<PAGE>   1
                                                                   EXHIBIT 10.69



                                                               [Execution Copy]



                                CREDIT AGREEMENT


                          Dated as of October 15, 1996


                                      among


                                 RISCORP, INC.,
                                  as Borrower,


                        THE SUBSIDIARIES OF THE BORROWER
                         FROM TIME TO TIME PARTY HERETO,
                                 as Guarantors,


                               THE SEVERAL LENDERS
                         FROM TIME TO TIME PARTY HERETO


                                       AND


                           NATIONSBANK, N.A. (SOUTH),
                                    as Agent

<PAGE>   2

                                TABLE OF CONTENTS


<TABLE>
<S>            <C>                                                                <C>
SECTION 1      DEFINITIONS............................................             1
  1.2          Definitions............................................             1
  1.2          Computation of Time Periods............................            25
  1.3          Accounting Terms.......................................            25

SECTION 2      CREDIT FACILITIES .....................................            26
  2.1          Revolving Loans .......................................            26
  2.2          Term Loan .............................................            27
  2.3          Interest ..............................................            28
  2.4          Committed Notes .......................................            29

SECTION 3      OTHER PROVISIONS RELATING TO CREDIT FACILITIES ........            29
  3.1          Default Rate ..........................................            29
  3.2          Extension and Conversion...............................            29
  3.3          Prepayments ...........................................            30
  3.4          Termination and Reduction of Revolving Committed
               Amount.................................................            31
  3.5          Fees ..................................................            31
  3.6          Capital Adequacy ......................................            32
  3.7          Inability To Determine Interest Rate ..................            32
  3.8          Illegality ............................................            32
  3.9          Requirements of Law ...................................            33
  3.10         Taxes .................................................            34
  3.11         Indemnity .............................................            36
  3.12         Pro Rata Treatment ....................................            37
  3.13         Sharing of Payments ...................................            38
  3.14         Payments, Computations, Etc. ..........................            38
  3.15         Evidence of Debt ......................................            40


SECTION 4      GUARANTY ..............................................            41
  4.1          The Guarantee .........................................            41
  4.2          Obligations Unconditional .............................            41
  4.3          Reinstatement .........................................            42
  4.4          Remedies ..............................................            43
  4.5          Rights of Contribution ................................            43
  4.6          Continuing Guarantee ..................................            44

SECTION 5      CONDITIONS ............................................            44
  5.1          Closing Conditions ....................................            44
  5.2          Conditions to all Extensions of Credit ................            45
</TABLE>

                                     - i -

<PAGE>   3
<TABLE>
<S>            <C>                                                                <C>
SECTION 6      REPRESENTATIONS AND WARRANTIES ........................            46
  6.1          Financial Condition ...................................            46
  6.2          No Change; Dividends ..................................            47
  6.3          Organization; Existence; Compliance with Law ..........            47
  6.4          Power; Authorization; Enforceable Obligations .........            47
  6.5          No Legal Bar ..........................................            48
  6.6          No Material Litigation ................................            48
  6.7          No Default ............................................            48
  6.8          Ownership of Property; Liens ..........................            48
  6.9          No Burdensome Restrictions ............................            49
  6.10         Taxes .................................................            49
  6.11         ERISA .................................................            49
  6.12         Governmental Regulations, Etc. ........................            50
  6.13         Subsidiaries ..........................................            52
  6.14         Purpose of Loans ......................................            52
  6.15         Environmental Matters .................................            52
  6.16         Insurance Policies ....................................            53

SECTION 7      AFFIRMATIVE COVENANTS .................................            53
  7.1          Information Covenants .................................            53
  7.2          Preservation of Existence and Franchises ..............            57
  7.3          Books and Records .....................................            57
  7.4          Compliance with Law ...................................            57
  7.5          Payment of Taxes and Other Indebtedness ...............            57
  7.6          Insurance/Reinsurance .................................            57
  7.7          Maintenance of Property ...............................            58
  7.8          Performance of Obligations ............................            58
  7.9          Use of Proceeds .......................................            58
  7.10         Audits/Inspections ....................................            58
  7.11         Financial Covenants ...................................            58
  7.12         Additional Credit Parties .............................            59
  7.13         Ownership of Subsidiaries .............................            60
  7.14         Dividends .............................................            60

SECTION 8      NEGATIVE COVENANTS ....................................            60
  8.1          Indebtedness ..........................................            61
  8.2          Liens .................................................            62
  8.3          Nature of Business ....................................            62
  8.4          Consolidation, Merger, Sale or Purchase of
               Assets, etc. ..........................................            62
  8.5          Advances, Investments, Loans, etc. ....................            63
  8.6          Restricted Payments ...................................            63
  8.7          Prepayments of Indebtedness, etc. .....................            63
  8.8          Transactions with Affiliates ..........................            64
  8.9          Fiscal Year ...........................................            64
  8.10         Limitation on Restrictions on Subsidiary
                 Dividends and Other Distributions, etc. .............            64
  8.11         Issuance of Stock .....................................            64
  8.12         Sale Leasebacks .......................................            64
  8.13         Settlements ...........................................            65
  8.14         No Further Negative Pledges ...........................            65
  8.15         No Foreign Subsidiaries ...............................            65
</TABLE>

                                     - ii -

<PAGE>   4
<TABLE>
<S>            <C>                                                                <C>
SECTION 9      EVENTS OF DEFAULT .....................................            65
  9.1          Events of Default .....................................            65
  9.2          Acceleration; Remedies ................................            68

SECTION 10     AGENCY PROVISIONS .....................................            69
 10.1          Appointment ...........................................            69
 10.2          Delegation of Duties ..................................            70
 10.3          Exculpatory Provisions ................................            70
 10.4          Reliance on Communications ............................            70
 10.5          Notice of Default .....................................            71
 10.6          Non-Reliance on Agent and Other Lenders ...............            71
 10.7          Indemnification .......................................            72
 10.8          Agent in its Individual Capacity ......................            72
 10.9          Successor Agent .......................................            72

SECTION 11     MISCELLANEOUS .........................................            73
 11.1          Notices ...............................................            73
 11.2          Right of Set-Off ......................................            74
 11.3          Benefit of Agreement ..................................            74
 11.4          No Waiver; Remedies Cumulative ........................            77
 11.5          Payment of Expenses, etc. .............................            78
 11.6          Amendments, Waivers and Consents ......................            78
 11.7          Counterparts ..........................................            79
 11.8          Headings ..............................................            79
 11.9          Survival ..............................................            79
 11.10         Governing Law; Submission to Jurisdiction;
                 Venue ...............................................            79
 11.11         Severability ..........................................            80
 11.12         Entirety ..............................................            80
 11.13         Binding Effect; Termination ...........................            81
 11.14         Confidentiality .......................................            81
 11.15         Source of Funds .......................................            81

</TABLE>


                                    SCHEDULES

<TABLE>
<S>         <C>              <C>
Schedule    1.1A             Existing Affiliate Contracts
Schedule    1.1B             Investments
Schedule    1.1C             Liens
Schedule    2.1(a)           Lenders
Schedule    2.1(b)(i)        Form of Notice of Borrowing
Schedule    2.4              Form of Committed Note
Schedule    3.2              Form of Notice of Extension/Conversion
Schedule    5.1(e)           Form of Legal Opinion
Schedule    6.1(a)           Financial Statement Disclosures
Schedule    6.4              Required Consents, Authorizations, Notices
                               and Filings
Schedule    6.6              Litigation
Schedule    6.13             Subsidiaries
Schedule    7.1(c)           Form of Officer's Compliance Certificate
Schedule    7.12             Form of Joinder Agreement
Schedule    8.1              Indebtedness
Schedule    11.3(b)          Form of Assignment and Acceptance

</TABLE>

                                    - iii -

<PAGE>   5

                                CREDIT AGREEMENT



     THIS CREDIT AGREEMENT dated as of October 15, 1996 (the "Credit
Agreement"), is by and among RISCORP, INC., a Florida corporation (the
"Borrower"), the subsidiaries of the Borrower identified on the signature pages
hereto and such other subsidiaries as may from time to time become a party
hereto (the "Guarantors"), the several lenders identified on the signature pages
hereto and such other lenders as may from time to time become a party hereto
(the "Lenders") and NATIONSBANK, N.A. (SOUTH), as agent for the Lenders (in such
capacity, the "Agent").

                              W I T N E S S E T H

     WHEREAS, the Borrower has requested that the Lenders provide a $50,000,000
credit facility for the purposes hereinafter set forth;

     WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;

     NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

                                    SECTION 1

                                   DEFINITIONS

     1.1 Definitions. As used in this Credit Agreement, the following terms
shall have the meanings specified below unless the context otherwise requires:

          "Actuarial Report" shall mean an actuarial review and valuation
     statement of an Insurance Subsidiary's loss and loss adjustment expense
     reserve positions as of December 31 of any fiscal year (or such other date
     requested by the Agent), with respect to the insurance business in force,
     and covering such other subjects as are customary in actuarial reviews and
     reasonably requested by the Agent, prepared by an independent actuarial
     firm reasonably acceptable to the Agent in accordance with reasonable
     actuarial assumptions and procedures, not inconsistent with the assumptions
     and procedures previously employed, and accompanied by a report prepared by
     such actuarial firm reviewing the adequacy of loss reserves of each
     Insurance Subsidiary (which firm shall be provided access to or copies of
     all reserves analyses and valuations relating to the insurance business of
     each such Insurance Subsidiary) together with its opinion affirming the
     adequacy of such loss reserves.


                                      -1-
<PAGE>   6

          "Additional Credit Party" means each Person that becomes a Guarantor
     after the Closing Date by execution of a Joinder Agreement.

          "Affiliate" means, with respect to any Person, any other Person (i)
     directly or indirectly controlling or controlled by or under direct or
     indirect common control with such Person or (ii) directly or indirectly
     owning or holding five percent (5%) or more of the equity interest in such
     Person. For purposes of this definition, "control" when used with respect
     to any Person means the power to direct the management and policies of such
     Person, directly or indirectly, whether through the ownership of voting
     securities, by contract or otherwise; and the terms "controlling" and
     "controlled" have meanings correlative to the foregoing.

          "Agency Services Address" means NationsBank, N.A., NC1-001-15-04, 101
     North Tryon Street, Charlotte, North Carolina 28255, Attn: Agency Services,
     or such other address as may be identified by written notice from the Agent
     to the Borrower.

          "Agent" shall have the meaning assigned to such term in the heading
     hereof, together with any successors or assigns.

          "Agent's Fee Letter" means that certain letter agreement, dated as of
     October 11, 1996, between the Agent and the Borrower, as amended, modified,
     supplemented or replaced from time to time.

          "Agent's Fees" shall have the meaning assigned to such term in Section
     3.5(b).

          "Annual Statement" means, with respect to any Insurance Subsidiary,
     such Insurance Subsidiary's annual statement to the insurance regulatory
     authorities of its domiciliary state, as the same may be amended from time
     to time.

          "Applicable Percentage" means, for purposes of calculating the
     applicable interest rate for any day for any Eurodollar Loan, the
     appropriate applicable percentage corresponding to the Consolidated Funded
     Debt Coverage Ratio in effect as of the most recent Calculation Date:


                                      -2-
<PAGE>   7
<TABLE>
<CAPTION>
=========================================================================
                                                                Applicable
                                   Consolidated                 Percentage
                                    Funded Debt                    for
                                     Coverage                   Eurodollar
    Pricing Level                      Ratio                      Loans
-------------------------------------------------------------------------
        <S>                         <C>                            <C>
          I                         Greater than                   1.75%
                                        1.75
-------------------------------------------------------------------------
          II                        Greater than                   1.50%
                                   1.25 but less
                                   than or equal
                                      to 1.75
-------------------------------------------------------------------------
         III                        Greater than                   1.25%
                                   1.00 but less
                                   than or equal
                                      to 1.25
-------------------------------------------------------------------------
          IV                        Greater than                   1.00%
                                   0.75 but less
                                   than or equal
                                      to 1.00
-------------------------------------------------------------------------
          V                         Less than or                   0.75%
                                  equal to 0.75
=========================================================================
</TABLE>


     The Applicable Percentages shall be determined and adjusted quarterly on
     the date (each a "Calculation Date") five Business Days after the date by
     which the Borrower is required to provide the officer's certificate in
     accordance with the provisions of Section 7.1(c); provided, however that
     (i) the initial Applicable Percentages shall be based on Pricing Level II
     (as shown above) and shall remain at Pricing Level II until the first
     Calculation Date subsequent to the Closing Date and, thereafter, the
     Pricing Level shall be determined by the then current Consolidated Funded
     Debt Coverage Ratio, and (ii) if the Borrower fails to provide the
     officer's certificate to the Agency Services Address as required by Section
     7.1(c), the Applicable Percentage from such Calculation Date shall be based
     on Pricing Level I until such time as an appropriate officer's certificate
     is provided, whereupon the Pricing Level shall be determined by the then
     current Consolidated Funded Debt Coverage Ratio. Each Applicable Percentage
     shall be effective from one Calculation Date until the next Calculation
     Date. Any adjustment in the Applicable Percentages shall be applicable to
     all existing Loans as well as any new Loans made or issued.

          "Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
     States Code, as amended, modified, succeeded or replaced from time to time.

          "Bankruptcy Event" means, with to any Person, the occurrence of any of
     the following with respect to such


                                      -3-
<PAGE>   8

     Person: (i) a court or governmental agency having jurisdiction in the
     premises shall enter a decree or order for relief in respect of such Person
     in an involuntary case under any applicable bankruptcy, insolvency or other
     similar law now or hereafter in effect, or appointing a receiver,
     liquidator, assignee, custodian, trustee, sequestrator (or similar
     official) of such Person or for any substantial part of its Property or
     ordering the winding up or liquidation of its affairs; or (ii) there shall
     be commenced against such Person an involuntary case under any applicable
     bankruptcy, insolvency or other similar law now or hereafter in effect, or
     any case, proceeding or other action for the appointment of a receiver,
     liquidator, assignee, custodian, trustee, sequestrator (or similar
     official) of such Person or for any substantial part of its Property or for
     the winding up or liquidation of its affairs, and such involuntary case or
     other case, proceeding or other action shall remain undismissed,
     undischarged or unbonded for a period of sixty (60) consecutive days; or
     (iii) such Person shall commence a voluntary case under any applicable
     bankruptcy, insolvency or other similar law now or hereafter in effect, or
     consent to the entry of an order for relief in an involuntary case under
     any such law, or consent to the appointment or taking possession by a
     receiver, liquidator, assignee, custodian, trustee, sequestrator (or
     similar official) of such Person or for any substantial part of its
     Property or make any general assignment for the benefit of creditors; or
     (iv) such Person shall be unable to, or shall admit in writing its
     inability to, pay its debts generally as they become due.

          "Base Rate" means, for any day, the rate per annum (rounded upwards,
     if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the
     greater of (a) the Federal Funds Rate in effect on such day plus 1/2 of 1%
     or (b) the Prime Rate in effect on such day. If for any reason the
     Agent shall have determined (which determination shall be conclusive absent
     manifest error) that it is unable after due inquiry to ascertain the
     Federal Funds Rate for any reason, including the inability or failure of
     the Agent to obtain sufficient quotations in accordance with the terms
     hereof, the Base Rate shall be determined without regard to clause (a) of
     the first sentence of this definition until the circumstances giving rise
     to such inability no longer exist. Any change in the Base Rate due to a
     change in the Prime Rate or the Federal Funds Rate shall be effective on
     the effective date of such change in the Prime Rate or the Federal Funds
     Rate, respectively.

          "Base Rate Loan" means any Loan bearing interest at a rate determined
     by reference to the Base Rate.

          "Borrower" means the Person identified as such in the heading hereof,
     together with any permitted successors and assigns.


                                      -4-
<PAGE>   9

          "Borrower's Obligations" means, without duplication, (i) all of the
     obligations of the Borrower to the Lenders and the Agent, whenever arising,
     under this Credit Agreement, the Notes or any of the other Credit Documents
     and (ii) all liabilities and obligations, whenever arising, owing from the
     Borrower to any Lender, or any Affiliate of a Lender, arising under any
     Hedging Agreement.

          "Business Day" means a day other than a Saturday, Sunday or other day
     on which commercial banks in Charlotte, North Carolina or Sarasota, Florida
     are authorized or required by law to close, except that, when used in
     connection with a Eurodollar Loan, such day shall also be a day on which
     dealings between banks are carried on in U.S. dollar deposits in London,
     England, Charlotte, North Carolina and New York, New York.

          "Calculation Date" has the meaning set forth in the definition of
     Applicable Percentage.

          "Capital Lease" means, as applied to any Person, any lease of any
     Property (whether real, personal or mixed) by that Person as lessee which,
     in accordance with GAAP, is or should be accounted for as a capital lease
     on the balance sheet of that Person.

          "Change of Control" means the occurrence of any of the following
     events: (i) William D. Griffin shall fail to have beneficial ownership,
     directly or indirectly, of at least 51% of the of the combined voting power
     of all Voting Stock of the Borrower, (ii) excluding William D. Griffin, any
     Person or two or more Persons acting in concert shall have acquired
     beneficial ownership, directly or indirectly, of, or shall have acquired by
     contract or otherwise, or shall have entered into a contract or arrangement
     that, upon consummation, will result in its or their acquisition of,
     control over, Voting Stock of the Borrower (or other securities convertible
     into such Voting Stock) representing 35% or more of the combined voting
     power of all Voting Stock of the Borrower, (iii) the shareholders of the
     Borrower shall approve any plan or proposal for the liquidation or
     dissolution of the Borrower, or (iv) during any period of up to 24
     consecutive months, commencing after the Closing Date, individuals who at
     the beginning of such 24 month period were directors of the Borrower
     (together with any new director whose election by the Borrower's Board of
     Directors or whose nomination for election by the Borrower's shareholders
     was approved by a vote of at least two-thirds of the directors then still
     in office who either were directors at the beginning of such period or
     whose election or nomination for election was previously so approved) cease
     for any reason to constitute a majority of the directors of the Borrower
     then in office. As used herein, "beneficial ownership" shall have the
     meaning provided in Rule 13d-3 of the Securities and Exchange Commission
     under the Securities Exchange Act of 1934.


                                      -5-
<PAGE>   10

          "Closing Date" means the date hereof.

          "Code" means the Internal Revenue Code of 1986, as amended, and any
     successor thereto, as interpreted by the rules and regulations issued
     thereunder, in each case as in effect from time to time. References to
     sections of the Code shall be construed also to refer to any successor
     sections.

          "Commitment" means with respect to each Lender, the Revolving
     Commitment of such Lender and the Term Loan Commitment of such Lender.

          "Commitment Percentage" means, for any Lender, the percentage
     identified as its Commitment Percentage on Schedule 2.1(a), as such
     percentage may be modified in connection with any assignment made in
     accordance with the provisions of Section 11.3.

          "Committed Note" means a promissory note of the Borrower in favor of a
     Lender delivered pursuant to Section 2.4 and evidencing the Loans of such
     Lender, as such promissory note may be amended, modified, restated or
     replaced from time to time.

          "Consolidated Capital Expenditures" means, for any period, all capital
     expenditures of the Borrower and its Subsidiaries, as determined in
     accordance with GAAP.

          "Consolidated Capitalization" means, at any time, the sum of (i)
     Consolidated Net Worth at such time plus (ii) Consolidated Funded
     Indebtedness at such time.

          "Consolidated Cash Restricted Payments" means, for any period, all
     cash Restricted Payments made by the Borrower and any of its Subsidiaries
     (other than any such Restricted Payments made to the Borrower or a
     Subsidiary) for such period.

          "Consolidated EBITDA" means, for any period, the sum of (a)
     Consolidated Net Income for such period plus (b) an amount which, in
     the determination of Consolidated Net Income for such period, has been
     deducted for (i) Consolidated Interest Expense for such period, (ii)
     Consolidated Tax Expense for such period, (iii) consolidated depreciation
     and amortization expense of the Borrower and its Subsidiaries for such
     period and (iv) all other non-cash expenses of the Borrower and its
     Subsidiaries for such period less (c) to the extent included in
     Consolidated Net Income, amortization of negative goodwill, all as
     determined in accordance with GAAP.

          "Consolidated Current Maturities Coverage Ratio" means, as of the last
     day of any fiscal quarter of the Borrower, the ratio of (a) (i)
     Consolidated EBITDA for the four-quarter period ended as of such date minus
     (ii) Consolidated Capital Expenditures for the four-quarter period ended as
     of such date



                                      -6-
<PAGE>   11

     minus (iii) Consolidated Tax Expense for the four-quarter period ended as
     of such date minus (iv) Consolidated Cash Restricted Payments for the
     four-quarter period ended as of such date minus (v) all non-cash gains and
     other items taken into account in determining Consolidated EBITDA for the
     four-quarter period ended as of such date to (b) Consolidated Scheduled
     Funded Indebtedness Payments as of such date.

          "Consolidated Funded Debt Coverage Ratio" means, as of the last day of
     any fiscal quarter of the Borrower, the ratio of (i) Consolidated Funded
     Indebtedness as of such date to (ii) Consolidated EBITDA for the four
     fiscal-quarter period ended as of such date.

          "Consolidated Funded Indebtedness" means, at any time, the outstanding
     principal amount of all Funded Indebtedness, without duplication, of the
     Borrower and its Subsidiaries at such time.

          "Consolidated Interest Expense" means, for any period, all interest
     expense of the Borrower and its Subsidiaries for such period, as determined
     in accordance with GAAP.

          "Consolidated Leverage Ratio" means, as of the last day of any fiscal
     quarter of the Borrower, the ratio of (i) Consolidated Funded Indebtedness
     as of such date to (ii) Consolidated Capitalization as of such date.

          "Consolidated Net Income" means, for any period, net income after
     taxes for such period for the Borrower and its Subsidiaries on a
     consolidated basis, as determined in accordance with GAAP.

          "Consolidated Net Worth" means, as of any date, total shareholders'
     equity of the Borrower and its Subsidiaries as of such date, as determined
     in accordance with GAAP, excluding the effect of FASB 115.

          "Consolidated Net Written Premiums" means, as of the last day of any
     fiscal year, with respect to the Insurance Subsidiaries, the sum of the
     total amount of premiums written after deducting or adding premiums on
     business ceded to or assumed from others (as shown on line 32, column 4,
     Part 2B of page 9 of the Annual Statement for such date) by the Insurance
     Subsidiaries on a consolidated basis in accordance with SAP.

          "Consolidated Net Written Premiums to Statutory Surplus Ratio" means,
     as of the last day of any fiscal year, the ratio of (i) Consolidated Net
     Written Premiums as of such date to (ii) Consolidated Statutory Surplus as
     of such date.

          "Consolidated Scheduled Funded Indebtedness Payments" means, as of the
     last day of any fiscal quarter of the Borrower, the scheduled payments of
     principal on Funded Indebtedness for the Borrower and its Subsidiaries for
     the


                                      -7-
<PAGE>   12


     twelve month period ending on such date. With respect to the Revolving
     Loans, Consolidated Scheduled Funded Indebtedness Payments shall be deemed
     to be (i) as of the last day of any fiscal quarter ending on or before
     September 30, 1997, one fifth (1/5) of the average daily outstanding
     principal balance on the Revolving Loans during the immediately preceding
     fiscal quarter and (ii) as of the last day of any fiscal quarter ending
     after October 1, 1997 and on or before the Conversion Date, one-quarter
     (1/4) of the average daily outstanding principal balance on the Revolving
     Loans during the immediately preceding fiscal quarter.

          "Consolidated Statutory Surplus" means, as of any date, with respect
     to the Insurance Subsidiaries, the aggregate amount (without duplication)
     of policyholders' surplus (as shown on line 25 in column 1 on page 3 of
     such Person's most recent SAP Statement) of the Insurance Subsidiaries on a
     consolidated basis in accordance with SAP, or an amount determined in a
     consistent manner for any date other than one as of which a SAP Statement
     is prepared.

          "Consolidated Tax Expense" means, for any period, all income tax
     expense of the Borrower and its Subsidiaries for such period, as determined
     in accordance with GAAP.

          "Conversion Date" means September 30, 1998.

          "Credit Documents" means a collective reference to this Credit
     Agreement, the Notes, each Joinder Agreement, the Agent's Fee Letter, and
     all other related agreements and documents issued or delivered hereunder or
     thereunder or pursuant hereto or thereto.

          "Credit Party" means any of the Borrower and the Guarantors.

          "Default" means any event, act or condition which with notice or lapse
     of time, or both, would constitute an Event of Default.

          "Delivered Annual Statements" means (i) with respect to RISCORP
     Insurance, that certain Annual Statement, as filed with the appropriate
     Governmental Authorities of its state of domicile, for the fiscal
     year ending December 31, 1995, (ii) with respect to RISCORP Property, those
     certain Annual Statements, as filed with the appropriate Governmental
     Authorities of its state of domicile, for the fiscal years ending December
     31, 1995 and December 31, 1994 and (iii) with respect to RISCORP National
     Insurance, those certain Annual Statements, as filed with the appropriate
     Governmental Authorities of its state of domicile, for the fiscal years
     ending December 31, 1995, December 31, 1994 and December 31, 1993.



