SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                    FOR QUARTERLY PERIOD ENDED JUNE 30, 1997

                          Commission File Number 1-8538

                            WESTBRIDGE CAPITAL CORP.
             (Exact name of Registrant as specified in its Charter)

        DELAWARE                                      73-1165000
(State of Incorporation)                   (I.R.S. Employer Identification No.)

   777 MAIN STREET, FORT WORTH, TEXAS                              76102
(Address of Principal Executive Offices)                        (Zip Code)

                                  817-878-3300

              (Registrant's Telephone Number, including Area Code)

                                  800-437-8690

  (Registrant's Shareholder and Investor Relations Toll Free Telephone Number)

                                 NOT APPLICABLE

   (Former Name, Address and Former Fiscal Year, if changed since Last Report)

Indicate,  by check  mark  whether  the  Registrant:  (1) has filed all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. YES X NO_____

Common Stock - Par Value $.10    6,217,044 Shares Outstanding at August 11, 1997



<PAGE>



                                                                       FORM 10-Q

Company or group of companies for which report is filed:

                            WESTBRIDGE CAPITAL CORP.

This quarterly report, filed pursuant to Rule 13a-13 and 15d-13 of the General
Rules and Regulations under the Securities Exchange Act of 1934, consists of the
following information as specified in Form 10-Q:

                                                                       PAGE(S)

PART I - FINANCIAL INFORMATION

   Item 1 - FINANCIAL STATEMENTS

         1. Consolidated Balance Sheets at June 30, 1997, 
            December 31, 1996 and June 30, 1996.                         3-4

         2. Consolidated Statements of Operations for the 
            Three and Six Months Ended June 30, 1997 and 1996.            5

         3. Consolidated Statements of Cash Flows for the Three 
            and Six Months Ended June 30, 1997 and 1996.                 6-7

         4. Notes to Consolidated Financial Statements.                  8-10

Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS                                           11-19

PART II - OTHER INFORMATION

   Item 1 - LEGAL PROCEEDINGS                                             20

   Item 6 - EXHIBITS AND REPORTS ON FORM 8-K                              20



<PAGE>



                            WESTBRIDGE CAPITAL CORP.
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

                                     ASSETS

                                              June 30,    December 31, June 30,
                                               1997          1996        1996
                                            (UNAUDITED)    (AUDITED) (UNAUDITED)
Investments:
Fixed Maturities:
Available-for-sale, at market value
(amortized cost $123,338, $90,370
and $86,383)                                      $126,753   $ 91,947   $ 86,563
Equity securities, at market                         2,056      1,596      1,747
Mortgage loans on real estate                          408        658        609
Investment real estate                                   -          -        141
Policy loans                                           283        282        273
Short-term investments                              10,015      7,722     10,067
                                                  --------   --------   --------

Total Investments                                  139,515    102,205     99,400

Cash                                                13,761      1,013      3,585
Accrued investment income                            2,436      1,889      1,823
Receivables from agents, net of allowance
for doubtful accounts                               21,633     18,311     20,128
Deferred policy acquisition costs                   87,477     83,871     73,395
Leasehold improvements and equipment, at
cost, net of accumulated depreciation and
amortization                                         1,271      1,311      1,503
Due from reinsurers                                  4,031      1,456      5,283
Commissions receivable                               5,556      3,406      1,105
Other assets                                         9,273      7,254      8,383
                                                  --------   --------   --------

Total Assets                                      $284,953   $220,716   $214,605
                                                  ========   ========   ========





     The accompanying notes are an integral part of these financial statements.


<PAGE>



                            WESTBRIDGE CAPITAL CORP.
                           CONSOLIDATED BALANCE SHEETS

                        (in thousands, except share data)

        LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                     June 30,     December 31,  June 30,
                                                       1997          1996         1996
                                                   (UNAUDITED)     (AUDITED)   (UNAUDITED)

<S>                                                  <C>          <C>          <C>
Liabilities:
Policy liabilities and accruals:
Future policy benefits                                $  56,447    $  54,204    $  55,267
Claims                                                   30,548       39,186       38,527
                                                      ---------    ---------    ---------
                                                         86,995       93,390       93,794

Commission advances payable                               9,217        4,368          981
Other liabilities                                        16,047        4,196       12,091
Deferred income taxes                                     8,735       10,299        6,849
Notes payable                                            10,364       21,210       18,538
Senior subordinated notes, net of unamortized
discount, due 2002                                       19,397       19,350       19,306
Convertible subordinated notes, due 2004                 70,000            -            -
                                                      ---------    ---------    ---------

Total Liabilities                                       220,755      152,813      151,559
                                                      ---------    ---------    ---------
Redeemable Preferred Stock                               19,000       20,000       20,000
                                                      ---------    ---------    ---------

Stockholders' Equity:
Common stock, ($.10 par value, 30,000,000
shares authorized; 6,179,099, 6,039,994
and 5,993,458 shares issued)                                618          604          599
Capital in excess of par value                           30,884       29,226       29,210
Unrealized appreciation of investments
 carried at market value, net of tax                      2,906        1,057           87
Retained earnings                                        10,960       17,186       13,320
                                                      ---------    ---------    ---------
                                                         45,368       48,073       43,216
Less - Aggregate of shares held in treasury and
investment by affiliate in Westbridge Capital Corp. 
common stock (28,600 at June 30, 1997,
December 31, 1996 and June 30, 1996), at cost              (170)        (170)        (170)
                                                      ---------    ---------    ---------

Total Stockholders' Equity                               45,198       47,903       43,046
                                                      ---------    ---------    ---------

Total Liabilities, Redeemable Preferred

  Stock and Stockholders' Equity                      $ 284,953    $ 220,716    $ 214,605
                                                      =========    =========    =========
</TABLE>







     The accompanying notes are an integral part of these financial statements.
<PAGE>

                            WESTBRIDGE CAPITAL CORP.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                      (in thousands, except per share data)

                                   (unaudited)
<TABLE>
<CAPTION>
                                             Three Months Ended        Six Months Ended
                                                   JUNE  30,               JUNE 30,
                                            ----------------------  -----------------------
                                              1997         1996         1997         1996
                                            ----------------------  -----------------------
<S>                                        <C>          <C>         <C>          <C>
Revenues:
Premiums:
First-year                                  $   9,700    $  16,480   $  21,829    $  30,880
Renewal                                        31,322       22,560      60,013       43,570
                                            ---------    ---------   ---------    ---------
                                               41,022       39,040      81,842       74,450
Net investment income                           2,530        2,191       4,756        4,307
Fee and service income                          4,106        2,017       7,608        3,794
Net realized gain on investments                  192          116         132          201
                                            ---------    ---------   ---------    ---------
                                               47,850       43,364      94,338       82,752
                                            ---------    ---------   ---------    ---------
Benefits, claims and expenses:
Benefits and claims                            31,187       22,632      56,482       44,546
Amortization of deferred policy
acquisition costs                               8,090        6,026      13,330       10,355
Commissions                                     3,679        1,809       6,967        3,746
General and administrative expenses            11,046        7,133      18,368       13,699
Taxes, licenses and fees                        1,625        1,721       3,082        3,064
Interest expense                                1,702        1,013       2,926        1,964
                                            ---------    ---------   ---------    ---------
                                               57,329       40,334     101,155       77,374
                                            ---------    ---------   ---------    ---------
(Loss) income before income taxes, equity
in earnings of Freedom Holding
Company and extraordinary item                 (9,479)       3,030      (6,817)       5,378
(Benefit) provision for income taxes           (3,318)       1,060      (2,386)       1,882
Equity in Freedom Holding Company                   -           27           -           74
                                            ---------    ---------   ---------    ---------
(Loss) income before extraordinary item        (6,161)       1,997      (4,431)       3,570
Extraordinary loss from early
extinguishment of debt, net of tax             (1,007)           -      (1,007)           -
                                            ---------    ---------   ---------    ---------
Net (loss) income                           $  (7,168)   $   1,997   $  (5,438)   $   3,570
                                            =========    =========   =========    =========

Preferred stock dividends                         392          412         788          825
                                            ---------    ---------   ---------    ---------
(Loss) income applicable to
common stockholders                         $  (7,560)   $   1,585   $  (6,226)   $   2,745
                                            =========    =========   =========    =========

Earnings per common share:
Primary:
(Loss) income before extraordinary item     $   (1.07)   $     .26   $    (.85)   $     .45
Extraordinary item                               (.16)           -        (.17)           -
                                            ---------    ---------   ---------    ---------
Net (loss) income                           $   (1.23)   $     .26   $   (1.02)   $     .45
                                            =========    =========   =========    =========
Fully diluted:
(Loss) income before extraordinary item     $   (1.07)   $     .23   $    (.85)   $     .42
Extraordinary item                               (.16)           -        (.17)           -
                                            ---------    ---------   ---------    ---------
Net (loss) income                           $   (1.23)   $     .23   $   (1.02)   $     .42
                                            =========    =========   =========    =========

Weighted average shares outstanding:
Primary                                         6,129        6,113       6,093        6,109
Fully diluted                                   6,129        8,532       6,093        8,508
</TABLE>






     The accompanying notes are an integral part of these financial statements.


<PAGE>



                            WESTBRIDGE CAPITAL CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                             Three Months Ended     Six Months Ended
                                                                  JUNE 30,               JUNE 30,
                                                            -------------------   ---------------------
                                                               1997        1996      1997        1996
                                                            -------------------   ---------------------
<S>                                                       <C>         <C>         <C>         <C> 
Cash Flows From Operating Activities:
  (Loss) income applicable to common stockholders          $ (7,560)   $  1,585    $ (6,226)   $  2,745
  Adjustments to reconcile net (loss) income to cash
  provided by (used for) operating activities:
  Depreciation expense                                          119         130         237         261
  Amortization of deferred policy acquisition costs           8,090       6,026      13,330      10,355
  Equity in earnings of Freedom Holding Company                   -         (27)          -         (74)
  (Increase) decrease in receivables from agents             (2,532)        911      (3,322)     (3,188)
  Addition to deferred policy acquisition costs              (7,904)    (11,153)    (16,936)    (21,878)
  Decrease (increase) in due from reinsurers                 19,100      (2,052)     (2,575)     (5,283)
  Increase in commissions receivable                           (961)       (582)     (2,150)     (1,105)
  (Increase) decrease in other assets                        (1,003)      1,743      (2,019)      4,116
  (Decrease) increase in policy liabilities and accruals       (312)      1,513      (6,395)      3,399
  Increase in commission advances payable                     2,050         939       4,849         981
  (Decrease) increase in deferred income taxes               (2,233)       (313)     (1,564)        258
  (Decrease) increase in other liabilities                   (4,464)     (1,414)     11,851         174
  Other, net                                                 (1,956)       (113)       (794)        750
                                                           --------    --------    --------    --------
Net Cash Provided By (Used For) Operating Activities            434      (2,807)    (11,714)     (8,489)
                                                           --------    --------    --------    --------

Cash Flows From Investing Activities:
Acquisition of Freedom Holding Company                            -      (3,970)          -      (3,970)
Proceeds from investments sold:
Fixed maturities, classified as available-for-sale,
called or matured                                                88         600       2,761       5,188
Fixed maturities, classified as available-for-sale, sold      2,257      29,430      13,008      30,463
Short-term investments, sold or matured                       4,509      12,020       9,740      55,999
Other investments, sold or matured                               14         183         353         255
Cost of investments acquired                                (53,906)    (33,800)    (60,300)    (80,433)
Additions to leasehold improvements and equipment,
net of retirements                                             (105)        (99)       (197)       (174)
                                                           --------    --------    --------    --------
Net Cash (Used For) Provided By Investing Activities        (47,143)      4,364     (34,635)      7,328
                                                           --------    --------    --------    --------

Cash Flows From Financing Activities:
Issuance of convertible notes                                70,000           -      70,000           -
Issuance of notes payable                                     3,210         494       9,083       2,731
Repayment of notes payable                                  (12,963)          -     (19,929)          -
Issuance of common stock                                         21           -          89           2
Purchase and cancellation of common stock                         -           -        (146)          -
                                                           --------    --------    --------    --------
Net Cash Provided By Financing Activities                    60,268         494      59,097       2,733
                                                           --------    --------    --------    --------
Increase In Cash During Period                               13,559       2,051      12,748       1,572
Cash at Beginning Of Period                                     202       1,534       1,013       2,013
                                                           --------    --------    --------    --------
Cash at End Of Period                                      $ 13,761    $  3,585    $ 13,761    $  3,585
                                                           ========    ========    ========    ========

Supplemental Disclosures Of Cash Flow Information:
Cash paid during the periods for:
Interest                                                   $  1,028    $    721    $  2,121    $  1,617
Income taxes                                               $     13    $     30    $     48    $     32
</TABLE>

     The accompanying notes are an integral part of these financial statements.


<PAGE>



                            WESTBRIDGE CAPITAL CORP.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (unaudited)

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

One  thousand   shares  of  the  Company's   Series  A  Convertible   Redeemable
Exchangeable  Preferred  Stock ('Series A Preferred  Stock") were converted into
shares of Westbridge's  common stock,  par value $.10 per share ("Common Stock")
during the six months  ended June 30,  1997.  The  converted  shares of Series A
Preferred Stock had an aggregate  liquidation  preference of $1,000,000 and were
converted into 118,905 shares of Common Stock.

The Company  purchased the outstanding  capital stock of Freedom Holding Company
("FHC") in the second quarter of 1996 for a cash purchase price of $6.3 million.
This purchase resulted in the Company receiving assets and assuming  liabilities
as follows:

              Assets              $13,542,000
              Liabilities         $ 5,780,000

Adjustments to reconcile net income to cash used for operating activities in the
Company's Consolidated Statements of Cash Flows exclude increases relating to
the acquired assets and liabilities of FHC. Accordingly, these adjustments do
not correspond to the changes in the related line items on the Company's
Consolidated Balance Sheets.

The accompanying notes are an integral part of these financial statements.


<PAGE>



                            WESTBRIDGE CAPITAL CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (unaudited)

NOTE 1 - FINANCIAL STATEMENTS

The accompanying unaudited consolidated financial statements for Westbridge
Capital Corp. ("Westbridge" and, together with its consolidated subsidiaries,
the "Company") have been prepared in accordance with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X, and do not include all of the information
and footnotes required by generally accepted accounting principles ("GAAP") for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six months ended June
30, 1997 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1997. The financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996.

NOTE 2 - COMMITMENTS AND CONTINGENCIES

In the normal course of their business operations, National Foundation Life
Insurance Company ("NFL"), National Financial Insurance Company ("NFIC"),
American Insurance Company of Texas ("AICT"), and Freedom Life Insurance Company
of America ("FLICA"), Westbridge's primary insurance subsidiaries ("Insurance
Subsidiaries"), are involved in various claims disputes and other business
related disputes. In the opinion of management, the disposition of these matters
will have no material adverse effect on the Company's consolidated financial
position.

NOTE 3 - ISSUANCE OF CONVERTIBLE SUBORDINATED NOTES, DUE 2004

On April 29, 1997, the Company completed the sale of $65 million aggregate
principal amount of its 7-1/2% Convertible Subordinated Notes Due 2004 (the
"Convertible Notes") in an underwritten public offering. On May 16, 1997, the
Company completed the sale of an additional $5 million of its Convertible Notes
in connection with the underwriters' over-allotment option. The net proceeds of
the transaction approximated $67.7 million after deducting underwriting
commissions and other expenses incurred in connection with the sales. Each
$1,000 principal amount of the Convertible Notes is convertible into 91.575
shares of Westbridge Common Stock (6,410,250 shares in the aggregate) at an
initial conversion price of $10.92 per share, subject to certain anti-dilution
adjustments. Interest on the Convertible Notes will be paid semi-annually on May
1 and November 1 of each year, commencing November 1, 1997. Also, at the initial
closing for the sale of the Convertible Notes, Westbridge sold to the
underwriters, for nominal consideration, warrants to purchase, in the aggregate,
297,619 shares of Common Stock at an exercise price of $10.92 per share, subject
to certain anti-dilution provisions. The warrants are exercisable for a period
of four years commencing on April 29, 1998.

On May 1, 1997, Westbridge contributed approximately $7 million of the net
proceeds from the sale of the Convertible Notes to recapture a block of
insurance policies that had previously been reinsured consisting of
approximately $9 million in total recapture costs less approximately $2 million
in unearned premium reserves due to NFL and FLICA. SEE NOTE 4 - EXTRAORDINARY
ITEM. In addition, as of June 30, 1997, Westbridge had contributed approximately
$26 million of the net proceeds to the Insurance Subsidiaries to provide
adequate levels of statutory capital and surplus. The Company intends to use the
remaining net proceeds to increase sales of its Medical Expense and Critical
Care and Specified Disease products and for other general corporate purposes.


<PAGE>



NOTE 4 - EXTRAORDINARY ITEM

For the three months ended June 30, 1997, the Company recognized an aggregate of
$1,007,000 in extraordinary losses, net of taxes. Of this amount, (i) $574,000
resulted from the recognition of unamortized financing fees associated with the
prepayment and refinancing of the Company's revolving credit facility with Fleet
National Bank; and (ii) $433,000 resulted from the termination and recapture of
the block of reinsured insurance policies referred to in Note 3 above.

NOTE 5 - NEW ACCOUNTING PRONOUNCEMENT

In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share,"(the
"Statement") that revises the standards for computing earnings per share
previously found in APB Opinion No. 15, "Earnings Per Share." The Statement
established two measures of earnings per share: "basic earnings per share" and
"diluted earnings per share." Basic earnings per share is computed by dividing
income available to common shareholders by the weighted average number of common
shares outstanding during the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were converted or exercised. The Statement requires dual
presentation of basic and diluted earnings per share on the face of the income
statement for all entities with potential dilutive securities outstanding.

The Statement also requires a reconciliation of the numerator and denominator of
the basic earnings per share computation to the numerator and denominator of the
diluted earnings per share computation. The Statement is effective for interim
and annual periods ending after December 15, 1997. Earlier application is not
permitted. However, an entity may disclose pro forma earnings per share amounts
that would have resulted if the entity had applied the Statement in an earlier
period. The Company intends to adopt SFAS No. 128 in its annual financial
statements for the year ended December 31, 1997.

The pro forma unaudited earnings per share amounts that would have resulted
assuming the Company had computed its earnings per share in accordance with the
provisions established by SFAS No. 128 for the quarters ended June 30, 1997 and
1996 are as follows:

<TABLE>
<CAPTION>
                                         Three Months  Six Months   Three Months    Six Months
                                            ENDED         ENDED          ENDED        ENDED
                                         JUNE 30, 1997 JUNE 30, 1997 JUNE 30, 1996 JUNE 30, 1996
                                         ------------- ------------- ------------- -------------     

<S>                                       <C>            <C>            <C>          <C>    
Basic (loss) earnings per share           $  (1.23)      $  (1.02)      $   .27      $   .46
Diluted (loss) earnings per share         $  (1.23)      $  (1.02)      $   .24      $   .42
</TABLE>

Diluted weighted average shares exclude all dilutive securities for loss
periods.

NOTE 6 - EARNINGS PER SHARE

PRIMARY.  Primary  (loss)  earnings  per common share  amounts were  computed by
dividing net (loss)  income,  less  preferred  stock  dividends,  by the primary
weighted  average  number of shares  outstanding.  Primary loss per common share
amounts  related to the  extraordinary  item were computed by dividing the total
extraordinary item, net of tax, by the primary weighted average number of shares
outstanding.

The  primary   weighted   average  shares  consist  of  common  shares  and,  as
appropriate,  dilutive common stock equivalents outstanding for the period. As a
result, primary weighted average shares do not assume conversion of the Series A
Preferred  Stock or the  Convertible  Notes to common  stock.  Primary  weighted
average shares exclude all common stock equivalents for loss periods.

FULLY DILUTED. Fully diluted per common share amounts assume conversion of the
Series A Preferred Stock and the Convertible Notes, the elimination of the
related preferred stock dividend and the after-tax interest expense, and the
issuance of common stock for all other potentially dilutive securities. Fully
diluted (loss) earnings per common share were computed by dividing net (loss)
income plus after-tax interest expense related to the Convertible Notes by the
fully diluted weighted average number of shares outstanding. Fully diluted loss
per common share amounts related to the extraordinary item were computed by
dividing the total extraordinary item, net of tax, by the fully diluted weighted
average number of shares outstanding.

