any action that, in its judgment, (i) is contrary to any provision of this
Agreement, any other Loan Document or any certificate or other document
referred to or provided for in or received by it or the Banks under this
Agreement or any other Loan Document, (ii) is contrary to Applicable Law or
(iii) would expose it to any Liability or expense against which it has not been
indemnified to its satisfaction. The Administrative Agent may employ agents
and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good
faith. The Administrative Agent may deem and treat the payee of any Note as
the holder thereof for all purposes hereof unless and until a written notice of
the assignment or transfer thereof shall have been filed with the
Administrative Agent, together (to the extent required by Section 11.06) with
the written consent of the Company to such assignment or transfer.

10.02 Reliance by the Administrative Agent. The Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telecopier, telegram
or cable) believed by it to be genuine and correct and to have been signed,
sent or given by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent. As to any matters not expressly provided
for by this Agreement or any other Loan Document, the Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder or thereunder in accordance with instructions signed by the Majority
Banks, and such instructions of the Majority Banks and any action taken or
failure to act pursuant thereto shall be binding on all of the Banks.

10.03 Defaults. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of a Default (other than the non-
payment to it of principal of or interest on Loans or of facility fees) unless
the Administrative Agent has received notice from a Bank or the Company
specifying such Default and stating that such notice is a "Notice of Default".
In the event that the Administrative Agent receives such a notice of the
occurrence of a Default, the Administrative Agent shall give prompt notice
thereof to the Banks (and shall give each Bank prompt notice of each such non-
payment). In the event of any Default, the Administrative Agent shall (subject
to Section 10.07) (a) in the case of a Default that constitutes an Event of
Default, take either or both of the actions referred to in clause (1) of the
last paragraph of Section 9 if so directed by the Majority Banks and (b) in the
case of any Default, take such other action with respect to such Default as
shall be reasonably directed by the Majority Banks, provided that, unless and
until the Administrative Agent shall have received such directions, in the
event of any Default, the Administrative Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Banks.

10.04 Rights as a Bank. Each Person acting as the
Administrative Agent that is also a Bank shall, in its capacity as a Bank
hereunder, have the same rights and powers hereunder and under the other Loan
Documents as any other Bank and may exercise the

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same as though it were not acting as the Administrative Agent, and the term
"Bank" or "Banks" shall, unless the context otherwise indicates, include such
Person in its individual capacity. Each Person acting as the Administrative
Agent and the affiliates of any of them may (without having to account therefor
to any Bank) accept deposits from, lend money to and generally engage in any
kind of banking, trust or other business with the Company (and any of its
Subsidiaries or Affiliates) as if it were not acting as the Administrative
Agent, and each such Person and the affiliates of each of them may accept fees
and other consideration from the Company (and any of its Subsidiaries or
Affiliates) for services in connection with this Agreement or the other Loan
Documents or otherwise without having to account for the same to the Banks.

10.05 Indemnification. The Banks agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 11.03, but
without limiting the obligations of the Company under said Section 11.03)
ratably in accordance with the respective principal amounts of the Loans
outstanding made by the Banks (or, if no Loans are at the time outstanding,
ratably in accordance with their respective Commitments), for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever which
may be imposed on, incurred by or asserted against the Administrative Agent in
any way relating to or arising out of this Agreement or any other Loan Document
or any other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including, without limitation, the
costs and expenses which the Company is obligated to pay under Section 11.03,
but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or
of any such other documents, provided that no Bank shall be liable for any of
the foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.

10.06 Non-Reliance on Administrative Agent and Other Banks.
Each Bank agrees that it has made and will continue to make, independently and
without reliance on the Administrative Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, its own credit
analysis of the Company and its Subsidiaries and its own decision to enter into
this Agreement and the other documents to which it is a party executed in
connection herewith and that it will, independently and without reliance upon
the Administrative Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any of the other Loan Documents. The Administrative Agent shall not be
required to keep itself informed as to the performance or observance by the
Company of this Agreement or any of the other Loan Documents or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Company or any of its Subsidiaries. Except for
notices, reports and other documents and information expressly required to be
furnished to the Banks by the Administrative Agent hereunder and under the
other Loan Documents, the Administrative Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Company or any
of its Subsidiaries (or any of their affiliates) or the Loan Documents which
may come into the possession of the Administrative Agent or any of its
affiliates.

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10.07 Failure to Act. Except for action expressly required of
the Administrative Agent hereunder and under the other Loan Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Banks of their indemnification
obligations under Section 10.05 against any and all Liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action.

10.08 Resignation of the Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Banks and the Company. Upon receipt of any such notice of resignation,
the Majority Banks shall have the right, subject to the approval of the
Company, which approval shall not to be unreasonably withheld, to appoint a
successor Administrative Agent. If no successor Administrative Agent shall
have been so appointed by the Majority Banks and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Banks and subject to the approval of the Company, which approval shall not
be unreasonably withheld, appoint a successor Administrative Agent, which shall
be a bank which has an office in New York, New York with a combined capital and
surplus of at least $500,000,000. Upon the acceptance by any Person of its
appointment as a successor Administrative Agent, such Person shall thereupon
succeed to and become vested with all the rights, powers, privileges, duties
and obligations of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 10 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the
Administrative Agent.

10.09 Execution and Amendment of Loan Documents on Behalf of the
Banks. Each Bank hereby authorizes the Administrative Agent to execute and
deliver, in the name of and on behalf of such Bank, any Loan Document or any
other agreement, document or instrument referred to or provided for herein or
therein or relating to any such agreement, document or instrument which
requires execution by or on behalf of such Bank.