                                      -8-
<PAGE>   13

          "Dollars" and "$" means dollars in lawful currency of the United
     States of America.

          "Environmental Laws" means any and all lawful and applicable Federal,
     state, local and foreign statutes, laws, regulations, ordinances, rules,
     judgments, orders, decrees, permits, concessions, grants, franchises,
     licenses, agreements or other governmental restrictions relating to the
     environment or to emissions, discharges, releases or threatened releases of
     pollutants, contaminants, chemicals, or industrial, toxic or hazardous
     substances or wastes into the environment including, without limitation,
     ambient air, surface water, ground water, or land, or otherwise relating to
     the manufacture, processing, distribution, use, treatment, storage,
     disposal, transport, or handling of pollutants, contaminants, chemicals, or
     industrial, toxic or hazardous substances or wastes.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
     amended, and any successor statute thereto, as interpreted by the rules and
     regulations thereunder, all as the same may be in effect from time to time.
     References to sections of ERISA shall be construed also to refer to any
     successor sections.

          "ERISA Affiliate" means an entity which is under common control with
     any Credit Party within the meaning of Section 4001(a)(14) of ERISA, or is
     a member of a group which includes the Borrower and which is treated as a
     single employer under Sections 414(b), (c), (m), or (o) of the Code.

          "Eurodollar Loan" means any Loan bearing interest at a rate determined
     by reference to the Eurodollar Rate.

          "Eurodollar Rate" means, for the Interest Period for each Eurodollar
     Loan comprising part of the same borrowing (including conversions,
     extensions and renewals), a per annum interest rate determined pursuant to
     the following formula:

               Eurodollar Rate =         Interbank Offered Rate
                                   -----------------------------------
                                       1 Eurodollar Reserve Percentage

          "Eurodollar Reserve Percentage" means for any day, that percentage
     (expressed as a decimal) which is in effect from time to time under
     Regulation D of the Board of Governors of the Federal Reserve System (or
     any successor), as such regulation may be amended from time to time or any
     successor regulation, as the maximum reserve requirement (including,
     without limitation, any basic, supplemental, emergency, special, or
     marginal reserves) applicable with respect to Eurocurrency liabilities as
     that term is defined in Regulation D (or against any other category of
     liabilities that includes deposits by reference to which the interest rate
     of Eurodollar


                                      -9-
<PAGE>   14



     Loans is determined), whether or not Lender has any Eurocurrency
     liabilities subject to such reserve requirement at that time. Eurodollar
     Loans shall be deemed to constitute Eurocurrency liabilities and as such
     shall be deemed subject to reserve requirements without benefits of credits
     for proration, exceptions or offsets that may be available from time to
     time to a Lender. The Eurodollar Rate shall be adjusted automatically on
     and as of the effective date of any change in the Eurodollar Reserve
     Percentage.

          "Event of Default" means such term as defined in Section 9.1.

          "Existing Affiliate Contracts" means those certain agreements
     identified on Schedule 1.1A attached hereto, as such agreements exist as of
     the Closing Date.

          "Fees" means all fees payable pursuant to Section 3.5.

          "Federal Funds Rate" means, for any day, the rate of interest per
     annum (rounded upwards, if necessary, to the nearest whole multiple of
     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 such day 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 and (B) if no such rate is so published on such next preceding
     Business Day, the Federal Funds Rate for such day shall be the average rate
     quoted to the Agent on such day on such transactions as determined by the
     Agent.

          "Funded Indebtedness" means, with respect to any Person, without
     duplication, (i) all Indebtedness of such Person for borrowed money, (ii)
     all purchase money Indebtedness of such Person, including without
     limitation the principal portion of all obligations of such Person under
     Capital Leases, (iii) all Guaranty Obligations of such Person with respect
     to Funded Indebtedness of another Person, (iv) the maximum available amount
     of all standby letters of credit or acceptances issued or created for the
     account of such Person, (v) all Funded Indebtedness of another Person
     secured by a Lien on any Property of such Person, whether or not such
     Funded Indebtedness has been assumed, and (vi) the principal balance
     outstanding under any synthetic lease, tax retention operating lease,
     off-balance sheet loan or similar off-balance sheet financing product to
     which such Person is a party, where such transaction is considered borrowed
     money indebtedness for tax purposes but is classified as an operating lease
     in accordance with GAAP. The Funded Indebtedness of any Person shall
     include the Funded Indebtedness of any partnership or joint venture in
     which such Person is, a general partner or joint venturer.


                                      -10-
<PAGE>   15

          "GAAP" means generally accepted accounting principles in the United
     States applied on a consistent basis and subject to the terms of Section
     1.3 hereof.

          "Governmental Authority" means any Federal, state, local or foreign
     court or governmental agency, authority, instrumentality or regulatory
     body.

          "Guarantor" means each of those Persons identified as a "Guarantor" on
     the signature pages hereto, and each Additional Credit Party which may
     hereafter execute a Joinder Agreement, together with their successors and
     permitted assigns.

          "Guaranty Obligations" means, with respect to any Person, without
     duplication, any obligations of such Person (other than endorsements in the
     ordinary course of business of negotiable instruments for deposit or
     collection) guaranteeing or intended to guarantee any Indebtedness of any
     other Person in any manner, whether direct or indirect, and including
     without limitation any obligation, whether or not contingent, (i) to
     purchase any such Indebtedness or any Property constituting security
     therefor, (ii) to advance or provide funds or other support for the payment
     or purchase of any such Indebtedness or to maintain working capital,
     solvency or other balance sheet condition of such other Person (including
     without limitation keep well agreements, maintenance agreements, comfort
     letters or similar agreements or arrangements) for the benefit of any
     holder of Indebtedness of such other Person, (iii) to lease or purchase
     Property, securities or services primarily for the purpose of assuring the
     holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
     the holder of such Indebtedness against loss in respect thereof. The amount
     of any Guaranty Obligation hereunder shall (subject to any limitations set
     forth therein) be deemed to be an amount equal to the outstanding principal
     amount (or maximum principal amount, if larger) of the Indebtedness in
     respect of which such Guaranty Obligation is made.

          "Hedging Agreements" means any interest rate protection agreement
     between the Borrower and any Lender, or any Affiliate of a Lender, entered
     into in order to manage existing or anticipated interest rate risks
     associated with the obligations of the Borrower to the Lenders and the
     Agent under this Credit Agreement, the Notes or any of the other Credit
     Documents.

          "Home Office Building" means, collectively, (i) the office building
     occupied by the Borrower and its Subsidiaries, (ii) the realty upon which
     such building is located, at 1390 Main Street, Sarasota, Florida, and (iii)
     the parking area dedicated to such office building, all of which is owned
     by RISCORP Insurance.




                                      -11-
<PAGE>   16

          "Indebtedness" of any Person means (i) all obligations of such Person
     for borrowed money, (ii) all obligations of such Person evidenced by bonds,
     debentures, notes or similar instruments, or upon which interest payments
     are customarily made, (iii) all obligations of such Person under
     conditional sale or other title retention agreements relating to Property
     purchased by such Person (other than customary reservations or retentions
     of title under agreements with suppliers entered into in the ordinary
     course of business), (v) all obligations of such Person issued or assumed
     as the deferred purchase price of Property or services purchased by such
     Person (other than trade debt incurred in the ordinary course of business
     and due within six months of the incurrence thereof) which would appear as
     liabilities on a balance sheet of such Person, (v) all obligations of such
     Person under take-or-pay or similar arrangements or under commodities
     agreements, (vi) all Indebtedness of others secured by (or for which the
     holder of such Indebtedness has an existing right, contingent or
     otherwise, to be secured by) any Lien on, or payable out of the proceeds of
     production from, Property owned or acquired by such Person, whether or not
     the obligations secured thereby have been assumed, (vii) all Guaranty
     Obligations of such Person, (viii) the principal portion of all obligations
     of such Person under Capital Leases, (ix) all obligations of such Person in
     respect of interest rate protection agreements, foreign currency exchange
     agreements, commodity purchase or option agreements or other interest or
     exchange rate or commodity price hedging agreements (including, but not
     limited to, the Hedging Agreements) (it being understood that the amount of
     Indebtedness under any agreement described in this subclause (ix), as of
     any date, shall be deemed to be equal to the termination value payable by
     such Person if such agreement were terminated on such date), (x) the
     maximum amount of all standby letters of credit issued or bankers'
     acceptances facilities created for the account of such Person and, without
     duplication, all drafts drawn thereunder (to the extent unreimbursed), and
     (xi) the principal balance outstanding under any synthetic lease, tax
     retention operating lease, off balance sheet loan or similar off-balance
     sheet financing product to which such Person is a party, where such
     transaction is considered borrowed money indebtedness for tax purposes but
     is classified as an operating lease in accordance with GAAP; provided that
     Indebtedness shall not include (i) obligations with respect to insurance
     policies, annuities, guaranteed investment contracts and similar products
     underwritten by, or Reinsurance Agreements or Retrocession Agreements
     (including, without limitation, cut-through endorsements related thereto)
     entered into by, any Insurance Subsidiary in the ordinary course of its
     business and (ii) obligations with respect to Surplus Relief Reinsurance
     ceded by the Borrower or any Insurance Subsidiary. The Indebtedness of any
     Person shall include the Indebtedness of any partnership or joint venture
     in which such Person is a general partner or a joint venturer.



                                      -12-
<PAGE>   17



          "Insurance Subsidiary" means RISCORP Insurance, RISCORP Property,
     RISCORP National Insurance and all other Wholly Owned Subsidiaries of the
     Borrower licensed to engage in the business of property and casualty
     insurance.

          "Interbank Offered Rate" means, for the Interest Period for each
     Eurodollar Loan comprising part of the same borrowing (including
     conversions, extensions and renewals), a per annum interest rate (rounded
     upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal
     to the rate of interest, determined by the Agent on the basis of the
     offered rates for deposits in dollars for a period of time corresponding to
     such Interest Period (and commencing on the first day of such Interest
     Period), appearing on Telerate Page 3750 (or, if, for any reason, Telerate
     Page 3750 is not available, the Reuters Screen LIBO Page) as of
     approximately 11:00 A.M. (London time) two (2) Business Days before the
     first day of such Interest Period. As used herein, "Telerate Page 3750"
     means the display designated as page 3750 by Dow Jones Telerate, Inc. (or
     such other page as may replace such page on that service for the purpose of
     displaying the British Bankers Association London interbank offered rates)
     and "Reuters Screen LIBO Page" means the display designated as page "LIBO"
     on the Reuters Monitor Money Rates Service (or such other page as may
     replace the LIBO page on that service for the purpose of displaying London
     interbank offered rates of major banks).

          "Intercompany Indebtedness" means any Indebtedness of a Credit Party
     which (i) is owing to any other Credit Party and (ii) by its terms is
     specifically subordinated in right of payment to the prior payment of the
     obligations of the Credit Parties under this Credit Agreement and the other
     Credit Documents on terms and conditions reasonably satisfactory to the
     Required Lenders.

          "Interest Payment Date" means, (i) as to any Base Rate Loan, the last
     day of each March, June, September and December, the date of repayment of
     principal of such Loan, the Conversion Date and the Termination Date and
     (ii) as to any Eurodollar Loan, the last day of each Interest Period for
     such Loan, the date of repayment of principal of such Loan, the Conversion
     Date and on the Termination Date, and in addition where the applicable
     Interest Period is more than 3 months, then also on the date 3 months from
     the beginning of the Interest Period, and each 3 months thereafter. If an
     Interest Payment Date falls on a date which is not a Business Day, such
     Interest Payment Date shall be deemed to be the next succeeding Business
     Day, except that in the case of Eurodollar Loans where the next succeeding
     Business Day falls in the next succeeding calendar month, then on the next
     preceding Business Day.

          "Interest Period" means, as to any Eurodollar Loan, a period of one,
     two or three month's duration, as the Borrower may elect, commencing in
     each case, on the date of the


                                      -13-
<PAGE>   18


     borrowing (including conversions, extensions and renewals); provided,
     however, (A) if any Interest Period would end on a day which is not a
     Business Day, such Interest Period shall be extended to the next succeeding
     Business Day (except that in the case of Eurodollar Loans where the next
     succeeding Business Day falls in the next succeeding calendar month, then
     on the next preceding Business Day), (B) with respect to any Revolving
     Loan, no Interest Period shall extend beyond the Conversion Date, (C) with
     respect to the Term Loan, no Interest Period shall extend beyond the
     Termination Date, (D) with regard to any Eurodollar Loan constituting a
     portion of the Term Loan, no Interest Period shall extend beyond any
     principal amortization payment date unless the portion of the Term Loan
     comprised of Base Rate Loans together with the portion of the Term Loan
     comprised of Eurodollar Loans with Interest Periods expiring prior to the
     date such principal amortization payment is due, is at least equal to the
     amount of such principal amortization payment due on such date, and (E)
     where an Interest Period begins on a day for which there is no numerically
     corresponding day in the calendar month in which the Interest Period is to
     end, such Interest Period shall end on the last day of such calendar month.

          "Investment", in any Person, means any loan or advance to such Person,
     any purchase or other acquisition of any capital stock, warrants, rights,
     options, obligations or other securities of, or equity interest in, such
     Person, any capital contribution to such Person or any other investment in
     such Person, including, without limitation, any Guaranty Obligation
     incurred for the benefit of such Person.

          "Investment Grade Securities" means (i) U.S. Government Obligations;
     (ii) any certificate of deposit, maturing not more than 365 days after the
     date of acquisition, issued by, or time deposit of, a commercial banking
     institution that has combined capital and surplus of not less than
     $100,000,000 or its equivalent in foreign currency, whose debt is rated at
     the time as of which any investment there is made, of A (or higher)
     according to Standard & Poor's Corporation ("S&P") or Moody's Investors
     Services, Inc. ("Moody's"), or Al (or higher) by IBCA Ltd., or if none of
     S&P, Moody's and IBCA Ltd. shall then exist, the equivalent of such rating
     by any other nationally recognized securities rating agency; (iii)
     commercial paper, maturing not more than 270 days after the date of
     acquisition, issued by a corporation (other than an Affiliate or Subsidiary
     of the Company) with a rating, at the time as of which any investment
     therein is made, of A1 (or higher) according to S&P or "P-1" (or higher)
     according to Moody's, or if neither of S&P and Moody's shall then exist,
     the equivalent of such rating by any other nationally recognized securities
     rating agency; (iv) any bankers' acceptances or any money market deposit
     accounts, in each case, issued or offered by any commercial bank having
     capital and surplus in excess of $100,000,000 or its equivalent in foreign
     currency, whose debt is rated at the time as of which



                                      -14-
<PAGE>   19


     any investment there is made, of "A" (or higher) according to S&P or Moodys
     or "A1" (or higher) by IBCA Ltd., or if none of S&P, Moody's and IBCA Ltd.
     shall then exist, the equivalent of such rating by any other nationally
     recognized securities rating agency; (v) any other debt securities or debt
     instruments with a rating of BBB- or higher by S&P, Baa-3 or higher by
     Moody's, Class (2) or higher by NAIC or the equivalent of such rating by
     S&P, Moody's or NAIC, or if none of S&P, Moody's and NAIC shall then exist,
     the equivalent of such rating by any other nationally recognized securities
     rating agency; (vi) preferred stock with a rating of BBB- or higher by S&P,
     Baa-3 or higher by Moody's, Class (2) or higher by NAIC or the equivalent
     of such rating by S&P, Moody's or NAIC, or if none of S&P, Moody's and NAIC
     shall then exist, the equivalent of such rating by any other nationally
     recognized securities rating agency, provided that such preferred stock is
     mandatorily redeemable and required to be treated as a debt instrument in
     accordance with GAAP and (vii) any fund investing exclusively in
     investments of the types described in clauses (i) through (vi) above. For
     this purpose, "U.S. Government Obligations" means securities that are (x)
     direct obligations of the United States of America for the timely payment
     of which its full faith and credit is pledged or (y) obligations of a
     Person controlled or supervised by and acting as an agency or
     instrumentality of the United States of America the timely payment of which
     is unconditionally guaranteed as a full faith and credit obligation by the
     United States of America, which, in either case, are not callable or
     redeemable at the option of the issuer thereof, and shall also include a
     depository receipt issued by a bank (as defined in Section 3(a)(2) of the
     Securities Act of 1933, as amended), as custodian with respect to any such
     U.S. Government Obligation or a specific payment of principal of or
     interest on any such U.S. Government Obligation held by such custodian for
     the account of the holder of such depository receipt; provided that (except
     as required by law) such custodian is not authorized to make any deduction
     from the amount payable to the holder of such depository receipt from any
     amount received by the custodian in respect of the U.S. Government
     Obligation evidenced by such depository receipt.

          "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, substitute
     therefor or other substantially similar guidelines intended to measure the
     financial performance of companies in the property and casualty insurance
     industry, as the same shall be in effect from time to time.

          "Joinder Agreement" means a Joinder Agreement substantially in the
     form of Schedule 7.12 hereto, executed and delivered by an Additional
     Credit Party in accordance with the provisions of Section 7.12.


                                      -15-
<PAGE>   20



          Lenders" means each of the Persons identified as a "Lender" on the
     signature pages hereto, and each Person which may become a Lender by way of
     assignment in accordance with the terms hereof, together with their
     successors and permitted assigns.

          "Lien" means any mortgage, pledge, hypothecation, assignment, deposit
     arrangement, security interest, encumbrance, lien (statutory or otherwise),
     preference, priority or charge of any kind (including any agreement to give
     any of the foregoing, any conditional sale or other title retention
     agreement, any financing or similar statement or notice filed under the
     Uniform Commercial Code as adopted and in effect in the relevant
     jurisdiction or other similar recording or notice statute, and any lease in
     the nature thereof).

          "Loan" or "Loans" means the Revolving Loans and/or the Term Loan (or a
     portion of any Revolving Loan or Term Loan bearing interest at the Base
     Rate or the Eurodollar Rate and referred to as a Base Rate Loan or a
     Eurodollar Loan), individually or collectively, as appropriate.

          "Management Agreements" means, collectively, (i) that certain
     Management Agreement, dated as of January 1, 1995, by and between RISCORP
     Insurance and the Borrower, (ii) that certain Management Agreement, dated
     as of January 1, 1995, by and between RISCORP Property and the Borrower,
     (iii) that certain Management and Services Agreement, dated as of June 13,
     1996, by and between RISCORP National Insurance and the Borrower, and (iv)
     any agreements assigning the rights and/or obligations of the Borrower
     under the Management Agreements to RISCORP Management, each as may be
     amended or modified from time to time hereafter by the parties thereto.

          "Material Adverse Effect" means a material adverse effect on (i) the
     condition (financial or otherwise), operations, business, assets,
     liabilities or prospects of the Borrower or any of its Subsidiaries, (ii)
     the ability of any Credit Party to perform any material obligation under
     the Credit Documents to which it is a party or (iii) the material rights
     and remedies of the Lenders under the Credit Documents.

          "Materials of Environmental Concern" means any gasoline or petroleum
     (including crude oil or any fraction thereof) or petroleum products or any
     hazardous or toxic substances, materials or wastes, defined or regulated as
     such in or under any Environmental Laws, including, without limitation,
     asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

          "Multiemployer Plan" means a Plan which is a multiemployer plan as
     defined in Sections 3(37) or 4001(a)(3) of ERISA.


                                      -16-
<PAGE>   21


          "Multiple Employer Plan" means a Plan which the Borrower, any
     Subsidiary of the Borrower or any ERISA Affiliate and at least one employer
     other than the Borrower, any Subsidiary of the Borrower or any ERISA
     Affiliate are contributing sponsors.

          "NAIC" means the National Association of Insurance Commissioners and
     any successor thereof.

          "NationsBank" means NationsBank, N.A. (South) and its successors.

          "Non-Excluded Taxes" means such term as is defined in Section 3.10.

          "Non-Guarantor Subsidiary" means any Non-Insurance Subsidiary which is
     not a Guarantor.

          "Non-Insurance Subsidiary" means any Subsidiary of the Borrower which
     is not an Insurance Subsidiary.

          "Note" or "Notes" means any Committed Note.

          "Notice of Borrowing" means a written notice of borrowing in
     substantially the form of Schedule 2.1(b)(i), as required by Section
     2.1(b)(i) or Section 2.2(b).

          "Notice of Extension/Conversion" means the written notice of extension
     or conversion in substantially the form of Schedule 3.2, as required by
     Section 3.2.

          "Operating Lease" means, as applied to any Person, any lease
     (including, without limitation, leases which may be terminated by the
     lessee at any time) of any Property (whether real, personal or mixed) which
     is not a Capital Lease other than any such lease in which that Person is
     the lessor.

          "PBGC" means the Pension Benefit Guaranty Corporation established
     pursuant to Subtitle A of Title IV of ERISA and any successor thereof.

          "Permitted Investments" means any of the following: (i) cash; (ii)
     Investment Grade Securities; (iii) Investments in non-Investment Grade
     Securities so long as (a) the fair saleable value of All non-Investment
     Grade Securities held by the Insurance Subsidiaries does not exceed 10% of
     the consolidated Total Invested Assets of the Insurance Subsidiaries and
     (b) the fair saleable value of all non-Investment Grade Securities held by
     the Borrower and its Subsidiaries (including Insurance Subsidiaries) does
     not exceed 10% of the aggregate fair saleable value of all securities held
     by the Borrower and its Subsidiaries (including the Insurance Subsidiaries)
     on a consolidated basis; (iv) advances or loans to directors, officers,
     employees, agents, customers of suppliers (A) made in the ordinary course
     of business and consistent with the past


                                      -17-
<PAGE>   22


     practices of the Credit Parties or (B) to the extent not permitted by the
     foregoing subclause (A), that do not exceed $2,000,000 in the aggregate at
     any one time outstanding; (v) Investments in any Credit Party; (vi)
     Intercompany Indebtedness permitted by Section 8.1(c); (vii) Investments in
     a Non-Guarantor Subsidiary, provided that such Investments do not exceed
     $500,000 in the aggregate at any one time outstanding; (viii) accounts
     receivable created, acquired or made by the Borrower or any of its
     Subsidiaries in the ordinary course of business and payable or
     dischargeable in accordance with customary trade terms; (ix) Investments
     consisting of stock, obligations, securities or other property received by
     the Borrower or any of its Subsidiaries in settlement of accounts
     receivable (created in the ordinary course of business) from bankrupt
     obligors; (x) repurchase agreements entered into by a Person with a
     commercial banking institution (including any of the Lenders) or recognized
     securities dealer having capital and surplus in excess of $100,000,000 for
     direct obligations issued by or fully guaranteed by the United States of
     America in which such Person shall have a perfected first priority security
     interest (subject to no other Liens) and having, on the date of purchase
     thereof, a fair market value of at least 100% of the amount of the
     repurchase obligations; (xi) the Home Office Building; (xii) Investments of
     the Borrower in any Insurance Subsidiary, provided that no Default or Event
     of Default exists hereunder or would occur as a result thereof; (xiii)
     other Investments existing as of the Closing Date and set forth in Schedule
     1.1B; (xiv) Guaranty Obligations permitted by Section 8.1; (xv)
     acquisitions permitted by Section 8.4(d); and (xvi) transactions permitted
     by Section 8.8.

          "Permitted Liens" means:

               (i)   Liens in favor of the Agent on behalf of the Lenders;

               (ii)  Liens (other than Liens created or imposed under ERISA) for
          taxes, assessments or governmental charges or levies not yet due or
          Liens for taxes being contested in good faith by appropriate
          proceedings for which adequate reserves determined in accordance with
          GAAP have been established (and as to which the Property subject to
          any such Lien is not yet subject to foreclosure, sale or loss on
          account thereof);

               (iii)  statutory Liens of landlords and Liens of carriers,
          warehousemen, mechanics, materialmen and suppliers and other Liens
          imposed by law or pursuant to customary reservations or retentions of
          title arising in the ordinary course of business, provided that such
          Liens secure only amounts not yet due and payable or, if due and
          payable, are unfiled and no other action has been taken to enforce the
          same or are being contested in good faith by appropriate proceedings
          for which adequate


                                      -18-
<PAGE>   23


          reserves determined in accordance with GAAP have been established (and
          as to which the Property subject to any such Lien is not yet subject
          to foreclosure, sale or loss on account thereof);

               (iv)   Liens (other than Liens created or imposed under ERISA)
          incurred or deposits made by the Borrower and its Subsidiaries in the
          ordinary course of business in connection with workers' compensation,
          unemployment insurance and other types of social security, or to
          secure the performance of tenders, statutory obligations, bids,
          leases, government contracts, performance and return-of-money bonds
          and other similar obligations (exclusive of obligations for the
          payment of borrowed money);

               (v)    Liens in connection with attachments or judgments
          (including judgment or appeal bonds) provided that the judgments
          secured shall, within 30 days after the entry thereof, have been
          discharged or execution thereof stayed pending appeal, or shall have
          been discharged within 30 days after the expiration of any such stay;

               (vi)   easements, rights-of-way, restrictions (including zoning
          restrictions), minor defects or irregularities in title and other
          similar charges or encumbrances not, in any material respect,
          impairing the use of the encumbered Property for its intended
          purposes;

               (vii)  Liens on Property securing purchase money Indebtedness
          (including Capital Leases) to the extent permitted under Section
          8.1(f)(i), provided that (i) the Indebtedness secured by such Liens
          does not exceed the purchase price of the assets financed and (ii) any
          such Lien attaches to such Property concurrently with or within 90
          days after the acquisition thereof;

               (viii) Liens arising under escrows, trusts, custodianships,
          separate accounts, funds withheld procedures, and similar deposits,
          arrangements or agreements established with respect to insurance
          policies, annuities, guaranteed investment contracts and similar
          products underwritten by, or Reinsurance Agreements entered into by,
          the Borrower or any Insurance Subsidiary in the ordinary course of
          business;

               (ix)   deposits with insurance regulatory authorities;

               (x)    Liens on assets at the time such assets are acquired by
          the Borrower or any Subsidiary; provided that such Liens are not
          created in contemplation of such acquisition;



                                      -19-
<PAGE>   24

               (xi)   normal and customary rights of setoff upon deposits of
          cash in favor of banks or other depository institutions; and

               (xii)  Liens existing as of the Closing Date and set forth on
          Schedule 1.1C; provided that no such Lien shall at any time be
          extended to or cover any Property other than the Property subject
          thereto on the Closing Date.