The fully diluted weighted average shares consist of common shares and all other
dilutive securities outstanding for the period. Fully diluted weighted average
shares exclude all dilutive securities for loss periods.

See also NOTE 5 - NEW ACCOUNTING PRONOUNCEMENT.


<PAGE>


                            WESTBRIDGE CAPITAL CORP.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BUSINESS OVERVIEW

The Company markets medical expense and supplemental health insurance products
and managed care health plans to individuals in 41 states. Since 1992, the
Company has grown through a combination of acquisitions and, more recently,
through sales of its underwritten products. Primarily as a result of
acquisitions, the Company's total premiums grew from approximately $56.7 million
in 1992 to approximately $98.7 million in 1994. During the first quarter of
1995, the Company implemented a strategy of expanding the number of agents in
its marketing distribution system to increase sales of its underwritten
products. As a result of this initiative, the Company's net annualized written
premiums increased from $19.9 million in 1994 to $79.1 million in 1996 with
total premiums increasing 59.0% to $156.8 million in 1996. During the middle of
1996, the Company reduced the marketing of its underwritten products due to
statutory capital and surplus constraints caused by its rapid growth. While the
Company's recently completed sale of the Convertible Notes has provided the
Company with statutory capital and surplus to increase the marketing of its
underwritten products, the sales volume has not yet returned to the levels
experienced during the first six months of 1996. No assurance can be given that
such levels will be obtained in the foreseeable future.

The Company has taken advantage of its marketing distribution system to market
certain managed care health plans which are underwritten by Health Maintenance
Organizations ("HMOs") and other non-affiliated managed care organizations. This
marketing effort generates sales commissions that are included as a component of
fee and service income and the related expense is included as a component of
commissions. Fee and service income can be generated without regard to the
statutory capital and surplus requirements that apply to the Company's
underwritten products.

The Company derives its revenue primarily from premiums from its insurance
products and, to a significantly lesser extent, from fee and service income,
income earned on invested assets and gains on the sales or redemptions of
invested assets. The Company's primary expenses include benefits and claims in
connection with its insurance products, deferred policy acquisition costs
("DPAC"), commissions paid on policy renewals, general and administrative
expenses associated with policy and claims administration, taxes, licenses and
fees and interest on its indebtedness. In addition to the foregoing expenses,
Westbridge is obligated to pay dividends on its Series A Preferred Stock if and
when declared by the Board of Directors.

Fee and service income is generated from (i) commissions received by the Company
for sales of managed care products underwritten primarily by HMOs and other
managed care organizations, (ii) telemarketing services provided by Precision
Dialing Services, Inc. ("PDS"), and (iii) printing services provided by
Westbridge Printing Services, Inc. ("WPS").

Benefits and claims are comprised of (i) claims paid, (ii) changes in claim
reserves for claims incurred (whether or not reported) and (iii) changes in
policy benefit reserves based on actuarial assumptions of future benefit
obligations not yet incurred on policies in force.

DPAC consists of expenditures associated with the production of new business.
Such expenditures consist principally of the amount by which first-year
commission costs exceed commission costs paid in subsequent policy years and
policy issue costs. Also included in DPAC is the cost of insurance purchased
relating to acquired blocks of business. The amortization of these costs is
based on actuarially estimated future premium revenues. The amortization rate is
adjusted monthly to reflect actual experience.

ACQUISITIONS. Since 1992, the Company has from time to time acquired seasoned
blocks of business to supplement its revenue. These acquisitions included blocks
of: (i) Medicare Supplement products purchased from American Integrity Insurance
Company ("AII") in September 1992, (ii) Medicare Supplement products purchased
from Life and Health Insurance Company of America ("LHI") in March 1993, (iii)
Critical Care and Specified Disease products purchased from Dixie National Life
Insurance Company ("DNL") in February 1994, (iv) policies in all of the
Company's product lines purchased in the acquisition of NFIC and AICT in April
1994, and (v) Critical Care and Specified Disease products purchased in the
acquisition of the remaining 60% ownership interest in Freedom Holding Company,
FLICA's parent, in May 1996.

NEW BUSINESS PRODUCTION. The Company's ability to underwrite insurance products
is limited by state regulation of statutory capital and surplus requirements. As
a result of rapid growth in underwritten health insurance product sales during
1995 and the first six months of 1996, the Company experienced a decline in its
available statutory capital and surplus. Accordingly, the Company deliberately
reduced the marketing of its underwritten products from the second quarter of
1996 through April 1997, consistent with its available statutory capital and
surplus. This reduction in marketing efforts resulted in decreases in first-year
premiums over the last four quarters. As of June 30, 1997, the Company had
contributed approximately $33 million from the Convertible Note offering to its
Insurance Subsidiaries to provide adequate levels of statutory capital and
surplus. See Note 3 -- "ISSUANCE OF CONVERTIBLE SUBORDINATED NOTES, DUE 2004."
The Company intends to use the remaining net proceeds to increase sales of its
Medical Expense and Critical Care and Specified Disease products and for other
general corporate purposes. However, due to the relatively low margin on the
Company's Medicare Supplement products, the Company intends to reduce its
underwriting of such products in favor of marketing the Medicare Supplement
Products of other non-affiliated insurers. Any resulting increase in sales as a
result of the statutory capital and surplus contributions to the Insurance
Subsidiaries is not expected to significantly increase total premiums until
1998. As a result, the Company's earnings are not expected to be significantly
affected by increased sales, if any, during the remainder of 1997.

PREMIUMS. The following table shows the premiums received by the Company through
internal sales and through  acquisitions  during the periods indicated.  Certain
reclassifications  have been made to 1996  amounts  in order to  conform to 1997
presentation.

<TABLE>
<CAPTION>
                                    Three Months Ended        Six Months Ended
                                          JUNE 30,                 JUNE 30,
                                   ---------------------    ---------------------
                                     1997        1996         1997          1996
                                   ---------------------    ---------------------                          
<S>                               <C>          <C>          <C>          <C> 
Company-Issued Policies:
First-year premiums                $ 9,488      $15,845      $21,358      $29,430
Renewal premiums                    19,929        9,914       36,795       18,163
                                   -------      -------      -------      -------
Total Company-issued policies       29,417       25,759       58,153       47,593
                                   -------      -------      -------      -------

Acquired Policies:
NFIC and AICT                        5,283        6,880       10,842       14,247
FLICA                                3,152        2,763        6,386        5,171
AII                                  1,799        2,114        3,692        4,340
LHI                                    387          464          794          942
DNL                                    717          752        1,434        1,526
Other                                  267          308          541          631
                                   -------      -------      -------      -------
Total acquired policies             11,605       13,281       23,689       26,857
                                   -------      -------      -------      -------

  Total Premiums                   $41,022      $39,040      $81,842      $74,450
                                   =======      =======      =======      =======
</TABLE>

Generally, as a result of acquisitions of policies in force and the transfer of
assets and liabilities relating thereto, the Company receives higher revenues in
the form of premiums and net investment income and experiences higher expenses
in the form of benefits and claims, amortization of DPAC, commissions and
general and administrative expenses. The Company expects that the levels of
premiums, net investment income, net realized gains on investments, benefits and
claims, amortization of DPAC, commissions and general and administrative
expenses attributable to these acquired policies will continue to decline over
time as the acquired policies lapse.

The preceding statement and certain other statements contained in the Notes to
the Consolidated Financial Statements and Management's Discussion and Analysis
of Financial Condition and Results of Operations are forward-looking statements.
It is important to note that the Company's actual results could differ
materially from those projected in such forward-looking statements based on a
number of factors, some of which are beyond the Company's control. Such factors
include, but are not limited to, the Company's ability to successfully implement
its strategy (i) to expand its underwriting and marketing of medical expense and
health insurance products, (ii) to increase its fee and service income by
continuing to expand its marketing of managed care health plans underwritten
primarily by managed care organizations, and (iii) to cross-sell its
underwritten health insurance products in connection with its marketing of
managed care health plans. Additional information concerning factors that could
cause actual results to differ materially from those in the forward-looking
statements is contained from time to time in the Company's filings with the
Securities and Exchange Commission ("SEC") including, but not limited to, the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, the
Company's Quarterly Report on Form 10-Q for the three months ended March 31,
1997, and the Company's Prospectus dated April 24, 1997 included in the
Company's Registration Statement No. 333-24137 on Form S-1. Copies of these
filings may be obtained by contacting the Company or the SEC.

RESULTS OF OPERATIONS

THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1997  COMPARED TO SAME PERIODS  ENDED
JUNE 30, 1996

PREMIUMS.

THREE MONTHS ENDED JUNE 30, 1997. Premiums increased $2.0 million, or 5.1%, from
$39.0 million to $41.0 million. This increase resulted from an increase in
renewal premiums from Company-issued policies of $10.0 million, or 101.0%, that
was offset by a decrease in renewal premiums from acquired policies of $1.3
million, or 10.2%, and decreases in first-year premiums from Company-issued and
acquired policies of $6.3 million and $0.4 million, or 39.9% and 66.7%,
respectively.

The decrease in first-year premiums of Company-issued policies was attributable
to a decrease of $4.1 million, or 38.3%, in Medical Expense premiums and a
decrease of $2.2 million, or 46.8%, in Medicare Supplement premiums.

The increase in renewal premiums of Company-issued policies was attributable to
an increase of $6.0 million, or 166.7%, in Medical Expense premiums and an
increase of $4.0 million, or 133.3%, in Medicare Supplement premiums.

The decrease in first-year premiums from acquired policies was attributable to a
decrease of $0.4 million, or 66.7%, from the policies acquired in the FLICA
acquisition.

The decrease in renewal  premiums from acquired  policies was  attributable to a
decrease of $1.6 million,  or 23.2%,  from the policies acquired in the NFIC and
AICT acquisition and to a decrease of $0.5 million,  or 14.7%, from the policies
acquired from AII, LHI, and DNL. This decrease was offset by an increase of $0.8
million, or 38.1%, from the policies acquired in the FLICA acquisition.

SIX MONTHS ENDED JUNE 30, 1997. Premiums increased $7.3 million, or 9.8% from
$74.5 million to $81.8 million. This increase resulted from an increase in
renewal premiums from Company-issued policies of $18.6 million, or 102.2%, that
was offset by a decrease in renewal premiums from acquired policies of $2.2
million, or 8.7%, and decreases in first-year premiums from Company-issued and
acquired policies of $8.0 million and $1.1 million, or 27.2% and 73.3%,
respectively.

The decrease in first-year premiums of Company-issued policies was attributable
to a decrease of $4.4 million, or 23.2%, in Medical Expense premiums and a
decrease of $3.6 million, or 37.9%, in Medicare Supplement premiums. The
increase in renewal premiums of Company-issued policies was attributable to an
increase of $10.4 million, or 152.9%, in Medical Expense premiums and an
increase of $8.2 million, or 170.8%, in Medicare Supplement premiums.

The decrease in first-year premiums from acquired policies was attributable to a
decrease of $1.1 million, or 73.3%, from the policies acquired in the FLICA
acquisition.

The decrease in renewal  premiums from acquired  policies was  attributable to a
decrease of $3.4 million,  or 23.8%,  from the policies acquired in the NFIC and
AICT acquisition and to a decrease of $1.0 million,  or 13.5%, from the policies
acquired from AII, LHI, and DNL. This decrease was offset by an increase of $2.2
million, or 59.5%, from the policies acquired in the FLICA acquisition.

NET INVESTMENT INCOME.  Net investment income increased $0.3 million,  or 13.6%,
from $2.2 million to $2.5 million for the three months ended June 30, 1997.  Net
investment  income increased $0.5 million,  or 11.6%,  from $4.3 million to $4.8
million  for  the  six  months  ended  June  30,  1997.   These  increases  were
attributable to a higher average investment base resulting from the net proceeds
received  from the  Company's  sale of its  Convertible  Notes during the second
quarter.

FEE AND SERVICE INCOME.

THREE MONTHS ENDED JUNE 30, 1997. Fee and service income increased $2.1 million,
or 105.0%, from $2.0 million to $4.1 million.  This increase was attributable to
commissions  on managed  care  product  sales that were earned by the  Company's
controlled general agencies. 

SIX MONTHS ENDED JUNE 30, 1997. Fee and service income increased $3.8 million,
or 100.0%, from $3.8 million to $7.6 million. This increase was attributable to
an increase of $4.0 million relating to commissions on managed care product
sales that were earned by the Company's controlled general agencies and an
increase of $0.3 million relating to printing services. This increase was offset
by a $0.5 million decrease in other fees.

BENEFITS AND CLAIMS. Benefits and claims expense increased significantly during
the quarter ended June 30, 1997 as a result of sharply higher claim submissions
and medical inflation for the Medical Expense and Medicare Supplement products.
As of July 1, 1997, the Company has implemented certain rate increases and
modified certain features on some of those products. In addition, management is
aggressively reviewing its recent claims experience to determine whether further
actions are required in light of the pricing disparity with respect to these
products. The Company has the ability, within the constraints of the loss ratios
mandated by the regulatory authorities and subject to regulatory approval, to
raise premium rates on its products in the event of adverse claims experience.
However, the steps taken to correct the pricing disparity will not be
immediately reflected in the Company's results of operations. Until these
corrective actions are completely implemented and realized, the Company's
earnings will continue to be negatively impacted.

THREE MONTHS ENDED JUNE 30, 1997.  Benefits and claims  expense  increased  $8.6
million,  or 38.1%, from $22.6 million to $31.2 million as compared to the three
months ended June 30, 1996.  This  increase was  attributable  to an increase in
benefits    and   claims    expense    from    Company-issued    and    acquired
policies of $8.2 million and $0.4 million, or 62.1% and 4.3%, respectively.

The increase in benefits and claims  expense  from  Company-issued  policies was
primarily  attributable to an increase of $6.0 million,  or 101.7%, from Medical
Expense  products,  and an increase of $2.5  million,  or 45.5%,  from  Medicare
Supplement  products.  This  increase  was offset by a decrease of $0.3  million
related to Critical Care and Specified Disease and other products.

The increase in benefits and claims expense from acquired policies was primarily
attributable to an increase of $0.8 million, or 14.8%, from the policies
acquired in the NFIC and AICT acquisition. This increase was offset by a
decrease of $0.4 million, or 26.7%, from the closed block of business acquired
from AII. SIX MONTHS ENDED JUNE 30, 1997. Benefits and claims expense increased
$12.0 million, or 27.0%, from $44.5 million to $56.5 million. This increase was
attributable to an increase in benefits and claims expense from Company-issued
policies of $14.0 million, or 57.6%, offset by a decrease in benefits and claims
expense from acquired policies of $2.0 million, or 9.9%, respectively. The
increase in benefits and claims expense from Company-issued policies was
primarily attributable to an increase of $10.1 million, or 98.1%, from Medical
Expense products, and an increase of $3.9 million, or 37.1%, from Medicare
Supplement products.

The decrease in benefits and claims expense from acquired policies was primarily
attributable to a decrease of $2.0 million, or 16.0%, from the policies acquired
in the NFIC and AICT acquisition.

AMORTIZATION OF DPAC. A portion of the Company's quarterly loss resulted from an
increase in amortization of DPAC due to lower persistency as a result of rate
increase activity on inforce business. As management reviews and requests rate
increases for Medical Expense and Medicare Supplement products in order to
resolve pricing disparities and lower claim loss ratios, the Company's earnings
may be negatively impacted by further unanticipated increases in amortization of
DPAC during 1997 and 1998.

THREE MONTHS ENDED JUNE 30, 1997. Amortization of DPAC increased $2.1 million,
or 35.0%, from $6.0 million to $8.1 million. This increase was attributable to
$1.7 and $1.3 million, or 58.6% and 260.0%, from Company-issued Medical Expense
and Medicare Supplement products, respectively. This increase was offset by a
decrease of $0.6 million, or 33.3% from acquired policies and a decrease of $0.3
million from Company-issued Critical Care and Specified Disease and other
products.

SIX MONTHS ENDED JUNE 30, 1997. Amortization of DPAC increased $2.9 million, or
27.9%, from $10.4 million to $13.3 million. This increase was attributable to
$3.1 and $1.2 million, or 68.9% and 75.0%, from Company-issued Medical Expense
and Medicare Supplement products, respectively. This increase was offset by a
decrease of $1.0 million, or 32.3% from acquired policies and a decrease of $0.4
million from Company-issued Critical Care and Specified Disease and other
products.

COMMISSIONS.

THREE MONTHS ENDED JUNE 30, 1997. Commissions increased $1.9 million, or 105.6%,
from $1.8 million to $3.7 million. This increase was attributable to an increase
in commissions on sales of non-affiliated insurance products of $2.4 million
that was offset by a $0.3 million, or 23.1%, decrease in commissions on sales of
Company-issued policies. This increase was further offset by a decrease of $0.2
million, or 14.3%, in commissions on sales of acquired policies.

SIX MONTHS ENDED JUNE 30, 1997. Commissions increased $3.3 million, or 89.2%,
from $3.7 million to $7.0 million. This increase was attributable to an increase
in commissions on sales of non-affiliated insurance products of $4.5 million
that was offset by a $0.9 million, or 33.3%, decrease in commissions on sales of
Company-issued policies. This increase was further offset by a decrease of $0.3
million, or 10.0%, in commissions on sales of acquired policies.

GENERAL AND ADMINISTRATIVE EXPENSES.

THREE MONTHS ENDED JUNE 30, 1997. General and administrative  expenses increased
$3.9 million,  or 54.9%,  from $7.1 million to $11.0 million.  This increase was
primarily  attributable to a nonrecurring $3.1 million pre-tax charge associated
with an internal reorganization.
  
SIX MONTHS ENDED JUNE 30, 1997.  General and  administrative  expenses increased
$4.7 million,  or 34.3%, from $13.7 million to $18.4 million.  This increase was
primarily attributable to the nonrecurring  reorganization.  In addition,  fewer
policies  were  eligible  for deferral of  acquisition  costs as a result of the
reduction in the  Company's  marketing  efforts for its  underwritten  insurance
products from the second quarter of 1996 through April 1997.

TAXES,  LICENSES AND FEES. Taxes, licenses and fees were relatively unchanged as
increases  in premium  taxes were offset by  decreases  in state levied fees and
special  assessments  for both the three  months and six  months  ended June 30,
1997.

INTEREST EXPENSE.  Interest expense increased $0.7 million,  or 70.0%, from $1.0
million to $1.7  million  for the three  months  ended June 30,  1997.  Interest
expense increased $0.9 million,  or 45.0%, from $2.0 million to $2.9 million for
the six months ended June 30, 1997. This increase is attributable to the accrued
interest expense related to the issuance of $70 million  aggregate  principal of
the Company's 7-1/2% Convertible Notes.

PROVISION  FOR  INCOME  TAXES.  The  Company  reported a net loss for the second
quarter  ending June 30, 1997.  The provision for (benefit from) income taxes is
calculated by applying the 35%  statutory  federal tax rate to the Company's net
income  (loss)  for the  reporting  period.  Accordingly,  the  decrease  in the
provision  for income  taxes for both the three months and six months ended June
30, 1997 is directly attributable to the net loss recorded for the period.

EXTRAORDINARY ITEM. The Company recognized an extraordinary loss on the early
extinguishment of debt in the amount of $1.0 million, net of taxes, for the
second quarter ending June 30, 1997. This extraordinary charge is comprised of
(i) $0.4 million, net of taxes, relating to the termination and recapture of a
block of reinsured insurance policies and (ii) $0.6 million, net of taxes,
relating to the recognition of unamortized financing fees associated with the
prepayment and refinancing of the Company's revolving credit facility with Fleet
National Bank.

FINANCIAL CONDITION

LIQUIDITY, CAPITAL RESOURCES AND STATUTORY CAPITAL AND SURPLUS

WESTBRIDGE.