10.10 Consents under Loan Documents. Subject to Section 11.04
and 11.06(a) and except as otherwise expressly provided in this Agreement,
without the prior written consent of the Majority Banks, the Administrative
Agent will not consent to any amendment, modification, supplement or waiver
under any of the Loan Documents, provided that the Administrative Agent shall
not be required to consent to any such amendment, modification, supplement or
waiver that affects its rights or duties.

Section 11. Miscellaneous.

11.01 Waiver. No failure on the part of the Administrative
Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement,
any Note or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or

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privilege under this Agreement, any Note or any other Loan Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The remedies provided herein are cumulative and not exclusive of
any remedies provided by law.

11.02 Notices.

(a) All notices and other communications provided for herein or
in any other Loan Document (including, without limitation, any modifications
of, or waivers or consents under, this Agreement) shall be given or made by
telex, telecopy, telegraph, cable or in writing and telexed, telecopied,
telegraphed, cabled, mailed or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party, at such other address as shall be designated by such party
in a notice to each other party. Except as otherwise provided in this
Agreement or in any other Loan Document, all such communications shall be
deemed to have been duly given when transmitted by telex and the appropriate
answer-back is received, when transmitted by telecopier and received at such
telecopier number, when delivered to the telegraph or cable office or
personally delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.

(b) Any requirement under Applicable Law of reasonable notice
by the Administrative Agent or any Bank to the Company of any event in
connection with, or in any way related to, the Loan Documents or the exercise
by the Administrative Agent or any Bank of any of their rights thereunder shall
be met if notice of such event is given to the Company in the manner prescribed
above at least 10 days before (A) the date of such event or (B) the date after
which such event will occur.

11.03 Expenses, Etc. Whether or not any Loans are made
hereunder, the Company shall:

(a) pay or reimburse the Administrative Agent and each Bank for
all transfer, documentary, stamp and similar taxes, and all recording
and filing fees and taxes, payable in connection with, arising out of,
or in any way related to, the execution, delivery and performance of the
Loan Documents or the making of the Loans, and all other costs and
charges incurred in connection with any filing, registration, recording
or perfection of any security interest contemplated by this Agreement or
any other Loan Document or any other document referred to herein or
therein;

(b) pay or reimburse the Administrative Agent for all
reasonable costs and expenses (including reasonable fees and
disbursements of Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the
Administrative Agent, and of any appraisers, accountants and other
experts employed or retained by the Administrative Agent) incurred by
the Administrative Agent in connection with, arising out of, or in any
way related to (i) the negotiation, preparation, execution and delivery
of (A) this Agreement and the other Loan Documents, (B) whether or not
executed, any waiver, amendment, modification or consent thereunder or
thereto, (C) the syndication, whether before or after the Agreement
Date, of this Agreement, (ii) the administration of and any operations
under the Loan Documents, (iii) consulting with respect to any matter in
any way arising out of, related to, or connected with, the Loan
Documents, including (A) the protection,

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preservation, exercise or enforcement of any of the rights of the
Administrative Agent or the Banks in, under or related to the Loan
Documents or (B) the performance of any of the obligations of the
Administrative Agent or the Banks under or related to the Loan Documents
or (iv) protecting, preserving, exercising or enforcing any of the
rights of the Administrative Agent or the Banks in, under or related to
the Loan Documents;

(c) after the occurrence and during the continuation of a
Default, pay or reimburse each Bank for all costs and expenses
(including fees and disbursements of one legal counsel and other experts
employed or retained by the Banks) incurred by such Bank in connection
with, arising out of, or in any way related to (i) consulting with
respect to (A) the protection, preservation, exercise or enforcement of
any of its rights in, under or related to or the Loan Documents or (B)
the performance of any of its obligations under or related to the Loan
Documents or (ii) protecting, preserving, exercising or enforcing any of
its rights in, under or related to or the Loan Documents.

The Company hereby agrees to indemnify the Administrative Agent,
each Bank and their respective directors, officers, employees and agents from,
and hold each of them harmless against, any and all losses, liabilities,
claims, damages or expenses incurred by any of them arising out of or by reason
of any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings) arising out of or
relating to the entry into of this Agreement or any of the other Loan Documents
(or any amendment or other modification hereto or thereto) or any actual or
proposed use by the Company or any of its Subsidiaries of the proceeds of any
of the Loans, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified); provided, however, that no
indemnitee shall have the right to be indemnified hereunder (i) to the extent
that such claims directly relate to or arise solely out of any breach by such
indemnitee of its obligations under the Loan Documents, or (ii) to the extent
that such claims directly relate to or arise solely out of the relationship
between (A) an assignor Bank and an assignee Bank under this Agreement (unless
such assignee Bank became such pursuant to an assignment made at the request of
the Company as permitted hereunder) or (B) a Bank and a participant of such
Bank under this Agreement.

11.04 Amendments, Etc. Except as otherwise expressly provided
in this Agreement or the other Loan Documents, any provision of this Agreement
or the other Loan Documents may be amended or modified only by an instrument in
writing signed by the Company, the Administrative Agent and the Majority Banks,
or by the Company and the Administrative Agent acting with the consent of the
Majority Banks, and any provision of this Agreement or the other Loan Documents
may be waived by the Majority Banks or by the Administrative Agent acting with
the consent of the Majority Banks; provided that no amendment, modification or
waiver shall, unless by an instrument signed by all of the Banks or by the
Administrative Agent acting with the consent of all of the Banks: (i) change
the amount or change the term, or change the time or waive any requirement for
the reduction or termination, of the Commitments, (ii) change the date fixed
for the payment of principal of or interest on any RC Loan or any fee or other
amount (other than any Bid Rate Loan)