          "Person" means any individual, partnership, joint venture, firm,
     corporation, limited liability company, association, trust or other
     enterprise (whether or not incorporated) or any Governmental Authority.

          "Plan" means any employee benefit plan (as defined in Section 3(3) of
     ERISA) which is covered by ERISA and with respect to which the Borrower,
     any Subsidiary of the Borrower or any ERISA Affiliate is (or, if such plan
     were terminated at such time, would under Section 4069 of ERISA be deemed
     to be) an "employer" within the meaning of Section 3(5) of ERISA.

          "Prime Rate" means the rate of interest per annum publicly announced
     from time to time by NationsBank as its prime rate in effect at its
     principal office in Charlotte, North Carolina, with each change in the
     Prime Rate being effective on the date such change is publicly announced as
     effective (it being understood and agreed that the Prime Rate is a
     reference rate used by NationsBank in determining interest rates on certain
     loans and is not intended to be the lowest rate of interest charged on any
     extension of credit by NationsBank to any debtor).

          "Pro Forma Basis" means, with respect to any transaction, that such
     transaction shall be deemed to have occurred as of the first day of the
     four fiscal-quarter period ending as of the most recent fiscal quarter end
     preceding the date of such transaction with respect to which the Agent and
     the Lenders have received the officer's certificate in accordance with the
     provisions of Section 7.1(c). As used herein, "transaction" means (i) any
     incurrence, assumption or retirement of Indebtedness as referred to in
     Section 8.1(f)(i), (ii) any acquisition of capital stock or securities or
     any purchase, lease or other acquisition of Property as referred to in
     Section 8.4(d), (iii) any Restricted Payment as referred to in Section
     8.6(d) or (iv) any settlement as referred to in Section 8.13. With respect
     to any transaction of the type described in clause (i) above regarding
     Indebtedness which has a floating or formula rate, the implied rate of
     interest for such Indebtedness for the applicable period for purposes of
     this definition shall be determined by utilizing the rate which is or would
     be in effect with respect to such Indebtedness as at the relevant date of
     determination.


                                      -20-
<PAGE>   25


          Property" means any interest in any kind of property or asset, whether
     real, personal or mixed, or tangible or intangible.

          "Quarterly Statement" means, with respect to any Insurance Subsidiary,
     such Insurance Subsidiary's quarterly statement to the insurance regulatory
     authorities of its domiciliary state, as the same may be amended from time
     to time.

          "Register" shall have the meaning given such term in Section 11.3(c).

          "Regulation G, T, U, or X" means Regulation G, T, U or X,
     respectively, of the Board of Governors of the Federal Reserve System as
     from time to time in effect and any successor to all or a portion thereof.

          "Reinsurance Agreements" shall mean any agreement, contract, treaty,
     certificate or other arrangement whereby an Insurance Subsidiary agrees to
     transfer, cede or retrocede to another insurer or reinsurer all or part of
     the liability assumed by such an Insurance Subsidiary under a policy or
     policies of insurance issued by such an Insurance Subsidiary.

          "Release" means any spilling, leaking, pumping, pouring, emitting,
     emptying, discharging, injecting, escaping, leaching, dumping or disposing
     into the environment (including the abandonment or discarding of barrels,
     containers and other closed receptacles containing any Materials of
     Environmental Concern).

          "Reportable Event" means any of the events set forth in Section
     4043(c) of ERISA, other than those events as to which the post-event notice
     requirement is waived under subsections .13, .14, .18, .19, or .20 of PBGC
     Reg. Section 2615.

          "Required Lenders" means, at any time, Lenders which are then in
     compliance with their obligations hereunder (as determined by the Agent)
     and holding in the aggregate at least 51% of (i) the Revolving Commitments
     or (ii) if the Revolving Commitments have been terminated, the outstanding
     Loans.

          "Requirement of Law" means, as to any Person, the certificate of
     incorporation and by-laws or other organizational or governing documents of
     such Person, and any law, treaty, rule or regulation or determination of an
     arbitrator or a court or other Governmental Authority, in each case
     applicable to or binding upon such Person or any of its material property
     is subject.

          "Restricted Payment" means (i) any dividend or other distribution,
     direct or indirect, on account of any shares of any class of stock of the
     Borrower or any of its Subsidiaries, now or hereafter outstanding, (ii) any
     redemption, retirement,



                                      -21-
<PAGE>   26


     sinking fund or similar payment, purchase or other acquisition for value,
     direct or indirect, of any shares of any class of stock of the Borrower or
     any of its Subsidiaries, now or hereafter outstanding and (iii) any payment
     made to retire, or to obtain the surrender of, any outstanding warrants,
     options or other rights to acquire shares of any class of stock of the
     Borrower or any of its Subsidiaries, now or hereafter outstanding.

          "Retrocession Agreement" means any agreement, contract, treaty or
     other arrangement (other than Surplus Relief Reinsurance) whereby any
     insurer cedes or assumes reinsurance to or from other insurers.

          "Revolving Commitment" means, with respect to each Lender, the
     commitment of such Lender in an aggregate principal amount at any time
     outstanding of up to such Lender's Commitment Percentage of the Revolving
     Committed Amount, to make Revolving Loans in accordance with the provisions
     of Section 2.1(a).

          "Revolving Committed Amount" shall have the meaning assigned to such
     term in Section 2.1(a).

          "Revolving Loans" shall have the meaning assigned to such term in
     Section 2.1(a).

          "RISCORP Insurance" means RISCORP Insurance Company, a Florida stock
     insurance company.

          "RISCORP Management" means RISCORP Management Services, Inc., a
     Florida corporation.

          "RISCORP National Insurance" means RISCORP National Insurance Company
     (f/k/a Atlas Insurance Company), a Missouri corporation.

          "RISCORP Property" means RISCORP Property & Casualty Insurance
     Company, a Florida corporation.

          "Risk Based Capital Act" means the Risk Based Capital 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.

          "SAP" means, with respect to any Insurance Subsidiary, the accounting
     practices prescribed or permitted by the insurance commissioner (or other
     similar authority) in the jurisdiction of domicile of such insurance
     company for the preparation of Annual Statements, Quarterly Statements and
     other financial reports by insurance corporations of the same type as such
     Insurance Subsidiary, as applied on a consistent basis and subject to the
     terms of Section 1.3 hereof.


                                      -22-
<PAGE>   27

          "SAP Statement" means an Annual Statement or a Quarterly Statement.

          "Single Employer Plan" means any Plan which is covered by Title IV of
     ERISA, but which is not a Multiemployer Plan.

          Solvent" or "Solvency" means, with respect to any Person as of a
     particular date, that on such date (i) such Person is able to realize upon
     its assets and pay its debts and other liabilities, contingent obligations
     and other commitments as they mature in the normal course of business, (ii)
     such Person does not intend to, and does not believe that it will, incur
     debts or liabilities beyond such Person's ability to pay as such debts and
     liabilities mature in their ordinary course, (iii) such Person is not
     engaged in a business or a transaction, and is not about to engage in a
     business or a transaction, for which such Person's Property would
     constitute unreasonably small capital after giving due consideration to the
     prevailing practice in the industry in which such Person is engaged or is
     to engage, (iv) the fair value of the Property of such Person is greater
     than the total amount of liabilities, including, without limitation,
     contingent liabilities, of such Person and (v) the present fair saleable
     value of the assets of such Person is not less than the amount that will be
     required to pay the probable liability of such Person on its debts as they
     become absolute and matured. In computing the amount of contingent
     liabilities at any time, it is intended that such liabilities will be
     computed at the amount which, in light of all the facts and circumstances
     existing at such time, represents the amount that can reasonably be
     expected to become an actual or matured liability.

          "Subordinated Debt Agreement" shall mean that certain Note Purchase
     Agreement, dated as of January 1, 1995 (as amended by that certain Consent,
     Waiver and First Amendment to Amended and Restated Note Purchase Agreement,
     dated as of February 26, 1996, and as further amended by that certain
     Second Amendment to Amended and Restated Note Purchase Agreement, dated as
     October 15, 1996) between the Borrower and American Re-Insurance Company,
     providing for the incurrence by the Borrower of the Subordinated Debt, as
     may be hereafter amended, supplemented, renewed or replaced from time to
     time as permitted by Section 8.7(a) hereof.

          "Subordinated Indebtedness" shall mean the indebtedness owed by the
     Borrower to American Re-Insurance Company, pursuant to the Subordinated
     Debt Agreement.

          "Subsidiary" means, as to any Person, (a) any corporation more than
     50% of whose stock of any class or classes having by the terms thereof
     ordinary voting power to elect a majority of the directors of such
     corporation (irrespective of whether or not at the time, any class or
     classes of such corporation shall have or might have voting power by reason
     of the



                                      -23-
<PAGE>   28

     happening of any contingency) is at the time owned by such Person directly
     or indirectly through Subsidiaries, and (b) any partnership, association,
     joint venture or other entity in which such Person directly or indirectly
     through Subsidiaries has more than 50% equity interest at any time.

          "Surplus Relief Reinsurance" means any transaction in which any
     Insurance Subsidiary cedes business under a Reinsurance Agreement that
     would be considered a "financing type" Reinsurance Agreement as determined
     by the independent certified public accountants of the Borrower in
     accordance with principles published by the Financial Accounting Standards
     Board (including, but not limited to FASB 113 and EITF #93-6).

          "Term Loan" shall have the meaning assigned to such term in Section
     2.2(a).

          "Term Loan Commitment" means, with respect to each Lender, the
     commitment of such Lender to make its portion of the Term Loan in a
     principal amount equal to such Lender's Commitment Percentage of the Term
     Loan Committed Amount.

          "Term Loan Committed Amount" shall have the meaning assigned to such
     term in Section 2.2(a).

          "Termination Date" means September 30, 2001.

          "Termination Event" means (i) with respect to any Plan, the occurrence
     of a Reportable Event or the substantial cessation of operations (within
     the meaning of Section 4062(e) of ERISA); (ii) the withdrawal by the
     Borrower, any Subsidiary of the Borrower or any ERISA Affiliate from a
     Multiple Employer Plan during a plan year in which it was a substantial
     employer (as such term is defined in Section 4001(a)(2) of ERISA), or the
     termination of a Multiple Employer Plan; (iii) the distribution of a notice
     of intent to terminate or the actual termination of a Plan pursuant to
     Section 4041(a)(2) or 4041A of ERISA; (iv) the institution of proceedings
     to terminate or the actual termination of a Plan by the PBGC under Section
     4042 of ERISA; (v) any event or condition which might constitute grounds
     under Section 4042 of ERISA for the termination of, or the appointment of a
     trustee to administer, any Plan; or (vi) the complete or partial withdrawal
     of the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate from
     a Multiemployer Plan.

          "Total Invested Assets" means, with respect to any Insurance
     Subsidiary, the amount set forth on line 8(a) in column 1 on page 2 of
     such Insurance Subsidiary's most recent SAP Statement.

          "Unused Fee" shall have the meaning assigned to such term in Section
     3.5(a).



                                      -24-
<PAGE>   29


          "Unused Fee Calculation Period" shall have the meaning assigned to
     such term in Section 3.5(a).

          "Unused Revolving Committed Amount" means, for any period, the amount
     by which (a) the then applicable Revolving Committed Amount exceeds (b) the
     daily average sum for such period of the outstanding aggregate principal
     amount of all Revolving Loans.

          "Voting Stock" means, with respect to any Person, capital stock issued
     by such Person the holders of which are ordinarily, in the absence of
     contingencies, entitled to vote for the election of directors (or persons
     performing similar functions) of such Person, even though the right so to
     vote has been suspended by the happening of such a contingency.

          "Wholly Owned Subsidiary" of any Person means any Subsidiary 100% of
     whose Voting Stock or other equity interests is at the time owned by such
     Person directly or indirectly through other Wholly Owned Subsidiaries.

     1.2 Computation of Time Periods. For purposes of computation of periods of
time hereunder, the word "from" means "from and including" and the words "to"
and "until" each mean "to but excluding."

     1.3 Accounting Terms.

        (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 Lenders hereunder shall be prepared, (i) with respect to the
     Borrower and its consolidated Subsidiaries, in accordance with GAAP applied
     on a consistent basis and (ii) with respect to the Insurance Subsidiaries,
     in accordance with SAP applied on a consistent basis. All calculations made
     for the purposes of determining compliance with this Credit Agreement shall
     (except as otherwise expressly provided herein) be made by application of
     GAAP or SAP, as appropriate, applied on a basis consistent with the most
     recent annual or quarterly financial statements delivered pursuant to
     Section 6.1 hereof (or, prior to the delivery of the first financial
     statements pursuant to Section 6.1 hereof, consistent with the financial
     statements as at December 31, 1995); provided, however, if (a) a Borrower
     shall object to determining such compliance on such basis at the time of
     delivery of such financial statements due to any change in GAAP, SAP or the
     rules promulgated with respect thereto or (b) the Agent or the Required
     Lenders shall so object in writing within 30 days after delivery of such
     financial statements, then such calculations shall be made on a basis
     consistent with the most recent financial statements delivered by such
     Borrower to the Lenders as to which no such objection shall have been made.


                                      -25-
<PAGE>   30


          (b) All references to line items in any column and on any page of an
    Insurance Subsidiary's SAP Statement are deemed to be references to the
    equivalent item in the event that the form of such Person's SAP Statement
    is amended.


                                    SECTION 2

                                CREDIT FACILITIES

    2.1 Revolving Loans.

          (a) Revolving Commitment. Subject to the terms and conditions hereof
    and in reliance upon the representations and warranties set forth herein, 
    each Lender severally agrees to make available to the Borrower such 
    Lender's Commitment Percentage of revolving credit loans requested by the
    Borrower in Dollars ("Revolving Loans") from time to time from the Closing
    Date until the Conversion Date, or such earlier date as the Revolving
    Commitments shall have been terminated as provided herein for the purposes
    hereinafter set forth; provided, however, that the sum of the aggregate
    principal amount of outstanding Revolving Loans shall not exceed FIFTY
    MILLION DOLLARS ($50,000,000) (as such aggregate maximum amount may be
    reduced from time to time as provided in Section 3.4, the "Revolving
    Committed Amount"); provided, further, (i) with regard to each Lender
    individually, such Lender's outstanding Revolving Loans shall not exceed
    such Lender's Commitment Percentage of the Revolving Committed Amount, and
    (ii) with regard to the Lenders collectively, the aggregate principal
    amount of outstanding Revolving Loans shall not exceed the Revolving
    Committed Amount. Revolving Loans may consist of Base Rate Loans or
    Eurodollar Loans, or a combination thereof, as the Borrower may request,
    and may be repaid and reborrowed in accordance with the provisions hereof;
    provided, however, that, prior to the Conversion Date, no more than 8
    Eurodollar Loans shall be outstanding hereunder at any time. For purposes
    hereof, Eurodollar Loans with different Interest Periods shall be
    considered as separate Eurodollar Loans, even if they begin on the same
    date, although borrowings, extensions and conversions may, in accordance
    with the provisions hereof, be combined at the end of existing Interest
    Periods to constitute a new Eurodollar Loan with a single Interest Period.
    Revolving Loans hereunder may be repaid and reborrowed in accordance with
    the provisions hereof.

          (b) Revolving Loan Borrowings.

               (i) Notice of Borrowing. The Borrower shall request a Revolving
          Loan borrowing by written notice (or telephone notice promptly
          confirmed in writing) to the Agent not later than 11:00 A.M.
          (Charlotte, North Carolina time) on the Business Day prior to the date
          of the requested borrowing in the case of Base Rate Loans,



                                      -26-
<PAGE>   31
          and on the third Business Day prior to the date of the requested 
          borrowing  in the case of Eurodollar Loans. Each such request for 
          borrowing shall be irrevocable and shall specify (A) that a Revolving 
          Loan is requested, (B) the date of the requested borrowing (which 
          shall be a Business Day), (C) the aggregate principal amount to be 
          borrowed, and (D) whether the borrowing shall be comprised of Base 
          Rate Loans, Eurodollar Loans or a combination thereof, and if 
          Eurodollar Loans are requested, the Interest Period(s) therefor. If 
          the Borrower shall fail to specify in any such Notice of Borrowing 
          (I) an applicable Interest Period in the case of a Eurodollar Loan, 
          then such notice shall be deemed to be a request for an Interest 
          Period of one month, or (II) the type of Revolving Loan requested, 
          then such notice shall be deemed to be a request for a Base Rate Loan
          hereunder. The Agent shall give notice to each affected Lender 
          promptly upon receipt of each Notice of Borrowing pursuant to this 
          Section 2.1(b)(i), the contents thereof and each such Lender's share 
          of any borrowing to be made pursuant thereto.

               (ii) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that
          is a Revolving Loan shall be in a minimum aggregate principal amount
          of $1,000,000 and integral multiples of $100,000 in excess thereof (or
          the remaining amount of the Revolving Committed Amount, if less).

               (iii) Advances. Each Lender will make its Commitment Percentage
          of each Revolving Loan borrowing available to the Agent for the
          account of the Borrower as specified in Section 3.14(a), or in such
          other manner as the Agent may specify in writing, by 1:00 P.M.
          (Charlotte, North Carolina time) on the date specified in the
          applicable Notice of Borrowing in Dollars and in funds immediately
          available to the Agent. Such borrowing will then be made available to
          the Borrower by the Agent by crediting the account of the Borrower on
          the books of such office with the aggregate of the amounts made
          available to the Agent by the Lenders and in like funds as received by
          the Agent.

          (c) Repayment. The principal amount of all Revolving Loans shall be
     due and payable in full on the Conversion Date.

     2.2 Term Loan.

          (a) Term Commitment. Subject to and upon the terms and conditions and
     relying upon the representations and warranties herein set forth, each
     Lender agrees, severally and not jointly, to make available to the Borrower
     on the Conversion Date such Lender's Commitment Percentage of a term loan
     in Dollars (the "Term Loan") in the aggregate principal amount equal to the
     outstanding principal balance on the Revolving



                                      -27-
<PAGE>   32
     Loans as of such date (the "Term Loan Committed Amount"). The Term Loan may
     consist of Base Rate Loans or Eurodollar Loans, or a combination thereof,
     as the Borrower may request; provided, however, that, on and after the
     Conversion Date, no more than 3 Eurodollar Loans shall be outstanding
     hereunder at any time. For purposes hereof, Eurodollar Loans with different
     Interest Periods shall be considered as separate Eurodollar Loans, even if
     they begin on the same date, although borrowings, extensions and
     conversions may, in accordance with the provisions hereof, be combined at
     the end of existing Interest Periods to constitute a new Eurodollar Loan
     with a single Interest Period. Amounts repaid on the Term Loan may not be
     reborrowed.

          (b) Borrowing Procedures. The Borrower shall submit an appropriate
     Notice of Borrowing to the Agent not later than 11:00 A.M. (Charlotte, N.C.
     time) on the Conversion Date, with respect to the portion of the Term Loan
     initially consisting of a Base Rate Loan, or on the third Business Day
     prior to the Conversion Date, with respect to the portion of the Term Loan
     initially consisting of one or more Eurodollar Loans, which Notice of
     Borrowing shall be irrevocable and shall specify (i) that the funding of a
     Term Loan is requested and (ii) whether the funding of the Term Loan shall
     be comprised of Base Rate Loans, Eurodollar Loans or a combination thereof,
     and if Eurodollar Loans are requested, the Interest Period(s) therefor. If
     the Borrower shall fail to deliver such Notice of Borrowing to the Agent by
     11:00 A.M. (Charlotte, N.C. time) on the third Business Day prior to the
     Conversion Date, then the full amount of the Term Loan shall be disbursed
     on the Conversion Date as a Base Rate Loan. Each Lender shall make its
     Commitment Percentage of the Term Loan available to the Agent for the
     account of the Borrower at the office of the Agent specified in Section
     11.1, or at such other office as the Agent may designate in writing, by
     1:00 P.M. (Charlotte, North Carolina time) on the Conversion Date in
     Dollars and in funds immediately available to the Agent.

          (c) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that is
     part of the Term Loan shall be in an aggregate principal amount that is not
     less than $1,000,000 and integral multiples of $100,000 (or the then
     remaining principal balance of the Term Loan, if less).

          (d) Repayment of Term Loan. The principal amount of the Term Loan
     shall be repaid in twelve (12) equal and consecutive quarterly
     installments, such installments being (i) in an amount equal to one-twelfth
     (1/12) of the outstanding balance of the Term Loan as of the Conversion
     Date and (ii) due and payable as of the last day of each March, June,
     September and December (beginning on December 31, 1998 and ending on the
     Termination Date).

     2.3 Interest. Subject to the provisions of Section 3.1, all Loans shall
bear interest at a per annum rate equal to:


                                      -28-
<PAGE>   33


          (a) Base Rate Loans. During such periods as Loans shall be comprised
     in whole or in part of Base Rate Loans, such Base Rate Loans shall bear
     interest at a per annum rate equal to the Base Rate;

          (b) Eurodollar Loans. During such periods as Loans shall be comprised
     in whole or in part of Eurodollar Loans, such Eurodollar Loans shall bear
     interest at a per annum rate equal to the Eurodollar Rate plus the
     Applicable Percentage.

Interest on Loans shall be payable in arrears on each applicable Interest
Payment Date (or at such other times as may be specified herein).

     2.4 Committed Notes. The Loans made by each Lender shall be evidenced by a
duly executed promissory note of the Borrower to such Lender in an original
principal amount equal to such Lender's Commitment Percentage of the Revolving
Committed Amount and in substantially the form of Schedule 2.4.

                                    SECTION 3

                 OTHER PROVISIONS RELATING TO CREDIT FACILITIES

     3.1 Default Rate. Upon the occurrence, and during the continuance, of an
Event of Default, the principal of and, to the extent permitted by law, interest
on the Loans and any other amounts owing hereunder or under the other Credit
Documents shall bear interest, payable on demand, at a per annum rate 3% greater
than the rate which would otherwise be applicable (or if no rate is applicable,
whether in respect of interest, fees or other amounts, then 3% greater than the
Base Rate).

     3.2 Extension and Conversion. Subject to the terms of Section 5.2, the
Borrower shall have the option, on any Business Day, to extend existing Loans
into a subsequent permissible Interest Period or to convert Loans into Loans of
another interest rate type; provided, however, that (i) except as provided in
Section 3.8, Eurodollar Loans may be converted into Base Rate Loans only on the
last day of the Interest Period applicable thereto, (ii) Eurodollar Loans may be
extended, and Base Rate Loans may be converted into Eurodollar Loans, only if no
Default or Event of Default is in existence on the date of extension or
conversion, (iii) Loans extended as, or converted into, Eurodollar Loans shall
be subject to the terms of the definition of "Interest Period" set forth in
Section 1.1 and shall be in such minimum amounts as provided in, with respect to
Revolving Loans, Section 2.1(b)(ii) or, with respect to the Term Loan, 2.2(c),
(iv) prior to the Conversion Date, no more than 8 Eurodollar Loans shall be
outstanding hereunder at any time and, on and after the Conversion Date, no more
than 3 Eurodollar Loans shall be outstanding hereunder at any time (it being
understood that, for purposes hereof, Eurodollar Loans with different Interest
Periods shall be considered as separate Eurodollar Loans, even if they begin on
the


                                      -29-
<PAGE>   34

same date, although borrowings, extensions and conversions may, in accordance
with the provisions hereof, be combined at the end of existing Interest Periods
to constitute a new Eurodollar Loan with a single Interest Period), and (v) any
request for extension or conversion of a Eurodollar Loan which shall fail to
specify an Interest Period shall be deemed to be a request for an Interest
Period of one month. Each such extension or conversion shall be effected by the
Borrower by giving a Notice of Extension/Conversion (or telephone notice
promptly confirmed in writing) to the Agent prior to 11:00 A.M. (Charlotte,
North Carolina time) on the Business Day of, in the case of the conversion of a
Eurodollar Loan into a Base Rate Loan, and on the third Business Day prior to,
in the case of the extension of a Eurodollar Loan as, or conversion of a Base
Rate Loan into, a Eurodollar Loan, the date of the proposed extension or
conversion, specifying the date of the proposed extension or conversion, the
Loans to be so extended or converted, the types of Loans into which such Loans
are to be converted and, if appropriate, the applicable Interest Periods with
respect thereto. Each request for extension or conversion shall be irrevocable
and shall constitute a representation and warranty by the Borrower of the
matters specified in subsections (ii), (iii), (iv), (v) and (vi) of Section 5.2.
In the event the Borrower fails to request extension or conversion of any
Eurodollar Loan in accordance with this Section, or any such conversion or
extension is not permitted or required by this Section, then such Eurodollar
Loan shall be automatically converted into a Base Rate Loan at the end of the
Interest Period applicable thereto. The Agent shall give each Lender notice as
promptly as practicable of any such proposed extension or conversion affecting
any Loan.