Westbridge is an insurance holding company, the principal assets of which
consist of the capital stock of its operating subsidiaries. Accordingly,
Westbridge is dependent upon dividends from its operating subsidiaries, advances
from non-insurance company subsidiaries, principal and interest payments on a
surplus certificate issued by NFL to Westbridge, lease payments on fixed assets
and tax contributions under a tax sharing agreement among Westbridge and its
subsidiaries for funds to meet its obligations, including principal and interest
on its indebtedness and, if and when declared by the Board of Directors,
dividends on its Series A Preferred Stock.

Dividend payments from the Insurance Subsidiaries are regulated by the insurance
laws of their domiciliary states. NFL is domiciled in the State of Delaware.
Under the Delaware Insurance Code, an insurer domiciled in Delaware may not
declare or pay a dividend or other distribution from any source other than
"earned surplus" without the state insurance commissioner's prior approval.
"Earned surplus" is defined as an amount equal to the unassigned funds of an
insurer as set forth on its most recent statutory annual statement, including
all or part of the surplus arising from unrealized capital gains or revaluation
of assets. NFIC and AICT are domiciled in Texas. An insurer domiciled in Texas
may pay dividends only out of "surplus profits arising from its business" to the
extent of net gains from operations, not including realized capital gains, for
the twelve month period ending as of the preceding December 31. Moreover,
insurers domiciled in either Delaware or Texas may not pay "extraordinary
dividends" without first providing the state insurance commissioner with 30-days
prior notice, during which time such commissioner may disapprove the payment. An
"extraordinary dividend" is defined as a dividend whose fair market value
together with that of other dividends made within the preceding 12 months
exceeds the greater of (a) 10% of the insurer's surplus as regards policyholders
as of the preceding December 31 or (b) the net gain from operations of such
insurer, not including realized capital gains, for the twelve-month period
ending on the preceding December 31. FLICA is domiciled in Mississippi. Under
Mississippi Insurance Regulations, an insurer domiciled in Mississippi may pay
dividends limited to the lesser of 10% of statutory capital and surplus or 100%
of statutory net income for the preceding year unless prior written approval of
the Commissioner is obtained. With respect to ordinary dividends payable by an
insurer domiciled in Delaware, notice of any dividend must be provided to the
state insurance commissioner within five business days following the declaration
thereof and at least ten days prior to the payment thereof. NFL is currently
precluded from paying dividends during 1997 without prior regulatory approval
due to negative statutory "earned surplus" as a result of historical statutory
losses as of December 31, 1996. In addition, for the foreseeable future, NFL has
agreed to seek the approval of the Delaware insurance commissioner prior to
making any dividend payments. FLICA currently has the ability to pay NFL,
without prior regulatory approval, approximately $1.5 million in dividends
during 1997, none of which has been paid. NFIC and AICT are precluded from
making dividend payments during 1997 without prior written approval from the
insurance commissioner due to net losses on a statutory basis for the year ended
December 31, 1996. In the States of Delaware, Mississippi and Texas, the state
insurance commissioner reviews the dividends paid by each insurer domiciled in
such commissioner's state at least once each year to determine whether they are
reasonable in relation to the insurer's surplus as regards policyholders and
quality of earnings. The state insurance commissioner may issue an order to
limit or disallow the payment of ordinary dividends if such commissioner finds
the insurer to be presently or potentially financially distressed or troubled.

On April 29, 1997, Westbridge completed the sale of $65 million aggregate
principal amount of its Convertible Notes in an underwritten public offering. On
May 16, 1997, the Company completed the sale of an additional $5 million of its
Convertible Notes in connection with the underwriters' over-allotment. See Note
3 - "ISSUANCE OF CONVERTIBLE SUBORDINATED NOTES, DUE 2004." Westbridge received
approximately $67.7 million in net proceeds, after deducting underwriting
commissions and other expenses incurred in connection with the sale. On May 1,
1997, Westbridge contributed approximately $7 million of the net proceeds from
the sale of the Convertible Notes to recapture a block of insurance policies
that had previously been reinsured consisting of approximately $9 million in
recapture costs less approximately $2 million in unearned premium reserves due
to NFL and FLICA. In addition, as of June 30, 1997, Westbridge had contributed
approximately $26 million of the net proceeds to the Insurance Subsidiaries to
provide adequate levels of statutory capital and surplus. The Company intends to
use the remaining net proceeds to increase sales of its Medical Expense and
Critical Care and Specified Disease products and for other general corporate
purposes.

The Company's quarterly loss for the three months ended June 30, 1997 resulted
in a default under the Indenture (the "Senior Subordinated Indenture") relating
to the Company's 11% Senior Subordinated Notes due 2002 (the "Senior
Subordinated Notes") with respect to the requirement that Westbridge maintain,
over the four most recently completed fiscal quarters, a minimum consolidated
coverage ratio. Since the consolidated coverage ratio is measured over a rolling
four-quarter period, the Company is likely to remain in default of this ratio
through at least the third quarter of 1998. The Company is currently reviewing
its alternatives to address this default including, among other things, seeking
a waiver from the holders of the Senior Subordinated Notes and repurchasing all
or a portion of the Senior Subordinated Notes. The Company currently has
sufficient available funds to repurchase all outstanding Senior Subordinated
Notes.

Westbridge believes that its short-term cash requirements, including interest on
its Convertible Notes and Senior Subordinated Notes, and dividends on its Series
A Preferred Stock, will be met through operating cash flows, repayments of
advances from subsidiaries, and payments relating to a $0.8 million surplus
certificate held by NFL.

The Convertible Notes may not be redeemed prior to May 1, 2000 and, thereafter,
may be redeemed at the Company's option at a specified declining premium. The
Convertible Notes mature on May 1, 2004. The Senior Subordinated Notes may be
redeemed, at the Company's option, without premium, on or after March 1, 1998
and mature in March 2002. The Series A Preferred Stock may be redeemed at any
time at the Company's option and is subject to mandatory redemption on April 12,
2004.

INSURANCE SUBSIDIARIES.

The primary sources of cash for the Insurance Subsidiaries are premiums and
income on invested assets. Additional cash is periodically provided by advances
from Westbridge and from the sale of short-term investments and could, if
necessary, be provided through the sale of long-term investments and blocks of
business. The Insurance Subsidiaries' primary uses for cash are benefits and
claims, commissions, general and administrative expenses, taxes, licenses and
fees.

Benefits and claims expense increased significantly during the second quarter
ended June 30, 1997 as a result of sharply higher claim submissions and medical
inflation for the Medical Expense and Medicare Supplement products. As of July
1, 1997, the Company has implemented certain rate increases and modified certain
features on some of those products. In addition, management is aggressively
reviewing its recent claims experience to determine whether further actions are
required in light of the pricing disparity with respect to these products. The
Company has the ability, within the constraints of the loss ratios mandated by
the regulatory authorities and subject to regulatory approval, to raise premium
rates on its products in the event of adverse claims experience. However, the
steps taken to correct the pricing disparity will not be immediately reflected
in the Company's results of operations. Until these corrective actions are
completely implemented and realized, the Company's earnings will continue to be
negatively impacted.

In the ordinary course of business, the Company advances commissions on policies
written by its general agencies and their agents. The Company is reimbursed for
these advances from the commissions earned over the respective policy's life. In
the event that policies lapse prior to the time the Company has been fully
reimbursed, the general agency or the individual agents, as the case may be, are
responsible for reimbursing the Company for the outstanding balance of the
commission advance. The Company has not experienced material annual losses on
such commission advances.

The Company finances its obligations to make commission advances through
Westbridge Funding Corporation ("WFC"), an indirect wholly owned subsidiary of
Westbridge. On June 6, 1997, WFC prepaid and refinanced its revolving loan
credit facility with Fleet National Bank by entering into a Credit Agreement
dated as of such date with LaSalle National Bank (the "Credit Agreement"). See
NOTE 3 -- "EXTRAORDINARY ITEM." The Credit Agreement provides WFC with a
two-year, $20 million revolving loan facility (the "Receivables Financing"), the
proceeds of which are used to purchase agent advance receivables from the
Insurance Subsidiaries and certain affiliated marketing companies. WFC's
obligations under the Credit Agreement are secured by liens upon substantially
all of WFC's assets. As of June 30, 1997, $10.3 million was outstanding under
the Credit Agreement. The Credit Agreement terminates on June 6, 1999, at which
time the outstanding principal and interest thereunder will be due and payable.

WFC's obligations under the Credit Agreement have been guaranteed by Westbridge
under the Guaranty Agreement, and the Company has agreed to pledge all of the
issued and outstanding shares of the capital stock of WFC, NFL and NFIC as
collateral for that guaranty.

The ability of the Insurance Subsidiaries to underwrite insurance products is
limited by state regulation of statutory capital and surplus requirements. As a
result of rapid growth in underwritten health insurance product sales during
1995 and the first six months of 1996, the Company experienced a decline in its
available statutory capital and surplus. Accordingly, the Company deliberately
reduced the marketing of its underwritten products from the second quarter of
1996 through April 1997, consistent with its available statutory capital and
surplus. As of June 30, 1997, the Company had contributed approximately $33
million from the Convertible Note offering to its Insurance Subsidiaries to
provide adequate levels of statutory capital and surplus. See Note 3 --
"ISSUANCE OF CONVERTIBLE SUBORDINATED NOTES, DUE 2004." The Company intends to
use the remaining net proceeds to increase sales of its Medical Expense and
Critical Care and Specified Disease products and for other general corporate
purposes. Any resulting increase in sales as a result of the statutory capital
and surplus contributions to the Insurance Subsidiaries is not expected to
significantly increase total premiums until 1998. As a result, the Company's
earnings are not expected to be significantly affected by increased sales, if
any, during the remainder of 1997.


<PAGE>



CONSOLIDATED.

The Company's consolidated net cash used for operations totaled $11.7 million
and $8.5 million for the six months ended June 30, 1997 and 1996, respectively.
The increase in the amount of net cash used for operations was primarily the
result of the increase in the number of claims processed during the first six
months of 1997 coupled with the increase in certain medical costs covered by the
Company's Medical Expense and Medicare Supplement products as a result of
medical cost inflation. Additional increases in consolidated net cash used for
operations related to amounts remitted to reinsurers under certain reinsurance
arrangements. These increases in the consolidated net cash used for operations
were offset, in part, by lower levels of additions to DPAC as a result of the
Company's reduction of its marketing efforts for its underwritten products from
the second quarter of 1996 to April 1997.

Net cash (used for)  provided by investing  activities  for the six months ended
June 30,  1997 and June 30,  1996  totaled  $(34.6)  million  and $7.3  million,
respectively.  The increase in the cash outflow represents the investment of the
net proceeds from the issuance of the  Convertible  Notes.  Cash inflows for the
six  months  ended  June  30,  1996  were  utilized  to  fund   operating   cash
requirements.

Net cash provided by financing activities totaled $59.1 million and $2.7 million
for the six months ended June 30, 1997 and 1996, respectively. For the six
months ended June 30, 1997, approximately $67.7 million in cash was provided by
the issuance of $70.0 million aggregate principal of Convertible Notes offset,
in part, by cash payments of $8.6 million to retire a note payable associated
with a recaptured reinsurance agreement, $1.0 million to retire a note with a
related party and $1.3 million in net borrowings and repayments associated with
the Receivables Financing program.

For the six months ended June 30, 1996, cash was provided by borrowings under
the receivables financing program with Fleet National Bank.

The Company believes that its short-term cash requirements will be met through a
combination of operating and investing cash flows,  use of the revolving line of
credit,  and use of the proceeds from the issuance of the Convertible Notes. The
Company  anticipates that its longer-term cash requirements for the operation of
the business will be met through a combination  of operating and investing  cash
flows.

The Company had no significant high-yield, unrated or less than investment grade
fixed maturity securities in its investment portfolio as of June 30, 1997, and
it is the Company's policy not to exceed more than 5% of total assets in such
securities. Changes in interest rates may affect the market value of the
Company's investment portfolio. The Company's principal objective with respect
to the management of its investment portfolio is to meet its future policyholder
benefit obligations. In the event the Company was forced to liquidate
investments prior to maturity, investment yields could be compromised. The
Company has adopted a policy not to invest in real estate mortgage loans and,
accordingly, the Company has made no mortgage loans or real estate purchases
since 1989.

Inflation will affect claim costs on the Company's Medicare Supplement products
and Medical Expense products. Costs associated with a hospital stay and the
amounts reimbursed by the Medicare program are each determined, in part, based
on the rate of inflation. If hospital and other medical costs that are
reimbursed by the Medicare program increase, claim costs on the Medicare
Supplement products will increase. Similarly, as the hospital and other medical
costs increase, claim costs on the Medical Expense products will increase. The
Company has somewhat mitigated its exposure to inflation by incorporating
certain limitations on the maximum benefits which may be paid under its policies
and continues to file for premium rate increases as necessary.

The National Association of Insurance Commissioners ("NAIC") has developed
certain Risk-Based Capital ("RBC") statutory requirements for insurance
companies. Under these requirements, insurers whose statutory capital and
surplus fall below the specified level are subject to remedial action. These
guidelines are not effective unless they are adopted by the states. The States
of Delaware and Mississippi have each adopted the NAIC's RBC calculation
guidelines. The State of Texas has developed a RBC calculation that varies from
the NAIC. The RBC statutory requirements are based on the Insurance
Subsidiaries' year-end financial position and results of operations. The RBC for
each of the Insurance Subsidiaries exceeded the proposed thresholds for required
regulatory intervention as of December 31, 1996.


<PAGE>



                                     PART II

Item 1 - LEGAL PROCEEDINGS (See Part I - Note 2 to the Consolidated Financial
Statements).

Item 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)   EXHIBITS

     Exhibit 10.1 Credit  Agreement dated as of June 6, 1997 between  Westbridge
          Funding Corporation and LaSalle National Bank.

     Exhibit 10.2  Guaranty  Agreement  dated as of June 6,  1997 by  Westbridge
          Capital Corp. in favor of LaSalle National Bank.

     Exhibit 10.3 Pledge  Agreement dated as of June 6, 1997 between  Westbridge
          Marketing Corporation and LaSalle National Bank.

     Exhibit 10.4 Security Agreement dated as of June 6, 1997 between Westbridge
          Funding Corporation for the benefit of LaSalle National Bank.

     Exhibit 10.5 Second  Amended and  Restated  Receivables  Purchase  and Sale
          Agreement,  dated as of June 6, 1997 between National  Foundation Life
          Insurance  Company,  National Financial  Insurance  Company,  American
          Insurance Company of Texas, Freedom Life Insurance Company of America,
          and Westbridge Funding Corporation.

                                               
     Exhibit 10.6 Amended and Restated Non-Insurance Company Sellers Receivables
          Purchase and Sale Agreement, dated as of June 6, 1997 between American
          Senior Security Plans, L.L.C., Freedom Marketing Inc., Health Care-One
          Insurance Agency,  Health Care One Marketing Group,  Inc., LSMG, Inc.,
          Senior Benefits of Texas, Inc., and Westbridge Marketing Corporation.

     Exhibit 27 Financial Data Schedule, (included in electronic filing only).

(b)   REPORTS ON FORM 8-K

No Form 8-K was required to be filed during the period.


<PAGE>


                                    FORM 10-Q

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



WESTBRIDGE CAPITAL CORP.

 /S/ PATRICK J. MITCHELL

Patrick J. Mitchell

Executive Vice President, Chief Financial
Officer and Treasurer
(On Behalf of the Registrant and as
Principal Financial and Accounting Officer)

Dated at Fort Worth, Texas
August 13, 1997

                                                                    Exhibit 10.1
                                CREDIT AGREEMENT

                            DATED AS OF JUNE 6, 1997

                                     BETWEEN

                         WESTBRIDGE FUNDING CORPORATION

                                       AND

                              LASALLE NATIONAL BANK

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<PAGE>



                                TABLE OF CONTENTS

ARTICLE 1              DEFINITIONS; ACCOUNTING TERMS                           1
Section 1.1            Definitions                                             1
Section 1.2            Accounting Terms                                       14
Section 1.3            Exhibits and Schedules                                 15
Section 1.4            References to "Borrower and its Subsidiaries"          15
Section 1.5            Miscellaneous Terms                                    15
Section 1.6            Uniform Commercial Code Definitions                    15

ARTICLE 2              THE CREDIT                                             15
Section 2.1            The Revolving Loans                                    15
Section 2.2            The Revolving Note                                     16
Section 2.3            Procedure for Borrowing                                16
Section 2.4            Termination or Optional Reduction of Commitment ..     17
Section 2.5            Maturity of Revolving Loans                            17
Section 2.6            Mandatory Prepayments; Pledged Account                 17
Section 2.7            Optional Prepayments                                   18
Section 2.8            Interest on the Revolving Loans                        18
Section 2.9            Fees                                                   19
Section 2.10           Payments Generally                                     19
Section 2.11           Capital Adequacy                                       19
Section 2.12           Increased Costs                                        20
Section 2.13           Illegality                                             21
Section 2.14           Payments to be Free of Deductions                      21
Section 2.15           Computations                                           22
Section 2.16           Compensation                                           22

ARTICLE 3              SECURITY                                               23
Section 3.1            Security Agreement and Guaranty                        23
Section 3.2            Pledge Agreements                                      23
Section 3.3            Further Assurances                                     24
Section 3.4            Required Consents and Approvals                        24

ARTICLE 4              CONDITIONS PRECEDENT                                   24
Section 4.1            Documentary Conditions Precedent                       24
Section 4.2            Additional Conditions Precedent to Each Loan           28
Section 4.3            Deemed Representations                                 29

ARTICLE 5              REPRESENTATIONS AND WARRANTIES                         29
Section 5.1            Incorporation, Good Standing and Due Qualification     29
Section 5.2            Corporate Power and Authority; No Conflicts            29
Section 5.3            Legally Enforceable Agreements                         30
Section 5.4            Litigation                                             30
Section 5.5            Disclosures                                            30



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<PAGE>



Section 5.6                Ownership and Liens                                30
Section 5.7                Taxes                                              31
Section 5.8                ERISA                                              31
Section 5.9                Subsidiaries and Ownership of Stock                31
Section 5.10               Credit Arrangements                                31
Section 5.11               Operation of Business                              32
Section 5.12               No Default on Outstanding Judgments or Orders      32
Section 5.13               No Defaults on Other Agreements                    32
Section 5.14               Governmental Regulation                            32
Section 5.15               Consents and Approvals                             32
Section 5.16               Partnerships                                       32
Section 5.17               Environmental Protection                           33
Section 5.18               Copyrights, Patents, Trademarks, Etc               33
Section 5.19               Compliance with Laws                               33
Section 5.20               Receivables                                        33
Section 5.21               Use of Proceeds                                    34

ARTICLE 6                  AFFIRMATIVE COVENANTS                              34
Section 6.1                Maintenance of Existence                           34
Section 6.2                Conduct of Business                                34
Section 6.3                Maintenance of Properties                          34
Section 6.4                Maintenance of Records                             34
Section 6.5                Maintenance of Insurance                           34
Section 6.6                Compliance with Laws                               34
Section 6.7                Right of Inspection                                35
Section 6.8                Reporting Requirements                             35
         (a)               Annual GAAP Statements of Borrower                 35
         (b)               Quarterly GAAP Statements of Borrower              36
         (c)               Management Letters                                 36
         (d)               Notice of Litigation                               36
         (e)               Notices of Default                                 36
         (f)               Other Filings                                      36
         (g)               Borrowing Base Certificate                         37
         (h)               Additional Information                             37
Section 6.9                Certificates                                       37
         (a)               Officers' Certificate                              37
         (b)               Accountant's Certificate                           38
Section 6.10               Communication with Accountants                     38
Section 6.11               Further Assurances                                 38
Section 6.12               Compliance with Agreements                         38
Section 6.13               Use of Proceeds                                    38

ARTICLE 7                  NEGATIVE COVENANTS                                 39
Section 7.1                Debt                                               39
Section 7.2                Guaranties, Etc                                    39



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                                     - ii -


<PAGE>



Section 7.3         Liens                                                     39
Section 7.4         Investments                                               40
Section 7.5         Mergers and Consolidations and Acquisitions of Assets     40
Section 7.6         Sale of Assets                                            40
Section 7.7         Stock of the Borrower, Subsidiaries, Etc                  40
Section 7.8         Transactions with Affiliates                              40
Section 7.9         Capital Expenditures                                      40
Section 7.10        Minimum Consolidated GAAP Net Worth                       41
Section 7.11        Minimum Interest Coverage                                 41
Section 7.12        Minimum Collateral Ratio                                  41
Section 7.13        Distributions                                             41
Section 7.14        Receivables Purchase Agreements                           41

ARTICLE 8           EVENTS OF DEFAULT                                         41
Section 8.1         Events of Default                                         41
Section 8.2         Remedies                                                  44

ARTICLE 9           MISCELLANEOUS                                             45
Section 9.1         Amendments and Waivers                                    45
Section 9.2         Usury                                                     45
Section 9.3         Expenses; Indemnities                                     45
Section 9.4         Term; Survival                                            47
Section 9.5         Assignment; Participations                                47
Section 9.6         Notices                                                   47
Section 9.7         Setoff                                                    48
Section 9.8         Jurisdiction; Immunities                                  48
Section 9.9         Table of Contents; Headings                               48
Section 9.10        Severability                                              48
Section 9.11        Counterparts                                              49
Section 9.12        Integration                                               49
Section 9.13        Governing Law                                             49
Section 9.14        Confidentiality                                           49
Section 9.15        Authorization of Third Parties to Deliver Opinions, Etc   49
Section 9.16        Borrower's Waivers                                        49
Section 9.17        State of Making and Substantial Performance               50




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                                     - iii -


<PAGE>




<TABLE>
<S>             <C>

Schedule 1.1    Commitments and Lending Offices
Schedule 5.4    Litigation
Schedule 5.10   Credit Arrangements

Exhibit A       Form of Revolving Note
Exhibit B-1     Forms of Eligible Agent Contract
Exhibit B-2     Forms of Master General Agent Contract

Exhibit B-3     Forms of Eligible Agent Contract with Non-Affiliated Insurance
                  Companies

Exhibit C       Schedule of Maximum Advance Percentages by Policy Type
Exhibit D       Eligible Receivable Eligibility Criteria
Exhibit E       Form of Guaranty

Exhibit F       Form of Notice of Borrowing
Exhibit G       Form of Pledge Agreement
Exhibit H       Form of Security Agreement

Exhibit I-1     Form of Opinion of Special Counsel to Borrower and Guarantor
Exhibit I-2     Form of Opinion of General Counsel to Borrower, Guarantor and each

                  Eligible Seller

Exhibit I-3     Forms of Opinions of Special Counsel to and General Counsel
                  of the Guarantor Relating to the Pledge Agreement

Exhibit J       Form of Officer's Certificate
Exhibit K       Form of Borrowing Base Certificate

Exhibit L-1     Forms of Insurance Company Receivables Purchase and Sale
                  Agreement

Exhibit L-2     Forms of Non-Insurance Company Receivables Purchase and Sale
                  Agreement

</TABLE>

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                                     - iv -


<PAGE>



     CREDIT AGREEMENT dated as of June 6, 1997 between WESTBRIDGE FUNDING
CORPORATION, a Delaware corporation (the "Borrower"), and LASALLE NATIONAL BANK
(the "Bank").