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payable hereunder, under the other Loan Documents or under any letter,
agreement or other document providing for the payment of fees by the Company to
the Administrative Agent or the Banks in connection with any of the Loan
Documents, (iii) change the amount of any payment of principal of any RC Loan,
the rate at which interest is payable on any RC Loan or any fee is payable or
the amount of any other payment (other than with respect to any Bid Rate Loan)
to be made hereunder, under the other Loan Documents or under any letter,
agreement or other document providing for the payment of other amounts by the
Company to the Administrative Agent or the Banks in connection with any of the
Loan Documents, (iv) alter the terms of this Section 11.04 or any provision of
this Agreement requiring the consent or other action of all the Banks, (v)
amend the definition of the term "Majority Banks", (vi) waive or change any of
the conditions precedent set forth in Section 6 or (vii) release any
Collateral, if any; provided, further that no amendment, modification or
waiver shall (i) change the date fixed for the payment of principal of or
interest on any Bid Rate Loan or (ii) change the amount of any payment of
principal of any Bid Rate Loan or the rate at which interest is payable on any
Bid Rate Loan, unless by an instrument signed by the Bank which has made such
Bid Rate Loan or by the Administrative Agent acting with the consent of such
Bank; and provided, further, that any amendment of Section 10 and any other
amendment, modification or waiver that affects the rights and duties of the
Administrative Agent shall require the consent of the Administrative Agent.

Unless otherwise specified in such waiver, a waiver of any right
under the Loan Documents shall be effective only in the specific instance and
for the specific purpose for which given. No election not to exercise, failure
to exercise or delay in exercising any right, nor any course of dealing or
performance, shall operate as a waiver of any right of the Administrative Agent
or any Bank under the Loan Documents or Applicable Law, nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right of the Administrative Agent or any
Bank under the Loan Documents or Applicable Law.

11.05 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of the parties thereto
and their respective successors and permitted assigns.

11.06 Assignments and Participations.

(a) The Company may not assign its rights or obligations
hereunder, under the Notes or under the other Loan Documents without the prior
consent of all of the Administrative Agent and each Bank and no assignment of
any such obligation shall release the Company therefrom unless the
Administrative Agent and each Bank shall have consented to such release in a
writing specifically referring to the obligation from which the Company is to
be released.

(b) No Bank may assign any of its Loans or Notes in whole or in
part unless (i) it shall have received the prior consent (which consent shall
not be unreasonably withheld) of the Company and the Administrative Agent and
(ii) any such partial assignment shall be in an amount equal to $10,000,000 or
any integral multiple of $1,000,000 in excess thereof. Upon the effectiveness
of any assignment consented to by the Company and the Administrative

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Agent, the assignee shall have, to the extent of such assignment (unless
otherwise provided in such assignment with the consent of the Administrative
Agent), the obligations, rights and benefits of a Bank hereunder holding the
Loan (or portions thereof) assigned to it (in addition to the Loan, if any,
theretofore held by such assignee) and the assigning Bank shall, to the extent
of such assignment, be released from such obligations. The assignor Bank
shall, upon the effectiveness of any assignment of any of its Loans or Note,
pay to the Administrative Agent a transfer fee in an amount equal to $3,500
(without duplication of any fees paid pursuant to clause (c) below).

(c) No Bank may assign any of its Commitment unless (i) it
shall have received the prior consent (which consent shall not be unreasonably
withheld) of the Company and the Administrative Agent and (ii) any such partial
assignment shall be in an amount equal to $10,000,000 or any integral multiple
of $1,000,000 in excess thereof. Upon the effectiveness of any assignment
consented to by the Company and the Administrative Agent, the assignee shall
have, to the extent of such assignment (unless otherwise provided in such
assignment with the consent of the Company and the Administrative Agent), the
obligations, rights and benefits of a Bank hereunder holding the Commitment (or
portions thereof) assigned to it (in addition to the Commitment, if any,
theretofore held by such assignee) and the assigning Bank shall, to the extent
of such assignment, be released from the commitment (or portions thereof) so
assigned. The assignor Bank shall, upon the effectiveness of any assignment of
any of its Commitment, pay to the Administrative Agent a transfer fee in an
amount equal to $3,500 (without duplication of any fees paid pursuant to clause
(b) above).

(d) Any other provision of this Agreement to the contrary
notwithstanding (except with respect to any assignment made in accordance with
subsection (g) hereof), the right to the principal of, and interest on, a Loan
may be assigned only through (i) the surrender of the Note applicable thereto
to the Company and the reissuance of such Note by the Company to the new holder
or the surrender of such Note to the new holder or the surrender of such Note
to the Company and the issuance of a new Note applicable thereto by the Company
to the new holder (the "Issuance System"), or (ii) through a book entry system
maintained by the Company or Administrative Agent (the "Book Entry System").
If any assignments are made pursuant to the Book Entry System, the Company or
the Administrative Agent shall maintain a registry which reflects and
identifies the owners of interests in the Loans. Any assignment by a Bank of
an interest in a Loan shall be conditioned upon and shall not be effective
until such Bank notifies the Company or the Administrative Agent, who will in
turn notify the Company, of the identity of the Bank's assignee and the
interest in principal and interest assigned to such assignee in order for the
assignment to be accomplished in compliance with either the Issuance System or
Book Entry System. After any such Bank gives such notice to the Company or the
Administrative Agent, the assignment will be accomplished in accordance with
either the Issuance System or the Book Entry System.