     3.3 Prepayments.

          (a) Voluntary Prepayments. The Borrower shall have the right to prepay
     Loans in whole or in part from time to time, subject to Section 3.11, but
     otherwise without premium or penalty; provided, however, that (i)
     Eurodollar Loans may only be prepaid on three Business Days' prior written
     notice to the Agent and specifying the applicable Loans to be prepaid; (ii)
     any prepayment of Eurodollar Loans will be subject to Section 3.11; and
     (iii) each such partial prepayment of Loans shall be in a minimum principal
     amount of $1,000,000. Subject to the foregoing terms, amounts prepaid under
     this Section 3.3(a) shall be applied as the Borrower may elect.

          (b) Mandatory Prepayments. If at any time, the sum of the aggregate
     principal amount of outstanding Revolving Loans shall exceed the Revolving
     Committed Amount, the Borrower promises to prepay immediately the
     outstanding principal balance on the Revolving Loans in an amount
     sufficient to eliminate such excess.

          (c) General. All prepayments made pursuant to this Section 3.3 shall
     (i) be subject to Section 3.11 and (ii) unless the Borrower shall specify
     otherwise, be applied first to Base Rate Loans, if any, and then to
     Eurodollar Loans in



                                      -30-
<PAGE>   35

           direct order of Interest Period maturities. All prepayments of the
           Term Loan pursuant to this Section 3.3 shall be applied to principal
           installments thereof in inverse order of maturity. Amount prepaid on
           the Revolving Loans may be reborrowed in accordance with the
           provisions hereof. Amounts prepaid on the Term Loan may not be
           reborrowed.

           3.4 Termination and Reduction of Revolving Committed Amount.

          (a) Voluntary Reductions. The Borrower may from time to time
     permanently reduce or terminate the Revolving Committed Amount in whole or
     in part (in minimum aggregate amounts of $3,000,000 or in integral
     multiples of $1,000,000 in excess thereof (or, if less, the full remaining
     amount of the then applicable Revolving Committed Amount)) upon five
     Business Days' prior written notice to the Agent; provided, however, no
     such termination or reduction shall be made which would cause the aggregate
     principal amount of outstanding Revolving Loans to exceed the Revolving
     Committed Amount unless, concurrently with such termination or reduction,
     the Revolving Loans are repaid to the extent necessary to eliminate such
     excess. The Commitments of the Lenders shall automatically terminate on (i)
     with respect to the Revolving Commitments, the Conversion Date and (ii)
     with respect to the Term Loan Commitments, the Termination Date. The Agent
     shall promptly notify each affected Lender of receipt by the Agent of any
     notice from the Borrower pursuant to this Section 3.4(a).

          (b) Termination. The Revolving Commitments of the Lenders shall
     automatically terminate on the Conversion Date.

          (c) General. The Borrower shall pay to the Agent for the account of
     the Lenders in accordance with the terms of Section 3.5(a), on the date of
     each termination or reduction of the Revolving Committed Amount, the Unused
     Fee accrued through the date of such termination or reduction on the amount
     of the Revolving Committed Amount so terminated or reduced.

          3.5 Fees.

               (a) Unused Fee. In consideration of the Revolving Commitments of
          the Lenders hereunder, the Borrower agrees to pay to the Agent for the
          account of each Lender a fee (the "Unused Feel") on the Unused
          Revolving Committed Amount computed at a per annum rate of 0.25% for
          each day during the applicable Unused Fee Calculation Period
          (hereinafter defined). The Unused Fee shall commence to accrue on the
          Closing Date and shall be due and payable in arrears on the last
          business day of each March, June, September and December (and any date
          that the Revolving Committed Amount is reduced as provided in Section
          3.4 (a) and the Conversion Date) for the immediately preceding quarter
          (or portion thereof) (each such quarter or portion thereof for which
          the Unused Fee is payable hereunder being, herein referred to as an
          "Unused Fee Calculation Period"), beginning with the first of such
          dates to occur after the Closing Date.



                                      -31-
<PAGE>   36

               (b) Administrative Fees. The Borrower agrees to pay to the Agent,
          for its own account, the fees referred to in the Agent's Fee Letter
          (collectively, the "Agent's Fees").

          3.6 Capital Adequacy. If any Lender has determined, after the date
     hereof, that the adoption or the becoming effective of, or any change in,
     or any change by any Governmental Authority, central bank or comparable
     agency charged with the interpretation or administration thereof in the
     interpretation or administration of, any applicable law, rule or regulation
     regarding capital adequacy, or compliance by such Lender with any request
     or directive regarding capital adequacy (whether or not having the force of
     law) of any such authority, central bank or comparable agency, has or would
     have the effect of reducing the rate of return on such Lender's capital or
     assets as a consequence of its commitments or obligations hereunder to a
     level below that which such Lender could have achieved but for such
     adoption, effectiveness, change or compliance (taking into consideration
     such Lender's policies with respect to capital adequacy), then, upon notice
     from such Lender to the Borrower, the Borrower shall be obligated to pay to
     such Lender such additional amount or amounts as will compensate such
     Lender for such reduction. Each determination by any such Lender of amounts
     owing under this Section shall, absent manifest error, be conclusive and
     binding on the parties hereto.

          3.7 Inability To Determine Interest Rate. If prior to the first day of
     any Interest Period, the Agent shall have determined (which determination
     shall be conclusive and binding upon the Borrower) that, by reason of
     circumstances affecting the relevant market, adequate and reasonable means
     do not exist for ascertaining the Eurodollar Rate for such Interest Period,
     the Agent shall give telecopy or telephonic notice thereof to the Borrower
     and the Lenders as soon as practicable thereafter. If such notice is given
     (a) any Eurodollar Loans requested to be made on the first day of such
     Interest Period shall be made as Base Rate Loans and (b) any Loans that
     were to have been converted on the first day of such Interest Period to or
     continued as Eurodollar Loans shall be converted to or continued as Base
     Rate Loans. Until such notice has been withdrawn by the Agent, no further
     Eurodollar Loans shall be made or continued as such, nor shall the Borrower
     have the right to convert Base Rate Loans to Eurodollar Loans.

          3.8 Illegality. Notwithstanding any other provision herein, if the
     adoption of or any change in any Requirement of Law or in the
     interpretation or application thereof occurring after the Closing Date
     shall make it unlawful for any Lender to make or maintain Eurodollar
     Loans as contemplated by this Credit Agreement, (a) such Lender shall
     promptly give written notice of such circumstances to the Borrower and the
     Agent (which notice shall be withdrawn whenever such circumstances no
     longer exist), (b) the commitment of such Lender hereunder to make
     Eurodollar Loans, continue Eurodollar Loans as such and convert a Base
     Rate Loan to Eurodollar Loans shall forthwith be canceled and, until such
     time as it shall no longer be unlawful for such Lender to make or maintain
     Eurodollar Loans, such Lender shall then have a commitment



                                      -32-
<PAGE>   37

     only to make a Base Rate Loan when a Eurodollar Loan is requested and (c)
     such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
     converted automatically to Base Rate Loans on the respective last days of
     the then current Interest Periods with respect to such Loans or within such
     earlier period as required by law. If any such conversion of a Eurodollar
     Loan occurs on a day which is not the last day of the then current Interest
     Period with respect thereto, the Borrower shall pay to such Lender such
     amounts, if any, as may be required pursuant to Section 3.11.

          3.9 Requirements of Law. If, after the date hereof, the adoption of or
     any change in any Requirement of Law or in the interpretation or
     application thereof applicable to any Lender, or compliance by any Lender
     with any request or directive (whether or not having the force of law) from
     any central bank or other Governmental Authority, in each case made
     subsequent to the Closing Date (or, if later, the date on which such Lender
     becomes a Lender):

               (a) shall subject such Lender to any tax of any kind whatsoever
          with respect to any Eurodollar Loans made by it or its obligation to
          make Eurodollar Loans, or change the basis of taxation of payments to
          such Lender in respect thereof (except for (i) Non-Excluded Taxes
          covered by Section 3.10 (including Non-Excluded Taxes imposed solely
          by reason of any failure of such Lender to comply with its obligations
          under Section 3.10(b)) and (ii) changes in taxes measured by or
          imposed upon the overall net income, or franchise tax (imposed in lieu
          of such net income tax), of such Lender or its applicable lending
          office, branch, or any affiliate thereof));

               (b) shall impose, modify or hold applicable any reserve, special
          deposit, compulsory loan or similar requirement against assets held
          by, deposits or other liabilities in or for the account of, advances,
          loans or other extensions of credit by, or any other acquisition of
          funds by, any office of such Lender which is not otherwise included in
          the determination of the Eurodollar Rate hereunder; or

               (c) shall impose on such Lender any other condition (excluding
          any tax of any kind whatsoever);

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, upon notice to
the Borrower from such Lender, through the Agent, in accordance herewith, the
Borrower shall be obligated to promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost
or reduce any amount receivable, provided that, in any such case, the Borrower
may elect to convert the Eurodollar Loans made by such Lender hereunder to Base
Rate Loans by giving the Agent at least one Business Day's notice of such


                                      -33-
<PAGE>   38


election, in which case the Borrower shall promptly pay to such Lender, upon
demand, without duplication, such amounts, if any, as may be required pursuant
to Section 3.11. If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall provide prompt notice thereof to the
Borrower, through the Agent, certifying (x) that one of the events described in
this paragraph (a) has occurred and describing in reasonable detail the nature
of such event, (y) as to the increased cost or reduced amount resulting from
such event and (z) as to the additional amount demanded by such Lender and a
reasonably detailed explanation of the calculation thereof. Such a certificate
as to any additional amounts payable pursuant to this subsection submitted by
such Lender, through the Agent, to the Borrower shall be conclusive and binding
on the parties hereto in the absence of manifest error. This covenant shall
survive the termination of this Credit Agreement and the payment of the Loans
and all other amounts payable hereunder.

     3.10 Taxes.

          (a) Except as provided below in this subsection, all payments made by
     the Borrower under this Credit Agreement and any Notes shall be made free
     and clear of, and without deduction or withholding for or on account of,
     any present or future income, stamp or other taxes, levies, imposts,
     duties, charges, fees, deductions or withholdings, now or hereafter
     imposed, levied, collected, withheld or assessed by any court, or
     governmental body, agency or other official, excluding taxes measured by or
     imposed upon the overall net income of any Lender or its applicable lending
     office, or any branch or affiliate thereof, and all franchise taxes, branch
     taxes, taxes on doing business or taxes on the overall capital or net worth
     of any Lender or its applicable lending office, or any branch or affiliate
     thereof, in each case imposed in lieu of net income taxes, imposed: (i) by
     the jurisdiction under the laws of which such Lender, applicable lending
     office, branch or affiliate is organized or is located, or in which its
     principal executive office is located, or any nation within which such
     jurisdiction is located or any political subdivision thereof; or (ii) by
     reason of any connection between the jurisdiction imposing such tax and
     such Lender, applicable lending office, branch or affiliate other than a
     connection arising solely from such Lender having executed, delivered or
     performed its obligations, or received payment under or enforced, this
     Credit Agreement or any Notes. If any such non-excluded taxes, levies,
     imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
     Taxes") are required to be withheld from any amounts payable to the Agent
     or any Lender hereunder or under any Notes, (A) the amounts so payable to
     the Agent or such Lender shall be increased to the extent necessary to
     yield to the Agent or such Lender (after payment of all Non-Excluded Taxes)
     interest or any such other amounts payable hereunder at the rates or in the
     amounts specified in this Credit Agreement and any Notes, provided,
     however, that the Borrower shall be entitled to deduct and



                                      -34-
<PAGE>   39

     withhold any Non-Excluded Taxes and shall not be required to increase any
     such amounts payable to any Lender that is not organized under the laws of
     the United States of America or a state thereof if such Lender fails to
     comply with the requirements of paragraph (b) of this subsection whenever
     any Non-Excluded Taxes are payable by the Borrower, and (B) as promptly as
     possible thereafter the Borrower shall send to the Agent for its own
     account or for the account of such Lender, as the case may be, a certified
     copy of an original official receipt received by the Borrower showing
     payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when
     due to the appropriate taxing authority or fails to remit to the Agent the
     required receipts or other required documentary evidence, the Borrower
     shall indemnify the Agent and the Lenders for any incremental taxes,
     interest or penalties that may become payable by the Agent or any Lender as
     a result of any such failure. The agreements in this subsection shall
     survive the termination of this Credit Agreement and the payment of the
     Loans and all other amounts payable hereunder.

          (b) Each Lender that is not incorporated under the laws of the United
     States of America or a state thereof shall:

               (X) (i)   on or before the date of any payment by the Borrower
          under this Credit Agreement or Notes to such Lender, deliver to the
          Borrower and the Agent (A) two (2) duly completed copies of United
          States Internal Revenue Service Form 1001 or 4224, or successor
          applicable form, as the case may be, certifying that it is entitled to
          receive payments under this Credit Agreement and any Notes without
          deduction or withholding of any United States federal income taxes and
          (B) an Internal Revenue Service Form W-8 or W-9, or successor
          applicable form, as the case may be, certifying that it is entitled to
          an exemption from United States backup withholding tax;

                   (ii)  deliver to the Borrower and the Agent two (2) further
          copies of any such form or certification on or before the date that
          any such form or certification expires or becomes obsolete and after
          the occurrence of any event requiring a change in the most recent form
          previously delivered by it to the Borrower; and

                   (iii) obtain such extensions of time for filing and complete
          such forms or certifications as may reasonably be requested by the
          Borrower or the Agent; or

          (Y) in the case of any such Lender that is not a "bank" within the
     meaning of Section 881(c)(3)(A) of the Internal Revenue Code,(i) represent
     to the Borrower (for the benefit of the Borrower and the Agent) that it is
     not a bank within the meaning of Section 881(c)(3)(A) of the Internal
     Revenue Code, (ii) agree to furnish to the Borrower on or before the date
     of any payment by the Borrower, with a copy to the Agent two (2) accurate
     and complete original signed copies of



                                      -35-
<PAGE>   40

     Internal Revenue Service Form W-8, or successor applicable form certifying
     to such Lender's legal entitlement at the date of such certificate to an
     exemption from U.S. withholding tax under the provisions of Section 881(c)
     of the Internal Revenue Code with respect to payments to be made under this
     Credit Agreement and any Notes (and to deliver to the Borrower and the
     Agent two (2) further copies of such form on or before the date it expires
     or becomes obsolete and after the occurrence of any event requiring a
     change in the most recently provided form and, if necessary, obtain any
     extensions of time reasonably requested by the Borrower or the Agent for
     filing and completing such forms), and (iii) agree, to the extent legally
     entitled to do so, upon reasonable request by the Borrower, to provide to
     the Borrower (for the benefit of the Borrower and the Agent) such other
     forms as may be reasonably required in order to establish the legal
     entitlement of such Lender to an exemption from withholding with respect to
     payments under this Credit Agreement and any Notes;

     unless in any such case any change in treaty, law or regulation has
     occurred after the date such Person becomes a Lender hereunder which
     renders all such forms inapplicable or which would prevent such Lender from
     duly completing and delivering any such form with respect to it and such
     Lender so advises the Borrower and the Agent. Each Person that shall become
     a Lender or a participant of a Lender pursuant to subsection 11.3 shall,
     upon the effectiveness of the related transfer, be required to provide all
     of the forms certifications and statements required pursuant to this
     subsection, provided that in the case of a participant of a Lender the
     obligations of such participant of a Lender pursuant to this subsection (b)
     shall be determined as if the participant of a Lender were a Lender except
     that such participant of a Lender shall furnish all such required forms,
     certifications and statements to the Lender from which the related
     participation shall have been purchased.

          (c) In connection with this transaction there may or may not be due
     certain documentary stamp taxes and/or intangible taxes imposed by the
     State of Florida (the "Florida Taxes"). In addition to (and not in
     limitation of) the indemnification with respect to tax liabilities set
     forth above, the Borrower agrees to indemnify the Agent and each Lender,
     their directors, officers, agents and employees from and against any and
     all liability, damage, loss, cost, expense or reasonable attorney fees
     which may accrue to or be sustained by the Agent, a Lender or their
     directors, officers, agents or employees on account of or arising from any
     claim or action raised by, filed or brought by or in the name of any
     Florida governmental or administrative department with respect to
     nonpayment of the Florida Taxes against the Agent, a Lender, or any of
     their directors, officers, agents or employees.

     3.11 Indemnity. The Borrower promises to indemnify each Lender and to hold
each Lender harmless from an loss



                                      -36-
<PAGE>   41

which such Lender may sustain or incur (other than through such Lender's gross
negligence or willful misconduct) as a consequence of (a) default by the
Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice requesting the same in accordance
with the provisions of this Credit Agreement, (b) default by the Borrower in
making any prepayment of a Eurodollar Loan after the Borrower has given a notice
thereof in accordance with the provisions of this Credit Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day which is not the last day of
an Interest Period with respect thereto. With respect to Eurodollar Loans, such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Loans provided for herein (excluding, however, the Applicable Percentage
included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank Eurodollar market. The covenants of the Borrower set
forth in this Section 3.11 shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts payable hereunder.

     3.12 Pro Rata Treatment. Except to the extent otherwise provided herein:

          (a) Loans. Each Revolving Loan, each payment or prepayment of
     principal of any Revolving Loan, each payment of interest on the Revolving
     Loans, each payment of Unused Fees, each reduction of the Revolving
     Committed Amount and each conversion or extension of any Revolving Loan,
     shall be allocated pro rata among the Lenders in accordance with the
     respective principal amounts of their outstanding Loans.

          (b) Advances. Unless the Agent shall have been notified in writing by
     any Lender prior to a borrowing that such Lender will not make the amount
     that would constitute its ratable share of such borrowing available to the
     Agent, the Agent may assume that such Lender is making such amount
     available to the Agent, and the Agent may, in reliance upon such
     assumption, make available to the Borrower a corresponding amount. If such
     amount is not made available to the Agent by such Lender within the time
     period specified therefor hereunder, such Lender shall pay to the Agent, on
     demand, such amount with interest thereon at a rate equal to the Federal
     Funds Rate for the period until such Lender makes such amount immediately
     available to the Agent. A certificate of the Agent submitted to any Lender
     with respect to any amounts owing under this



                                      -37-
<PAGE>   42
     subsection shall be conclusive in the absence of manifest error.

     3.13 Sharing of Payments. The Lenders agree among themselves that, in the
event that any Lender shall obtain payment in respect of any Loan or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a participation in such Loans and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by repurchase of a participation theretofore sold, return
its share of that benefit (together with its share of any accrued interest
payable with respect thereto) to each Lender whose payment shall have been
rescinded or otherwise restored. The Borrower agrees that any Lender so
purchasing such a participation may, to the fullest extent permitted by law,
exercise all rights of payment, including setoff, banker's lien or counterclaim,
with respect to such participation as fully as if such Lender were a holder of
such Loan or other obligation in the amount of such participation. Except as
otherwise expressly provided in this Credit Agreement, if any Lender or the
Agent shall fail to remit to the Agent or any other Lender an amount payable by
such Lender or the Agent to the Agent or such other Lender pursuant to this
Credit Agreement on the date when such amount is due, such payments shall be
made together with interest thereon for each date from the date such amount is
due until the date such amount is paid to the Agent or such other Lender at a
rate per annum equal to the Federal Funds Rate. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this Section 3.13 applies, such Lender shall, to
the extent practicable, exercise its rights in respect of such secured claim in
a manner consistent with the rights of the Lenders under this Section 3.13 to
share in the benefits of any recovery on such secured claim.

     3.14 Payments, Computations, Etc.

     (a) Except as otherwise specifically provided herein, all payments
hereunder shall be made to the Agent in dollars in immediately available funds,
without offset, deduction counterclaim or withholding of any find, at the
Agent's office specified in Schedule 2.1(a) not later than 2:00 P.M. (Charlotte,


                                      -38-
<PAGE>   43

North Carolina time) on the date when due. Payments received after such time
shall be deemed to have been received on the next succeeding Business Day. The
Agent may (but shall not be obligated to) debit the amount of any such payment
which is not made by such time to any ordinary deposit account of the Borrower
maintained with the Agent (with notice to the Borrower). The Borrower shall, at
the time it makes any payment under this Credit Agreement, specify to the Agent
the Loans, Fees, interest or other amounts payable by the Borrower hereunder to
which such payment is to be applied (and in the event that it fails so to
specify, or if such application would be inconsistent with the terms hereof, the
Agent shall distribute such payment to the Lenders in such manner as the Agent
may determine to be appropriate in respect of obligations owing by the Borrower
hereunder, subject to the terms of Section 3.12 (a)). The Agent will distribute
such payments to such Lenders, if any such payment is received prior to 12:00
Noon (Charlotte, North Carolina time) on a Business Day in like funds as
received prior to the end of such Business Day and otherwise the Agent will
distribute such payment to such Lenders on the next succeeding Business Day.
Whenever any payment hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day (subject to accrual of interest and Fees for the period of such
extension), except that in the case of Eurodollar Loans, if the extension would
cause the payment to be made in the next following calendar month, then such
payment shall instead be made on the next preceding Business Day. Except as
expressly provided otherwise herein, all computations of interest and fees shall
be made on the basis of actual number of days elapsed over a year of 360 days,
except with respect to computation of interest on Base Rate Loans which (unless
the Base Rate is determined by reference to the Federal Funds Rate) shall be
calculated based on a year of 365 or 366 days, as appropriate. Interest shall
accrue from and include the date of borrowing, but exclude the date of payment.

         (b) Allocation of Payments After Event of Default. Notwithstanding any
other provisions of this Credit Agreement to the contrary, after the occurrence
and during the continuance of an Event of Default, all amounts collected or
received by the Agent or any Lender on account of the Borrower's Obligations or
any other amounts outstanding under any of the Credit Documents shall be paid
over or delivered as follows:

          FIRST, to the payment of all reasonable out-of-pocket costs and
     expenses (including without limitation reasonable attorneys, fees) of the
     Agent in connection with enforcing the rights of the Lenders under the
     Credit Documents;

          SECOND, to payment of any fees owed to the Agent;

          THIRD, to the payment of all reasonable out-of-pocket costs and
     expenses (including without limitation, reasonable attorneys, fees) of each
     of the Lenders in connection with enforcing its rights under the Credit
     Documents or otherwise


                                      -39-
<PAGE>   44


     with respect to the Borrower's Obligations owing to such Lender;

          FOURTH, to the payment of all of the Borrower's obligations consisting
     of accrued fees and interest, FIFTH, to the payment of the outstanding
     principal amount of the Borrower's Obligations;

          SIXTH, to all other Borrower's obligations and other obligations which
     shall have become due and payable under the Credit Documents or otherwise
     and not repaid pursuant to clauses "FIRST" through "FIFTH" above; and

          SEVENTH, to the payment of the surplus, if any, to whoever may be
     lawfully entitled to receive such surplus.

In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then outstanding Loans
held by such Lender bears to the aggregate then outstanding Loans) of amounts
available to be applied pursuant to clauses "THIRD", "FOURTH", "FIFTH" and
"SIXTH" above.

         3.15 Evidence of Debt. (a) Each Lender shall maintain an account or
accounts evidencing each Loan made by such Lender to the Borrower from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Credit Agreement. Each Lender will make
reasonable efforts to maintain the accuracy of its account or accounts and to
promptly update its account or accounts from time to time, as necessary.

         (b) The Agent shall maintain the Register pursuant to Section 11.3 (c)
hereof, and a subaccount for each Lender, in which Register and subaccounts
(taken together) shall be recorded (i) the amount, type and Interest Period of
each such Loan hereunder, (ii) the amount of any principal or interest due and
payable or to become due and payable to each Lender hereunder and (iii) the
amount of any sum received by the Agent hereunder from or for the account of the
Borrower and each Lender's share thereof. The Agent will make reasonable efforts
to maintain the accuracy of the subaccounts referred to in the preceding
sentence and to promptly update such subaccounts from time to time, as
necessary.