     The Borrower desires that the Bank extend credit as provided herein, and
the Bank is prepared to extend such credit. Accordingly, the Borrower and the
Bank agree as follows:

                                    ARTICLE 1

                          DEFINITIONS; ACCOUNTING TERMS

     Section 1.1 DEFINITIONS. As used in this Agreement, the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa):

     "AFFILIATE" means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event: (i) any Person which owns directly or indirectly 20% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 20% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person; and
(ii) each director and officer of such Person shall be deemed to be an Affiliate
of the Person.

     "AGREEMENT" means this Credit Agreement, as amended or supplemented from
time to time. References to Articles, Sections, Exhibits, Schedules and the like
refer to the Articles, Sections, Exhibits, Schedules and the like of this
Agreement unless otherwise indicated.

     "A.M. BEST RATING" means the most recent rating  announced by A.M. Best (or
any  successor  thereto) or, if such rating is no longer  announced by A.M. Best
(or its  successor),  the most recent rating  announced by another rating agency
selected by the Bank.

         "AIC" means American Insurance Company of Texas, a Texas corporation.

         "ANNIVERSARY DATE" means June 6 of each calendar year, commencing June
6, 1998.

         "APPLICABLE COMMITMENT FEE PERCENTAGE" means, on any date, the per
annum Applicable Rate specified below, determined by using the most recently
calculated Funded Debt Ratio of Guarantor, and the lowest RBC Ratio most
recently calculated for the Insurance Affiliates, and selecting the highest
corresponding Applicable Rate:


<PAGE>

FUNDED DEBT RATIO                   RBC RATIO    APPLICABLE RATE

Less than or equal                        175%      .40%
to .25/1

Greater than .25/1 but                    150%      .45%
less that or equal to .35/1

Greater than .35/1                        120%      .50%


         "APPLICABLE INTEREST RATE" means for any Revolving Loan, the Base Rate
or the LIBOR Rate PLUS, in each case, the Applicable Margin, for such Revolving
Loan.

         "APPLICABLE MARGIN" with respect to each LIBOR Rate Loan or Base Rate
Loan means, as of any date, the per annum rate specified below as the LIBOR Rate
margin ("LRM") or the Base Rate margin ("BRM"), as applicable, determined by
using the most recently calculated Funded Debt Ratio of the Guarantor, and the
lowest RBC Ratio most recently calculated for the Insurance Affiliates and
selecting the highest corresponding LRM or BRM, as applicable:

<TABLE>
<CAPTION>

                                   RBC RATIOS

<S>                <C>             <C>              <C>             <C>            <C>
Funded Debt
  Ratio                175%           150%              120%           110%           105%


Less than or        LRM= 1.75%      LRM= 2.00%       LRM= 2.25%      LRM= 2.50%     LRM= 2.75%
equal to .25/1      BRM= 0.250%     BRM= 0.250%      BRM= 0.500%     BRM= 0.500%    BRM= 0.625%

Greater than        LRM= 2.00%      LRM= 2.00%       LRM= 2.25%      LRM= 2.50%     LRM= 2.75%
 .25/1 but less      BRM= 0.250%     BRM= 0.250%      BRM= 0.500%     BRM= 0.500%    BRM= 0.625%
than or equal 
to .35/1

Greater than        LRM= 2.25%      LRM= 2.25%       LRM= 2.25%      LRM= 2.50%     LRM= 2.75%
 .35/1 but less      BRM= 0.500%     BRM= 0.500%      BRM= 0.500%     BRM= 0.500%    BRM= 0.625%
than or equal  
to .50/1

Greater than        LRM= 2.50%      LRM= 2.50%       LRM=  2.50%     LRM= 2.50%     LRM= 2.75%
 .50/1 but less      BRM= 0.500%     BRM= 0.500%      BRM=  0.500%    BRM= 0.500%    BRM= 0.625%
than or equal 
to .60/1

Greater than        LRM= 2.75%       LRM= 2.75%      LRM= 2.75%      LRM= 2.75%     LRM= 2.75%
 .60/1               BRM= 0.625%      BRM= 0.625%     BRM= 0.625%     BRM= 0.625%    BRM= 0.625%
</TABLE>



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<PAGE>



         Any change in the Applicable Margin based upon any change in the Funded
Debt Ratio of the Guarantor or the RBC Ratio for the Insurance Affiliates, shall
become effective for purposes of the accrual of interest hereunder on the date
three Business Days after the delivery to the Bank of the financial statements
of the Guarantor and its Subsidiaries for the most recently ended fiscal
quarter.

         "ASSIGNED COMMISSIONS" has the meaning set forth in Section 1.1 of each
Receivables Purchase Agreement.

         "ASSP" means American Senior Security Plans, L.L.C., a Delaware limited
liability company.

         "BASE RATE" means the fluctuating interest rate per annum which shall
be in effect from time to time and shall at all times equal the per annum
interest announced publicly from time to time by the Bank in Chicago, Illinois
as the Bank's corporate base lending rate (whether or not such rate is actually
charged by the Bank).

         "BASE RATE LOAN" means a Revolving Loan which bears interest at the
Base Rate plus the Applicable Margin.

         "BORROWING" means a borrowing consisting of a Revolving Loan from the
Bank under this Agreement.

         "BORROWING BASE" means, as of any date of determination, an amount
equal to 90% of the aggregate Eligible Agent Collateral Value attributable to
all Eligible Agent Obligors; PROVIDED, HOWEVER, that at any time the Borrower
maintains at least $1,250,000 in the Cash Collateral Account, the Borrowing Base
shall mean an amount equal to 95% of the aggregate Eligible Agent Collateral
Value attributable to all Eligible Agent Obligors; PROVIDED FURTHER, HOWEVER,
that at any time the Borrower maintains at least $2,500,000 in the Cash
Collateral Account, the Borrowing Base shall mean an amount equal to 100% of the
aggregate Eligible Agent Collateral Value attributable to all Eligible Agent
Obligors.

         "BUSINESS DAY" means any day (other than a Saturday, Sunday or legal
holiday) on which commercial banks are not authorized or required to close in
Illinois, except that, with respect to Borrowings, notices, determinations and
payments with respect to a LIBOR Rate Loan, such day shall be a "Business Day"
only if it is also a day for trading by and between banks in the interbank LIBOR
market.

         "CAPITAL EXPENDITURES" means, for any period, the Dollar amount of
gross expenditures (including payments in respect of Capital Lease Obligations)
made for fixed assets, real property, plant and equipment, and all renewals,
improvements and replacements thereto (but not repairs thereof) incurred during
such period, all as determined in accordance with GAAP.

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                                      - 3 -


<PAGE>



         "CAPITAL LEASE" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP.

         "CAPITAL LEASE OBLIGATION" means the obligation of the lessee under a
Capital Lease. The amount of a Capital Lease Obligation at any date is the
amount at which the lessee's liability under the related Capital Lease would be
required to be shown on its balance sheet at such date in accordance with GAAP.

         "CASH COLLATERAL ACCOUNT" means the interest bearing account maintained
by Borrower with the Bank from time to time in order to take advantage of the
increased rates of advance provided for in the defined term Borrowing Base.

         "CHANGE IN CONTROL" means, with respect to the Borrower, the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Securities Exchange Act of 1934
and the rules of the Securities and Exchange Commission thereunder as in effect
on the date hereof) other than the Guarantor or a Subsidiary of the Guarantor,
of shares representing more than 50% of the aggregate ordinary voting power for
the election of directors of the issued and outstanding capital stock of the
Borrower.

         "CLOSING DATE" means the date of the initial Loan hereunder, but in any
event not later than June 26, 1997.

         "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.

         "COMMITMENT" means the commitment of the Bank to make Revolving Loans
hereunder as set forth in SCHEDULE 1.1, as the same may be adjusted from time to
time pursuant to Sections 2.4 or by written agreement between the Borrower and
the Bank.

         "COMMITMENT PERIOD" means the period from and including the date hereof
to but not including the Revolving Loan Termination Date or such earlier date as
the Commitment shall terminate as provided herein.

         "CONSOLIDATED GAAP NET WORTH" means the sum of (a) the capital stock
and additional paid-in capital of the Borrower and its Subsidiaries on a
consolidated basis, plus (without duplication) (b) the amount of retained
earnings (inclusive of Deferred Revenues) (or, in the case of a deficit, minus
the deficit), minus (c) treasury stock, plus or minus (d) any other account
which is customarily added or deducted in determining stockholders' equity
(without giving effect to any increase or decrease to Consolidated GAAP Net
Worth attributable to the application of SFAS No. 115), all of which shall be
determined on a consolidated basis in accordance with GAAP.

         "DEBT" means, with respect to any Person: (a) indebtedness of such
Person for borrowed money; (b) indebtedness for the deferred purchase price of
Property or services (except trade payables and accrued expenses, incurred in
the ordinary course of business); (c)

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<PAGE>



the face amount of any outstanding letters of credit issued for the account of
such Person; (d) obligations arising under acceptance facilities; (e)
guaranties, endorsements (other than for collection in the ordinary course of
business) and other contingent obligations to purchase or to provide funds for
payment of the obligations of another Person, to supply funds to invest in any
Person to cause such Person to maintain a minimum working capital or net worth
or otherwise assure the creditors of such Person against loss; (f) obligations
secured by any Lien on Property of such Person; and (g) Capital Lease
Obligations.

         "DEFAULT" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.

         "DEFERRED REVENUES" with respect to any Person, means, for any period,
an amount reflected on such Person's financial statement for such period as
deferred revenues, determined in accordance with GAAP.

         "DEFAULT RATE" means a percentage per annum equal at all times to the
lesser of 2% per annum above the Applicable Interest Rate in effect from time to
time or the highest rate permitted by law.

         "DISTRIBUTIONS" means (a) dividends or other distributions in respect
of capital stock of a Person (except distributions in such stock) and (b) the
redemption or acquisition of such stock or of warrants, rights or other options
to purchase such stock (except when solely in exchange for such stock) unless
made, contemporaneously, from the net proceeds of a sale of such stock.

     "DOLLARS"  and the sign "$" mean  lawful  money  of the  United  States  of
America.

         "EARNED COMMISSIONS" with respect to any Eligible Agent Obligor, means,
as of any date of determination, that portion of all payments and collections
received by an Eligible Seller under any Insurance Policy that has been, or
should have been, applied by such Eligible Seller under an Eligible Agent
Contract to reduce the outstanding amount of any Eligible Receivable payable by
such Eligible Agent Obligor.

         "ELIGIBLE AGENT COLLATERAL VALUE" with respect to any Eligible Agent
Obligor, means, as of any date of determination, an amount equal to the
aggregate outstanding amount of all Eligible Receivables payable by such
Eligible Agent Obligor as of such determination date, which outstanding amount
shall be determined in the same manner as used to calculate the purchase price
described in Section 2.2(b)(ii) of each Receivables Purchase Agreement.

         "ELIGIBLE AGENT CONTRACT" means an agreement between an Eligible Seller
and an Eligible Agent Obligor, substantially in one of the forms set forth in
EXHIBIT B-1 or EXHIBIT B-2, as such Exhibits shall be amended from time to time
in accordance with Section 9.1.

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                                      - 5 -


<PAGE>



         "ELIGIBLE AGENT OBLIGOR" means a Master General Agent or a Sub-Agent of
a Master General Agent authorized by an Eligible Seller to sell insurance
policies of any of the types identified on EXHIBIT C.

     "ELIGIBLE INSURANCE COMPANY SELLER" means any of AIC, FLICA, NFIC and NFL.

         "ELIGIBLE NON-INSURANCE COMPANY SELLER" means, as of the date of this
Agreement, any of ASSP, HCO, HCO Marketing, LSMG, Senior Benefits of Texas,
Westbridge Marketing and Freedom Marketing, and thereafter any other entity
which has become a party to the Non-Insurance Company Receivables Purchase
Agreement, and which is reasonably acceptable to Bank based on such financial,
operational and other considerations which the Bank in its discretion deems
appropriate.

         "ELIGIBLE RECEIVABLE" means, as of any date of determination, a
Receivable as to which (a) each of the eligibility criteria set forth in EXHIBIT
D hereto is satisfied, (b) every representation and warranty set forth in each
Receivables Purchase Agreement with respect to such Receivable is true, complete
and correct, and (c) every covenant in each Receivables Purchase Agreement with
respect to such Receivable has been complied with in all material respects.

     "ELIGIBLE  SELLER" means any of the Eligible  Insurance Company Sellers and
any of the Eligible Non-Insurance Company Sellers.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.

         "ERISA AFFILIATE" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower.

         "EVENT OF DEFAULT" has the meaning given such term in Section 8.1.

         "FIRST-YEAR COMMISSIONS" with respect to an Insurance Policy originated
by any specified Eligible Agent Obligor pursuant to the terms of an Eligible
Agent Contract, means the aggregate amount that would be paid by the issuing
Eligible Seller to such Eligible Agent Obligor pursuant to the Eligible Agent
Contract during the first twelve months that such Insurance Policy is in force,
assuming such Insurance Policy remains in full force and effect for the entire
twelve month period.

         "FINANCING STATEMENTS" means the UCC-1 financing statements signed by
the Borrower in connection with the security interest granted to the Bank in the
Receivables and other collateral pursuant to the Security Agreement.

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                                      - 6 -


<PAGE>



         "FLICA" means Freedom Life Insurance Company of America, a Mississippi
corporation.

     "FREEDOM MARKETING" means Freedom Marketing, Inc.", a Texas corporation.

         "FUNDED DEBT" means, with respect to any Person, all Debt which by the
terms of the agreement governing, or instrument evidencing, such Debt matures
more than one year from, or is directly or indirectly renewable or extendable at
the option of the Debtor under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of more than one
year from the date of creation thereof, including current maturities of
long-term Debt, revolving credit and short-term Debt extendable beyond one year
at the option of the Debtor and, in respect of the Borrower, the Loans
outstanding hereunder.

         "FUNDED DEBT RATIO" means, with respect to the Guarantor, as at any
date, the ratio of Funded Debt to Total Capital, in each case, determined as of
the end of the most recent fiscal quarter ending on or prior to such date.

         "FUNDING DATE" means the date on which any Borrowing is made.

         "GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 5.5 (except for changes concurred in by the Borrower's independent
public accountants).

         "GAAP EBIT" with respect to any Person, means, for any period, an
amount equal to Net Income for such period, plus (without duplication, to the
extent deducted in determining Net Income) the sum of (a) Interest Expense for
such period, plus (b) income tax expense deducted in determining Net Income for
such period, all of which shall be determined in accordance with GAAP and
eliminating intercompany balances and transactions, as applicable.

         "GUARANTOR" means Westbridge Capital Corp., a Delaware corporation.

         "GUARANTY" means the Guaranty Agreement, substantially in the form of
EXHIBIT E hereto, duly executed and delivered by the Guarantor, as amended or
supplemented from time to time with the consent of the Bank.

     "HCO"  means  Health   Care-One   Insurance   Agency,   Inc.  a  California
corporation.

         "HCO MARKETING" means HealthCare One Marketing Group, Inc., a Texas
corporation.

         "INSURANCE AFFILIATE" means any of AIC, FLICA, NFIC and NFL.

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         "INSURANCE COMMISSIONER" means with respect to any Insurance Affiliate,
the head of any insurance regulatory authority and/or, if the context so
requires, such insurance regulatory authority in the relevant place of domicile
of such Insurance Affiliate at the relevant time.

         "INSURANCE COMPANY RECEIVABLES PURCHASE AGREEMENT" means the Second
Amended and Restated Receivables Purchase and Sale Agreement dated as of the
Closing Date by and between the Borrower and each of the Eligible Insurance
Company Sellers, as amended from time to time, a copy of which is attached as
EXHIBIT L-1 hereto.

         "INSURANCE POLICY" means an insurance policy of one or more of the
types set forth in EXHIBIT C hereto and which is written or sold by an Eligible
Agent Obligor.

         "INTEREST COVERAGE RATIO" at the end of any fiscal quarter means the
ratio of (i) an amount equal to the sum of (a) consolidated GAAP EBIT of the
Borrower and all Subsidiaries for the immediately preceding four fiscal quarters
(ending on such date) PLUS (b) Deferred Revenues, for the immediately preceding
four fiscal quarters (ending on such date), to (ii) total Interest Expense of
the Borrower and its Subsidiaries on a consolidated basis for the immediately
succeeding four fiscal quarters (beginning on such date). For purposes of clause
(ii) above, Interest Expense shall be calculated on the assumption that a LIBOR
Rate Loan for the full amount of the Commitment will be outstanding for the
period contemplated in the calculation and the Applicable Margin in effect on
the date of the certification required by Section 6.9(a) with respect to the
fiscal quarter being tested will remain in effect for the entire period
contemplated by the calculation.

         "INTEREST EXPENSE" with respect to any Person for any period, means,
the consolidated interest expense, including the interest portion of rental
payments under Capital Leases, as determined on a consolidated basis in
accordance with GAAP.