(e) A Bank may, without the consent of the Company or the
Administrative Agent, sell or agree to sell one or more other Persons a
participation in all or any part of any Loan held by it or Loans made or to be
made by it, or its Commitment or any other interest in the Loan Documents, in
which event, except as otherwise provided in Section 4.07(c), each such
participant shall not have any other rights or benefits under this Agreement or
any other Loan Document (the participant's rights against such Bank in respect
of such

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participation to be those set forth in the agreement (the "Participation
Agreement") executed by such Bank in favor of the participant). All amounts
payable by the Company to any Bank under Section 5 shall be determined as if
such Bank had not sold or agreed to sell any participations in such Loan and as
if such Bank were funding all of such Loan in the same way that it is funding
the portion of such Loan in which no participations have been sold. In no
event shall a Bank that sells a participation be obligated to the participant
under the Participation Agreement to take or refrain from taking any action
hereunder or under such Bank's Notes except that such Bank may agree in the
Participation Agreement that it will not, without the consent of the
participant, agree to (i) the increase or extension of the term, or the
extension of the time or waiver of any requirement for the reduction or
termination, of such Bank's Commitment, (ii) the extension of any date fixed
for the payment of principal of or interest on the related Loan or Loans or any
portion of any fees payable to the participant, (iii) the reduction of any
payment of principal thereof or (iv) the reduction of the rate at which either
interest is payable thereon or (if the participant is entitled to any part
thereof) a facility fee is payable hereunder to a level below the rate at which
the participant is entitled to receive interest or facility fee (as the case
may be) in respect of such participation.

(f) Notwithstanding anything set forth above, no assignee or
holder of a participation shall be entitled to any amounts that would otherwise
be payable to it with respect to its assignment or participation under Section
4.08 or Section 4.09 unless (i) such amounts are payable in respect of
Regulatory Changes that are enacted, adopted or issued after the date the
applicable assignment or participation agreement was executed or (ii) such
amounts would have been payable to the Bank that made such assignment or
granted such participation if such assignment had not been made or such
participation granted.

(g) Notwithstanding anything herein to the contrary, any Bank
may at any time, without the consent of the Company, the Administrative Agent
or any Bank, without payment of any transfer fees and without restrictions as
to amount or otherwise (i) assign any of its Loans, Notes or Commitments in
whole or in part to an Affiliate of such Bank or to another Bank and (ii)
pledge and assign as collateral all or any portion of its rights under the Loan
Documents to a Federal Reserve Bank, provided that no such pledge or assignment
pursuant to clause (ii) shall release the transferor Bank from its obligations
hereunder.

(h) A Bank may furnish any information concerning the Company
or any of its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and participants)
subject, however, to the provisions of Section 11.12.

11.07 Survival. Except as otherwise expressly provided therein,
the rights and obligations of the Company, the Administrative Agent, the Banks,
their respective affiliates and their respective directors, officers, employees
and agents, including but not limited to any such set forth in Sections 10.05
and 11.03, shall survive the repayment of the Loans and the termination of the
Commitments. In addition, each representation and warranty made, or deemed to
be made by a notice of borrowing of Loans, hereunder shall survive the making
of such Loans and no Bank shall be deemed to have waived, by reason of making
any such Loan, any Default which may arise by reason of such representation or
warranty proving to have been false or misleading, notwithstanding that the
Administrative Agent or such Bank

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may have had notice or knowledge or reason to know that such representation or
warranty was false or misleading at the time such Loans were made.

11.08 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.

11.09 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.

11.10 Governing Law; Submission to Jurisdiction. This Agreement
and the other Loan Documents shall be governed by, and construed in accordance
with, the law of the State of New York (without giving effect to its choice of
law principles). The Company hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Southern District of New York and
of any New York state court sitting in New York City for the purposes of all
legal proceedings arising out of or relating to this Agreement, the other Loan
Documents or the transactions contemplated hereby or thereby. The Company
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such
a court has been brought in an inconvenient forum. The Company hereby waives
personal service of process and consents that service of process upon it may be
made by certified or registered mail, return receipt requested, at its address
specified or determined in accordance with the provisions of Section 11.02, and
service so made shall be deemed completed on the third Business Day after such
service is deposited in the mail. Nothing herein shall affect the right of the
Administrative Agent, any Bank, any affiliate of any of them and any director,
officer, employee or agent of any of them to serve process in any other manner
permitted by law or shall limit the right of the Administrative Agent, any
Bank, any affiliate of any of them and any director, officer, employee or agent
of any of them to bring proceedings against the Company in the courts of any
other jurisdiction. Any judicial proceeding by the Company against the
Administrative Agent or any Bank arising out of or relating to this Agreement,
the other Loan Documents or the transactions contemplated hereby or thereby
shall be brought only in a court located in, in the case of the Administrative
Agent, the City and State of New York and, in the case of a Bank, the
jurisdiction in which such Bank's principal United States office is located.

11.11 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE
ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

11.12 Confidentiality. The Administrative Agent and each Bank
agrees (on behalf of itself and each of its Affiliates, Subsidiaries,
directors, officers, employees and representatives) to use reasonable
precautions to keep confidential, in accordance with their customary procedures
for handling confidential information of this nature and in accordance