         (c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.15 (and, if consistent
with the entries of the Agent, subsection (a)) shall be prima facie evidence of
the existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Agent to maintain any
such account, such Register or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation



                                      -40-
<PAGE>   45

of the Borrower to repay the Loans made by such Lender in accordance with the
terms hereof.

                                   SECTION 4

                                    GUARANTY

     4.1 The Guarantee. Each of the Guarantors hereby jointly and severally
guarantees to each Lender, each Affiliate of a Lender that enters into a Hedging
Agreement and the Agent as hereinafter provided the prompt payment of the
Borrower's obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration or otherwise) strictly in accordance with
the terms thereof. The Guarantors hereby further agree that if any of the
Borrower's Obligations are not paid in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise), the
Guarantors will jointly and severally, promptly pay the same, without any demand
or notice whatsoever, and that in the case of any extension of time of payment
or renewal of any of the Borrower's Obligations, the same will be promptly paid
in full when due (whether at extended maturity, as a mandatory prepayment, by
acceleration or otherwise) in accordance with the terms of such extension or
renewal.

     Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents or Hedging Agreements, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers) then the
obligations of each Guarantor hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).

     4.2 Obligations Unconditional. The obligations of the Guarantors under
Section 4.1 hereof are joint and several, absolute and unconditional,
irrespective of the value, genuineness, validity, regularity or enforceability
of any of the Credit Documents or Hedging Agreements, or any other agreement or
instrument referred to therein, or any substitution, release or exchange of any
other guarantee of or security for any of the Borrower's Obligations, and, to
the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 4.2 that the obligations of the Guarantors hereunder shall be absolute
and unconditional under any and all circumstances. Each Guarantor agrees that
such Guarantor shall have no right of subrogation, indemnity, reimbursement or
contribution against the Borrower or any other Guarantor of the Borrower's
Obligations for amounts paid under this Guaranty until such time as the Lenders
(and any Affiliates of Lenders entering into Hedging Agreements) have been paid
in full, all Commitments under the Credit Agreement have been terminated and no
Person or Governmental Authority shall


                                      -41-
<PAGE>   46


have any right to request any return or reimbursement of funds from the Lenders
in connection with monies received under the Credit Documents or Hedging
Agreements. Without limiting the generality of the foregoing, it is agreed that,
to the fullest extent permitted by law, the occurrence of any one or more of the
following shall not alter or impair the liability of any Guarantor hereunder
which shall remain absolute and unconditional as described above:

          (i) at any time or from time to time, without notice to any Guarantor,
     the time for any performance of or compliance with any of the Borrower's
     Obligations shall be extended, or such performance or compliance shall be
     waived;

          (ii) any of the acts mentioned in any of the provisions of any of the
     Credit Documents, any Hedging Agreement or any other agreement or
     instrument referred to in the Credit Documents or Hedging Agreements shall
     be done or omitted;

          (iii) the maturity of any of the Borrower's Obligations shall be
     accelerated, or any of the Borrower's Obligations shall be modified,
     supplemented or amended in any respect, or any right under any of the
     Credit Documents, any Hedging Agreements or any other agreement or
     instrument referred to in the Credit Documents or Hedging Agreements shall
     be waived or any other guarantee of any of the Borrower's Obligations or
     any security therefor shall be released or exchanged in whole or in part or
     otherwise dealt with;

          (iv) any Lien granted to, or in favor of, the Agent or any Lender or
     Lenders as security for any of the Borrower's Obligations shall fail to
     attach or be perfected; or

          (v) any of the Borrower's Obligations shall be determined to be void
     or voidable (including, without limitation, for the benefit of any creditor
     of any Guarantor) or shall be subordinated to the claims of any Person
     (including, without limitation, any creditor of any Guarantor).

With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit
Documents, any Hedging Agreements or any other agreement or instrument referred
to in the Credit Documents or Hedging Agreements or against any other Person
under any other guarantee of, or security for, any of the Borrower's
Obligations.

        4.3 Reinstatement. The obligations of the Guarantors under this Section
4 shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Borrower's obligations
is rescinded or must be otherwise restored by any holder of any of the
Borrower's obligations, whether as a result of any proceedings in bankruptcy



                                      -42-
<PAGE>   47

or reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.

         4.4 Remedies. The Guarantors agree that, to the fullest extent
permitted by law, as between the Guarantors, on the one hand, and. the Agent and
the Lenders, on the other hand, the Borrower's Obligations may be declared to be
forthwith due and payable as provided in Section 9.2 hereof (and shall be deemed
to have become automatically due and payable in the circumstances provided in
said Section 9.2) for purposes of Section 4.1 hereof notwithstanding any stay,
injunction or other prohibition preventing such declaration (or preventing the
Borrower's Obligations from becoming automatically due and payable) as against
any other Person and that, in the event of such declaration (or the Borrower's
Obligations being deemed to have become automatically due and payable), the
Borrower's Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of said
Section 4.1.

     4.5 Rights of Contribution. The Guarantors hereby agree, as among
themselves, that if any Guarantor shall become an Excess Funding Guarantor (as
defined below), each other Guarantor shall, on demand of such Excess Funding
Guarantor (but subject to the succeeding provisions of this Section 4.5), pay to
such Excess Funding Guarantor an amount equal to such Guarantor's Pro Rata Share
(as defined below and determined, for this purpose, without reference to the
properties, assets, liabilities and debts of such Excess Funding Guarantor) of
such Excess Payment (as defined below). The payment obligation of any Guarantor
to any Excess Funding Guarantor under this Section 4.5 shall be subordinate and
subject in right of payment to the prior payment in full of the obligations of
such Guarantor under the other provisions of this Section 4, and such Excess
Funding Guarantor shall not exercise any right or remedy with respect to such
excess until payment and satisfaction in full of all of such obligations. For
purposes hereof, (i) "Excess Funding Guarantor" shall mean, in respect of any
obligations arising under the other provisions of this Section 4 (hereafter, the
"Guaranteed Obligations"), a Guarantor that has paid an amount in excess of its
Pro Rata Share of the Guaranteed obligations; (ii) "Excess Payment" shall mean,
in respect of any Guaranteed Obligations, the Amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guaranteed obligations; and
(iii) "Pro Rata Share", for the purposes of this Section 4.5, shall mean, for
any Guarantor, the ratio (expressed as a percentage) of (a) the amount by which
the aggregate present fair saleable value of all of its assets and properties
exceeds the amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of such Guarantor hereunder) to (b)



                                      -43-
<PAGE>   48



the amount by which the aggregate present fair saleable value of all assets and
other properties of the Borrower and all of the Guarantors exceeds the amount of
all of the debts and liabilities (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of the Borrower and
the Guarantors hereunder) of the Borrower and all of the Guarantors, all as of
the Closing Date (if any Guarantor becomes a party hereto subsequent to the
Closing Date, then for the purposes of this Section 4.5 such subsequent
Guarantor shall be deemed to have been a Guarantor as of the Closing Date and
the information pertaining to, and only pertaining to, such Guarantor as of the
date such Guarantor became a Guarantor shall be deemed true as of the Closing
Date).

     4.6 Continuing Guarantee. The guarantee in this Section 4 is a continuing
guarantee, and shall apply to all Borrower's obligations whenever arising.

                                    SECTION 5

                                   CONDITIONS

     5.1 Closing Conditions. The obligation of the Lenders to enter into this
Credit Agreement and to make the initial Loans, whichever shall occur first,
shall be subject to satisfaction of the following conditions (in form and
substance acceptable to the Lenders):

          (a) The Agent shall have received original counterparts of this Credit
     Agreement executed by each. of the parties hereto;

          (b) The Agent shall have received an appropriate original Committed
     Note for each Lender, executed by the Borrower;

          (c) The Agent shall have received all documents it may reasonably
     request relating to the existence and good standing of each of the Credit
     Parties, the corporate or other necessary authority for and the validity of
     the Credit Documents, and any other matters relevant thereto, all in form
     and substance reasonably satisfactory to the Agent;

          (d) The Agent shall have received a certificate executed by the chief
     financial officer of the Borrower as of the Closing Date stating that
     immediately after giving effect to this Credit Agreement and the other
     Credit Documents, (i) the Borrower on a consolidated basis is Solvent (ii)
     no Default or Event of Default exists and (iii) the representations and
     warranties set forth in Section 6 are true and correct in all material
     respects;

          (e) The Agent shall have received a legal opinion of Holland & Knight,
     counsel for the Credit Parties, dated as of



                                      -44-
<PAGE>   49
     the Closing Date and substantially in the form of Schedule 5.1(e)

          (f) No material adverse change shall have occurred since December 31,
     1995 in the condition (financial or otherwise), business, management or
     prospects of the Borrower and its Subsidiaries taken as a whole;

          (g) The Agent shall have received copies of insurance policies or
     certificates of insurance of the Credit Parties evidencing liability and
     casualty insurance meeting the requirements of the Credit Documents;

          (h) The Agent shall have received a copy, certified by an officer of
     the Borrower as true and complete, of the Subordinated Debt Agreement,
     together with any amendments thereto;

          (i) The Agent shall have received, for its own account and for the
     accounts of the Lenders, all fees and expenses required by this Credit
     Agreement or any other Credit Document to be paid on or before the Closing
     Date; and

          (j) The Agent shall have received such other documents, agreements or
     information which may be reasonably requested by the Agent.

     5.2 Conditions to all Extensions of Credit. The obligations of each Lender
to make, convert or extend any Loan (including the initial Loans) are subject to
satisfaction of the following conditions in addition to satisfaction on the
Closing Date of the conditions set forth in Section 5.1:

          (i) The Borrower shall have delivered, an appropriate Notice of
     Borrowing or Notice of Extension/Conversion;

          (ii) The representations and warranties set forth in Section 6 shall
     be, subject to the limitations set forth therein, true and correct in all
     material respects as of such date (except for those which expressly relate
     to an earlier date);

          (iii) There shall not have been commenced against the Borrower or any
     Guarantor an involuntary case under any applicable bankruptcy, insolvency
     or other similar law now or hereafter in effect, or any case, proceeding or
     other action for the appointment of a receiver, liquidator, assignee,
     custodian, trustee, sequestrator (or similar official) of such Person or
     for any substantial part of its Property or for the winding up or
     liquidation of its affairs, and such involuntary case or other case,
     proceeding or other action shall remain undismissed, undischarged or
     unbonded;

          (iv) No Default or Event of Default shall exist and be continuing
     either prior to or after giving effect thereto;


                                      -45-
<PAGE>   50


          (v) No material adverse change shall have occurred since December 31,
     1995 in the condition (financial or otherwise), business, management or
     prospects of the Borrower and its Subsidiaries taken as a whole; and

          (vi) Immediately after giving effect to the making of such Loan (and
     the application of the proceeds thereof), the sum of the aggregate
     principal amount of outstanding Revolving Loans shall not exceed the
     Revolving Committed Amount.

The delivery of each Notice of Borrowing and each Notice of Extension/Conversion
shall constitute a representation and warranty by the Borrower of the
correctness of the matters specified in subsections (ii), (iii), (iv), (v) and
(vi) above.


                                    SECTION 6

                         REPRESENTATIONS AND WARRANTIES

     The Credit Parties hereby represent to the Agent and each Lender that:

     6.1 Financial Condition. (a) The audited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as of December 31, 1995 and the
audited consolidated statements of earnings and statements of cash flows for the
years ended December 31, 1995 and December 31, 1994 have heretofore been
furnished to each Lender. Such financial statements (including the notes
thereto)(i) have been audited by KPMG Peat Marwick, (ii) have been prepared in
accordance with GAAP consistently, applied throughout the periods covered
thereby and (iii) present fairly (on the basis disclosed in the footnotes to
such financial statements) the consolidated financial condition, results of
operations and cash flows of the Borrower and its consolidated Subsidiaries as
of such date and for such periods. The unaudited interim balance sheets of the
Borrower and its consolidated Subsidiaries as at the end of, and the related
unaudited interim statements of earnings and of cash flows for, each fiscal
quarterly period ended after December 31, 1995 and prior to the Closing Date
have heretofore been furnished to each Lender. Such interim financial statements
for each such quarterly period, (i) have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby and (ii) present
fairly (on the basis disclosed in the footnotes to such financial statements)
the consolidated financial condition, results of operations and cash flows of
the Borrower and its consolidated Subsidiaries as of such date and for such
periods. During the period from December 31, 1995 to and including the Closing
Date, except as disclosed on Schedule 6.1(a), there has been no sale, transfer
or other disposition by the Borrower or any of its Subsidiaries of any material
part of the business or property of the Borrower and its consolidated
Subsidiaries, taken as a whole, and no purchase or other acquisition by, any of
them of any business or property (including any capital stock of any other
person) material in relation to the consolidated financial



                                      -46-
<PAGE>   51

condition of the Borrower and its consolidated Subsidiaries, taken as a whole,
in each case, which, is not reflected in the foregoing financial statements or
in the notes thereto and has not otherwise been disclosed in writing to the
Lenders on or prior to the Closing Date.

     (b) The Delivered Annual Statements, including, without limitation, the
provisions made therein for reserves, policy and contract claims, copies of
which have heretofore been delivered to each Lender, have been prepared in
accordance with SAP applied on a consistent basis (except as otherwise disclosed
to the Lenders). The Quarterly Statements of each of the Insurance Subsidiaries,
including, without limitation, the provisions made therein for reserves, policy
and contract claims, as filed with the appropriate Governmental Authorities of
its state of domicile, for the fiscal quarters ending March 31, 1996 and June
30, 1996, copies of which have heretofore been delivered to each Lender, have
been prepared in accordance with SAP applied on a consistent basis (except as
otherwise disclosed to the Lenders). All SAP Statements which have heretofore
been delivered to the Lenders fairly present the financial condition, the
results of operations, changes in equity and changes in financial position of
the Insurance Subsidiaries as of and for the respective dates and period
indicated therein.

     6.2 No Change; Dividends. Since December 31, 1995, (a) there has been no
development or event relating to or affecting the Borrower or any of its
Subsidiaries which has had or would be reasonably expected to have a Material
Adverse Effect and (b) except as permitted under this Credit Agreement, no
dividends or other distributions have been declared, paid or made upon the
capital stock or other equity interest in the Borrower or any of its
Subsidiaries nor, except to the extent permitted under this Credit Agreement,
has any of the capital stock or other equity interest in the Borrower or any of
its Subsidiaries been redeemed, retired, purchased or otherwise acquired for
value by such Person.

     6.3 Organization; Existence; Compliance with Law. Each of the Borrower and
its Subsidiaries (a) is a corporation duly organized, validly existing and is in
good standing under the laws of the jurisdiction of its incorporation or
organization, (b) has the corporate or other necessary power and authority, and
the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
(c) is duly qualified as a foreign entity and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification, and (d) is in compliance
with all material Requirements of Law.

     6.4 Power; Authorization; Enforceable Obligations. Each of the Credit
Parties has the corporate or other necessary power and authority, and the legal
right, to make, deliver and perform the Credit Documents to which it is a party,
and in the case of the Borrower, to borrow hereunder, and has taken all
necessary corporate action to authorize the borrowings on the terms and



                                      -47-
<PAGE>   52


conditions of this Credit Agreement and to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. No consent or
authorization of, filing with, notice to or other similar act by or in respect
of, any Governmental Authority or any other Person is required to be obtained or
made by or on behalf of any Credit Party in connection with the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of the Credit Documents to which such Credit Party is a party,
except for consents, authorizations, notices and filings described in Schedule
6.4, all of which have been obtained or made or have the status described in
such Schedule 6.4. This Credit Agreement has been, and each other Credit
Document to which any Credit Party is a party will be, duly executed and
delivered on behalf of the Credit Parties. This Credit Agreement constitutes,
and each other Credit Document to which any Credit Party is a party when
executed and delivered will constitute, a legal, valid and binding obligation of
such Credit Party enforceable against such party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

     6.5 No Legal Bar. The execution, delivery and performance of the Credit
Documents by the Credit Parties, the borrowings hereunder and the use of the
proceeds thereof (a) will not violate any Requirement of Law or contractual
obligation of the Borrower or any of its Subsidiaries in any respect that would
reasonably be expected to have a Material Adverse Effect, (b) will not violate
any provision of the Subordinated Debt Agreement, (c) will not result in, or
require, the creation or imposition of any Lien on any of the properties or
revenues of any of the Borrower or any of its Subsidiaries pursuant to any such
Requirement of Law or contractual obligation, and (d) will not violate or
conflict with any provision of any Credit Party's articles of incorporation or
by-laws.

     6.6 No Material Litigation. Except as disclosed and described in Schedule
6.6 attached hereto, no litigation investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge of the
Credit Parties, threatened by or against the Borrower or any of its Subsidiaries
or against any of their respective properties or revenues which (a) relates to
any of the Credit Documents or any of the transactions contemplated hereby or
thereby or (b) would be reasonably expected to have a Material Adverse Effect.

     6.7 No Default. Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any of their contractual obligations in any
respect which would be reasonably expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.

     6.8 Ownership of Property: Liens. Each of the Borrower and its Subsidiaries
has good record and marketable title in fee simple


                                      -48-
<PAGE>   53


to, or a valid leasehold interest in, all its material real property, and good
title to, or a valid leasehold interest in, all its other material property, and
none of such property is subject to any Lien, except for Permitted Liens.

     6.9 No Burdensome Restrictions. Except as previously disclosed in writing
to the Lenders on or prior to the Closing Date, no Requirement of Law or
contractual obligation of the Borrower or any of its Subsidiaries would be
reasonably expected to have a Material Adverse Effect.

     6.10 Taxes. Each of the Borrower and its Subsidiaries has filed or caused
to be filed all United States federal income tax returns and all other material
tax returns which, to the best knowledge of the Credit Parties, are required to
be filed and has paid (a) all taxes shown to be due and payable on said returns
or (b) all taxes shown to be due and payable on any assessments of which it has
received notice made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental
Authority (other than any (i), taxes, fees or other charges with respect to
which the failure to pay, in the aggregate, would not have a Material Adverse
Effect or (ii) taxes, fees or other charges the amount or validity of which are
currently being contested and with respect to which reserves in conformity with
GAAP have been provided on the books of such Person), and no tax Lien has been
filed, and, to the best knowledge of the Credit Parties, no claim is being
asserted, with respect to any such tax, fee or other charge.

     6.11 ERISA. Except as would not result in a Material Adverse Effect:

     (a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no Termination Event has occurred,
and, to the best knowledge of the Credit Parties, no event or condition has
occurred or exists as a result of which any Termination Event could reasonably
be expected to occur, with respect to any Plan; (ii) no "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section 412 of
the Code, whether or not waived, has occurred with respect to any Plan; (iii)
each Plan has been maintained, operated, and funded in compliance with its own
terms and in material compliance with the provisions of ERISA, the Code, and any
other applicable federal or state laws; and (iv) no lien in favor of the PBGC or
a Plan has arisen or is reasonably likely to arise on account of any Plan.

     (b) The actuarial present value of all "benefit liabilities" under all
Single Employer Plans (determined within the meaning of Section 401(a)(2) of the
Code, utilizing the actuarial assumptions used to fund such Plans), whether or
not vested, did not, as of the last annual valuation date prior to the date on
which this representation is made or deemed made, exceed the current value of
the assets of all such Plans.




                                      -49-
<PAGE>   54

     (c) Neither the Borrower, any of the Subsidiaries of the Borrower nor any
ERISA Affiliate has incurred, or, to the best knowledge of the Credit Parties,
could be reasonably expected to incur, any withdrawal liability under ERISA to
any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower, any of
the Subsidiaries of the Borrower nor any ERISA Affiliate would become subject to
any withdrawal liability under ERISA if the Borrower, any of the Subsidiaries of
the Borrower or any ERISA Affiliate were to withdraw completely from all
Multiemployer Plans and Multiple Employer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed made.
Neither the Borrower, any of the Subsidiaries of the Borrower nor any ERISA
Affiliate has received any notification that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of ERISA), is insolvent
(within the meaning of Section 4245 of ERISA), or has been terminated (within
the meaning of Title IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Credit Parties, reasonably expected to be in reorganization,
insolvent, or terminated.

     (d) No prohibited transaction (within the meaning of Section 406 of ERISA
or Section 4975 of the Code) or breach of fiduciary responsibility has occurred
with respect to a Plan which has subjected or may subject the Borrower, any of
the Subsidiaries of the Borrower or any ERISA Affiliate to any liability under
Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or
under any agreement or other instrument pursuant to which the Borrower, any of
the Subsidiaries of the Borrower or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.

     (e) The present value (determined using actuarial and other assumptions
which are reasonable with respect to the benefits provided and the employees
participating) of the liability of the Borrower, each Subsidiary of the Borrower
and each ERISA Affiliate for post-retirement welfare benefits to be provided to
their current and former employees under Plans which are welfare benefit plans
(as defined in Section 3(1) of ERISA), net of all assets under all such Plans
allocable to such benefits, are reflected on the Financial Statements in
accordance with FAS 106.

     6.12 Governmental Regulations, Etc.

          (a) No part of the proceeds of the Loans will be used, directly or
     indirectly, for the purpose of purchasing or carrying any "margin stock"
     within the meaning of Regulation G or Regulation U, or for the purpose of
     purchasing or carrying or trading in any securities. If requested by any
     Lender or the Agent, the Borrower will furnish to the Agent and each Lender
     a statement to the foregoing effect in conformity with the requirements of
     FR Form U-1 referred to in said Regulation U. No indebtedness being reduced
     or retired out of the proceeds of the Loans was or will be incurred for the
     purpose of purchasing or carrying any margin stock within the meaning of
     Regulation U or any "margin security" within



                                      -50-
<PAGE>   55
     the meaning of Regulation T. "Margin stock" within the meanings of
     Regulation U does not constitute more than 25% of the value of the
     consolidated assets of the Borrower and its Subsidiaries. None of the
     transactions contemplated by this Credit Agreement (including, without
     limitation, the direct or indirect use of the proceeds of the Loans) will
     violate or result in a violation of the Securities Act of 1933, as amended,
     or the Securities Exchange Act of 1934, as amended, or regulations issued
     pursuant thereto, or Regulation G, T, U or X.

          (b) Neither the Borrower nor any of its Subsidiaries is subject to
     regulation under the Public Utility Holding Company Act of 1935, the
     Federal Power Act or the Investment Company Act of 1940, each as amended.
     In addition, neither the Borrower nor any of its Subsidiaries (other than
     RISCORP Asset management, Inc.) is (i) an "investment company" registered
     or required to be registered under the Investment Company Act of 1940, as
     amended, and is not controlled by such a company, or (ii) a "holding
     company", or a "subsidiary company" of a "holding company", or an
     "affiliate" of a "holding company" or of a "subsidiary" of a "holding
     company", within the meaning of the Public Utility Holding Company Act of
     1935, as amended.

          (c) The Insurance Subsidiaries have filed all reports, statements,
     documents, registrations, filings, or submissions required to be filed with
     any Governmental Authority with respect to which the failure to so file
     will individually or in the aggregate have a material adverse effect on the
     condition (financial or otherwise), operations, business, assets,
     liabilities or prospects of any Insurance Subsidiary, or except as
     otherwise agreed to by the applicable Governmental Authority. All such
     filings complied with applicable law in all material respects when filed,
     and no material deficiencies have been asserted by any Governmental
     Authority with respect to such filings or submissions.

          (d) No director, executive officer or principal shareholder of the
     Borrower or any of its Subsidiaries is a director, executive officer or
     principal shareholder of any Lender. For the purposes hereof the terms
     "director", "executive officer" and "principal shareholder" (when used with
     reference to any Lender) have the respective meanings assigned thereto in
     Regulation 0 issued by the Board of Governors of the Federal Reserve
     System.

          (e) Each of the Borrower and its Subsidiaries has obtained all
     material licenses, permits, franchises or other governmental authorizations
     necessary to the ownership of its respective Property and to the conduct of
     its business.

          (f) Neither the Borrower nor any of its Subsidiaries is in violation
     of any applicable statute, regulation or ordinance of the United States of
     America, or of any state, city, town, municipality, count or an other
     Jurisdiction or


                                      -51-
<PAGE>   56


     of any agency thereof (including without limitation, environmental laws and
     regulations), which violation could reasonably be expected to have a
     Material Adverse Effect.

          (g) Each of the Borrower and its Subsidiaries is current with all
     material reports and documents, if any, required to be filed with any state
     or federal securities commission or similar agency and is in full
     compliance in all material respects with all applicable rules and
     regulations of such commissions.

     6.13 Subsidiaries. Schedule 6.13 sets forth all the Subsidiaries of the
Borrower at the Closing Date, the jurisdiction of their incorporation and the
direct or indirect ownership interest of the Borrower therein.

     6.14 Purpose of Loans. The proceeds of the Revolving Loans hereunder shall
be used solely by the Borrower for the working capital and general corporate
purposes of the Borrower and its Wholly Owned Subsidiaries (other than RISCORP
Asset Management, Inc.). The proceeds of the Term Loan shall be used solely by
the Borrower to repay in full the Revolving Loans.