         "INTEREST PERIOD" means (a) for each LIBOR Rate Loan, the period
commencing on the date of such LIBOR Rate Loan or on the last day of the
preceding Interest Period, as the case may be, and ending on the numerically
corresponding day of the last month of the period selected by the Borrower
pursuant to the following provisions: the duration of each LIBOR Rate Loan
Interest Period shall be one (1), two (2), three (3) or six (6) months, in each
case as the Borrower may select, upon notice received by the Bank not later than
11:00 a.m. (Chicago time) on the third Business Day prior to the first day of
such Interest Period, payable at the lesser of (i) the end of each interest
period or (ii) each ninety day period; and (b) for each Base Rate Loan, the
period commencing on the date of such Base Rate Loan or on the last day of the
preceding Interest Period, as the case may be, pursuant to notice received by
the Bank not later than 11:00 a.m. (Chicago time) on any Business Day selected
by the Borrower as the first day of such Interest Period, and ending on the
thirtieth (30th) day after the date of such Base Rate Loan or the last day of
the preceding Interest Period, as the case may be; PROVIDED, HOWEVER, that:

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(i)  whenever the last day of any Interest Period would otherwise occur on a day
     other than a Business  Day, the last day of such  Interest  Period shall be
     extended to occur on the next  succeeding  Business Day;  PROVIDED that, if
     such extension would cause the last day of such Interest Period to occur in
     the next following  calendar  month,  the last day of such Interest  Period
     shall occur on the next preceding Business Day; and

(ii) no Interest Period for any Revolving Loan shall extend beyond the Revolving
     Loan Termination Date.

         "INVESTMENT" in any Person means (a) the acquisition (whether for cash,
property, services or securities or by merger or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of such Person and (b) any advance, loan or other extension of credit
to, such Person and (without duplication) any amount committed to be advanced,
lent or extended to such Person.

         "LENDING OFFICE" means, for each type of Revolving Loan, the lending
office of the Bank (or of an affiliate of the Bank) designated as such for such
type of Revolving Loan on SCHEDULE 1.1 or such other office of the Bank (or of
an affiliate of the Bank) as the Bank may from time to time specify to the
Borrower as the office through which its Revolving Loans of such type are to be
made and maintained.

         "LIBOR RATE" means, for the Interest Period for each LIBOR Rate Loan
comprising part of the same Borrowing, an interest rate per annum equal to (x)
the rate quoted by the Bank at 11:00 a.m. London time (or as soon thereafter as
practical) at which deposits in Dollars are offered by prime commercial banks to
prime commercial banks in the London interbank LIBOR market two Business Days
before the first day of such Interest Period for a period equal to such Interest
Period and in an amount equal to the Borrowing, divided by (y) one (1) minus the
Reserve Requirement, if any, for each such LIBOR Rate Loan for such Interest
Period.

         "LIBOR RATE LOAN" means a Revolving Loan which bears interest at the
LIBOR Rate, PLUS the Applicable Margin.

         "LIEN" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.

         "LOAN DOCUMENTS" mean this Agreement, the Revolving Note, the Guaranty,
the Security Agreement, the Pledge Agreements (if delivered) and any other
documents, agreements, reports, and instruments now or hereafter executed in
connection herewith or contemplated hereby.

         "LSMG" means LSMG, Inc., a Texas corporation.

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         "MASTER GENERAL AGENT" means any (i) agent of an Eligible Insurance
Company Seller, which is party to a Master General Agent Contract with such
Eligible Insurance Company Seller, or (ii) Eligible Non-Insurance Company Seller
in its capacity as agent of a Non-Affiliated Insurance Company pursuant to the
terms of a Master General Agent Contract.

         "MASTER GENERAL AGENT CONTRACT" means an agreement between either (i) a
Master General Agent and an Eligible Seller substantially in one of the forms
set forth in EXHIBIT B-2, or (ii) an Eligible Non-Insurance Company Seller and a
Non-Affiliated Insurance Company substantially in one of the forms set forth in
EXHIBIT B-3.

         "MATERIALLY ADVERSE EFFECT" means any material adverse effect upon the
business, assets, liabilities, condition (financial or otherwise), results of
operations or, as far as the Borrower can reasonably foresee, prospects of the
Borrower and its Subsidiaries taken as a whole, or the Guarantor and its
Subsidiaries, taken as a whole, or upon the ability of the Borrower or the
Guarantor to perform in all material respects its obligations under this
Agreement or any other Loan Document, as applicable, resulting from any act,
omission, situation, status, event, or undertaking, either singly or taken
together.

         "MULTIEMPLOYER PLAN" means a Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.

         "NFIC" means National Financial Insurance Company, a Texas corporation.

     "NFL"  means  National   Foundation  Life  Insurance  Company,  a  Delaware
corporation.

         "NET INCOME" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such period, as
determined in accordance with GAAP.

         "NON-AFFILIATED INSURANCE COMPANY" means, as of the date of this
Agreement, any of Blue Cross/Blue Shield of California, FOUNDATION Health
National Life Insurance Company, FOUNDATION Health, a California Health Plan,
Inc., MEDFIRST Health Plans of Louisiana, Inc., UNICARE Life and Health
Insurance Company and UNICARE Insurance Company, and thereafter any other entity
which has become a party to an Eligible Agent Contract, and which is reasonably
acceptable to Bank based on such financial, operational and other considerations
which the Bank in its discretion deems appropriate, including without
limitation, minimum A.M. Best Rating.

         "NON-INSURANCE COMPANY RECEIVABLES PURCHASE AGREEMENT" means the
Amended and Restated Receivables Purchase and Sale Agreement dated as of the
Closing Date by and between the Borrower and each of the Eligible Non-Insurance
Company Sellers, as amended from time to time, a copy of which is attached as
EXHIBIT L-2 hereto.

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         "NOTICE OF BORROWING" means the certificate, in the form of EXHIBIT F
hereto, to be delivered by the Borrower to the Bank pursuant to Sections 2.3 and
4.2(g) and shall include any accompanying certifications or documents.

         "OBLIGATIONS" means all indebtedness, obligations and liabilities of
the Borrower and its Subsidiaries, if any, to the Bank under this Agreement, the
Security Agreement or the Revolving Note.

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

         "PERMITTED INVESTMENTS" means (a) direct obligations of the United
States of America, or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States of America, or of any agency
thereof, in either case maturing not more than 90 days from the date of
acquisition thereof; (b) certificates of deposit issued by or other overnight
deposits with any bank or trust company organized under the laws of the United
States of America or any state thereof and having capital, surplus and undivided
profits of at least $500,000,000 and having long term unsecured and unguaranteed
debt rated "BBB+" or better or "Baa1" or better by Standard & Poor's Ratings
Group, a division of McGraw Hill, Inc. or Moody's Investors Service, Inc.,
respectively, maturing not more than 90 days from the date of acquisition
thereof; (c) commercial paper rated A-1 or better or P-1 by Standard & Poor's
Ratings Group, a Division of McGraw Hill, Inc., or Moody's Investors Service,
Inc., respectively, maturing not more than 90 days from the date of acquisition
thereof; (d) repurchase agreements and reverse repurchase agreements with any
bank having combined capital and surplus in an amount of not less than
$500,000,000, or any primary dealer of United States government securities in
each case, having long term unsecured and unguaranteed debt rated "BBB+" or
better or "Baa1" or better by Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc. or Moody's Investors Service, Inc., respectively, relating to
marketable direct obligations issued or unconditionally guaranteed or insured by
the United States of America or any agency or instrumentality thereof and backed
by the full faith and credit of the United States of America, in each case
maturing within 60 days from the date of acquisition thereof; in each case so
long as the same (x) provide for the payment of principal and interest (and not
principal alone or interest alone) and (y) are not subject to any contingency
regarding the payment of principal or interest; and (e) long-term debt rated
"BBB+" or better or "Baa1" or better by Standard & Poor's Rating Group, a
division of McGraw Hill, Inc. or Moody's Investors Services, Inc., respectively.

         "PERMITTED LIENS" has the meaning specified in Section 7.3.

         "PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.

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         "PLAN" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA, other than a
Multiemployer Plan.

         "PLEDGE AGREEMENT" means a Pledge Agreement, substantially in the form
of EXHIBIT G hereto, duly executed and delivered by the Guarantor and the Bank,
as amended or supplemented from time to time.

         "PLEDGE APPROVALS" has the meaning specified in Section 3.4.

         "PLEDGED ACCOUNT" means any account maintained by the Borrower with the
Bank for purposes of receiving the payments to be made pursuant to Section 2.6.

         "PROHIBITED TRANSACTION" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code for which there is no applicable statutory
or regulatory exemption (including a class exemption or an individual
exemption).

         "PROPERTY" means any interest of any kind in property or assets,
whether real, personal or mixed, and whether tangible or intangible.

         "RBC RATIO" shall have the meaning assigned to it in the Guaranty.

         "RECEIVABLE" means rights under any Eligible Agent Contract by which
(a) an Eligible Agent Obligor is bound to make payments to an Eligible Seller
and (b) an Eligible Seller is permitted to offset amounts owed to such Eligible
Agent Obligor, to repay advances of FirstYear Commissions made by such Eligible
Seller to such Eligible Agent Obligor or any other Eligible Agent Obligor and to
pay interest and/or other finance charges to the Eligible Seller.

     "RECEIVABLES  PURCHASE  AGREEMENT" means the Insurance Company  Receivables
Purchase Agreement or the Non-Insurance  Company Receivables Purchase Agreement,
as

applicable.

         "REGULATIONS D, X AND U" means Regulations D, X and U of the Board of
Governors of the Federal Reserve System, as amended or supplemented from time to
time.

         "REGULATORY CHANGE" means any change after the date of this Agreement
in United States federal, state or foreign laws or regulations (including
Regulation D) or the adoption or making after such date of any orders, rulings,
interpretations, directives, guidelines or requests applying to a class of banks
including the Bank, of or under any United States federal, state, or foreign
laws or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.

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         "REPORTABLE EVENT" means any of the events set forth in Section 4043(c)
of ERISA as to which events the PBGC by regulation has not waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, PROVIDED that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA shall be a
Reportable Event regardless of any waivers given under Section 412(d) of the
Code.

         "RESERVE REQUIREMENT" means for any LIBOR Rate Loans for any Interest
Period (or, as the case may be, shorter period), the average maximum rate at
which reserves (including marginal, supplemental or emergency reserves, if any)
are required to be maintained during such period under Regulation D by member
banks of the Federal Reserve System in Chicago, Illinois with deposits exceeding
one billion Dollars against "Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks by reason of any Regulatory Change against: (i) any category of
liabilities which includes deposits by references to which the LIBOR Rate is to
be determined as provided in the definition of "LIBOR Rate", as applicable, in
this Article 1, or (ii) any category of extensions of credit or other assets
which include LIBOR Rate Loans.

     "REVOLVING LOAN" or "Revolving  Loans" has the meaning specified in Section
2.1. Each Revolving Loan shall be a Base Rate Loan or a LIBOR Rate Loan.

         "REVOLVING LOAN TERMINATION DATE" means June 5, 2000; PROVIDED,
HOWEVER, if not fewer than thirteen (13) months nor more than fifteen (15)
months prior to any Anniversary Date, the Borrower requests the Bank to extend
the Revolving Loan Termination Date for an additional year and if the Bank in
its sole discretion in writing within thirty (30) days of such request, grants
such request, the Revolving Loan Termination Date means the date to which the
Revolving Loan Termination Date has been so extended. If such date is not a
Business Day, the Revolving Loan Termination Date shall be the next preceding
Business Day.

         "REVOLVING NOTE" means a promissory note of the Borrower, in the form
of EXHIBIT A hereto, evidencing the Revolving Loans made by the Bank hereunder.

         "SECURITY AGREEMENT" means the Security Agreement in the form of
EXHIBIT H hereto, duly executed and delivered by the Borrower and the Bank, as
amended or supplemented from time to time.

     "SENIOR  BENEFITS OF TEXAS" means Senior  Benefits of Texas,  Inc., a Texas
corporation.

         "SENIOR OFFICER" means the (a) chief executive officer, (b) chief
operating officer, (c) the president, or (d) chief financial officer of the
person designated.

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     "SFAS NO. 115" means Statement of Financial  Accounting  Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities,  issued by the
Financial Accounting Standards Board in May, 1993.

     "SUB-AGENT"  has the  meaning  specified  in any one of the forms of Master
General Agent Contracts.

         "SUBORDINATED DEBT" means any unsecured Debt for money borrowed by the
Borrower or its Subsidiaries, as applicable, in an amount satisfactory to the
Bank and which is subordinated to the Borrower's Obligations under terms
satisfactory in form and substance to the Bank in its sole judgment, as
evidenced by the Bank's written consent thereto given prior to the creation of
such Debt.

         "SUBSIDIARY" means with respect to any Person, any corporation,
partnership or joint venture whether now existing or hereafter organized or
acquired: (i) in the case of a corporation, of which a majority of the
securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) are at the time owned by such Person and/or one or more
Subsidiaries of such Person or (ii) in the case of a partnership or joint
venture, in which such Person is a general partner or joint venturer or of which
a majority of the partnership or other ownership interests are at the time owned
by such Person and/or one or more of its Subsidiaries. Unless the context
otherwise requires, references in this Agreement to "Subsidiary" or
"Subsidiaries" shall be deemed to be references to a Subsidiary or Subsidiaries
of the Borrower or of a Subsidiary of the Borrower.

         "TOTAL CAPITAL" means Funded Debt PLUS Consolidated GAAP Net Worth.

         "UNFUNDED VESTED LIABILITIES" means, with respect to any Plan, the
amount (if any) by which the present value of all vested benefits under the Plan
exceeds the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrower
or any ERISA Affiliate to the PBGC or the Plan under Title IV of ERISA.

     "WESTBRIDGE MARKETING" means Westbridge Marketing  Corporation,  a Delaware
corporation."

         Section 1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, applied on a
consistent basis, and all financial data required to be delivered hereunder
shall be prepared in accordance with GAAP, applied on a consistent basis; EXCEPT
as otherwise specifically prescribed herein. In the event that GAAP changes
during the term of this Agreement such that the financial covenants contained in
Article 6 would then be calculated in a different manner or with different
components (a) the Borrower and the Bank agree to enter into good faith
negotiations to amend this Agreement in such respects as are necessary to
conform those

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covenants as criteria for evaluating the Borrower's financial condition to
substantially the same criteria as were effective prior to such change in GAAP
and (b) the Borrower shall be deemed to be in compliance with the financial
covenants contained in such Sections during the sixty (60) days following any
such change in GAAP if and to the extent that the Borrower would have been in
compliance therewith under GAAP as in effect immediately prior to such change;
PROVIDED, HOWEVER, if an amendment shall not be agreed upon within sixty (60)
days or such longer period as shall be agreed to by the Bank, for purposes of
determining compliance with such covenants until such amendment shall be agreed
upon, such terms shall be construed in accordance with GAAP as in effect
immediately prior to such change in GAAP.

         Section 1.3 EXHIBITS AND SCHEDULES. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by this reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules.

         Section 1.4 REFERENCES TO "BORROWER AND ITS SUBSIDIARIES". Any
reference herein to "Borrower and its Subsidiaries" or the like shall refer
solely to Borrower during such times, if any, as the Borrower shall have no
Subsidiaries.

         Section 1.5 MISCELLANEOUS TERMS. The term "or" is disjunctive; the term
"and" is conjunctive. The term "shall" is mandatory, the term "may" is
permissive. Masculine terms also apply to females; feminine terms also apply to
males. The term "including" is by way of example and not limitation.

         Section 1.6 UNIFORM COMMERCIAL CODE DEFINITIONS. The non-capitalized
terms used in this Agreement that are not otherwise defined in the Agreement and
that are defined in Article 9 of the Uniform Commercial Code as in effect in the
State of Illinois are used herein as so defined.

                                    ARTICLE 2

                                   THE CREDIT

         Section 2.1 THE REVOLVING LOANS. Subject to the terms and conditions of
this Agreement, the Bank agrees to make revolving loans to the Borrower
(hereinafter collectively referred to as the "Revolving Loan" or "Revolving
Loans") from time to time from the date hereof until and including the Revolving
Loan Termination Date, but not exceeding in the aggregate principal amount at
any one time outstanding, the lesser of (i) an amount equal to the Borrowing
Base or (ii) the amount of TWENTY MILLION AND NO/00 DOLLARS ($20,000,000). Each
Borrowing under this Section 2.1 of (i) a Base Rate Loan shall be in the
principal amount of not less than $200,000; or (ii) a LIBOR Rate Loan shall be
in the principal amount of not less than $200,000. During the Commitment Period
and subject to the foregoing limitations, the Borrower may borrow, repay and
reborrow Revolving Loans, all in accordance with the terms and conditions of
this Agreement.

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         Section 2.2       THE REVOLVING NOTE.

         (a) The Revolving Loans of the Bank shall be evidenced by a single
promissory note in favor of the Bank in the form of EXHIBIT A, dated the Closing
Date, and duly completed and executed by the Borrower.

         (b) The Bank is authorized to record and, prior to any transfer of the
Revolving Note, endorse on a schedule forming a part thereof appropriate
notations evidencing the date, the type, the amount and the maturity of each
Revolving Loan made by it which is evidenced by such Revolving Note and the date
and amount of each payment of principal made by the Borrower with respect
thereto; PROVIDED, that failure to make any such endorsement or notation shall
not affect the Obligations of the Borrower hereunder or under the Revolving
Note. The Bank is hereby irrevocably authorized by the Borrower to so endorse
the Revolving Note and to attach to and make a part of the Revolving Note a
continuation of any such schedule as and when required. The Bank may, at its
option, record and maintain such information in its internal records rather than
on such schedule.

         Section 2.3       PROCEDURE FOR BORROWING.

         (a) The Borrower shall give the Bank a Notice of Borrowing,
substantially in the form of EXHIBIT F hereto, prior to 11:00 a.m. (Chicago
time), on the date of a Borrowing of a Base Rate Loan and at least three (3)
Business Days before a Borrowing of a LIBOR Rate Loan, specifying:

(i)     the date of such Borrowing, which shall be a Business Day,

(ii)    the principal amount of such Borrowing,

(iii)   whether the Revolving Loan comprising such Borrowing is to be a Base
         Rate Loan or a LIBOR Rate Loan, and

(iv)    if a LIBOR Rate Loan, the Interest Period with respect to such
         Borrowing.

         (b)      No Notice of Borrowing shall be revocable by the Borrower.

         (c) There shall be no more than twelve (12) Interest Periods relating
to LIBOR Rate Loans outstanding at any time.

         (d) If the Bank makes a new Revolving Loan hereunder on a day on which
the Borrower is to repay an outstanding Revolving Loan from the Bank, the Bank
shall apply the proceeds of its new Revolving Loan to make such repayment and
only an amount equal to the excess (if any) of the amount being borrowed over
the amount being repaid shall be made available by the Bank to the Borrower.

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         (e) Notwithstanding anything to the contrary herein contained, if, upon
the expiration of any Interest Period applicable to any Borrowing of a Revolving
Loan, the Borrower shall fail to give a new Notice of Borrowing and Borrowing
Base Certificate as set forth in this Section, the Borrower shall be deemed to
have given a Borrowing Base Certificate demonstrating a Borrowing Base in excess
of the aggregate principal amount of Revolving Loans outstanding and a new
Notice of Borrowing of a Base Rate Loan in principal amount equal to the
outstanding principal amount of such Revolving Loan and the proceeds of the new
Borrowing shall be applied directly to repay such outstanding principal amount
on the day of such Borrowing.

         Section 2.4 TERMINATION OR OPTIONAL REDUCTION OF COMMITMENT. The
Commitment shall terminate on the Revolving Loan Termination Date and any
Revolving Loans then outstanding (together with accrued interest thereon) shall
be due and payable on such date. No termination of the Commitment hereunder
shall relieve the Borrower of any of its outstanding Obligations to the Bank
hereunder or otherwise. The Borrower shall have the right, upon prior written
notice of at least five (5) Business Days to the Bank, to terminate or, from
time to time, reduce the Commitment, PROVIDED that (i) any such reduction of the
Commitment shall be accompanied by the prepayment of the Revolving Note,
together with accrued interest thereon to the date of such prepayment and any
amount due pursuant to Section 2.7, to the extent, if any, that the aggregate
unpaid principal amount thereof then outstanding exceeds the Commitment as then
reduced and (ii) any such termination of the Commitment shall be accompanied by
prepayment in full of the unpaid principal amount of the Revolving Note,
together with accrued interest thereon to the date of such prepayment and any
amount due pursuant to Section 2.7. Any such partial reduction of the Commitment
shall be in an aggregate principal amount of $500,000 or any whole multiple of
$250,000 in excess thereof and shall reduce permanently the Commitment then in
effect hereunder.