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with safe and sound banking practices, any non-public information supplied to
it by the Company pursuant to this Agreement or the other Loan Documents (and
not otherwise known to such party) which is identified by the Company as being
confidential at the time the same is delivered to the Administrative Agent or
any Bank (or the Affiliates or Subsidiaries of any of them), provided that
nothing herein shall limit the disclosure of any such information (a) to the
extent required by Applicable Law, statute, rule, regulation or judicial
process, (b) to counsel for any of the Administrative Agent or any Bank, (c) to
bank examiners, auditors, accountants or other regulatory or administrative
bodies to whose jurisdiction such Bank may be subject, (d) to the
Administrative Agent or any other Bank, (e) in connection with any litigation
to which any one or more of the Banks is a party, (f) to the extent required
for the purpose of protecting, preserving, exercising or enforcing any of the
rights of the Administrative Agent or the Banks in, under or related to the
Loan Documents, performing any of the obligations of the Administrative Agent
or the Banks under or related to the Loan Documents and consulting with respect
to any of the foregoing matters, (g) to any Affiliate or Subsidiary of any Bank
so long as such Bank causes such Affiliate or Subsidiary to adhere to the
provisions of this Section 11.12 as though it were legally bound thereby, or
(h) to any assignee or participant (or prospective assignee or participant) so
long as such assignee or participant (or prospective assignee or participant)
first executes and delivers to the respective Bank a Confidentiality Agreement
in substantially the form of Exhibit C hereto; provided, further, that, unless
specifically prohibited by Applicable Law or court order, each Bank shall,
prior to disclosure thereof, notify the Company of any request for disclosure
of any such non-public information (i) by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of such Bank by such governmental
agency) or (ii) pursuant to legal process; and provided finally that in no
event shall the Administrative Agent or any Bank be obligated or required to
return any materials furnished by the Company. The obligations of each Bank
and the Administrative Agent under this Section 11.12 shall supersede and
replace the obligations of such Bank or the Administrative Agent, as the case
may be, under any other document, agreement or instrument in respect of this
financing which imposed on any Bank or the Administrative Agent obligations
similar to those imposed by this Section 11.12 and which was signed and
delivered by such Bank or the Administrative Agent to the Company prior to the
Agreement Date.

11.13 Amounts Payable Due Upon Request for Payment. All amounts
payable by the Company under Section 4.09, Section 5, Section 11.03 and under
the other provisions of the Loan Documents shall, except as otherwise expressly
provided, be immediately due upon request for the payment thereof.

11.14 Remedies of the Essence. The various rights and remedies
of the Administrative Agent and the Banks under the Loan Documents are of the
essence of those agreements, and the Administrative Agent and the Banks shall
be entitled to obtain a decree requiring specific performance of each such
right and remedy.

11.15 Rights Cumulative. Each of the rights and remedies of the
Administrative Agent and the Banks under the Loan Documents shall be in
addition to all of their other rights and remedies under the Loan Documents and
Applicable Law, and nothing in the Loan Documents shall be construed as
limiting any such rights or remedies.

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11.16 LIMITATION OF LIABILITY. NONE OF THE ADMINISTRATIVE
AGENT, THE BANKS, THEIR RESPECTIVE AFFILIATES OR THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND
THE COMPANY HEREBY WAIVES, RELEASES AND AGREES NOT TO ▇▇▇ FOR, ANY SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGES SUFFERED BY THE COMPANY IN CONNECTION WITH
ANY CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THE LOAN
DOCUMENTS OR THE RELATIONSHIPS ESTABLISHED THEREUNDER OR THE TRANSACTIONS
CONTEMPLATED THEREBY, WHETHER SUCH CLAIM ARISES OR IS ASSERTED BEFORE OR AFTER
THE AGREEMENT DATE OR BEFORE OR AFTER THE MATURITY DATE.

11.17 Reference Banks. Each Reference Bank shall furnish to the
Administrative Agent timely information for the purpose of determining the
Eurodollar Base Rate. If any Reference Bank shall notify the Administrative
Agent that thenceforth it shall not be able to furnish such information in a
timely manner or shall assign all of its Loans or Commitment to a Person that
is not an Affiliate of such Reference Bank, the Administrative Agent shall,
with the consent of the Majority Banks and after consultation with the Company,
appoint another Bank as a Reference Bank in place of such Reference Bank.

11.18 Schedules. Any Schedule to this Agreement may disclose on
the Agreement Date, in addition to the relevant information with respect to the
Company and its Subsidiaries as of the Agreement Date, relevant information
with respect to any Person that may become a Subsidiary of the Company after
the Agreement Date.

11.19 Severability of Provisions. Any provision of the Loan
Documents that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. To the extent permitted by Applicable Law, the Company hereby
waives any provision of Applicable Law that renders any provision of the Loan
Documents prohibited or unenforceable in any respect.

11.20 Entire Agreement. This Agreement, the Notes and the other
Loan Documents embody the entire agreement among the Company, the
Administrative Agent and the Banks relating to the subject matter hereof and
supersede all prior agreements, representations and understandings, if any,
relating to the subject matter hereof.

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

PENNCORP FINANCIAL GROUP, INC.

By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
General Counsel and Secretary

Address for Notices:

PennCorp Financial Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: Chief Financial Officer

With a copy to:

PennCorp Financial, Inc.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇

Credit Agreement
82
Commitment THE BANK OF NEW YORK, as
---------- Administrative Agent and
as a Bank
$47,000,000

By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President

Lending Office for all Loans:
The Bank of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Address for Notices:
The Bank of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇

With a copy to:

▇▇▇▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Credit Agreement
83
Commitment THE CHASE MANHATTAN BANK, as a
---------- Managing Agent and as a Bank

$42,000,000

By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President

Lending Office for all Loans:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇

Credit Agreement
84
Commitment THE FIRST NATIONAL BANK OF CHICAGO,
---------- as a Managing Agent and as a Bank

$42,000,000

By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President

Lending Office for all Loans:
The First National Bank of Chicago
One First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Address for Notices:
The First National Bank of Chicago
One First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇

Credit Agreement
85
Commitment NATIONSBANK, N.A., as a Managing Agent
---------- and as a Bank

$42,000,000

By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Bank Debt Specialist

Lending Office for all Loans:
NationsBank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

Address for Notices:
NationsBank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇ ▇▇▇▇

Credit Agreement
86
Commitment FLEET NATIONAL BANK, as a Co-Agent
---------- and as a Bank

$36,000,000

By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President

Lending Office for all Loans:
Fleet Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Address for Notices:
Fleet Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Senior Vice President

Credit Agreement
87
Commitment MELLON BANK, N.A., as a Co-Agent and
---------- as a Bank