     6.15 Environmental Matters.

     (a) Each of the facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") and all operations at the
Properties are in compliance with all applicable Environmental Laws, and there
is no violation of any Environmental Law with respect to the Properties or the
businesses operated by the Borrower or any of its Subsidiaries (the
"Businesses"), and there are no conditions relating to the Businesses or
Properties that could give rise to liability under any applicable Environmental
Laws.

     (b) None of the Properties contains, or has previously contained, any
Materials of Environmental Concern at, on or under the Properties in amounts or
concentrations that constitute or constituted a violation of, or could give rise
to liability under, Environmental Laws.

     (c) Neither the Borrower nor any of its Subsidiaries has received any
written or verbal notice of, or inquiry from any Governmental Authority
regarding, any violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Businesses, nor
does the Borrower or any of its Subsidiaries have knowledge or reason to believe
that any such notice will be received or is being threatened.

     (d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, or generated, treated, stored or disposed of
at, on or under any of the Properties or any other location, in each case by or
on behalf of


                                      -52-
<PAGE>   57

the Borrower or any of its Subsidiaries in violation of, or in a manner that
would be reasonably likely to give rise to liability under, any applicable
Environmental Law.

         (e) No judicial proceeding or governmental or administrative action is
pending or, to the best knowledge of any Credit Party, threatened, under any
Environmental Law to which the Borrower or any of its Subsidiaries is or will be
named as a party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Borrower or any of its Subsidiaries, the Properties or the Businesses.

         (f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations (including, without limitation, disposal) of the Borrower or any
of its Subsidiaries in connection with the Properties or otherwise in connection
with the Businesses, in violation of or in amounts or in a manner that could
give rise to liability under Environmental Laws.

         6.16 Insurance Policies. All insurance policies or contracts,
including, without limitation, annuities issued or assumed by the Insurance
Subsidiaries and now in force, are, to the extent required under applicable law,
on forms approved by the insurance regulatory authority of the state or
jurisdiction where issued or have been filed with and not objected to by such
authority within the period provided for objection except where the issuance of
such policies or contracts without such approval or expiration of the period for
objection will not, individually or in the aggregate, have a Material Adverse
Effect. All policy or annuity dividends and benefits payable by the Insurance
Subsidiaries have in all material respects been paid in accordance with the
terms of the policies and annuities under which they arose, except for such
dividends or other benefits for which such Insurance Subsidiary reasonably
believes there is a reasonable basis to contest payment.


                                    SECTION 7

                              AFFIRMATIVE COVENANTS

     Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:

     7.1 Information Covenants. The Borrower will furnish, or cause to be
furnished, to the Agent:

          (a) Annual Financial Statements.

          (i) As soon as available, and in any event within 120 days after the
     close of each fiscal year of the Borrower and


                                      -53-
<PAGE>   58


     its Subsidiaries, a consolidated balance sheet and income statement of the
     Borrower and its Subsidiaries, as of the end of such fiscal year, together
     with related consolidated statements of operations, retained earnings,
     changes in stockholders' equity and cash flows for such fiscal year,
     setting forth in comparative form consolidated figures for the preceding
     fiscal year, all such financial information described above to be in
     reasonable form and detail and audited by independent certified public
     accountants of recognized national standing reasonably acceptable to the
     Agent and whose opinion shall be to the effect that such financial
     statements have been prepared in accordance with GAAP (except for changes
     with which such accountants concur) and shall not be limited as to the
     scope of the audit or qualified as to the status of the Borrower and its
     Subsidiaries as a going concern.

          (ii) As soon as available, and in any event within 120 days (or, if
     later, as required by applicable law) after the close of each fiscal year
     of an Insurance Subsidiary, the most recent SAP Statement of such Insurance
     Subsidiary, as audited in accordance with applicable law and accompanied by
     a certificate of a knowledgeable officer of such Insurance Subsidiary to
     the effect that such SAP Statement fairly presents in all material respects
     the financial condition of such Insurance Subsidiary and has been prepared
     in accordance with SAP.

          (b) Quarterly Financial Statements.

          (i) As soon as available, and in any event within 45 days after the
     close of each fiscal quarter of the Borrower and its Subsidiaries (other
     than the fourth fiscal quarter, in which case 120 days after the end
     thereof) a consolidated and consolidating balance sheet and income
     statement of the Borrower and its Subsidiaries, as of the end of such
     fiscal quarter, together with related consolidated statements of
     operations, retained earnings and cash flows for such fiscal quarter in
     each case setting forth in comparative form consolidated figures for the
     corresponding period of the preceding fiscal year, all such financial
     information described above to be in reasonable form and detail and
     reasonably acceptable to the Agent, and accompanied by a certificate of the
     chief financial officer of the Borrower to the effect that such quarterly
     financial statements fairly present in all material respects the financial
     condition of the Borrower and its Subsidiaries and have been prepared in
     accordance with GAAP, subject to changes resulting from audit and normal
     year-end audit adjustments.

          (ii) As soon as available, and in any event within 45 days after the
     close of each fiscal quarter of an Insurance Subsidiary (other than the
     fourth fiscal quarter, in which case 120 days after the end thereof), the
     most recent SAP Statement of such Insurance Subsidiary, in each case



                                      -54-
<PAGE>   59


     accompanied by a certificate of a knowledgeable officer of such Insurance
     Subsidiary to the effect that such SAP Statement fairly presents in all
     material respects the financial condition of such Insurance Subsidiary and
     has been prepared in accordance with SAP.

          (c) Officer's Certificate. At the time of delivery of the financial
     statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate
     of the chief financial officer of the Borrower; substantially in the form
     of Schedule 7.1(c), (i) demonstrating compliance with the financial
     covenants contained in Section 7.11 by calculation thereof as of the end of
     each such fiscal period and (ii) stating that no Default or Event of
     Default exists, or if any Default or Event of Default does exist,
     specifying the nature and extent thereof and what action the Borrower
     proposes to take with respect thereto.

          (d) Actuarial Report. Within the period for delivery of the annual
     financial statements provided in Section 7.1(a)(ii), an Actuarial Report
     prepared by an independent actuary reasonably acceptable to the Agent and
     certified as to such Insurance Subsidiary's reserve position as of such
     fiscal year end by such independent actuary.

          (e) IRIS Test Results. As soon as received after the end of each
     Fiscal Year of each Insurance Subsidiary, a copy of the final report to
     such Insurance Subsidiary from the NAIC as to such Insurance Subsidiary's
     status under the IRIS Tests.

          (f) Auditor's Reports. Promptly upon receipt thereof, a copy of any
     other report or "management letter" submitted by independent accountants to
     the Borrower or any of its Subsidiaries in connection with any annual,
     interim or special audit of the books of such Person.

          (g) Reports. Promptly upon transmission or receipt thereof, (a)
     copies of any filings and registrations with, and reports to or from, the
     Securities and Exchange Commission, or any successor agency, and copies of
     all financial statements, proxy statements, notices and reports as the
     Borrower or any of its Subsidiaries shall send to its shareholders or to a
     holder of any Indebtedness owed by the Borrower or any of its Subsidiaries
     in its capacity as such a holder, (b) copies of any reports on examination
     or similar reports, financial examination reports or market conduct
     examination reports by a Governmental Authority with respect to any
     Insurance Subsidiary relating to such Insurance Subsidiary's insurance
     business, (c) copies of all Insurance Holding Company Systems Act filings
     and (d) upon the request of the Agent, all reports and written information
     to and from the United States Environmental Protection Agency, or any state
     or local agency responsible for environmental matters, the United States
     Occupational Health and Safety Administration, or any state or local agency
     responsible for health and safety matters, or any


                                      -55-
<PAGE>   60


     successor agencies or authorities concerning environmental, health or
     safety matters.

          (h) Notices. Upon obtaining knowledge thereof, the Borrower will give
     written notice to the Agent immediately of (a) the occurrence of an event
     or condition consisting of a Default or Event of Default, specifying the
     nature and existence thereof and what action the Credit Parties propose to
     take with respect thereto, and (b) the occurrence of any of the following
     with respect to the Borrower or any of its Subsidiaries (i) the pendency or
     commencement of any litigation, arbitral or governmental proceeding against
     such Person which if adversely determined is likely to have a Material
     Adverse Effect, (ii) the institution of any proceedings against such Person
     with respect to, or the receipt of notice by such Person of potential
     liability or responsibility for violation, or alleged violation of any
     federal, state or local law, rule or regulation, including but not limited
     to, Environmental Laws, the violation of which would likely have a Material
     Adverse Effect, or (iii) any notice or determination concerning the
     imposition of any withdrawal liability by a Multiemployer Plan against such
     Person or any ERISA Affiliate, the determination that a Multiemployer Plan
     is, or is expected to be, in reorganization within the meaning of Title IV
     of ERISA or the termination of any Plan.

          (i) ERISA. Upon obtaining knowledge thereof, the Borrower will give
     written notice to the Agent promptly (and in any event within five business
     days) of: (i) of any event or condition, including, but not limited to, any
     Reportable Event, that constitutes, or might reasonably lead to, a
     Termination Event; (ii) with respect to any Multiemployer Plan, the receipt
     of notice as prescribed in ERISA or otherwise of any withdrawal liability
     assessed against the Borrower or any of its ERISA Affiliates, or of a
     determination that any Multiemployer Plan is in reorganization or insolvent
     (both within the meaning of Title IV of ERISA); (iii) the failure to make
     full payment on or before the due date (including extensions) thereof of
     all amounts which the Borrower, any of the Subsidiaries of the Borrower or
     any ERISA Affiliate is required to contribute to each Plan pursuant to its
     terms and as required to meet the minimum funding standard set forth in
     ERISA and the Code with respect thereto; or (iv) any change in the funding
     status of any Plan that could have a Material Adverse Effect; together,
     with a description of any such event or condition or a copy of any such
     notice and a statement by the chief financial officer of the Borrower
     briefly setting forth the details regarding such event, condition, or
     notice, and the action, if any, which has been or is being taken or is
     proposed to be taken by the Credit Parties with respect thereto. Promptly
     upon request, the Borrower shall furnish the Agent and the Lenders with
     such additional information concerning any Plan as may be reasonably
     requested, including, but not limited to, copies of



                                      -56-
<PAGE>   61

          each annual report/return (Form 5500 series), as well as all
          schedules and attachments thereto required to be filed with the
          Department of Labor and/or the Internal Revenue Service pursuant to
          ERISA and the Code, respectively, for each "plan year, (within the
          meaning of Section 3(39) of ERISA).

              (j) Other Information. With reasonable promptness upon any such
          request, such other information regarding the business, properties or 
          financial condition of the Borrower or any of its Subsidiaries as the 
          Agent or the Required Lenders may reasonably request.

          7.2 Preservation of Existence and Franchises. The Borrower will, and
     will cause each of its Subsidiaries to, do all things necessary to preserve
     and keep in full force and effect its existence, rights, franchises and
     authority, except (a) as a result of or in connection with a dissolution,
     merger or disposition of a Subsidiary permitted by Section 8.4(a), Section
     8.4(b) or Section 8.4(c) or (b) as would not, in the reasonable opinion of
     the Agent, result in a Material Adverse Effect.

          7.3 Books and Records. The Borrower will, and will cause each of its
     Subsidiaries to, keep complete and accurate books and records of its
     transactions in accordance with good accounting practices on the basis of
     GAAP and, with respect to any Insurance Subsidiary, SAP (including the
     establishment and maintenance of appropriate reserves).

          7.4 Compliance with Law. The Borrower will, and will cause each of its
     Subsidiaries to, comply with all laws, rules, regulations and orders, and
     all applicable restrictions imposed by all Governmental Authorities,
     applicable to it and its property if noncompliance with any such law, rule,
     regulation, order or restriction would have a Material Adverse Effect.

          7.5 Payment of Taxes and Other Indebtedness. Except as otherwise
     provided pursuant to the terms of the definition of "Permitted Liens" set
     forth in Section 1.1, the Borrower will, and will cause each of its
     Subsidiaries to, pay and discharge (i) all taxes, assessments and
     governmental charges for levies imposed upon it, or upon its income or
     profits, or upon any of its properties, before they shall become
     delinquent, (ii) all lawful claims (including claims for labor, materials
     and supplies) which, if unpaid, might give rise to a Lien upon any of its
     properties, and (iii) except as prohibited hereunder, all of its other
     Indebtedness as it shall become due.

          7.6 Insurance/Reinsurance.

               (a) The Borrower will, and will cause each of its Subsidiaries
          to, at all times maintain in full force and effect insurance
          (including worker's compensation insurance, liability insurance,
          casualty insurance and business interruption insurance) in such
          amounts, covering such risks


                                      -57-
<PAGE>   62

          and liabilities and with such deductibles or self-insurance retentions
          as are in accordance with normal industry practice.

               (b) The Borrower will cause each of its Insurance Subsidiaries to
          maintain, at all time and in accordance with normal industry practice,
          Reinsurance Agreements that are with reinsurers rated "A-" or better
          by A.M. Best & Company, Inc., provided that up to $3,000,000 in
          Reinsurance Agreements may be with reinsurers that are rated less than
          "A-" but no worse than "B" by A.M. Best & Company, Inc.

          7.7 maintenance of Property. The Borrower will, and will cause each 
of its Subsidiaries to, maintain and preserve its properties and equipment 
material to the conduct of its business in good repair, working order and 
condition, normal wear and tear and casualty and condemnation excepted, and 
will make, or cause to be made, in such properties and equipment from time to
time all repairs, renewals, replacements, extensions, additions, betterments
and improvements thereto as may be needed or proper, to the extent and in the
manner customary for companies in similar businesses.

          7.8 Performance of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, perform in all material respects all of its 
obligations under the terms of all material agreements, indentures, mortgages, 
security agreements or other debt instruments (including, without limitation, 
the Subordinated Debt Agreement) to which it is a party or by which it is bound.

          7.9 Use of Proceeds. The Borrower will use the proceeds of the
Loans solely for the purposes set forth in Section 6.14.

          7.10 Audits/Inspections. Upon reasonable notice and during normal
business hours, the Borrower will, and will cause each of its Subsidiaries to, 
permit representatives appointed by the Agent, including, without limitation, 
independent accountants, agents, attorneys, and appraisers to visit and inspect
its property, including its books and records, its accounts receivable and 
inventory, its facilities and its other business assets, and to make 
photocopies or photographs thereof and to write down and record any information
such representative obtains and shall permit the Agent or its representatives 
to investigate and verify the accuracy of information provided to the Lenders 
and to discuss all such matters with the officers, employees and 
representatives of such Person, all (unless an Event of Default shall have 
occurred and be continuing) at the Lenders' sole cost and expense.

          7.11 Financial Covenants.

                    (a) Consolidated Leverage Ratio. As of the last day of each
               fiscal quarter, the Borrower shall cause the Consolidated
               Leverage Ratio to be no greater than 0.45 to 1.00.

                    (b) Consolidated Current Maturities Coverage Ratio. The
               Borrower shall cause the Consolidated Current Maturities


                                      -58-
<PAGE>   63


     Coverage Ratio as of the last day of each fiscal quarter to be at least:

<TABLE>
<CAPTION>
             Period                                     Ratio
             ------                                     -----

     <S>                                                <C>
     Each fiscal quarter end
     occurring from the Closing
     Date through and including
     September 30, 1997                                 1.2 to 1.0

     Each fiscal quarter end
     occurring from October 1, 1997
     through and including September
     30, 1998                                           1.5 to 1.0

     Each fiscal quarter end
     occurring from October 1,
     1998 and thereafter                                1.2 to 1.0
</TABLE>

          (c) Consolidated Net Written Premiums to Statutory Surplus Ratio. The
     Borrower shall cause the Consolidated Net Written Premiums to Statutory
     Surplus Ratio to be no greater than 3.0 to 1.0 as of the last day of each
     fiscal year of its Insurance Subsidiaries.

          (d) Risk Based Capital.

               (i) The Borrower shall cause each Insurance Subsidiary to
          maintain a ratio, as of the last day of each fiscal year, of (A) Total
          Adjusted Capital (as defined in the Risk-Based Capital Act or in the
          rules and procedures prescribed from time to time by the NAIC with
          respect thereto) to (B) the Company Action Level RBC (as defined in
          the Risk-Based Capital Act or in the rules and procedures prescribed
          from time to time by the NAIC with respect thereto) of at least one
          hundred twenty-five percent (125%).

               (ii) Notwithstanding the subsection (i) hereof, the Borrower
          shall cause those Insurance Subsidiaries representing 75%, in the
          aggregate, of Consolidated Net Written Premiums to maintain a
          consolidated ratio, as of the last day of each fiscal year, of (A)
          Total Adjusted Capital (as defined in the Risk-Based Capital Act or in
          the rules and procedures prescribed from time to time by the NAIC with
          respect thereto) to (B) the Company Action Level RBC (as defined in
          the Risk-Based Capital Act or in the rules and procedures prescribed
          from time to time by the NAIC with respect thereto) of at least one
          hundred fifty-percent (150%).

     7.12 Additional Credit Parties. At any time that the Non-Guarantor
Subsidiaries shall at any time have total assets equal to or greater than 
$500,000, in any instance, or $2,000,000, collectively, then the Borrower will 
promptly notify the Agent


                                      -59-
<PAGE>   64

     thereof, and promptly cause one or more Non-Guarantor Subsidiaries to
     become a "Guarantor" hereunder by

               (A) execution of a Joinder Agreement in substantially the same
          form as Schedule 7.12 attached hereto;

               (B) delivery of such other documentation as the Agent may
          reasonably request, including, without limitation, certified
          resolutions and other organizational and authorizing documents of such
          Person and favorable opinions of counsel to such Person (which shall
          cover, among other things, the legality, validity, binding effect and
          enforceability of the documentation referred to above), all in form,
          content and scope reasonably satisfactory to the Agent,

     such that immediately after the joinder of such Subsidiary or Subsidiaries,
     the remaining Non-Guarantor Subsidiaries shall not have total assets equal
     to or greater than $500,000, in any instance, or $2,000,000, collectively.

          7.13 Ownership of Subsidiaries. Except to the extent otherwise
     provided in Section 8.4 (b) and Section 8.11, the Borrower shall, directly
     or indirectly, own at all times 100% of the capital stock of each of its
     Subsidiaries.

          7.14 Dividends. The Borrower shall (a) cause each of its Subsidiaries
     from time to time to pay cash dividends or make other distributions or
     payments in cash (directly or, through other Subsidiaries of the Borrower,
     indirectly) to the Borrower in amounts that, taken together, are sufficient
     to permit the Borrower to (i) pay all principal of and any accrued interest
     in respect of the Loans and all other indebtedness or obligations of any
     and every kind owing by the Borrower to the Agent and/or any of the Lenders
     hereunder as the same shall become due and payable (whether at stated
     maturity, by mandatory prepayment, by acceleration or otherwise) and (ii)
     pay for all capital expenditures made by the Borrower, (b) cause each of
     its Insurance Subsidiaries to make payments in accordance with the terms of
     the Management Agreements, and (c) cause each of its Insurance Subsidiaries
     to request on a timely basis regulatory approval to the extent necessary
     for such Subsidiary to pay such dividends or make such distributions or
     payments.


                                    SECTION 8

                               NEGATIVE COVENANTS

          Each Credit Party hereby covenants and agrees that, so long as this
     Credit Agreement is in effect or any amounts payable hereunder or under any
     other Credit Document shall remain outstanding, and until all of the
     Commitments hereunder shall have terminated:



                                      -60-
<PAGE>   65

          8.1 Indebtedness. The Borrower will not, nor will it permit any of its
     Subsidiaries to, contract, create, incur, assume or permit to exist any
     Indebtedness, except:

               (a) Indebtedness arising under this Credit Agreement and the
          other Credit Documents;

               (b) Indebtedness of the Borrower and any of its Subsidiaries set
          forth in Schedule 8.1 (and renewals, refinancings and extensions
          thereof on terms, and conditions no less favorable to such Person than
          such existing Indebtedness);

               (c) Intercompany Indebtedness incurred in the ordinary course of
          business and consistent with the past practices of the Credit Parties
          or for cash management purposes;

               (d) obligations of the Borrower in respect of any interest rate
          protection agreement or foreign currency exchange agreement
          (including, but not limited to, the Hedging Agreements) entered into
          in order to manage existing or anticipated interest rate or exchange
          rate risks and not for speculative purposes; provided that, so long as
          any Subordinated Indebtedness shall remain outstanding, Indebtedness
          permitted under this Section 8.1(d) may only be incurred to the extent
          allowed under Section 8.8(a)(i)(C) of the Subordinated Debt Agreement;

               (e) Subordinated Indebtedness; and

               (f) in addition to the Indebtedness otherwise permitted by this
          Section 8.1,

                    (i) other Indebtedness hereafter incurred by the Borrower
               provided that (A) the loan documentation with respect to such
               Indebtedness shall not contain covenants or default provisions
               relating to the Borrower that are more restrictive than the
               covenants and default provisions contained in the Credit
               Documents, (B) on the date of incurrence of such Indebtedness
               after giving effect on a Pro Forma Basis to the incurrence of
               such Indebtedness and to the concurrent retirement of any other
               Indebtedness, if any, of the Borrower or any of its Subsidiaries,
               no Default or Event of Default would exist hereunder and (C) so
               long as any Subordinated Indebtedness shall remain outstanding,
               Indebtedness permitted under subsection (f)(i) may only be
               incurred to the extent allowed under Section 8.8 (b) of the
               Subordinated Debt Agreement; and

                    (ii) Guaranty obligations of any Subsidiary of the Borrower
               that is a Guarantor with respect to any Indebtedness of the
               Borrower permitted under this Section 8.1(f).


                                      -61-
<PAGE>   66

          8.2 Liens. The Borrower will not, nor will it permit any of its
     Subsidiaries to, contract, create, incur, assume or permit to exist any
     Lien with respect to any of their Property, whether now owned or after
     acquired, except for Permitted Liens.

          8.3 Nature of Business. The Borrower will, and will cause its
     Subsidiaries to, remain principally engaged in the property and casualty
     insurance business and such business activities incidental or related
     thereto and will not engage in (i) writing lines of insurance for which it
     does not currently hold all necessary licenses or (ii) any line of business
     in which they are not currently engaged to such an extent that the business
     of the Borrower and its Subsidiaries taken as a whole would be
     fundamentally different in nature from the business of the Borrower and its
     Subsidiaries on the Closing Date.

          8.4 Consolidation, Merger, Sale or Purchase of Assets, etc. The
     Borrower will not, nor will it permit any of its Subsidiaries to:

               (a) except in connection with a disposition of assets permitted
          by the terms of subsection (c) below, dissolve, liquidate or wind up
          their affairs;

               (b) enter into any transaction of merger or consolidation;
          provided, however, that, so long as no Default or Event of Default
          would be directly or indirectly caused as a result thereof, (i) the
          Borrower may merge or consolidate with any of its Subsidiaries
          provided that the Borrower is the surviving corporation; (ii) any
          Subsidiary of the Borrower may merge or consolidate with any other
          Subsidiary of the Borrower, provided after giving effect to such
          merger or consolidation, no Default or Event of Default would exist
          hereunder;

               (c) sell, lease, transfer or otherwise dispose of any Property
          other than (i) the sale of assets pursuant to Reinsurance Agreements
          entered into in the ordinary course of business, (ii) the sale or
          disposition of machinery and equipment no longer used or useful in the
          conduct of such Person's business, and (iii) the sale of assets to the
          Borrower or any Subsidiary of the Borrower, provided that after giving
          effect to such sale or other disposition, no Default or Event of
          Default would exist hereunder;

               (d) except as otherwise permitted by Section 8.4(b), acquire all
          or any portion of the capital stock or securities of any other Person
          or purchase, lease or otherwise acquire (in a single transaction or a
          series of related transactions) all or any substantial part of the
          Property of any other Person, unless (i) such Person is engaged in a
          business or businesses substantially similar to any business currently
          conducted by the Borrower or any of its Subsidiaries, (ii) such
          acquisition is approved by the board of directors of such Person,
          (iii) after giving effect on a Pro Forma Basis to any such
          acquisition:(including but not limited to any


                                      -62-
<PAGE>   67

         Indebtedness to be incurred or assumed by the Borrower or any of its
         Subsidiaries in connection therewith), no Default or Event of Default
         would exist hereunder and (iv) so long as any Subordinated Indebtedness
         shall remain outstanding, acquisitions permitted under this Section
         8.4(d) may only be undertaken to the extent allowed under Section 8.11
         of the Subordinated Debt Agreement.

          8.5 Advances, Investments, Loans, etc.. The Borrower will not, nor
     will it permit any of its Subsidiaries to, acquire, make or permit to exist
     any Investments other than Permitted Investments.