         Section 2.5 MATURITY OF REVOLVING LOANS. Each Revolving Loan shall
mature, and the principal amount thereof shall be due and payable, on the last
day of the Interest Period applicable to such Revolving Loan, or such earlier
date as provided herein.

         Section 2.6       MANDATORY PREPAYMENTS; PLEDGED ACCOUNT.

         (a) If as of the end of any month (i) (x) the aggregate principal
amount of the Revolving Loan, less (y) an amount equal to the aggregate
Shortfall Deposits (as defined below) made during the immediately preceding
Abatement Period (as defined below), exceeds (ii) the Borrowing Base, the
Borrower shall deposit into the Pledged Account an amount equal to such excess
(such deposit referred to herein as a "Shortfall Deposit"), accompanied by the
deposit into the Pledge Account of accrued interest on such amount to the date
thereof, or pay to the Bank, without premium or penalty (except as set forth in
Section 2.16) an amount equal to such excess, accompanied by the payment of
accrued interest on such amount to the date thereof. Such payment shall be made
on or before the date the Borrower is required to deliver the monthly Borrowing
Base Certificate pursuant to Section 6.8(g). For purposes of this Section 2.6,
"Abatement Period" means, with respect to any date of determination, a period
ending on the date of determination and commencing on

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<PAGE>



the last to occur of (x) the date of the most recent Borrowing, or (y) the date
of the most recent repayment of any LIBOR Rate Loan.

         (b) Any and all amounts on deposit in the Pledged Account may be
invested from time to time by the Borrower in Permitted Investments so long as
such Permitted Investments will mature on such dates and in such amounts as will
permit the Borrower to make any required payments to the Bank at the end of each
Interest Period.

         Section 2.7       OPTIONAL PREPAYMENTS.

         (a) The Borrower may, upon at least one (1) Business Day's notice to
the Bank, prepay any Base Rate Loan, without premium or penalty, in whole at any
time or from time to time in part by paying the principal amount being prepaid
together with accrued interest thereon to the date of prepayment.

         (b) The Borrower may, upon at least three (3) Business Days' notice to
the Bank, prepay any LIBOR Rate Loan, in whole at any time or from time to time
in part, without premium or penalty (except as set forth in Section 2.16), by
paying the principal amount being prepaid together with accrued interest thereon
to the date of prepayment.

         Section 2.8       INTEREST ON THE REVOLVING LOANS.

         (a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Base Rate Loan is made
until it becomes due, at a rate per annum equal to the Base Rate for such day,
plus the Applicable Margin. Interest shall be payable monthly in arrears on the
first Business Day of each calendar month, commencing July 1, 1997. Such
interest shall accrue from and including the date of such Borrowing to but
excluding the date of any repayment thereof and shall be computed on the basis
of a fraction, the numerator of which is the actual number of days elapsed from
the date of Borrowing and the denominator of which is three hundred sixty (360).
Overdue principal of and, to the extent permitted by law, overdue interest on
the Base Rate Loans shall bear interest for each day overdue until paid at a
percentage per annum equal to the Default Rate.

         (b) Each LIBOR Rate Loan shall bear interest on the unpaid principal
amount thereof, for each day from the date such LIBOR Rate Loan is made until it
becomes due, at a rate per annum equal to the LIBOR Rate for the relevant
Interest Period, plus the Applicable Margin. Interest shall be payable on the
last day of the Interest Period applicable thereto; PROVIDED, that if such
Interest Period is longer than ninety (90) days, interest shall be payable every
ninety (90) days and on the last day of such Interest Period. Such interest
shall accrue from and including the date of such Borrowing to but excluding the
date of any repayment thereof and shall be computed on the basis of a fraction,
the numerator of which is the actual number of days elapsed from the date of
Borrowing and the denominator of which is three hundred sixty (360). Overdue
principal of and, to the extent permitted by

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law, overdue interest on the LIBOR Rate Loans shall bear interest for each day
overdue until paid at a percentage per annum equal to the Default Rate.

         (c) At the option of the Borrower, the Borrower may enter into an
interest rate swap, cap or collar agreement, or similar arrangement with the
Bank providing for the transfer or mitigation of interest risks with respect to
the Loans either generally or under specific contingencies, and on such terms
and conditions as are reasonably acceptable to Borrower and Bank.

         Section 2.9       FEES.

         (a) The Borrower shall pay to the Bank those certain fees set forth in
the letter of even date herewith from Bank to Borrower (the "Fee Letter") which
fees shall be paid on the Closing Date.

          (b) The Borrower shall pay to the Bank an unused fee for the
Commitment Period, payable in arrears at the Applicable Commitment Fee
Percentage in effect from time to time on the daily unused portion of the Bank's
Commitment with respect to the Revolving Loan. The unused fee shall begin to
accrue as of the Closing Date and shall be payable quarterly on the first
Business Day of January, April, July and October of each year beginning in July,
1997.

     (c) The fees required by  paragraphs  (a) and (b) of this Section shall not
be refundable.

         Section 2.10 PAYMENTS GENERALLY. All payments under this Agreement
shall be made in Dollars in immediately available funds not later than 2:00 p.m.
(Chicago time) on the due date (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day) to
the Bank at its address set forth on the signature pages hereof or at such other
address as it may hereafter designate by notice to the Borrower for the account
of the Lending Office of the Bank specified by the Bank on SCHEDULE 1.1 hereto.
The Borrower shall, at the time of making each payment under this Agreement,
specify to the Bank the principal or other amount payable by the Borrower under
this Agreement to which such payment is to be applied (and in the event that it
fails to so specify, or if a Default or Event of Default has occurred and is
continuing, the Bank may apply such payment as it may elect in its sole
discretion). If the due date of any payment under this Agreement would otherwise
fall on a day which is not a Business Day, such date shall be extended to the
next succeeding Business Day and such extension of time shall in such case be
included in the computation of such payment; PROVIDED that, if such extension
would cause the last day of an Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the next
preceding Business Day.

         Section 2.11      CAPITAL ADEQUACY.

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         (a) If after the date hereof, either (i) the introduction of, or any
change in, or in the interpretation or enforcement of, any law, regulation,
order, ruling, interpretation, directive, guideline or request or (ii) the
compliance with any order, ruling, interpretation, directive, guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) issued, announced, published, promulgated or made after
the date hereof (including, in any event, any law, regulation, order, ruling,
interpretation, directive, guideline or request contemplated by the report dated
July, 1988 entitled "International Convergence of Capital Measurement and
Capital Standards" issued by the Basle Committee on Banking Regulation and
Supervisory Practices) affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and the Bank reasonably determines that the amount of such required or expected
capital is increased by or based upon the existence of the Bank's Revolving
Loans hereunder or the Bank's commitment to lend hereunder, then, upon demand by
the Bank, the Borrower shall be liable for, and shall pay to the Bank, within
thirty (30) days following demand from time to time by the Bank, additional
amounts sufficient to compensate the Bank in the light of such circumstances for
the effects of such law, regulation, order, ruling, interpretation, directive,
guideline or request, to the extent that the Bank reasonably determines such
increase in capital to be allocable to the existence of the Bank's Revolving
Loans hereunder or of the Bank's commitment to lend hereunder. A certificate
substantiating such amounts and identifying the event giving rise thereto,
submitted to the Borrower by the Bank, shall be conclusive, absent manifest
error.

         (b) The Bank shall notify the Borrower of any event occurring after the
date hereof entitling the Bank to any compensation under paragraph (a) above as
promptly as practicable, but in any event within 30 days after the Bank obtains
actual knowledge thereof; PROVIDED that (i) if the Bank fails to give such
notice within thirty (30) days after it obtains actual knowledge of such an
event, the Bank shall, with respect to compensation payable pursuant to this
Section in respect of any costs resulting from such event, only be entitled to
payment under this Section for costs incurred from and after the date thirty
(30) days prior to the date that the Bank does give such notice and (ii) the
Bank will use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to designate a different Lending Office for the
Revolving Loans affected by such event if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the sole
opinion of the Bank, be disadvantageous to the Bank.

         Section 2.12      INCREASED COSTS.

         (a) If after the date hereof, due to either (i) the introduction of or
any change in or in the interpretation or enforcement of, any law, regulation,
order, ruling, directive, guideline or request, or (ii) the compliance with any
order, ruling, directive, guideline or request from any central bank or other
governmental authority (whether or not having the force of law) issued,
announced, published, promulgated or made after the date hereof, there shall be
any increase in the cost to the Bank of agreeing to make or making, funding or
maintaining LIBOR Rate Loans, then the Borrower shall be liable for, and shall
from time to time, within thirty (30) days following a demand by the Bank, pay
to the Bank for the

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account of the Bank additional amounts sufficient to compensate the Bank for
such increased cost. A certificate substantiating the amount of such increased
cost, submitted to the Borrower by the Bank, shall be conclusive, absent
manifest error.

         (b) The Bank shall notify the Borrower of any event occurring after the
date hereof entitling the Bank to any compensation under paragraph (a) above as
promptly as practicable, but in any event within 30 days after the Bank obtains
actual knowledge thereof; PROVIDED that (i) if the Bank fails to give such
notice within thirty (30) days after it obtains actual knowledge of such an
event, the Bank shall, with respect to compensation payable pursuant to this
Section in respect of any costs resulting from such event, only be entitled to
payment under this Section for costs incurred from and after the date thirty
(30) days prior to the date that the Bank does give such notice and (ii) the
Bank will use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to designate a different Lending Office for the
Revolving Loans affected by such event if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the sole
opinion of the Bank, be disadvantageous to the Bank.

         Section 2.13 ILLEGALITY. Notwithstanding any other provision of this
Agreement, if after the date hereof the introduction of, or any change in or in
the interpretation or enforcement of, any law, regulation, order, ruling,
directive, guideline or request shall make it unlawful, or any central bank or
other governmental authority shall assert that it is unlawful, for the Bank or
its Lending Office to perform its obligations hereunder to make LIBOR Rate Loans
or to continue to fund or maintain LIBOR Rate Loans hereunder, then, on notice
thereof by the Bank to the Borrower, (i) the obligation of the Bank to make
LIBOR Rate Loans shall terminate (and the Bank shall make all of its Revolving
Loans as Base Rate Loans notwithstanding any election by the Borrower to have
the Bank make LIBOR Rate Loans) and (ii) if legally permissible, at the end of
the current Interest Period for such LIBOR Rate Loans, otherwise five (5)
Business Days after such notice and demand, all LIBOR Rate Loans of the Bank
then outstanding will automatically convert into Base Rate Loans; PROVIDED,
HOWEVER, that before making any such demand, the Bank agrees to use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Lending Office if the making of such a
designation would allow the Bank or its Lending Office to continue to perform
its obligations to make LIBOR Rate Loans and would not, in the judgment of the
Bank, be otherwise disadvantageous to the Bank. A certificate describing such
introduction or change in or in the interpretation or enforcement of such law,
regulation, order, ruling, directive, guideline or request, submitted to the
Borrower by the Bank, shall be conclusive evidence of such introduction, change,
interpretation or enforcement, absent manifest error. The Bank and the Borrower
agree to negotiate in good faith in order to agree upon a mutually acceptable
mechanism to provide that LIBOR Rate Loans made by the Bank as to which the
foregoing conditions occur shall convert into Base Rate Loans.

         Section 2.14 PAYMENTS TO BE FREE OF DEDUCTIONS. All payments by the
Borrower under this Agreement shall be made without setoff or counterclaim and
free and clear of, and without deduction for, any taxes (other than any taxes
imposed on or measured by the gross

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<PAGE>



income or profits of the Bank), levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any country or any political
subdivision thereof or taxing or other authority therein unless the Borrower is
compelled by law to make such deduction or withholding. If any such obligation
is imposed upon the Borrower with respect to any amount payable by it hereunder,
it will pay to the Bank, on the date on which such amount becomes due and
payable hereunder and in Dollars, such additional amount as shall be necessary
to enable the Bank to receive the same net amount which it would have received
on such due date had no such obligation been imposed upon the Borrower. If the
Bank is at any time, or any permitted assignee of the Bank hereunder (an
"Assignee"), is organized under the laws of any jurisdiction other than the
United States or any state or other political subdivision thereof, the Bank or
the Assignee shall deliver to the Borrower on the date it becomes a party to
this Agreement, and at such other times as may be necessary in the determination
of the Borrower in its reasonable discretion, such certificates, documents or
other evidence, properly completed and duly executed by the Bank or the Assignee
(including, without limitation, Internal Revenue Service Form 1001 or Form 4224
or any other certificate or statement of exemption required by Treasury
Regulations Section 1.1441-4(a) or Section 1.1441-6(c) or any successor thereto)
to establish that the Bank or the Assignee is not subject to deduction or
withholding of United States Federal Income Tax under Section 1441 or 1442 of
the Internal Revenue Code or otherwise (or under any comparable provisions of
any successor statute) with respect to any payments to the Bank or the Assignee
of principal, interest, fees or other amounts payable hereunder. Borrower shall
not be required to pay any additional amount to the Bank or any Assignee under
this Section if the Bank or such Assignee shall have failed to satisfy the
requirements of the immediately preceding sentence; PROVIDED that if the Bank or
any Assignee shall have satisfied such requirements on the date it became a
party to this Agreement, nothing in this Section shall relieve Borrower of its
obligation to pay any additional amounts pursuant to this Section in the event
that, as a result of any change in applicable law, the Bank or such Assignee is
no longer properly entitled to deliver certificates, documents or other evidence
at a subsequent date establishing the fact that the Bank or the Assignee is not
subject to withholding as described in the immediately preceding sentence.

         Section 2.15 COMPUTATIONS. All computations of interest and like
payments hereunder on the Revolving Loans shall, in the absence of clearly
demonstrable error, be considered correct and binding on the Borrower and the
Bank, unless within thirty (30) Business Days after receipt of any notice by the
Bank of such outstanding amount, the Borrower notifies the Bank to the contrary.

         Section 2.16 COMPENSATION. In the event of any prepayment pursuant to
Section 2.6 or 2.7(b), if such prepayment occurs on a date that is not the last
day of the Interest Period applicable to the Revolving Loan being prepaid, the
Borrower shall pay any amounts as shall be sufficient (in the reasonable opinion
of the Bank) to compensate the Bank for any loss, cost or expense which the Bank
may incur as a result of such prepayment, including without limitation, any
loss, cost or expense incurred by reason of funds liquidation or reemployment of
deposits or other funds acquired by the Bank to fund or maintain such LIBOR Rate
Loan.

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Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so prepaid for the
period from the date of such prepayment to the last day of the then current
Interest Period for such LIBOR Rate Loan at the applicable rate of interest for
such LIBOR Rate Loan provided for herein over (ii) the amount of interest that
otherwise would have accrued on such principal amount at a rate per annum equal
to the interest component of the amount the Bank would have bid in the London
interbank market for Dollar deposits of leading banks in amounts comparable to
such principal amount and with maturities comparable to such period (as
reasonably determined by the Bank), if the Bank has match-funded such LIBOR Rate
Loan, or the Bank's cost of funds, if the Bank has not match-funded. The Bank
will furnish to the Borrower a certificate setting forth the basis and amount of
each request by such Bank for compensation under this Section.

                                    ARTICLE 3

                                    SECURITY

         Section 3.1 SECURITY AGREEMENT AND GUARANTY. In order to secure payment
when due of the principal and interest under the Revolving Note and the other
Obligations, the Borrower agrees to deliver to the Bank or cause to be delivered
to the Bank on the Closing Date the following:

     (a) the Security Agreement duly executed by the Borrower;

     (b) each Receivables  Purchase Agreement duly executed and delivered by the
Borrower and each of the Eligible Sellers;

     (c) the Guaranty duly executed and delivered by the Guarantor; and

     (d) the Financing Statements.

         Section 3.2 PLEDGE AGREEMENTS. In order to further secure payment when
due of the principal and interest under the Revolving Note and the other
Obligations, the Borrower agrees, subject to obtaining the applicable Pledge
Approvals, to cause to be delivered to the Bank within five (5) Business Days
after any Pledge Approval has been obtained the following:

     (a) the Pledge  Agreement  relating to the Pledge  Approval  which has been
obtained, duly executed and delivered by the Guarantor;

     (b) the stock  certificates  representing  all of the  outstanding  capital
stock of NFIC, NFL and the Borrower,  as applicable (with stock powers signed in
blank); and

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     (c) the favorable opinions of special counsel to and general counsel of the
Guarantor,  dated  as of  the  date  of  the  respective  Pledge  Agreement,  in
substantially the forms attached as EXHIBIT I-3 hereto.

         Section 3.3 FURTHER ASSURANCES. At any time following the delivery to
the Bank of this Agreement, the Security Agreement, the Guaranty, or the Pledge
Agreements, at the request of the Bank, the Borrower will execute any
certificate, instrument, statement or document and will procure any such
certificate, instrument, statement or document (and pay all connected costs)
which the Bank reasonably deems necessary to preserve the security interests of
the Bank contemplated hereby.

         Section 3.4 REQUIRED CONSENTS AND APPROVALS. The Borrower agrees to
use, or cause the Guarantor to use, reasonable efforts to obtain, or cause to be
obtained, as soon as practicable, all necessary approvals and consents by the
appropriate Insurance Commissioners permitting the pledge of all of the capital
stock of NFL and NFIC to the Bank and the execution and delivery of the Pledge
Agreements (collectively, the "Pledge Approvals"). The Bank acknowledges and
agrees that receipt of the Pledge Approvals is not a condition to performance by
the Bank of its obligations hereunder.