$36,000,000

By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Asst. Vice President

Lending Office for all Loans:
Mellon Bank, N.A.
One Mellon Bank Center - Room 370
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Address for Notices:
Mellon Bank, N.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: Euclid ▇. ▇▇▇▇▇

Credit Agreement
88
Commitment BANK OF MONTREAL, as a Co-Agent and as
---------- a Bank

$30,000,000

By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇
Title: Director

Lending Office for all Loans:
Bank of Montreal
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Address for Notices:
Bank of Montreal
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇

Credit Agreement
89
Commitment CIBC INC., as a Co-Agent and as a Bank
----------

$30,000,000

By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director, CIBC Wood Gund
Securities Corp., as Agent

Lending Office for all Loans:
Canadian Imperial Bank of Commerce
Two Paces West
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇ ▇▇▇▇▇▇▇

Address for Notices:
Canadian Imperial Bank of Commerce
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇

Credit Agreement
90
Commitment DRESDNER BANK AG, NEW YORK BRANCH
---------- & GRAND CAYMAN BRANCH, as a Co-Agent
and as a Bank
$30,000,000

By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President

By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Treasurer

Lending Office for all Loans:
Dresdner Bank
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

Address for Notices:
Dresdner Bank
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇

Credit Agreement
91
Commitment SUNTRUST BANK, NATIONAL ASSOCIATION
----------

$20,000,000

By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: First Vice President and
Manager Insurance and
Financial Services

Lending Office for all Loans:
SunTrust Bank, Central Florida, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Mail Code 1043
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇

Address for Notices:
SunTrust Bank, Central Florida, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Mail Code 1043
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇

Credit Agreement
92
Commitment BANK ONE, TEXAS N.A.
----------

$20,000,000

By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President

Lending Office for all Loans:
Bank One, Texas N.A.
Bank ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇

Address for Notices:
Bank One, Texas N.A.
Bank ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇ ▇▇▇▇▇▇

Credit Agreement
93
Commitment CORESTATES BANK, N.A.
----------

$20,000,000

By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President

Lending Office for all Loans:
CoreStates Bank N.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FC 1-8-8-4

Address for Notices:
CoreStates Bank N.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FC 1-8-8-4

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, VP

Credit Agreement
94
Commitment FIRST UNION NATIONAL BANK OF NORTH
---------- CAROLINA

$20,000,000

By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President

Lending Office for all Loans:
First Union National Bank of North
Carolina
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

Address for Notices:
First Union National Bank of North
Carolina
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇ ▇▇▇▇▇▇▇

Credit Agreement
95
Commitment LTCB TRUST COMPANY
----------

$20,000,000

By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President

Lending Office for all Loans:
LTCB Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Address for Notices:
LTCB Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇

Credit Agreement
96
Commitment ING (U.S.) CAPITAL CORPORATION
----------

$15,000,000

By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President

Lending Office for all Loans:
ING (U.S.) Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

Address for Notices:
ING (U.S.) Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇/▇▇▇-▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇

Credit Agreement
97
Schedule 2.02(b)(i)

REQUEST FOR BID RATE LOANS

[Name and address
of the Administrative Agent]

Date:

Ladies and Gentlemen:

Reference is made to the Credit Agreement, dated as of ________,
1997, among Penncorp Financial Group, Inc., the Banks listed on the signature
pages thereof, The Chase Manhattan Bank, The First National Bank of Chicago and
NationsBank, N.A., as Managing Agents, Fleet National Bank, Mellon Bank, N.A.,
Bank of Montreal, CIBC Inc. and Dresdner Bank AG, New York Branch & Grand
Cayman Branch, as Co-Agents, and The Bank of New York, as Administrative Agent
(the "Credit Agreement").

Pursuant to Section 2.02(b)(i) of the Credit Agreement, the
Company hereby requests to have the following Bid Rate Loans made to it on the
date and upon the terms specified below:

(a) The date on which the requested Bid Rate Loan shall be made
is ____________; and

(b) The principal amount of the requested Bid Rate Loan is
$____________; and

The undersigned represents and warrants that (a) the borrowing
requested hereby complies with the requirements of the Credit Agreement and (b)
[except to the extent set forth on Annex A hereto,(1) (i) each Loan Document
representation and warranty is true and correct at and as of the date hereof
and (except to the extent the undersigned gives notice to the Banks to the
contrary prior to 5:00 p.m. on the Business Day before the requested date for
the making of the Bid Rate Loans) will be true and correct at and as of the
time the Bid Rate Loans are made, in each case both with and without giving
effect to the Bid Rate Loans and the application of the proceeds thereof, and
(ii) no Default has occurred and is continuing as of the date hereof or would
result from the making of the Bid Rate Loans or from the application of the
proceeds thereof if the Bid Rate Loans were made on the date hereof, and
(except to the extent the undersigned gives notice to the Banks to the contrary
prior to 5:00 p.m. on the Business Day before the requested date for the making
of the Bid Rate Loans) no Default will have occurred and be continuing at the
time the Bid Rate Loans
98
are to be made or would result from the making of the Bid Rate Loans or from
the application of the proceeds thereof.

PENNCORP FINANCIAL GROUP, INC.