          8.6 Restricted Payments. The Borrower will not, nor will it permit any
     of its Subsidiaries to, directly or indirectly, declare, order, make or set
     apart any sum for or pay any Restricted Payment, except (a) to make
     dividends payable solely in the same class of capital stock of such Person,
     (b) to make dividends or other distributions payable to the Borrower
     (directly or indirectly through Subsidiaries of the Borrower), (c) the
     Subsidiaries of RISCORP Management may make dividends or other
     distributions payable to RISCORP Management (directly or indirectly through
     Subsidiaries of RISCORP Management) and (d) the Borrower may make
     Restricted Payments if (i) the Subordinated Indebtedness shall have been
     repaid in full, (ii) the Subordinated Debt Agreement shall have been
     terminated and (iii) after giving effect on a Pro Forma Basis to such
     Restricted Payment (including but not limited to any Indebtedness to be
     incurred or assumed by the Borrower or any of its Subsidiaries in
     connection therewith), no Default or Event of Default would exist
     hereunder.

          8.7 Prepayments of Indebtedness, etc.. The Borrower will not, nor will
     it permit any of its Subsidiaries to, (i) after the issuance thereof,amend
     or modify (or permit the amendment or modification of) any of the terms of
     any Indebtedness (including, without limitation, the Subordinated
     Indebtedness) if such amendment or modification would add or change any
     terms in a manner adverse to the issuer of such Indebtedness, or shorten
     the final maturity or average life to maturity or require any payment to be
     made sooner than originally scheduled or increase the interest rate
     applicable thereto or change any subordination provision thereof, or (ii)
     (A) if any Default or Event of Default has occurred and is continuing or
     would be directly or indirectly caused as a result thereof, make (or give
     any notice with respect thereto) any voluntary or optional payment, any
     prepayment or any redemption or acquisition for value of (including without
     limitation, by way of depositing money or securities with the trustee with
     respect thereto before due for the purpose of paying when due), refund,
     refinance or exchange of any other Indebtedness (other than Subordinated
     Indebtedness) or (B) make (or give any notice with respect thereto) any
     voluntary or optional payment, any prepayment or any redemption or
     acquisition for value of (including without limitation, by way of
     depositing money or securities with the trustee with respect thereto before
     due for the purpose of paying when due); refund; refinance or exchange of
     any Subordinated Indebtedness, provided that the Borrower may use cash
     proceeds


                                      -63-
<PAGE>   68


     received from the issuance of common stock to prepay the Subordinated
     indebtedness or (C) amend, modify or change its articles of incorporation
     (or corporate charter or other similar organizational document) or bylaws
     (or other similar document where such change would have a Material Adverse
     Effect.

          8.8 Transactions with Affiliates. The Borrower will not, nor will it
     permit any of its Subsidiaries to, enter into any transaction (or series of
     related transactions) directly or indirectly with or for the benefit of any
     Affiliate of the Borrower (other than a Subsidiary) or any officer or
     director of any Affiliate unless (a) such transaction (or series of related
     transactions) is in the ordinary course of business on terms that are no
     less favorable to the Borrower or such Subsidiary, as the case may be, than
     the Borrower or any such Subsidiary would obtain in a comparable
     transaction (or series of related transactions) with a Person not an
     Affiliate, (b) such transaction (or series of related transactions) is
     approved by the Board of Director's of the Borrower, and (c) with respect
     to any transaction (or series of related transactions) involving aggregate
     payments or commitments in excess of $7,000,000, the Borrower receives an
     opinion from a nationally recognized investment banking firm, or other
     nationally or regionally recognized appraisal firm, that such transaction
     (or series of "related transactions) is fair to the Borrower or such
     Subsidiary, as the case may be, from a financial point of view. The
     restrictions contained in the foregoing sentence shall not apply to any
     payments made under the Existing Affiliate Contracts.

          8.9 Fiscal Year. The Borrower will not, nor will it permit any of its
     Subsidiaries to, change its fiscal year.

          8.10 Limitation on Restrictions on Subsidiary Dividends and other
     Distributions, etc.. The Borrower will not, nor will it permit any of its
     Subsidiaries to, directly or indirectly, create or otherwise cause, incur,
     assume, suffer or permit to exist or become effective any consensual
     encumbrance or restriction of any kind on the ability of any such Person to
     (a) pay dividends or make any other distribution on any of such Person's
     capital stock, (b) subject to subordination provisions, pay any
     Indebtedness owed to the Borrower or any other Credit Party, (c) make loans
     or advances to any other Credit Party or (d) transfer any of its Property
     to any other Credit Party, except for encumbrances or restrictions existing
     under or by reason of (i) customary non-assignment provisions in any lease
     governing a leasehold interest, (ii) the Subordinated Debt Agreement, as in
     existence on the date hereof, and (iii) this Credit Agreement and the other
     Credit Documents.

          8.11 Issuance of Stock. The Borrower will not, nor will it permit any
     of its Subsidiaries to, issue, sell or otherwise dispose of any shares of
     capital stock of any Subsidiary of the Borrower (including by way of sales
     of treasury, stock) or any options or warrants to purchase, or securities
     convertible into, capital stock of any Subsidiary of a Borrower.

          8.12 Sale Leasebacks. The Borrower will not, nor will it permit any of
     its Subsidiaries to, directly or indirectly, become.



                                      -64-
<PAGE>   69
     or remain liable as lessee or as guarantor or other surety with respect to
     any lease, whether an Operating Lease or a Capital Lease, of any Property
     (whether real or personal or mixed), whether now owned or hereafter
     acquired, (i) which such Person has sold or transferred or is to sell or
     transfer to any other Person other than a Credit Party or (ii) which such
     Person intends to use for substantially the same purpose as any other
     Property which has been sold or is to be sold or transferred by such Person
     to any other Person in connection with such lease.

          8.13 Settlements. The Borrower will not, nor will it permit any of its
     Subsidiaries to, enter into any binding settlement agreement with respect
     to any litigation, investigation or proceeding, whether pending or
     threatened, by or against the Borrower or any of its Subsidiaries, unless
     after giving effect on a Pro Forma Basis to any such settlement (including
     but not limited to any payment made or any Indebtedness to be incurred or
     assumed by the Borrower or any of its Subsidiaries in connection
     therewith), no Default or Event of Default would exist hereunder.

          8.14 No Further Negative Pledges. Except with respect to prohibitions
     against other encumbrances on specific Property encumbered to secure
     payment of particular Indebtedness (which Indebtedness relates solely to
     such specific Property, and improvements and accretions thereto and is
     otherwise permitted hereby), the Borrower will not, nor will it permit any
     of its Subsidiaries to, enter into, assume or become subject to any
     agreement prohibiting or otherwise restricting the creation or assumption
     of any Lien upon its properties or assets, whether now owned or hereafter
     acquired, or requiring the grant of any security for such obligation if
     security is given for some other obligation.

          8.15 No Foreign Subsidiaries. Neither the Borrower nor any of its
     Subsidiaries will create, acquire or permit to exist any direct or indirect
     Subsidiary of such Person which is not incorporated or organized under the
     laws of any State of the United States or the District of Columbia.

                                    SECTION 9

                                EVENTS OF DEFAULT

          9.1 Events of Default. An Event of Default shall exist upon the
     occurrence of any of the following specified events (each an "Event of
     Default"):

               (a) Payment. Any Credit Party shall

               (i) default in the payment when due of any principal of any of
          the Loans, or

               (ii) default, and such defaults shall continue for five (5) or
          more Business Days, in the payment when due of any interest on the
          Loans or of any



                                      -65-
<PAGE>   70

           Fees or other amounts owing hereunder, under any of the other Credit
           Documents or in connection herewith or therewith; or

               (b) Representations Any representation, warranty or statement
          made or deemed to be made by any Credit Party herein, in any of the
          other Credit Documents, or in any statement or certificate delivered
          or required to be delivered pursuant here to or thereto shall prove
          untrue in any material respect on the date as of which it was deemed
          to have been made; or

               (c) Covenants. Any Credit Party shall

                    (i) default in the due performance or observance of any
               term, covenant or agreement contained in Sections 7.2, 7.9, 7.11,
               7.12 or 8.1 through 8.15, inclusive, or

                    (ii) default in the due performance or observance by it of
               any term, covenant or agreement (other than those referred to in
               subsections (a), (b) or (c) (i) of this Section 9.1) contained in
               this Credit Agreement and such default shall continue unremedied
               for a period of at least 45 days after the earlier of a
               responsible officer of a Credit Party becoming aware of such
               default or notice thereof by the Agent; or

               (d) Other Credit Documents. (i) Any Credit Party shall default in
          the due performance or observance of any term, covenant or agreement
          in any of the other Credit Documents (subject to applicable grace or  
          cure periods, if any), or (ii) except as the result of or in
          connection with a dissolution, merger or disposition of a Subsidiary
          permitted by Section 8.4 (a), Section 8.4 (b) or Section 8.4 (c), any
          Credit Document shall fail to be in. full force and effect or to give
          the Agent and/or the Lenders the Liens, rights, powers and privileges
          purported to be,created thereby; or

               (e) Guaranties. Except as the result of or in connection with a
          Dissolution, merger or disposition of a Subsidiary permitted by
          Section 8.4 (a), Section 8.4 (b) or Section 8.4(c), the guaranty given
          by any Guarantor hereunder (including any Additional Credit Party) or
          any provision thereof shall cease to be in full force and effect, or
          any Guarantor (including any Additional Credit Party) hereunder or any
          Person acting by or on behalf of such Guarantor shall deny or
          disaffirm such Guarantor's obligations under such guaranty, or any
          Guarantor shall default in the due performance or observance of any
          term, covenant or agreement on its part to be performed or observed
          pursuant to any guaranty or



                                      -66-
<PAGE>   71

               (f) Bankruptcy, etc. Any Bankruptcy Event shall occur with
          respect to the Borrower or any of its Subsidiaries; or

               (g) Insurance Regulatory Orders. There shall occur any seizure,
          vesting, or intervention by or under the authority of any Governmental
          Authority by which (i) the management of any Insurance Subsidiary is
          displaced, or (ii) the authority of any Insurance Subsidiary is
          displaced, or is curtailed, in any materially adverse manner; or

               (h) Defaults under Other Agreements.

                    (i) The Borrower or any of its Subsidiaries shall default in
               the performance or observance (beyond the applicable grace period
               with respect thereto, if any) of any obligation or condition of
               the Subordinated Debt Agreement; or

                    (ii) The Borrower or any of its Subsidiaries shall default.,
               in any materially adverse manner, in the performance or
               observance (beyond the applicable grace period with respect
               thereto, if any) of any obligation or condition of any contract
               or lease; or

                    (iii) With respect to any Indebtedness (other than
               Indebtedness outstanding under this Credit Agreement) in excess
               of $1,000,000 in the aggregate for the Borrower and its
               Subsidiaries taken as a whole, (A) the Borrower or any of its
               Subsidiaries shall (1) default in any payment (beyond the
               applicable grace period with respect thereto, if any) with
               respect to any such Indebtedness, or (2) the occurrence and
               continuance of a default in the observance or performance
               relating to such Indebtedness or contained in any instrument or
               agreement evidencing, securing or relating thereto, or any other
               event or condition shall occur or condition exist, the effect of
               which default or other event or condition is to cause, or permit,
               the holder or holders of such Indebtedness (or trustee or agent
               on behalf of such holders) to cause (determined without regard to
               whether any notice or lapse of time is required), any such
               Indebtedness to become due prior to its stated maturity; or (B)
               any such Indebtedness shall be declared due and payable, or
               required to be prepaid other than by a regularly scheduled
               required prepayment, prior to the stated maturity thereof; or

               (i) Subordinated Indebtedness.

                    (i) The violation by any party to the Subordinated Debt
               Agreement of any provision of Section 10 thereof, or the ceasing
               of such agreement to be in full force and effect; or


                                      -67-
<PAGE>   72


                    (ii) The Borrower shall make any payments of principal in
               respect of the Subordinated Indebtedness prior to the repayment
               in full of the Loans, other than as permitted under Section 8.7;
               or

               (j) Judgments. One or more judgments or decrees shall be entered
          against the Borrower or any of its Subsidiaries involving an aggregate
          liability in excess of $2,000,000 (or, if less and so long as the
          Subordinated Indebtedness shall remain outstanding, the aggregate
          amount of judgment liabilities permitted under Section 11.1(j) of the
          Subordinated Debt Agreement) and any such judgments or decrees shall
          not (i) have been vacated, discharged or stayed or bonded pending
          appeal within 45 days from the entry therefor (ii) have been paid or
          fully covered by insurance provided by a carrier who has acknowledged
          coverage; or

               (k) ERISA. Any of the following events or conditions, if such
          event or condition could have a Material Adverse Effect: (1) any
          "accumulated funding deficiency," as such term is defined in Section
          302 of ERISA and Section 412 of the Code, whether or not waived, shall
          exist with respect to any Plan, or any lien shall arise on the assets
          of the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
          in favor of the PBGC or a Plan; (2) a Termination Event shall occur
          with respect to a Single Employer Plan, which is, in the reasonable
          opinion of the Agent, likely to result in the termination of such Plan
          for purposes of Title IV of ERISA; (3) a Termination Event shall occur
          with respect to a Multiemployer Plan or Multiple Employer Plan, which
          is, in the reasonable opinion of the Agent, likely to result in (i)
          the termination of such Plan for purposes of Title IV of ERISA, or
          (ii) the Borrower, any Subsidiary of the Borrower or any ERISA
          Affiliate incurring any liability in connection with a withdrawal
          from, reorganization of (within the meaning of Section 4241 of ERISA),
          or insolvency or (within the meaning of Section 4245 of ERISA) such
          Plan; or (4) any prohibited transaction (within the meaning of Section
          406 of ERISA or Section 4975 of the Code) or breach of fiduciary
          responsibility shall occur which may subject the Borrower, any
          Subsidiary of the Borrower or any ERISA Affiliate to any liability
          under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of
          the Code, or under any agreement or other instrument pursuant to which
          the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
          has agreed or is required to indemnify any person against any such
          liability; or

               (1) Ownership. There shall occur a Change of Control.

          9.2 Acceleration; Remedies. Upon the occurrence of an Event of
     Default, and at any time thereafter unless and until such Event of Default
     has been waived by the Required Lenders or cured to the



                                      -68-
<PAGE>   73

     satisfaction of the Required Lenders (pursuant to the voting procedures in
     Section 11.6), the Agent shall, upon the request and direction of the
     Required Lenders, by written notice to the Credit Parties take any of the
     following actions:

               (i) Termination of Commitments. Declare the Commitments
          terminated whereupon the Commitments shall be immediately terminated.

               (ii) Acceleration. Declare the unpaid principal of and any
          accrued interest in respect of all Loans and any and all other
          indebtedness or obligations of any and every kind owing by the
          Borrower to the Agent and/or any of the Lenders hereunder to be due
          whereupon the same shall be immediately due and payable without
          presentment, demand, protest or other notice of any kind, all of which
          are hereby waived by the Borrower.

               (iii) Enforcement of Rights. Enforce any and all rights and
          interests created and existing under the Credit Documents and all
          rights of set-off.

          Notwithstanding the foregoing, if an Event of Default specified in
     Section 9.1(f) shall occur, then the Commitments shall automatically
     terminate and all Loans all accrued interest in respect thereof, all
     accrued and unpaid fees and other indebtedness or obligations owing to the
     Agent and/or any of the Lenders hereunder automatically shall immediately
     become due and payable without the giving of any notice or other action by
     the Agent or the Lenders.


                                   SECTION 10

                                AGENCY PROVISIONS

          10.1 Appointment. Each Lender hereby designates and appoints
     NationsBank, N.A. (South) as administrative agent (in such capacity as
     Agent hereunder, the "Agent") of such Lender to act as specified herein and
     the other Credit Documents, and each such Lender hereby authorizes the
     Agent as the agent for such Lender, to take such action on its behalf under
     the provisions of this Credit Agreement and the other Credit Documents and
     to exercise such powers and perform such duties as are expressly delegated
     by the terms hereof and of the other Credit Documents, together with such
     other powers as are reasonably incidental thereto. Notwithstanding any
     provision to the contrary elsewhere herein and in the other Credit
     Documents, the Agent shall not have any duties or responsibilities, except
     those expressly set forth herein And therein, or any fiduciary relationship
     with any Lender, and no implied covenants, obligations or liabilities
     functions, responsibilities, duties, shall be read into this Credit
     Agreement or any of the other Credit Documents, or shall otherwise exist
     against the Agent. The provisions of this Section are solely for the
     benefit of the Agent and the Lenders and none of the, Credit Parties shall
     have any rights as a third party beneficiary of the provisions hereof. In



                                      -69-
<PAGE>   74

     performing its functions and duties under this Credit Agreement and the
     other Credit Documents, the Agent shall act solely as agent of the Lenders
     and does not assume and shall not be deemed to have assumed any obligation
     or relationship of agency or trust with or for any Credit Party or any of
     their respective Affiliates.

          10.2 Delegation of Duties. The Agent may execute any of their
     respective duties hereunder or under the other Credit Documents by or
     through agents or attorneys-in-fact and shall be entitled to advice of
     counsel concerning all matters pertaining to such duties. The Agent shall
     not be responsible for the negligence or misconduct of any agents or
     attorneys-in-fact selected by it with reasonable care.

          10.3 Exculpatory Provisions. The Agent and its officers, directors,
     employees, agents, attorneys-in-fact or affiliates shall not be (i) liable
     for any action lawfully taken or omitted to be taken by it or such Person
     under or in connection herewith or in connection with any of the other
     Credit Documents (except for its or such Person's own gross negligence
     or willful misconduct), or (ii) responsible in any manner to any of the
     Lenders for any recitals, statements, representations or warranties made
     by any of the Credit Parties contained herein or in any of the other
     Credit Documents or in any certificate, report, document, financial
     statement or other written or oral statement referred to or provided for
     in, or received by the Agent under or in connection herewith or in
     connection with the other Credit Documents, or enforceability or
     sufficiency therefor of any of the other Credit Documents, or for any
     failure of any Credit Party to perform its obligations hereunder or
     thereunder. The Agent shall not be responsible to any Lender for the
     effectiveness, genuineness, validity, enforceability, collectability or
     sufficiency of this Credit Agreement, or any of the other Credit Documents
     or for any representations, warranties, recitals or statements made herein
     or therein or made by the Borrower or any Credit Party in any written or
     oral statement or in any financial or other statements, instruments,
     reports, certificates or any other documents in connection herewith or
     therewith furnished or made by the Agent to the Lenders or by or on behalf
     of the Credit Parties to the Agent or any Lender or be required to
     ascertain or inquire as to the performance or observance of any of the
     terms, conditions, provisions, covenants or agreements contained herein or
     therein or as to the use of the proceeds of the Loans or of the existence
     or possible existence of any Default or Event of Default or to inspect the
     properties, books or records of the Credit Parties or any of their
     respective Affiliates.

          10.4 Reliance on Communications. The Agent shall be entitled to rely,
     and shall be fully protected in relying, upon any note, writing,
     resolution, notice, consent, certificate, affidavit, letter, cablegram,
     telegram, telecopy, telex or teletype message, statement, order or other
     document or conversation believed by it to be genuine and correct and to
     have been signed, sent or made by the proper Person or Persons and upon
     advice and statements of legal counsel (including, without limitation,
     counsel to any of the Credit Parties, independent accountants and other
     experts



                                      -70-
<PAGE>   75


     selected by the Agent with reasonable care).  The Agent may deem and treat
     the Lenders as the owner of their respective interests hereunder for all
     purposes unless a written notice of assignment, negotiation or transfer
     thereof shall have been filed with the Agent in accordance with Section
     11.3(b) hereof. The Agent shall be fully justified in failing or refusing
     to take any action under this Credit Agreement or under any of the other
     Credit Documents unless it shall first receive such advice or concurrence
     of the Required Lenders as it deems appropriate or it shall first be
     indemnified to its satisfaction by the Lenders against any and all
     liability and expense which may be incurred by it by reason of taking or
     continuing to take any such action. The Agent shall in all cases be fully
     protected in acting, or in refraining from acting, hereunder or under any
     of the other Credit Documents in accordance with a request of the Required
     Lenders (or to the extent specifically provided in Section 11.6, all the
     Lenders) and such request and any action taken or failure to act pursuant
     thereto shall be binding upon all the Lenders (including their successors
     and assigns).

          10.5 Notice of Default. The Agent shall not be deemed to have
     knowledge or notice of the occurrence of any Default or Event of Default
     hereunder unless the Agent has received notice from a Lender or a Credit
     Party referring to the Credit Document, describing such Default or Event of
     Default and stating that such notice is a "notice of default." In the event
     that the Agent receives such a notice, the Agent shall give prompt notice
     thereof to the Lenders. The Agent shall take such action with respect to
     such Default or Event of Default as shall be reasonably directed by the
     Required Lenders.

          10.6 Non-Reliance on Agent an Lenders. Each Lender expressly
     acknowledges that each of the Agent and its officers, directors, employees,
     agents, attorneys-in-fact or affiliates has not made any representations or
     warranties to it and that no act by the Agent or any affiliate thereof
     hereinafter taken, including any review of the affairs of any Credit Party
     or any of their respective Affiliates, shall be deemed to constitute any
     representation or warranty by the Agent to any Lender. Each Lender
     represents to the Agent that it has, independently and without reliance
     upon the Agent or any other Lender, and based on such documents and
     information as it has deemed appropriate, made its own appraisal of and
     investigation into the business, assets, operations, property, financial
     and other conditions, prospects and creditworthiness of the Borrower, the
     other Credit Parties or their respective Affiliates and made its own
     decision to make its Loans hereunder and enter into this Credit Agreement.
     Each Lender also represents that it will, independently and without
     reliance upon the Agent or any other Lender, and based on such documents
     and information as it shall deem appropriate at the time, continue to make
     its own credit analysis, appraisals and decisions in taking or not taking
     action under this Credit Agreement, and to make such investigation as it
     deems necessary to inform itself as to the business, assets, operations,
     property, financial and other conditions, prospects and creditworthiness of
     the Borrower, the Parties and their respective Affiliates. Except for



                                      -71-
<PAGE>   76

     notices, reports and other documents expressly required to be furnished to
     the Lenders by the Agent hereunder, the Agent shall not have any duty or
     responsibility to provide any Lender with any credit or other information
     concerning the business, operations, assets, property, financial or other
     conditions, prospects or creditworthiness of the Borrower, the other Credit
     Parties or any of their respective Affiliates which may come into the
     possession of the Agent or any of its officers, directors, employees,
     agents, attorneys-in-fact or affiliates.

          10.7 Indemnification. The Lenders agree to indemnify the Agent in its
     capacity as such (to the extent not reimbursed by the Borrower and without
     limiting the obligation of the Borrower to do so), ratably according to
     their respective Commitments (or if the Commitments have expired or been
     terminated, in accordance with the respective principal amounts of
     outstanding Loans of the Lenders), from and against any and all
     liabilities, obligations, losses, damages, penalties, actions, judgments,
     suits, costs, expenses or disbursements of any kind whatsoever which may at
     any time (including without limitation at any time following the final
     payment of all of the obligations of the Borrower hereunder and under the
     other Credit Documents) be imposed on, incurred by or asserted against the
     Agent in its capacity as such in any way relating to or arising out of this
     Credit Agreement or the other Credit Documents or any documents
     contemplated by or referred to herein or therein or the transactions
     contemplated hereby or thereby or any action taken or omitted by the Agent
     under or in connection with any of the foregoing; provided that no Lender
     shall be liable for the payment of any portion of such liabilities,
     obligations, losses, damages, penalties, actions, judgments, suits, costs,
     expenses or disbursements resulting from the gross negligence or willful
     misconduct of the Agent. If any indemnity furnished to the Agent for any
     purpose shall, in the opinion of the Agent, be insufficient or become
     impaired, the Agent may call for additional indemnity and cease, or not
     commence, to do the acts indemnified against until such additional
     indemnity is furnished. The agreements in this Section shall survive the
     repayment of the Loans and other obligations under the Credit Documents and
     the termination of the Commitments hereunder.

          10.8 Agent in its Individual Capacity. The Agent and its affiliates
     may make loans to, accept deposits from and generally engage in any kind of
     business with the Borrower, its Subsidiaries or their respective Affiliates
     as though the Agent were not the Agent hereunder. With respect to the Loans
     made by and all obligations of the Borrower hereunder and under the other
     Credit Documents, the Agent shall have the same rights and powers under,
     this Credit Agreement as any Lender and may exercise the same as though it
     were not the Agent, and the terms "Lender" and "Lenders" shall include the
     Agent in its individual capacity.

          10.9 Successor Agent. The Agent may, at any time resign upon 20 days'
     written notice to the Lenders, and be removed with or without cause by the
     Required Lenders upon 30 days written notice to the Agent. Upon any such
     resignation or removal, the Required Lenders shall have the right to
     appoint a successor Agent. If no


                                      -72-
<PAGE>   77

     successor Agent shall have been so appointed by the Required Lenders, and
     shall have accepted such appointment, within 30 days after the notice of
     resignation or notice of removal, as appropriate, then the retiring Agent
     shall select a successor Agent provided such successor is a Lender
     hereunder or a commercial bank organized under the laws of the United
     States of America or of any State thereof and has a combined capital and
     surplus of at least $400,000,000. Upon the acceptance of any appointment as
     Agent hereunder by a successor, such successor Agent shall thereupon
     succeed to and become vested with all the rights, powers, privileges and
     duties of the retiring Agent, and the retiring Agent shall be discharged
     from its duties and obligations as Agent, as appropriate, under this Credit
     Agreement and the other Credit Documents and the provisions of this Section
     10.9 shall inure to its benefit as to any actions taken or omitted to be
     taken by it while it was Agent under this Credit Agreement.