                                    ARTICLE 4

                              CONDITIONS PRECEDENT

         Section 4.1 DOCUMENTARY CONDITIONS PRECEDENT. The Commitment of the
Bank to make Revolving Loans under this Agreement is subject to the condition
precedent that the Borrower shall have delivered to the Bank, on or prior to the
Closing Date, the following, in form and substance reasonably satisfactory to
the Bank:

     (a) the  Revolving  Note for the  account of the Bank duly  executed by the
Borrower;

     (b) the Security Agreement duly executed by Borrower;

     (c) the Guaranty duly executed by Guarantor;

     (d) a Pledge Agreement with respect to the stock of Borrower, duly executed
by Westbridge Marketing,  together with the stock certificates evidencing all of
the issued and outstanding shares of capital stock of Borrower (with stock power
signed in blank);

     (e) a certificate of the Secretary or Assistant  Secretary of the Borrower,
dated the Closing  Date,  attesting on behalf of the  Borrower to all  corporate
action taken by the Borrower,  including  resolutions  of its Board of Directors
authorizing  the  execution,  delivery and  performance of this  Agreement,  the
Security Agreement,  the Revolving Note, the Receivables Purchase Agreements and
each other document to be delivered by the Borrower

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<PAGE>



pursuant to this Agreement, and attesting to the names and true signatures of
the officers of the Borrower authorized to sign this Agreement, the Security
Agreement, the Receivables Purchase Agreements, the Revolving Note, and the
other documents to be delivered by the Borrower under this Agreement;

         (f) a certificate of the Secretary or Assistant Secretary of the
Guarantor, dated the Closing Date, attesting on behalf of the Guarantor to all
corporate action taken by the Guarantor, including resolutions of its Board of
Directors authorizing the execution, delivery and performance of the Guaranty
and the Pledge Agreements (following receipt of the Pledge Approvals) and each
other document to be delivered by the Guarantor thereunder, and attesting to the
names and true signatures of the officers of the Guarantor authorized to sign
the Guaranty, the Pledge Agreements (following the receipt of the Pledge
Approvals) and the other documents to be delivered by the Guarantor thereunder;

         (g) a certificate of the Secretary or Assistant Secretary of each
Eligible Seller, dated the Closing Date, attesting on behalf of such Eligible
Seller to all corporate action taken by such Eligible Seller, including
resolutions of its Board of Directors authorizing the execution, delivery and
performance of the Receivables Purchase Agreement to which it is a party and
each other document to be delivered by the Eligible Seller thereunder, and
attesting to the names and true signatures of the officers of the Eligible
Seller authorized to sign the Receivables Purchase Agreement to which it is a
party and the other documents to be delivered by the Eligible Seller thereunder;

         (h) a certificate of a Senior Officer of the Borrower, dated the
Closing Date, certifying on behalf of the Borrower that (i) the representations
and warranties of the Borrower in Article 5 of this Agreement and Section 4 of
the Security Agreement, are true, complete and correct in all material respects
on such date as though made on and as of such date (or, if such representation
or warranty is expressly stated to have been made as of a specific date, as of
such specific date), (ii) no event has occurred and is continuing which
constitutes a Default or Event of Default, (iii) the Borrower has performed and
complied in all material respects with all agreements and conditions contained
in this Agreement which are required to be performed or complied with by the
Borrower at or before the Closing Date, and (iv) to the knowledge of the
Borrower, since March 31, 1997, no event has occurred that has had, or could
reasonably be expected to have, a Materially Adverse Effect;

         (i) a certificate of a Senior Officer of the Guarantor, dated the
Closing Date, certifying on behalf of the Guarantor that (i) the representations
and warranties of the Guarantor in Article 4 of the Guaranty are true, complete
and correct in all material respects on such date as though made on and as of
such date (or, if such representation or warranty is expressly stated to have
been made as of a specific date, as of such specific date), (ii) no event has
occurred and is continuing which constitutes a Default or Event of Default under
this Agreement, (iii) the Guarantor has performed and complied in all material
respects with all agreements and conditions contained in the Guaranty which are
required to be performed or complied with by the Guarantor at or before the
Closing Date, and (iv) since March 31,

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<PAGE>



1997,  no event has occurred  that has had, or could  reasonably  be expected to
have, a Materially Adverse Effect;

         (j) a certificate of a Senior Officer of each Eligible Seller, dated
the Closing Date, certifying on behalf of such Eligible Seller that (i) the
representations and warranties of such Eligible Seller in Article IV of the
Receivables Purchase Agreement to which it is a party are true, complete and
correct in all material respects on such date as though made on and as of such
date (or, if such representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date), (ii) no event has
occurred and is continuing which constitutes a default under the Receivables
Purchase Agreement to which it is a party, and (iii) to the knowledge of such
Eligible Seller, since March 31, 1997, no event has occurred that has had, or
could reasonably be expected to have, a Materially Adverse Effect;

         (k) a certificate of a Senior Officer of the Borrower, substantially in
the form of EXHIBIT J, which certificate shall include information required to
establish that the Borrower will be in compliance with the covenants set forth
in Sections 7.10 and 7.11 of this Agreement, after giving effect to the
transactions contemplated herein;

         (l) a certificate of a Senior Officer of the Guarantor, substantially
in the form of ATTACHMENT 4 to EXHIBIT A to the Guaranty, which certificate
shall include information required to establish that the Guarantor will be in
compliance with the covenants set forth in Sections 6.3 to 6.9 of the Guaranty,
after giving effect to the transactions contemplated herein and in the Guaranty
Agreement;

         (m) a certificate of good standing for the Borrower as of a recent date
by the Secretary of State of its jurisdiction of incorporation and each state
where the Borrower, by the nature of its business, is required to qualify to do
business, except where the failure to be so qualified could not reasonably be
expected to have a Materially Adverse Effect;

         (n) a certificate of good standing for the Guarantor as of a recent
date by the Secretary of State of its jurisdiction of incorporation and each
state where the Guarantor, by the nature of its business, is required to qualify
to do business, except where the failure to be so qualified could not reasonably
be expected to have a Materially Adverse Effect;

         (o) a certificate of good standing for each Eligible Seller as of a
recent date by the Secretary of State of each jurisdiction of incorporation and
each state where each Eligible Seller, by the nature of its business, is
required to qualify to do business, except where the failure to be so qualified
could not reasonably be expected to have a Materially Adverse Effect;

         (p) a certificate of authority from each Insurance Commissioner
certifying that each Eligible Insurance Company Seller is duly licensed and in
good standing with the applicable Insurance Commissioner, except where any such
failure could not reasonably be expect to have a Materially Adverse Effect;

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     (q) a  favorable  opinion  of  special  counsel  to the  Borrower  and  the
Guarantor dated the Closing Date, in substantially the form set forth in EXHIBIT
I-1 hereto;

     (r) a  favorable  opinion of general  counsel of the  Guarantor,  dated the
Closing Date, in substantially the form set forth in EXHIBIT I-2 hereto;

     (s) a certificate of a Senior Officer of the Borrower  certifying that each
consent,  license,  approval and notice  required by the Borrower in  connection
with the execution, delivery,  performance,  validity and enforceability of this
Agreement,  the Security Agreement, the Receivables Purchase Agreements and each
other document and instrument required to be delivered in connection herewith is
in full force and effect,  except as otherwise  provided in Section 5.15 of this
Agreement;

     (t) a certificate of a Senior Officer of the Guarantor certifying that each
consent,  license,  approval and notice  required by the Guarantor in connection
with the execution, delivery,  performance,  validity and enforceability of this
Agreement,  the Security Agreement, the Pledge Agreements (subject to the Pledge
Approvals),  the Guaranty,  the Receivables  Purchase  Agreements and each other
document  and  instrument  required  to be  delivered  in  connection  herewith,
including  the  documents  described  in Article 3 hereof,  is in full force and
effect, except as otherwise provided in Section 4.13 of the Guaranty;

     (u) a certificate  of a Senior Officer of each Eligible  Seller  certifying
that each consent, license, approval and notice required by such Eligible Seller
in  connection  with  the  execution,   delivery,   performance,   validity  and
enforceability of the Receivables  Purchase Agreement to which it is a party and
each other  document  and  instrument  required to be  delivered  in  connection
herewith is in full force and effect,  except as  otherwise  provided in Section
5.15 of this Agreement;

     (v) a Master General Agent Contract for each Master General Agent, attached
to a  certificate  of a Senior  Officer of the  Eligible  Seller  party  thereto
certifying  that such  Master  General  Agent  Contract  is a true,  correct and
complete copy,  including all amendments and supplements thereto, and is in full
force and effect on the Closing Date;

     (w) all corporate and legal  proceedings and all instruments and agreements
in connection with the transactions contemplated by this Agreement, the Security
Agreement, the Pledge Agreements (subject to the Pledge Approvals), the Guaranty
and the Receivables Purchase Agreements shall be reasonably satisfactory in form
and  substance  to the Bank and the Bank shall have  received  any and all other
information  and documents  with respect to the Borrower,  the Guarantor and any
Insurance Affiliate, which it may reasonably request;

     (x) payment to the Bank of the amounts set forth in Section 2.9(b) hereof;

     (y) payment to Rudnick & Wolfe,  special  counsel to the Bank, of its legal
fees and disbursements; and

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     (z) payment to Coopers & Lybrand, LLP of its audit fees and disbursements.

         Section 4.2 ADDITIONAL CONDITIONS PRECEDENT TO EACH LOAN. The
obligation of the Bank to make the Revolving Loans pursuant to a Borrowing
(including the initial Borrowing), unless waived by the Bank, shall be subject
to the further conditions precedent that on the date of such Revolving Loan:

         (a) the representations and warranties of the Borrower contained in
Article 5 of this Agreement and Section 4 of the Security Agreement are true and
correct in all material respects on and as of the date of such Revolving Loan as
though made on and as of such date (or, if such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date);

         (b) the representations and warranties of the Guarantor contained in
Article 5 of the Guaranty and Section 2 of the Pledge Agreements (if in effect)
are true and correct in all material respects on and as of the date of such
Revolving Loan as though made on and as of such date (or, if such representation
or warranty is expressly stated to have been made as of a specific date, as of
such specific date);

         (c) to the extent that Eligible Receivables are being purchased from an
Eligible Seller with the proceeds of such Borrowing, the representations and
warranties of such Eligible Seller contained in Article IV of the Receivables
Purchase Agreement to which it is a party are true and correct in all material
respects on and as of the date of such Revolving Loan as though made on and as
of such date (or, if such representation or warranty is expressly stated to have
been made as of a specific date, as of such specific date);

         (d) the Borrower has complied in all material respects with all
conditions contained in this Agreement that are required to be complied with by
the Borrower, and the Borrower has performed in all material respects all
agreements contained in this Agreement and the Security Agreement that are
required to be performed by the Borrower;

     (e)  there  does not exist  any  Default  or Event of  Default  under  this
Agreement;

     (f) since the date of the last  Borrowing  under this  Agreement  (or if no
Borrowing has occurred,  since March 31, 1997), there has occurred no event that
could reasonably be expected to have a Materially Adverse Effect;

         (g) the Bank shall have received a duly executed Notice of Borrowing in
the form of EXHIBIT F, and a duly executed Borrowing Base Certificate in the
form of EXHIBIT K, except to the extent otherwise provided in Section 2.3(e);

     (h) the Bank  shall  have  received  a duly  executed  Assignment  for each
Receivable included in the calculation of the Borrowing Base;

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         (i) the Bank shall have received evidence, in form and substance
reasonably satisfactory to it, that each consent, approval, order, license, or
permit required from any Person, including without limitation any Insurance
Commissioner, required to authorize, or required in connection with the
performance by the Borrower, the Guarantor or any Eligible Seller of, or the
legality, validity, binding effect or enforceability of, this Agreement, the
Guaranty or the Receivables Purchase Agreements, including the use of proceeds
of any Borrowing by the Borrower to acquire Eligible Receivables, shall have
been received or given and remain in full force and effect, and the Bank shall
have received updated legal opinions in form and substance reasonably
satisfactory to the Bank relating to such matters.

     (j) the  Borrower's  Consolidated  GAAP Net  Worth  shall  not be less than
$1,000,000;

     (k) the Guarantor's Consolidated GAAP Net Worth shall not be less than

$62,500,000; and

     (l) the  initial  Loan  shall have been  requested  not later than June 26,
1997.

         Section 4.3 DEEMED REPRESENTATIONS. Each Notice of Borrowing hereunder
and acceptance by the Borrower of the proceeds of such Borrowing shall
constitute a representation and warranty that the statements contained in
Section 4.2, in the Notice of Borrowing and in the Borrowing Base Certificate
are true and correct both on the date of such Notice of Borrowing and, unless
the Borrower otherwise notifies the Bank prior to such Borrowing, as of the date
of such Borrowing.

                                    ARTICLE 5

                         REPRESENTATIONS AND WARRANTIES

         The Borrower hereby represents and warrants the following:

         Section 5.1 INCORPORATION, GOOD STANDING AND DUE QUALIFICATION. The
Borrower is duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has the power and authority to own
its assets and to transact the business in which it is now engaged, and is duly
qualified as a foreign corporation and in good standing under the laws of each
other jurisdiction in which such qualification is required, except where the
failure to be so qualified could not reasonably be expected to have a Materially
Adverse Effect. The Borrower has all requisite power and authority to execute
and deliver and to perform all of its obligations under this Agreement, the
Revolving Note, the Security Agreement, the Receivables Purchase Agreements and
the other writings contemplated hereby.

        Section 5.2 CORPORATE POWER AND AUTHORITY; NO CONFLICTS.  The execution,
delivery  and  performance  by the  Borrower  of this  Agreement,  the  Security
Agreement,  the Receivables Purchase Agreements and the Revolving Note have been
duly authorized by all

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necessary corporate action and do not and will not (a) require any consent or
approval of its stockholders; (b) violate any provisions of its certificate of
incorporation or by-laws; (c) violate any provision of, or require any filing,
registration, consent or approval under, any material law, rule, regulation
(including without limitation, Regulation U and X), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to and binding upon the Borrower or any Subsidiary; (d) result in
a breach of, or constitute a default or require any consent under, any
indenture, mortgage or loan or credit agreement or any other material agreement,
lease or instrument to which the Borrower or any Subsidiary is a party or by
which it or its Properties may be bound; or (e) except as contemplated hereby,
or by the Revolving Note or the Security Agreement, result in, or require, the
creation or imposition of any Lien upon or with respect to any of the Properties
now owned or hereafter acquired by the Borrower.

         Section 5.3 LEGALLY ENFORCEABLE AGREEMENTS. This Agreement, the
Security Agreement and the Revolving Note constitute the legal, valid and
binding obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

         Section 5.4 LITIGATION. Except as disclosed on SCHEDULE 5.4, there are
no actions, suits or proceedings or investigations (other than routine
examinations performed by insurance regulatory authorities) pending or, to the
knowledge of the Borrower, threatened against or affecting, the Borrower or any
of its Subsidiaries, or any Property of any of them before any court,
governmental agency or arbitrator, which, in any one case or in the aggregate,
could reasonably be expected to have a Materially Adverse Effect.

         Section 5.5 DISCLOSURES. (a) The Borrower has heretofore furnished to
the Bank the balance sheets of the Borrower as at December 31, 1996 and 1995 and
as at March 31, 1997 and the related statements of income, retained earnings and
cash flows of the Borrower for the fiscal years and quarters ended on such
dates. All such financial statements are complete and correct and fairly present
in all material respects the financial condition of the Borrower as at such
dates and the results of operations for the fiscal years and quarters ended on
such dates, all in accordance with GAAP.

                  (b) All written financial projections furnished by or on
behalf of the Borrower to the Bank in connection with the negotiation of this
Agreement, have been prepared in good faith. Since March 31, 1997 (or the date
of the most recent Borrowing hereunder, which ever is later), no event or
circumstance has occurred that could reasonably be expected to have a Materially
Adverse Effect.

        Section  5.6  OWNERSHIP  AND  LIENS.   Each  of  the  Borrower  and  its
Subsidiaries  has good and valid title to, or valid leasehold  interests in, its
material Properties, and none of the

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material Properties owned by the Borrower or its Subsidiaries, and none of its
leasehold interests is subject to any Lien, except any Permitted Liens.

         Section 5.7 TAXES. Each of the Borrower and its Subsidiaries has filed
(or had filed on its behalf) all federal and all other material tax returns
required to be filed, has paid all due and payable taxes, assessments and
governmental charges and levies, including interest and penalties, shown to be
due in such returns or imposed upon it or upon its Properties, and has made
adequate provision for the payment of such taxes, assessments and other charges
accruing but not yet due and payable, except with respect to taxes which are
being contested in good faith by the Borrower or its Subsidiaries and for which
such Person has established and maintains adequate reserves for payment. To the
best knowledge of Borrower, there is no tax assessment contemplated or proposed
by any governmental agency against the Borrower or any of its Subsidiaries that
could reasonably be expected to have a Materially Adverse Effect, other than, as
of each date subsequent to the Closing Date, such contemplated or proposed tax
assessments with respect to which (i) Borrower has promptly notified Bank in
writing of its knowledge and (ii) the Borrower or the appropriate Subsidiary of
the Borrower has in good faith commenced, or intends to commence within the time
period permitted by the applicable law or regulation, and thereafter diligently
pursued or will pursue, as the case may be, appropriate proceedings in
opposition to such assessment.

         Section 5.8 ERISA. Each of the Borrower and its Subsidiaries is in
compliance in all material respects with all applicable provisions of ERISA.
Within the three-year period prior to the date hereof, neither a Reportable
Event nor a Prohibited Transaction has occurred with respect to any Plan; no
notice of intent to terminate a Plan has been filed nor has any Plan been
terminated; no circumstance exists which constitutes grounds under Section 4042
of ERISA entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings;
neither the Borrower nor any ERISA Affiliate has completely or partially
withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; each
of the Borrower and its ERISA Affiliates has met its minimum funding
requirements under ERISA with respect to all of its Plans and there are no
Unfunded Vested Liabilities and neither the Borrower nor any ERISA Affiliate has
incurred any material liability to the PBGC under ERISA other than for premium
payments incurred in the normal course of operating the Plans.

         Section 5.9 SUBSIDIARIES AND OWNERSHIP OF STOCK. As of the date of this
Agreement, the Borrower has no Subsidiaries.

         Section 5.10 CREDIT ARRANGEMENTS. SCHEDULE 5.10 is a complete and
correct list, as of the date hereof, of all credit agreements, indentures,
guaranties, Capital Leases, mortgages, and other material instruments,
agreements and arrangements presently in effect providing for or relating to
extensions of credit (including agreements and arrangements for the issuance of
letters of credit or for acceptance financing) in respect of which the Borrower
or any of its Subsidiaries is in any manner directly or contingently obligated,
other than trade payables in the ordinary course of business; and the maximum
principal or face amounts of the credit in question, which are outstanding and
which can be outstanding, are therein set

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forth and are correctly stated as of the date hereof, and all Liens given or
agreed to be given as security therefor are therein set forth and are correctly
described or indicated in such Schedule.

         Section 5.11 OPERATION OF BUSINESS. Each of the Borrower and its
Subsidiaries possesses all licenses, permits and franchises, or rights thereto,
necessary to conduct its business as now conducted and as presently proposed to
be conducted, except where the absence of which could reasonably be expected to
have a Materially Adverse Effect, and neither the Borrower nor any of its
Subsidiaries is in violation in any material respect of any valid rights of
others with respect to any of the foregoing.

         Section 5.12 NO DEFAULT ON OUTSTANDING JUDGMENTS OR ORDERS. Each of the
Borrower and its Subsidiaries has satisfied all material judgments and neither
the Borrower nor any Subsidiary is in default with respect to any judgment,
writ, injunction, decree, rule or regulation of any court, arbitrator or
federal, state, municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign, which could, in any one
case or in the aggregate, reasonably be expected to have a Materially Adverse
Effect.

         Section 5.13 NO DEFAULTS ON OTHER AGREEMENTS. Neither the Borrower nor
any of its Subsidiaries is in default in any material respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument material to its business to
which it is a party.

         Section 5.14 GOVERNMENTAL REGULATION. Neither the Borrower nor any of
its Subsidiaries is subject to regulation under the Investment Company Act of
1940, as amended, or any statute or regulation limiting its ability to incur
indebtedness for money borrowed as contemplated hereby.

         Section 5.15 CONSENTS AND APPROVALS. No authorization, consent,
approval, order, license or permit from, or filing, registration or
qualification with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, or any other Person, including without
limitation, any Insurance Commissioner, is required to authorize, or is required
in connection with the execution, delivery and performance by the Borrower of,
or the legality, validity, binding effect or enforceability with respect to the
Borrower of, this Agreement, or the Receivables Purchase Agreements, except for
(i) filings and recordings of Liens created pursuant to the Security Agreement,
(ii) those consents, approvals or other similar actions that have been obtained
and have not been modified, amended, rescinded or revoked and are in full force
and effect, and (iii) consents, approvals or similar actions, the failure of
which to obtain or perform could not reasonably be expected to have a Materially
Adverse Effect.

         Section  5.16  PARTNERSHIPS.  Neither  the  Borrower  nor  any  of  its
Subsidiaries is a partner in any partnership.

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         Section 5.17 ENVIRONMENTAL PROTECTION. Each of the Borrower and its
Subsidiaries has obtained all material permits, licenses and other
authorizations which are required under all environmental laws, including laws
relating 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, except to the extent failure to have any such
permit, license or authorization could not reasonably be expected to have a
Materially Adverse Effect. Each of the Borrower and its Subsidiaries is in
compliance with all terms and conditions of the required permits, licenses and
authorizations, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the environmental laws or contained in any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, except to the extent
failure to comply could not reasonably be expected to have a Materially Adverse
Effect. None of the Properties of the Borrower or its Subsidiaries, either owned
or leased, have been included or, to the knowledge of the Borrower, proposed for
inclusion on the National Priorities List adopted pursuant to the Comprehensive
Environmental Response Compensation and Liability Act, as amended, or on any
similar list or inventory of sites requiring response or cleanup actions adopted
by any other federal, state or local agency.

         Section 5.18 COPYRIGHTS, PATENTS, TRADEMARKS, ETC. Neither the Borrower
nor any of its Subsidiaries uses in the operation of its business as presently
conducted, any patents, trademarks, service marks, trade names, or copyrighted
materials the loss by the Borrower or such Subsidiary of which would have a
Materially Adverse Effect.