By ,
--------------------------------
Name:
Title:

---------------
1. If the representation and warranty in either clause (b)(i) or (b)(ii)
would be incorrect, include the material in brackets and set forth the
reasons such representation and warranty would be incorrect on an
attachment labeled Annex A.
99
Schedule 2.02(b)(ii)

FORM OF BID RATE LOAN OFFER

[Name and address
of Administrative Agent]

Date:

Ladies and Gentlemen:

Reference is made to the Credit Agreement, dated as of _________,
1997, among Penncorp Financial Group, Inc., the Banks listed on the signature
pages thereof, The Chase Manhattan Bank, The First National Bank of Chicago and
NationsBank, N.A., as Managing Agents, Fleet National Bank, Mellon Bank, N.A.,
Bank of Montreal, CIBC Inc. and Dresdner Bank AG, New York Branch & Grand
Cayman Branch, as Co-Agents, and The Bank of New York, as Administrative Agent
(the "Credit Agreement"). In response to your request for Bid Rate Loans dated
___________, 19__, the undersigned hereby offers to make the following Bid Rate
Loan(s) in the amount(s) and at the rate(s) set forth below for the indicated
Bid Rate maturity dates.

BID RATE MATURITY DATES

---------------------------------------- --------------------------------------- ---------------------------------------
BID RATE LOANS

Amount1/ Interest Rate2/ Amount1/ Interest Rate2/ Amount1/ Interest Rate2/
------- -------------- ------- -------------- ------- --------------

[Max: ]/1 [Max: ]/1 [Max: ]/1
[Min: ]/1 [Min: ]/1 [Min: ]/1
------------- --------------- ------------- --------------- ------------- ---------------

provided that the aggregate principal amount of Bid Rate Loans for which the
above offers may be accepted shall not exceed [$ ]. /3
100
We agree that the offer(s) set forth above, subject to the
satisfaction of the conditions set forth in Section 6.02 of the Credit
Agreement, irrevocably obligate the undersigned to make the Bid Rate Loan(s)
for which such offers are accepted, in whole or in part.

[NAME OF BANK]

By
---------------------------
Name:
Title:

---------------
1. (a) Principal amount offered for each Bid Rate maturity date may not
exceed principal amount requested.

(b) Not more than three offers may be made with respect to each Bid Rate
maturity date.

2. Specify rate of interest per annum and state it as a decimal to the
nearest 1/10,000 of 1%.

3. Include and specify aggregate limitation if the sum of individual offers
exceeds the amount the Bank is willing to lend.
101
Schedule 7.03

SCHEDULE OF LITIGATION
102
Schedule 7.04

SCHEDULE OF CONSENTS
103
Schedule 7.08(a)

SCHEDULE OF ERISA OBLIGATIONS, NON-COMPLIANCES AND LIABILITIES
104
Schedule 7.08(b)

SCHEDULE OF UNRECOGNIZED RETIREE WELFARE LIABILITIES
105
Schedule 7.12

SCHEDULE OF ENVIRONMENTAL MATTERS
106
Schedule 7.13

SCHEDULE OF SUBSIDIARIES AND INVESTMENTS
107
Schedule 7.14

SCHEDULE OF MATERIAL AGREEMENTS AND BURDENSOME PROVISIONS
108
Schedule 7.21

SCHEDULE OF RESTRICTIVE COVENANTS
109
Schedule 8.07

SCHEDULE OF LIENS
110
Schedule 8.08

SCHEDULE OF EXISTING INDEBTEDNESS
111
EXHIBIT A

PENNCORP FINANCIAL GROUP, INC.

RC NOTE

_______________, 19__

FOR VALUE RECEIVED, PENNCORP FINANCIAL GROUP, INC. (the
"Company") hereby promises to pay to the order of __________ (the "Bank") the
principal amount of the RC Loans of the Bank outstanding, on the dates and in
the amounts specified in Section 3.01(a) of the Credit Agreement referred to
below, and to pay interest on the principal amount of each Loan on the dates
and at the rates specified in Sections 3.02(a) of such Credit Agreement. All
payments due the Bank hereunder shall be made to the Bank at the place, in the
type of money and funds and in the manner specified in Section 4.01 of such
Credit Agreement.

Each holder hereof is authorized to endorse on the grid attached
hereto, or on a continuation thereof, each Loan of the Bank and each payment,
with respect thereto.

Presentment, demand, protest, notice of dishonor and notice of
intent to accelerate are hereby waived by the undersigned.

This RC Note evidences RC Loans made under, and is entitled to
the benefits of, the Credit Agreement, dated as of __________, 1997, among the
Company, Penncorp Finance Group, Inc., the Banks listed on the signature pages
thereof, The Chase Manhattan Bank, The First National Bank of Chicago and
NationsBank, N.A., as Managing Agents, Fleet National Bank, Mellon Bank, N.A.,
Bank of Montreal, CIBC Inc. and Dresdner Bank AG, New York Branch & Grand
Cayman Branch, as Co-Agents, and The Bank of New York, as Administrative Agent,
as the same may be amended from time to time. Reference is made to such Credit
Agreement, as so amended, for provisions relating to the prepayment and the
acceleration of the maturity hereof.

This RC Note shall be construed in accordance with and governed
by the internal law of the State of New York (without giving effect to its
choice of law principles).

PENNCORP FINANCIAL GROUP, INC.

By
----------------------------------
Name:
Title:
112
GRID

RC NOTE

Amount of Amount of Notation
Date RC Loan Principal Repaid Made By
---- --------- ---------------- --------

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

113
EXHIBIT B

PENNCORP FINANCIAL GROUP, INC.

BID RATE NOTE

_______________, 19__

FOR VALUE RECEIVED, PENNCORP FINANCIAL GROUP, INC. (the
"Company") hereby promises to pay to the order of __________ (the "Bank") the
principal amount of the Bid Rate Loans of the Bank outstanding, on the dates
and in the amounts specified in Sections 2.02(b) and 3.01(b) of the Credit
Agreement referred to below, and to pay interest on the principal amount of
each Bid Rate Loan on the dates and at the rates specified in Sections 2.02(b)
and 3.02(b) of such Credit Agreement. All payments due the Bank hereunder
shall be made to the Bank at the place, in the type of money and funds and in
the manner specified in Section 4.01 of such Credit Agreement.