                                   SECTION 11

                                  MISCELLANEOUS

          11.1 Notices. Except as otherwise expressly provided herein, all
     notices and other communications shall have been duly given and shall be
     effective (i) when delivered, (ii) when transmitted via telecopy (or other
     facsimile device) to the number set out below, (iii) the day following the
     day on which the same has been delivered prepaid to a reputable national
     overnight air courier service, or (iv) the third Business Day following the
     day on which the same is sent by certified or registered mail, postage
     prepaid, in each case to the respective parties at the address, in the case
     of the Borrower, Guarantors and the Agent, set forth below, and, in the
     case of the Lenders, set forth on Schedule 2.1(a), or at such other address
     as such party may specify by written notice to the other parties hereto:

                    if to the Borrower or the Guarantors:

                           RISCORP, Inc.
                           1390 Main Street
                           Sarasota, Florida 34236-5642
                           Attn: Chief Financial Officer
                           Telephone: (941) 951-2022
                           Telecopy:  (941) 951-1495

                    with a copy to:

                           Brown, Clark & Walters
                           Sarasota City Center, Suite 1100
                           1819 Main Street
                           Sarasota, Florida 34236
                           Attn: Daryl Brown, Esq.
                           Telephone: (941) 957-3800
                           Telecopy:  (941) 957-3888


                                      -73-
<PAGE>   78





                         if to the Agent:

                             NationsBank, N.A. (South)
                             Independence center, 15th Floor
                             NCl-001-15-04
                             101 N. Tryon Street
                             Charlotte, North Carolina 28255
                             Attn: Agency Services
                             Telephone: (704) 386-8958
                             Telecopy:  (704) 386-9923

                         with a copy to:

                             NationsBank, N.A. (South)
                             1605 Main Street, Suite 101
                             FL4-237-01-04
                             Sarasota, Florida 34236-5847
                             Attn: Mark A. McDonell
                             Telephone: (941) 952-2741
                             Telecopy:  (941) 952-2853

         11.2 Right of Set-Off. In Addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Lender is
authorized at any time and from time to time, without presentment, demand,
protest or other notice of any kind (all of which rights being hereby expressly
waived), to set off and to appropriate and apply any and all deposits (general
or special) and any other indebtedness at any time held or owing by such Lender
(including, without limitation branches, agencies or Affiliates of such Lender
wherever located) to or for the credit or the account of any Credit Party
against obligations and liabilities of such Person to such Lender hereunder,
under the Notes, the other Credit Documents or otherwise, irrespective of
whether such Lender shall have made any demand hereunder and although such
obligations, liabilities or claims, or any of them, may be contingent or
unmatured, and any such set-off shall be deemed to have been made immediately
upon the occurrence of an Event of Default even though such charge is made or
entered on the books of such Lender subsequent thereto. Any Person purchasing a.
participation in the Loans and Commitments hereunder pursuant to Section 3.13 or
Section 11.3(d) may exercise all rights of set-off with respect to its
participation interest as fully as if such Person were a Lender hereunder.

          11.3 Benefit of Agreement.

               (a) Generally This Credit Agreement shall be binding upon and
          inure to the benefit of and be enforceable by the respective
          successors and assigns of the parties hereto; Provided that none of
          the Credit Parties may assign or transfer any of its interests without
          prior written consent of the Lenders; provided further that the rights
          of each Lender to transfer, assign or grant participations in its
          rights and/or obligations hereunder shall be limited as set forth in



                                      -74-
<PAGE>   79

          this Section 11.3, Provided however that nothing herein shall prevent
          or prohibit any Lender from (i) pledging its Loans hereunder to a
          Federal Reserve Bank in support of borrowings made by such Lender from
          such Federal Reserve Bank, or (ii) granting assignments or selling
          participations in such Lender's Loans and/or Commitments hereunder to
          its parent company and/or to any Affiliate or Subsidiary of such
          Lender.

               (b) Assignments. Each Lender may assign all or a portion of its
          rights and obligations hereunder, pursuant to an assignment agreement
          substantially in the form of Schedule 11.3(b), to (i) any Lender or
          any Affiliate or Subsidiary of a Lender, or (ii) any other commercial
          bank, financial institution or "accredited investor" (as defined in
          Regulation D of the Securities and Exchange Commission) reasonably
          acceptable to the Agent and, so long as no Default or Event of Default
          has occurred and is continuing, the Borrower; Provided that (i) any
          such assignment (other than any assignment to an existing Lender)
          shall be in a minimum aggregate amount of $5,000,000 (or, if less, the
          remaining amount of the Commitment being assigned by such Lender) of
          the Commitments and in integral multiples of $1,000,000 above such
          amount and (ii) each such assignment shall be of a constant, not
          varying, percentage of all such Lender's rights and obligations under
          this Credit Agreement. Any assignment hereunder shall be effective
          upon delivery by the assigning Lender to the Agent of written notice
          of the assignment together with a transfer fee of $3,500 payable to
          the Agent for its own account from and after the later of W the
          effective date specified in the applicable assignment agreement and
          (ii) the date of recording of such assignment in the Register pursuant
          to the terms of subsection (c) below. The assigning Lender will give
          prompt notice to the Agent and the Borrower of any such assignment.
          Upon the effectiveness of any such assignment (and after notice to,
          and (to the extent required pursuant to the terms hereof), with the
          consent of, the Borrower as provided herein), the assignee shall
          become a "Lender" for all purposes of this Credit Agreement and the
          other Credit Documents and, to the extent of such assignment, the
          assigning Lender shall be relieved of its obligations hereunder to the
          extent of the Loans and Commitment components being assigned. Along
          such lines the Borrower agrees that upon notice of any such assignment
          and surrender of the appropriate Note or Notes, it will promptly
          provide to the assigning Lender and to the assignee separate
          promissory notes in the amount of their respective interests
          substantially in the form of the original Note (but with notation
          thereon that it is given in substitution for and replacement of the
          original Note or any replacement notes thereof). By executing and
          delivering an assignment agreement in accordance with this Section
          11.3(b), the assigning Lender thereunder and the assignee thereunder
          shall be deemed to confirm to and agree with each other and the other
          parties hereto as follows: (i) such assigning Lender, warrants that it
          is the legal and beneficial owner of the interest being assigned
          thereby free and clear of an adverse



                                      -75-
<PAGE>   80

          claim; (ii) except as set forth in clause (i) above, such assigning
          Lender makes no representation or warranty and assumes no
          responsibility with respect to any statements, warranties or
          representations made in or in connection with this Credit Agreement,
          any of the other Credit Documents or any other instrument or document
          furnished pursuant hereto or thereto, or the execution, legality,
          validity, enforceability, genuineness, sufficiency or value of this
          Credit Agreement, any of the other Credit Documents or any other
          instrument or document furnished pursuant hereto or thereto or the
          financial condition of any Credit Party or any of their respective
          Affiliates or the performance or observance by any Credit Party of any
          of its obligations under this Credit Agreement, any of the other
          Credit Documents or any other instrument or document furnished
          pursuant hereto or thereto; (iii) such assignee represents and
          warrants that it is legally authorized to enter into such assignment
          agreement; (iv) such assignee confirms that it has received a copy of
          this Credit Agreement, the other Credit Documents and such other
          documents and information as it has deemed appropriate to make its own
          credit analysis and decision to enter into such assignment agreement;
          (v) such assignee will independently and without reliance upon the
          Agent, such assigning Lender or any other Lender, and based on such
          documents and information as it shall deem appropriate at the time,
          continue to make its own credit decisions in taking or not taking
          action under this Credit Agreement and the other Credit Documents;
          (vi) such assignee appoints and authorizes the Agent to take such
          action on its behalf and to exercise such powers under this Credit
          Agreement or any other Credit Document as are delegated to the Agent
          by the terms hereof or thereof, together with such powers as are
          reasonably incidental thereto; and (vii) such assignee agrees that it
          will perform in accordance with their terms all the obligations which
          by the terms of this Credit Agreement and the other Credit Documents
          are required to be performed by it as a Lender. Notwithstanding the
          provisions of Section 11.5, each assigning Lender shall pay any and
          all fees and expenses incurred in connection with any assignments made
          by it pursuant to this Section 11.3(b).

               (c) Maintenance of Register. The Agent shall maintain at one of
          its offices in Charlotte, North Carolina a copy of each Lender
          assignment agreement delivered to it in accordance with the terms of
          subsection (b) above and a register for the recordation of the
          identity of the principal amount, type and Interest Period of each
          Loan outstanding hereunder, the names, addresses and the Commitments
          of the Lenders pursuant to the terms hereof from time to time (the
          "Register"). The Agent will make reasonable efforts to maintain the
          accuracy of the Register and to promptly update the Register from time
          to time as necessary. The entries in the Register shall be conclusive
          in the absence of manifest error and the Borrower, the Agent and the
          Lenders may treat each Person whose name is recorded in the Register
          pursuant to the terms hereof as a Lender hereunder for all purposes of
          this Credit Agreement. The Register shall be available for inspection
          by the Borrower



                                      -76-
<PAGE>   81


          and each Lender, at any reasonable time and from time to time upon
          reasonable prior notice.

               (d) Participations. Each Lender may sell, transfer, grant or
          assign participations in all or any part of such Lender's interests
          and obligations hereunder; provided that (i) such selling Lender shall
          remain a "Lender" for all purposes under this Credit Agreement (such
          selling Lender's obligations under the Credit Documents remaining
          unchanged) and the participant shall not constitute a Lender
          hereunder, (ii) no such participant shall have, or be granted, rights
          to approve any amendment or waiver relating to this Credit Agreement
          or the other Credit Documents except to the extent any such amendment
          or waiver would (A) reduce the principal" of or rate of interest on or
          Fees in respect of any Loans in which the participant is
          participating, (B) postpone the date fixed for any payment of
          principal (including extension of the Conversion Date, the Termination
          Date or the date of any mandatory prepayment), interest or Fees in
          which the participant is participating, or (C) except as expressly
          provided in the Credit Documents, release any Guarantor from its
          guaranty obligations hereunder, and (iii) sub-participations by the
          participant (except to an affiliate, parent company or affiliate of a
          parent company of the participant) shall be prohibited. In the case of
          any such participation, the participant shall not have any rights
          under this Credit Agreement or the other Credit Documents (the
          participant's rights against the selling Lender in respect of such
          participation to be those set forth in the participation agreement
          with such Lender creating such participation) and all amounts payable
          by the Borrower hereunder shall be determined as if such Lender had
          not sold such participation, provided, however, that such participant
          shall be entitled to receive additional amounts under Sections 3.6,
          3.9, 3.10 and 3.11 on the same basis as if it were a Lender.

          11.4 No Waiver; Remedies Cumulative. No failure or delay on the part
     of the Agent or any Lender in exercising any right, power or privilege
     hereunder or under any other Credit Document and no course of dealing
     between the Agent or any Lender and any of the Credit Parties shall operate
     as a waiver thereof; nor shall any single or partial exercise of any right,
     power or privilege hereunder or under any other Credit Document preclude
     any other or further exercise thereof or the exercise of any other right,
     power or privilege hereunder or thereunder. The rights and remedies
     provided herein are cumulative and not exclusive, of any rights or remedies
     which the Agent or any Lender would otherwise have. No notice to or demand
     on any Credit Party in any case shall entitle the Borrower or: any other
     Credit, Party to any other, or further notice or demand in similar or other
     circumstances or constitute a waiver of the rights of the Agent or the
     Lenders to any other or further action in any circumstances without notice
     or demand.


                                      -77-
<PAGE>   82

          11.5 Payment of Expenses, etc. The Borrower agrees to: (i) pay all
     reasonable out-of-pocket costs and expenses (A) of the Agent in connection
     with the negotiation, preparation, execution and delivery and
     administration of this Credit Agreement and the other Credit Documents and
     the documents and instruments referred to therein (including, without
     limitation, the reasonable fees and expenses of Moore & Van Allen, PLLC,
     special counsel to the Agent) and any amendment, waiver or consent relating
     hereto and thereto including, but not limited to, any such amendments,
     waivers or consents resulting from or related to any work-out,
     renegotiation or restructure relating to the performance by the Credit
     Parties under this Credit Agreement and (B) of the Agent and the Lenders in
     connection with enforcement of the Credit Documents and the documents and
     instruments referred to therein (including, without limitation, in
     connection with any such enforcement, the reasonable fees and disbursements
     of counsel for the Agent and each of the Lenders); (ii) pay and hold each
     of the Lenders harmless from and against any and all present and future
     stamp and other similar taxes with respect to the foregoing matters and
     save each of the Lenders harmless from and against any and all liabilities
     with respect to or resulting from any delay or omission (other than to the
     extent attributable to such Lender) to pay such taxes; and (iii) indemnify
     each Lender, its officers, directors, employees, representatives and agents
     from and hold each of them harmless against any and all losses,
     liabilities, claims, damages or expenses incurred by any of them as a
     result of, or arising out of, or in any way related to, or by reason of (A)
     any investigation, litigation or other proceeding (whether or not any
     Lender is a party thereto) related to the entering into and/or performance
     of any Credit Document or the use of proceeds of any Loans (including other
     extensions of credit) hereunder or the consummation of any other
     transactions contemplated in any Credit Document, including, without
     limitation, the reasonable fees and disbursements of counsel incurred in
     connection with any such investigation, litigation or other proceeding or
     (B) the presence or Release of any Materials of Environmental Concern at,
     under or from any Property owned, operated or leased by the Borrower or any
     of its Subsidiaries, or the failure by the Borrower or any of its
     Subsidiaries to comply with any Environmental Law (but excluding, in the
     case of either of clause (A) or (B) above, any such losses, liabilities,
     claims, damages or expenses to the extent incurred by reason of gross
     negligence or willful misconduct on the part of the Person to be
     indemnified).

          11.6 Amendments, Waivers and Consents. Neither this Credit Agreement
     nor any other Credit Document nor any of the terms hereof or thereof may be
     amended, changed, waived, discharged or terminated unless such amendment,
     change, waiver, discharge or termination is in Writing entered into by, or
     approved in writing by, the Required Lenders and the Borrower, provided
     that no such amendment, change, waiver, discharge or termination shall,
     without the consent of each Lender:

               (i) extend the final maturity of any Loan, or any portion
          thereof;




                                      -78-
<PAGE>   83

               (ii) reduce the rate or extend the time of payment of interest
          (other than as a result of waiving the applicability of any
          post-default increase in interest rates) on any Loan or fees
          hereunder;

               (iii) reduce the principal amount on any Loan, or increase the
          Commitments of the Lenders over the amount thereof in effect (it being
          understood and agreed that a waiver of any Default or Event of Default
          or of a mandatory reduction in the total commitments shall not
          constitute a change in the terms of any Commitment of any Lender);

               (iv) except as the result of or in connection with a dissolution,
          merger or disposition of a Subsidiary permitted by Section 8.4(a),
          Section 8.4(b) or Section 8.4(c), release all or substantially all of
          the Guarantors from the guaranty obligations hereunder;

               (v) amend, modify or waive any provision of this Section 11.6 or
          Section 3.6, 3.10, 3.11, 3.12, 3.13, 5.1, 5.2, 9.1(a), 11.2., 11.3,
          11.5 or 11.9;

               (vi) reduce any percentage specified in, or otherwise modify, the
          definition of "Required Lenders;" or

               (vii) consent to the assignment or transfer by the Borrower (or
          any Guarantor) of any of its rights and obligations under (or in
          respect of) the Credit Documents to which it is a party.

          No provision of Section 10 may be amended without the consent of the
          Agent.

          11.7 Counterparts. This Credit Agreement may be executed in any number
     of counterparts, each of which when so executed and delivered shall be an
     original, but all of which shall constitute one and the same instrument. It
     shall not be necessary in making proof of this Credit Agreement to produce
     or account for more than one such counterpart.

          11.8 Headings. The headings of the sections and subsections hereof are
     provided for convenience only and shall not in any way affect the meaning
     or construction of any provision of this Credit Agreement.

          11.9 Survival. All indemnities set forth herein, including, without
     limitation, in Section 3.9, 3.11, 10.7 or 11.5 shall survive the execution
     and delivery of this Credit Agreement, the making of the Loans, the
     repayment of the Loans and other obligations under the Credit Documents and
     the termination of the Commitments hereunder, and all representations and
     warranties made by the Credit Parties herein shall survive delivery of the
     Notes and the making of the Loans hereunder.

          11.10 Governing Law; Submission to Jurisdiction; Venue.



                                      -79-
<PAGE>   84

                    (a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
               THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
               THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
               ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA. Any legal
               action or proceeding with respect to this Credit Agreement or any
               other Credit Document may be brought in the courts of the State
               of Florida in Sarasota County, or of the United, States for the
               Middle District of Florida, and, by execution and delivery of
               this Credit Agreement, each of the Credit Parties hereby
               irrevocably accepts for itself and in respect of its property,
               generally and unconditionally, the nonexclusive jurisdiction of
               such courts. Each of the Credit Parties further irrevocably
               consents to the service of process out of any of the
               aforementioned courts in any such action or proceeding by the
               mailing of copies thereof by registered or certified mail,
               postage prepaid, to it at the address set out for notices
               pursuant to Section 11.1, such service to become effective three
               (3) days after such mailing. Nothing herein shall affect the
               right of the Agent to serve process in any other manner permitted
               by law or to commence legal proceedings or to otherwise proceed
               against any Credit Party in any other jurisdiction.

                    (b) Each of the Credit Parties hereby irrevocably waives any
               objection which it may now or hereafter have to the laying of
               venue of any of the aforesaid actions or proceedings arising out
               of or in connection with this Credit Agreement or any other
               Credit Document brought in the courts referred to in
               subsection (a) hereof and hereby further irrevocably waives and
               agrees not to plead or claim in any such court that any such
               action or proceeding brought in any such court has been brought
               in an inconvenient forum.

                    (c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE
               LENDERS, THE BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY
               WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
               COUNTERCLAIM ARISING OUT OF RELATING TO THIS CREDIT AGREEMENT,
               ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
               CONTEMPLATED HEREBY.

          11.11 Severability. if any provision of any of the Credit Documents is
     determined to be illegal, invalid or unenforceable, such provision shall be
     fully severable and the remaining provisions shall remain in full force and
     effect and shall be construed without giving effect to the illegal, invalid
     or unenforceable provisions.

          11.12 Entirety. This Credit Agreement together with the other Credit
     Documents represent the entire agreement of the parties hereto and thereto,
     and supersede all prior agreements and understandings, oral or written, if
     any, including any commitment letters or correspondence relating to the
     Credit Documents or the transactions contemplated herein and therein.


                                      -80-
<PAGE>   85
          11.13 Binding Effect; Termination. (a) This Credit Agreement shall
     become effective at such time on or after the Closing Date when it shall
     have been executed by the Borrower, the Guarantors and the Agent, and the
     Agent shall have received copies hereof (telefaxed or otherwise) which,
     when taken together, bear the signatures of each Lender, and thereafter
     this Credit Agreement shall be binding upon and inure to the benefit of the
     Borrower, the Guarantors, the Agent and each Lender and their respective
     successors and assigns.

          (b) The term of this Credit Agreement shall be until no Loans or any
     other amounts payable hereunder or under any of the other Credit Documents
     shall remain outstanding and until all of the Commitments hereunder shall
     have expired or been terminated.

          11.14 Confidentiality. The Agent and the Lenders agree to keep
     confidential (and to cause their respective affiliates, officers,
     directors, employees, agents and representatives to keep confidential) all
     information, materials and documents furnished to the Agent or any such
     Lender by or on behalf of any Credit Party (whether before or after the
     Closing Date) which relates to the Borrower or any of its Subsidiaries (the
     "Information"). Notwithstanding the foregoing, the Agent and each Lender
     shall be permitted to disclose Information (i) to its affiliates, officers,
     directors, employees, agents and representatives in connection with its
     participation in any of the transactions evidenced by this Credit Agreement
     or any other Credit Documents or the administration of this Credit
     Agreement or any other Credit Documents; (ii) to the extent required by
     applicable laws and regulations or by any subpoena or similar legal
     process, or requested by any Governmental Authority; (iii) to the extent
     such Information (A) becomes publicly available other than as a result of a
     breach of this Credit Agreement or any agreement entered into pursuant to
     clause (iv) below, (B) becomes available to the Agent or such Lender on a
     non-confidential basis from a source other than o Credit Party or (C) was
     available to the Agent or such Lender on o non-confidential basis prior to
     its disclosure to the Agent or such Lender by a Credit Party; (iv) to any
     assignee or participant (or prospective assignee or participant) so long as
     such assignee or participant (or prospective assignee or participant) first
     specifically agrees in a writing furnished to and for the benefit of the
     Credit Parties to be bound by the terms of this Section 11.14; or (v) to
     the extent that the Borrower shall have consented in writing to such
     disclosure. Nothing set forth in this Section 11.14 shall obligate the
     Agent or any Lender to return any materials furnished by the Credit
     Parties.

          11.15 Source of Funds. Each of the Lenders hereby represents and
     warrants to the Borrower that at least one of the following statements is
     an accurate representation as to the source of funds to be used by such
     Lender in connection with the financing hereunder:

          (a) no part of such funds constitutes assets allocated to any
          separate. account maintained by such Lender in


                                      -81-
<PAGE>   86


          which any employee benefit plan (or its related trust) has any
          interest;

          (b) to the extent that any part of such funds constitutes assets
          allocated to any separate account maintained by such Lender, such
          Lender has disclosed to the Borrower the name of each employee benefit
          plan whose assets in such account exceed 10% of the total assets of
          such account as of the date of, such purchase (and, for purposes of
          this subsection (b), all employee benefit plans maintained by the same
          employer or employee organization are deemed to be a single plan); or

          (c) such funds constitute assets of one or more specific benefit plans
          which such Lender has identified in writing to the Borrower.

     As used in this Section 11.15, the terms "employee benefit plan" and
     "separate account" shall have the respective meanings assigned to such
     terms in Section 3 of ERISA.

          11.16 Conflict. To the extent that there is a conflict or
     inconsistency between any provision hereof, on the one hand, and any
     provision of any Credit Document, on the other hand, this Credit Agreement
     shall control.

                           (Signature Page to Follow]



                                      -82-
<PAGE>   87

     IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.

BORROWER:                RISCORP, INC.,
                         a Florida corporation

                         By: /s/ Anthony Tang
                            --------------------------------
                         Name:  Anthony Tang
                         Title: Vice President of Treasury













                                      S-1

<PAGE>   88

GUARANTORS:                        RISCORP ACQUISITION, INC.,
                                        a Florida corporation

                                   RISCORP OF FLORIDA, INC.,
                                        a Florida corporation

                                   RISCORP SERVICES, INC.,
                                        a Florida corporation

                                   RISCORP MANAGEMENT SERVICES, INC.,
                                        a Florida corporation

                                   RISCORP WEST, INC.,
                                        an Oklahoma corporation

                                   RISCORP OF VIRGINIA, INC.,
                                        a Virginia corporation

                                   RISCORP OF NORTH CAROLINA, INC.,
                                        a North Carolina corporation

                                   RISCORP INSURANCE SERVICES, INC.,
                                        a Florida corporation

                                   RISCORP MANAGED CARE SERVICES, INC.,
                                        a Florida corporation

                                   RISCORP OF ILLINOIS, INC.,
                                        an Illinois corporation

                                   SARASOTA INTERNATIONAL RISK AND INSURANCE
                                        SERVICES, INC., a Florida corporation

                                   SARASOTA CLAIMS AND INSURANCE SERVICES
                                        CORPORATION, a Florida corporation

                                   COMPSOURCE ACQUISITION, INC.,
                                        a Florida corporation

                                   COMPSOURCE, INC.,
                                        a North Carolina corporation

                                   INDEPENDENT ASSOCIATION ADMINISTRATORS
                                        INCORPORATED, a Florida corporation


                                    By: /s/ Anthony Tang
                                       ---------------------------------------
                                    Name:  Anthony Tang
                                    Title: Vice President of Treasury of
                                           each of the above Guarantors



                                       S-2

<PAGE>   89
LENDERS:                           NATIONSBANK, N.A. (SOUTH),
                                   individually in its capacity as a
                                   Lender and in its capacity as Agent

                                   By /s/ Mark A. McDonell
                                     -----------------------------------------
                                   Name:  Mark A. McDonell
                                   Title: Senior Vice President

                                   SOUTHTRUST BANK OF ASSOCIATION

                                   By Anthony D. Nigro
                                      ----------------------------------------
                                   Name:  Anthony D. Nigro
                                   Title: Assistant Vice President














                                     S-3