Each holder hereof is authorized to endorse on the grid attached
hereto, or on a continuation thereof, each Bid Rate Loan of the Bank and each
payment, with respect thereto.

Presentment, demand, protest, notice of dishonor and notice of
intent to accelerate are hereby waived by the undersigned.

This Bid Rate Note evidences Bid Rate Loans made under, and is
entitled to the benefits of, the Credit Agreement, dated as of __________,
1997, among the Company, the Banks listed on the signature pages thereof, The
Chase Manhattan Bank, The First National Bank of Chicago and NationsBank, N.A.,
as Managing Agents, Fleet National Bank, Mellon Bank, N.A., Bank of Montreal,
CIBC Inc. and Dresdner Bank AG, New York Branch & Grand Cayman Branch, as Co-
Agents, and The Bank of New York, as Administrative Agent, as the same may be
amended from time to time. Reference is made to such Credit Agreement, as so
amended, for provisions relating to the acceleration of the maturity hereof.

This Bid Rate Note shall be construed in accordance with and
governed by the internal law of the State of New York (without giving effect to
its choice of law principles).

PENNCORP FINANCIAL GROUP, INC.

By
----------------------------------
Name:
Title:
114
GRID

BID RATE NOTE

Amount of Amount of Notation
Date Bid Rate Loan Principal Repaid Made By
---- ------------- ---------------- --------

115
EXHIBIT C

[Form of Confidentiality Agreement]

[Date]

CONFIDENTIALITY AGREEMENT

[Insert Name and
Address of Prospective
Participant or Assignee]

Re: Credit Agreement dated as of ___________, 1997 among PennCorp Financial
Group, Inc., the Banks listed on the signature pages thereof, The Chase
Manhattan Bank, The First National Bank of Chicago and NationsBank,
N.A., as Managing Agents, Fleet National Bank, Mellon Bank, N.A., Bank
of Montreal, CIBC Inc. and Dresdner Bank AG, New York Branch & Grand
Cayman Branch, as Co-Agents, and The Bank of New York, as Administrative
Agent

Dear ____________:

As a Bank party to the above-referenced Credit Agreement (as the same
may be amended or modified from time to time, the "Credit Agreement"), we have
agreed with PennCorp Financial Group, Inc. (the "Company") pursuant to Section
11.12 of the Credit Agreement to use reasonable precautions to keep
confidential, except as otherwise provided therein, in accordance with our
customary procedures for handling confidential information of that nature and
in accordance with safe and sound banking practices, all non-public information
supplied to us by the Company pursuant to the Credit Agreement or the other
Loan Documents (and not otherwise known to us) which is identified by the
Company as being confidential at the time the same is delivered to us or to our
Affiliates or Subsidiaries pursuant to the Credit Agreement. Terms used but
not defined in this Confidentiality Agreement shall have the meanings ascribed
thereto in the Credit Agreement.

As provided in said Section 11.12, we are permitted to provide you,
as a prospective [holder of a participation in the Loans (as defined in the
Credit Agreement)] [assignee Bank], with certain of such non-public information
subject to the execution and delivery by you, prior to receiving such non-
public information, of a Confidentiality Agreement in this form. Such
information will not be made available to you until your execution and return
to us of this Confidentiality Agreement.

Accordingly, in consideration of the foregoing, you agree (on behalf
of yourself and each of your Affiliates, Subsidiaries, directors, officers,
employees and representatives) that (a) such information will not be used by
you except in connection
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with the proposed [participation] [assignment] mentioned above and (b) you
shall use reasonable precautions, in accordance with your customary procedures
for handling confidential information of this nature and in accordance with
safe and sound banking practices, to keep such information confidential,
provided that nothing herein shall limit the disclosure of any such information
(i) to the extent required by Applicable Law, statute, rule, regulation or
judicial process, (ii) to your counsel or to counsel for any of the Banks or
the Agents, (iii) to bank examiners, auditors, accountants or other regulatory
or administrative bodies to whose jurisdiction you may be subject, (iv) to the
Agents or any other Bank, (v) in connection with any litigation to which you or
any one or more of the Banks is a party, (vi) to the extent required for the
purpose of protecting, preserving, exercising or enforcing any of your rights
or the rights of the Banks or the Agents in, under or related to the Loan
Documents, performing any of your obligations or the obligations of the Banks
or the Agents under or related to the Loan Documents and consulting with
respect to any of the foregoing matters, or (vii) to any of your Affiliates or
Subsidiaries or to any Affiliate or Subsidiary of any Bank so long as you or
such Bank, as appropriate, cause(s) such Affiliate or Subsidiary to adhere to
the provisions of Section 11.12 of the Credit Agreement as though it were
legally bound thereby; provided, further, that, unless specifically prohibited
by Applicable Law or court order, you agree, prior to disclosure thereof, to
notify the Company of any request for disclosure of any such non-public
information (A) by any governmental agency or representative thereof (other
than any such request in connection with an examination of your financial
condition by such governmental agency) or (B) pursuant to legal process; and
provided finally that in no event shall you be obligated or required to return
any materials furnished to you pursuant to this Confidentiality Agreement.

Would you please indicate your agreement to the foregoing by signing
at the place provided below on the enclosed copy of this Confidentiality
Agreement.

Very truly yours,

[Insert Name of Bank]

By:
---------------------------
Name:
Title:

The foregoing is agreed to
as of the date of this letter.

[Insert name of prospective
participant or assignee]

By:
-------------------------
Name:
Title:

FLEET NATIONAL BANK MELLON BANK, N.A. BANK OF MONTREAL CIBC INC. DRESDNER BANK AG, NEW YORK BRANCH & GRAND CAYMAN BRANCH as Co-Agents -and-

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