         Section 5.19 COMPLIANCE WITH LAWS. Neither the Borrower nor any of its
Subsidiaries is in violation of any laws, ordinances, rules or regulations,
applicable to it, of any federal, state or municipal governmental authorities,
instrumentalities or agencies, including without limitation, the United States
Occupational Safety and Health Act of 1970, as amended, except where such
violation could not reasonably be expected to have a Materially Adverse Effect.

         Section 5.20 RECEIVABLES. All Receivables and all books, records and
documents relating thereto are and will be genuine and in all respects what they
purport to be; the amount of each Receivable shown on the books and records of
the Borrower (as adjusted on the books and records of the Borrower, from time to
time, to reflect payments received by the Borrower with respect to such
Receivable) represented as owing or to be owing at maturity by each Eligible
Agent Obligor is and will, be the correct amount actually owing or to be owing
by such Eligible Agent Obligor at maturity. The Borrower has no knowledge of any
fact which would impair the validity or collectibility of any Receivable, except
to the extent that such impairment could not reasonably be expected to have a
Materially Adverse Effect.

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         Section  5.21  USE  OF  PROCEEDS.  Neither  Borrower  nor  any  of  its
Subsidiaries  nor any Eligible Seller is engaged  principally,  or as one of its
important  activities,  in the business of  extending  credit for the purpose of
purchasing or carrying any such "margin stock."

                                    ARTICLE 6

                              AFFIRMATIVE COVENANTS

         During the term of this Agreement, and until performance, payment
and/or satisfaction in full of the Obligations, the Borrower covenants and
agrees that it shall, and shall cause each of its Subsidiaries to, unless the
Bank otherwise consents in writing:

         Section 6.1 MAINTENANCE OF EXISTENCE. Preserve and maintain its
corporate existence and good standing in the jurisdiction of its incorporation,
and qualify and remain qualified as a foreign corporation in each jurisdiction
in which such qualification is required from time to time, except where failure
to be so qualified would not have a Materially Adverse Effect.

         Section  6.2 CONDUCT OF  BUSINESS.  Continue to engage in a business of
the same general type as conducted by it on the date of this Agreement.

         Section 6.3 MAINTENANCE OF PROPERTIES. Maintain, keep and preserve all
of its material Properties (tangible and intangible), necessary or useful in the
conduct of its business, in good working order and condition, ordinary wear and
tear excepted, EXCEPT that the failure to maintain, preserve and protect a
particular item of Property that is not of significant value, either
intrinsically or to the operations of Borrower and its Subsidiaries, taken as a
whole, shall not constitute a violation of this covenant.

         Section 6.4 MAINTENANCE OF RECORDS. Keep accurate and complete records
and books of account, in which complete entries will be made in accordance with
GAAP, reflecting all financial transactions of the Borrower and its
Subsidiaries.

         Section 6.5 MAINTENANCE OF INSURANCE. Maintain insurance (subject to
customary deductibles and retentions) with financially sound and reputable
insurance companies, in such amounts and with such coverages (including without
limitation public liability insurance, fire, hazard and extended coverage
insurance on all of its assets, necessary workers' compensation insurance and
all other coverages as are consistent with industry practice) as are maintained
by companies of established reputation engaged in similar businesses and
similarly situated; provided that such insurance may be obtained from Affiliates
of the Borrower.

         Section 6.6 COMPLIANCE WITH LAWS. Comply in all respects with all
applicable laws, rules, regulations and orders, except where the failure to so
comply would not have a Materially Adverse Effect. Such compliance shall
include, without limitation, paying all taxes, assessments and governmental
charges imposed upon it or upon its Property (and all

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<PAGE>



penalties and other costs, if any, related thereto), unless contested in good
faith by appropriate proceedings and for which adequate reserves have been set
aside.

         Section 6.7 RIGHT OF INSPECTION. From time to time upon prior notice
and in accordance with customary standards and practices within the banking
industry (including, without limitation, upon any Event of Default or whenever
the Bank may have reasonable cause to believe that an Event of Default has
occurred and is continuing), the Borrower shall permit the Bank or any agent or
representative thereof, to examine and make copies and abstracts from the
records and books of account of, and visit the Properties of, the Borrower and
its Subsidiaries to discuss the affairs, finances and accounts of the Borrower
and any such Subsidiaries with any of their respective officers and directors
and the Borrower's independent accountants, and to make such verification
concerning the Borrower and its Subsidiaries as may be reasonable under the
circumstances, and upon request, furnish promptly to the Bank true copies of all
financial information made available to Senior Officers of Borrower and its
Subsidiaries; PROVIDED, that the Bank shall use reasonable efforts to not
materially interfere with the business of the Borrower and its Subsidiaries and
to treat as confidential any and all information obtained pursuant to this
Section, except to the extent disclosure is required by any law, regulation,
order, ruling, directive, guideline or request from any central bank or other
government authority (whether or not having the force of law).

         Section 6.8 REPORTING REQUIREMENTS. The Borrower shall, and shall cause
each of its Subsidiaries, as applicable, to, furnish to the Bank:

         (a) ANNUAL GAAP STATEMENTS OF BORROWER. Within one hundred twenty (120)
days following the end of Borrower's fiscal year copies of:

         (i)      the  consolidated  balance  sheets  of the  Borrower  and  its
                  Subsidiaries as at the close of such fiscal year, and

         (ii)     the  consolidated  statements of operations  and statements of
                  stockholders'  equity  and  cash  flows,  in each  case of the
                  Borrower and its Subsidiaries for such fiscal year,

         in each case setting forth in comparative form the figures for the
         preceding fiscal year and prepared in accordance with GAAP, all in
         reasonable detail and accompanied by an opinion of Price Waterhouse LLP
         or other firm of independent public accountants of recognized national
         standing selected by the Borrower and reasonably acceptable to the
         Bank, to the effect that the financial statements have been prepared in
         accordance with GAAP (except for changes in application in which such
         accountants concur) and present fairly in all material respects in
         accordance with GAAP the financial condition of the Borrower and its
         Subsidiaries as of the end of such fiscal year and the results of its
         operations for the fiscal year then ended and that the examination of
         such accountants in connection with such financial statements has been
         made in accordance with generally accepted auditing standards and,
         accordingly, included such tests of the

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         accounting records and such other auditing procedures as were
         considered necessary under the circumstances.

         (b) QUARTERLY GAAP STATEMENTS OF BORROWER. As soon as available, and in
any event within sixty (60) days after the end of each quarterly fiscal period
of the Borrower (other than the fourth fiscal quarter of any fiscal year),
copies of:

         (i)      the  consolidated  balance  sheets  of the  Borrower  and  its
                  Subsidiaries as at the end of such fiscal quarter, and

         (ii)     the  consolidated  statements of operations  and statements of
                  stockholders'  equity  and  cash  flows,  in each  case of the
                  Borrower and its  Subsidiaries for such fiscal quarter and the
                  portion of such fiscal year ended with such fiscal quarter,

         in each case setting forth in comparative form the figures for the
         preceding fiscal year and prepared in accordance with GAAP all in
         reasonable detail and certified by a Senior Officer of such company as
         presenting fairly in accordance with GAAP the financial condition of
         the Borrower and its Subsidiaries as of the end of such period and the
         results of operations for such period, subject only to normal year-end
         accruals and audit adjustments and the absence of footnotes.

         (c) MANAGEMENT LETTERS. Promptly upon receipt thereof, copies of any
reports or management letters relating to the internal financial controls and
procedures delivered to the Borrower or any of its Subsidiaries by any
independent certified public accountant in connection with examination of the
financial statements of the Borrower or any such Subsidiary.

         (d) NOTICE OF LITIGATION. Promptly after the commencement thereof,
notice of any action, suit and proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, against the Borrower or any of its Subsidiaries, (A) which, if
determined adversely to the Borrower or such Subsidiary, would have a Materially
Adverse Effect, or (B) commenced by any creditor or lessor under any written
credit agreement with respect to borrowed money or material lease which asserts
a default thereunder on the part of the Borrower or any of its Subsidiaries.

         (e) NOTICES OF DEFAULT. As soon as practicable and in any event within
fifteen (15) days after the occurrence of each Default or Event of Default, a
written notice setting forth the details of such Default or Event of Default and
the action which is proposed to be taken by the Borrower with respect thereto.

         (f) OTHER  FILINGS.  Promptly  upon the filing  thereof and at any time
upon the  reasonable  request of the Bank,  permit the Bank the  opportunity  to
review copies of all reports,  including  annual reports,  and notices which the
Borrower  or any  Subsidiary  files with or  receives  from the PBGC or the U.S.
Department of Labor under ERISA; and as soon

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<PAGE>



as practicable and in any event within fifteen (15) days after the Borrower or
any if its Subsidiaries knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that the PBGC or
the Borrower or any such Subsidiary has instituted or will institute proceedings
under Title IV of ERISA to terminate any Plan, the Borrower will deliver to the
Bank a certificate of a Senior Officer of the Borrower setting forth details as
to such Reportable Event or Prohibited Transaction or Plan termination and the
action the Borrower proposes to take with respect thereto.

         (g) BORROWING BASE CERTIFICATE. Within fifteen (15) days following the
end of each month, a Borrowing Base Certificate dated as of the end of such
month in the form of EXHIBIT K hereto, setting forth the Eligible Agent
Collateral Value attributable to each Eligible Agent Obligor.

         (h) ADDITIONAL INFORMATION. Such additional information as the Bank may
reasonably request concerning the Borrower and its Subsidiaries and for that
purpose all pertinent books, documents and vouchers relating to its business,
affairs and Properties, including investments as shall from time to time be
designated by the Bank.

         Section 6.9       CERTIFICATES.

         (a)  OFFICERS'  CERTIFICATE.   Simultaneously  with  each  delivery  of
financial  statements  pursuant to Section 6.8(a) and 6.8(b), the Borrower shall
deliver to the Bank a certificate of its Chief Financial Officer which will

         (i)      certify  on  behalf of the  Borrower  that  such  officer  has
                  reviewed the  Agreement  and the other Loan  Documents and the
                  condition   and   transactions   of  the   Borrower   and  its
                  Subsidiaries   for  the  period   covered  by  such  financial
                  statements,  and state that to the best of his  knowledge  the
                  Borrower has observed or performed  all of its  covenants  and
                  other agreements, and satisfied every condition,  contained in
                  this Agreement and the other Loan Documents, and no Default or
                  Event of  Default  has  occurred  and is  continuing  or, if a
                  Default or Event of Default has occurred and is continuing,  a
                  statement  as to the nature  thereof  and the action  which is
                  proposed to be taken with respect thereto,

         (ii)     include information (with detailed calculations  substantially
                  in the  form  set out in  EXHIBIT  J)  required  to  establish
                  whether the Borrower was in compliance  with the covenants set
                  forth in Sections 7.10 and 7.11 of this  Agreement  during the
                  period  covered  by  the  financial   statements   then  being
                  delivered, and

         (iii)    include information (with detailed calculations  substantially
                  in the  form  set out in  EXHIBIT  J)  required  to  establish
                  whether,  as of the last day of each  month  during  the prior
                  calendar quarter, the Borrowing Base

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                  exceeded the aggregate principal amount of the Revolving Loans
                  outstanding on each such date.

         (b) ACCOUNTANT'S CERTIFICATE. Simultaneously with each delivery of
financial statements pursuant to Section 6.8(a), the Borrower will deliver to
the Bank a certificate of the independent certified public accountants who
certify such statements, stating whether, in the course of their audit of the
financial statements, they obtained any knowledge of a condition or event which
constitutes a Default or Event of Default and the nature thereof.

         Section 6.10 COMMUNICATION WITH ACCOUNTANTS. Borrower authorizes Bank
to communicate directly with its independent certified public accountants and
authorizes those accountants to disclose to Bank any and all financial
statements and other supporting financial documents and schedules relating to
Borrower and its Subsidiaries. Prior to the occurrence of an Event of Default,
the Bank will use reasonable efforts to advise the Borrower of any such
communications. At or before the initial Closing Date, Borrower shall deliver a
letter addressed to such accountants instructing them to comply with the
provisions of this Section 5.2 and indicating that a primary intent of Borrower
is for the financial statements prepared by such accountants to benefit or
influence Bank and that Bank will rely upon such financial statements.

         Section 6.11 FURTHER ASSURANCES. The Borrower shall take all such
further actions and execute and file or record, at its own cost and expense, all
such further documents and instruments as the Bank may at any time reasonably
determine may be necessary or advisable; and shall do, execute, acknowledge,
deliver, record, file, and register any and all such further acts, deeds,
conveyances, estoppel certificates, transfers, certificates, assurances and
other instruments as the Bank may reasonably require from time to time in order
to carry out more effectively the purposes of this Agreement, the Security
Agreement, the Guaranty, any Pledge Agreement, the Receivables Purchase
Agreements or the Revolving Note.

         Section 6.12 COMPLIANCE WITH AGREEMENTS. Promptly and fully comply with
all contractual obligations under all agreements, mortgages, indentures, leases
and/or instruments to which any one or more of the Borrower and its Subsidiaries
is a party, whether such agreements, mortgages, indentures, leases or
instruments are with the Bank or another Person, except where such failure to so
comply would not have a Materially Adverse Effect.

         Section 6.13 USE OF PROCEEDS. Use proceeds of the Revolving Loans
solely to (i) acquire Eligible Receivables, (ii) repay Revolving Loans made
hereunder, (iii) pay to the Bank interest accrued on the Revolving Loans made
hereunder, (iv) pay to the Bank the fees described in Section 2.9, (v) pay
costs, expenses and charges described in Section 9.3(a), and (vi) pay reasonable
costs, expenses and charges of outside legal counsel to the Borrower, the
Guarantor and each Eligible Seller incurred in connection with the preparation,
negotiation and regulatory approval of this Agreement, the Security Agreement,
the Pledge Agreements, the Guaranty, the Receivables Purchase Agreements and the
Revolving Note. Notwithstanding the foregoing, nothing contained in this
Agreement shall prohibit the

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Borrower from using the proceeds of the Revolving Loans to repay, directly or
indirectly, any and all amounts owed to Fleet National Bank under the Credit
Agreement dated as of December 28, 1995, as amended, between the Borrower and
Fleet National Bank of Connecticut. No part of such proceeds shall be used to
purchase or carry, or to extend credit to others for the purpose of purchasing
or carrying, any "margin stock" (as such term is defined in Regulation G of the
Board of Governors of the Federal Reserve System) in violation of Regulations U
and X.

                                    ARTICLE 7

                               NEGATIVE COVENANTS

         During the term of this Agreement, and until performance, payment
and/or satisfaction in full of the Obligations, the Borrower covenants and
agrees that Borrower shall not, and shall not permit its Subsidiaries to, unless
the Bank otherwise consents in writing:

         Section 7.1 DEBT.  Create,  incur,  assume or suffer to exist any Debt,
except:

         (a)      Debt of the Borrower  under this  Agreement  and the Revolving
                  Note;

         (b)      Debt permitted under Section 7.2 hereof; and

         (c)      Subordinated Debt of the Borrower or its Subsidiaries.

         Section 7.2 GUARANTIES, ETC. Assume, guarantee, endorse or otherwise be
or become directly or contingently responsible or liable (including, but not
limited to, an agreement to purchase any obligation, or to supply or advance any
funds, or an agreement to cause such Person to maintain a minimum working
capital or net worth or otherwise to assure the creditors of any Person against
loss) for the obligations of any Person, except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business.

         Section 7.3 LIENS. Create, incur, assume or suffer to exist any Lien,
upon or with respect to any of its Properties, now owned or hereafter acquired,
except (the following being referred to herein as "Permitted Liens"):

         (a) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable, if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;

         (b) Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than forty-five (45) days, or which are being contested in
good faith by appropriate proceedings and for which appropriate reserves have
been established;

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         (c)  Liens  or  deposits  under  workers'  compensation,   unemployment
insurance, social security or similar legislation (other than ERISA);

         (d) judgment and other similar Liens arising in connection with court
proceedings; PROVIDED that the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively contested
in good faith and by appropriate proceedings;

         (e) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by the Borrower or any of its Subsidiaries of the
Property or assets encumbered thereby in the normal course of its business or
materially impair the value of the Property subject thereto; and

         (f)      Liens created pursuant to the Security Agreement.

         Section  7.4   INVESTMENTS.   Neither  the  Borrower  nor  any  of  its
Subsidiaries will make any Investment in any other Person,  except for Permitted
Investments.

         Section 7.5 MERGERS AND CONSOLIDATIONS AND ACQUISITIONS OF ASSETS.
Merge or consolidate with any Person (whether or not Borrower or any Subsidiary
is the surviving entity), or acquire all or substantially all of the assets or
any of the capital stock of any Person.

         Section 7.6 SALE OF ASSETS.  Sell,  lease or  otherwise  dispose of any
material assets, except in the ordinary course of business.

         Section 7.7 STOCK OF THE BORROWER, SUBSIDIARIES, ETC. Issue any
additional shares of the Borrower's capital stock to any Person or pledge,
assign, hypothecate, transfer, convey, sell or otherwise dispose of, encumber or
grant any security interest in, or deliver to any other Person, any shares of
capital stock of its Subsidiaries, or permit any such Subsidiaries to issue any
additional shares of its capital stock to any Person other than the Borrower or
any Subsidiaries, except directors' qualifying shares.

         Section 7.8 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of
any kind with any Affiliate of the Borrower, or any Person that owns or holds
five percent (5%) or more of the outstanding common stock of the Borrower, OTHER
THAN (a) the Receivables Purchase Agreements, (b) transactions between or among
Borrower and its wholly owned Subsidiaries or between or among its wholly owned
Subsidiaries or (c) transactions on terms at least as favorable to the Borrower
or its Subsidiaries as would be the case in an arm'slength transaction between
unrelated parties of equal bargaining power.

         Section 7.9 CAPITAL EXPENDITURES.  Make or permit to be made, or commit
to make any Capital Expenditure.

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         Section 7.10 MINIMUM  CONSOLIDATED  GAAP NET WORTH.  At any time during
the term  hereof,  permit  Consolidated  GAAP Net Worth of the  Borrower and its
Subsidiaries  to be less than an amount equal to the sum of (a) $1,000,000  PLUS
(b)  50%  of  any  cumulative  positive  Net  Income  of the  Borrower  and  its
Subsidiaries  for each  fiscal  quarter  following  the  fiscal  quarter  ending
December  31, 1996 PLUS (c)  Deferred  Revenues as of the end of the most recent
fiscal quarter.

         Section 7.11 MINIMUM  INTEREST  COVERAGE.  As of the end of each fiscal
quarter permit the Interest Coverage Ratio to be less than 1.10 to 1.00.

         Section 7.12 MINIMUM COLLATERAL RATIO. At any time that the principal
amount of the Revolving Loans outstanding under this Agreement exceeds the
Borrowing Base, fail to comply with the provisions of Section 2.6 hereof.

         Section 7.13 DISTRIBUTIONS. Make any Distribution to any Person, OTHER
THAN, Distributions to the Guarantor in an amount equal to any advances, loans
or other contributions made by Guarantor to Borrower to enable Borrower to make
deposits from time to time in the Cash Collateral Account, so long as before and
after giving effect to any such Distributions, no Default or Event of Default
shall have occurred and be continuing.

         Section 7.14 RECEIVABLES  PURCHASE  AGREEMENTS.  Amend, modify or waive
any material provision of any Receivables Purchase Agreement.

                                    ARTICLE 8

                                EVENTS OF DEFAULT

         Section 8.1 EVENTS OF DEFAULT.  Any of the following events shall be an
"Event of Default":

         (a) the Borrower shall fail to pay any principal amount when due,
whether at stated maturity, by acceleration, by notice of prepayment or
otherwise, or Borrower shall fail to pay any premium or interest, or any fees or
other amounts payable hereunder, within five days after the date due;

         (b) the representations and warranties made by the Borrower in this
Agreement, the Security Agreement or the Revolving Note, or which is contained
in any certificate, document, financial or other written statement furnished at
any time under or in connection with this Agreement or the Revolving Note shall
prove to have been incorrect in any material respect on or as of the date made;

         (c) the representations and warranties made by the Guarantor in the
Guaranty or any Pledge Agreement executed and delivered by the Guarantor, or
which is contained in any certificate, document, financial or other written
statement furnished at any time under or in

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<PAGE>



connection  therewith shall prove to have been incorrect in any material respect
on or as of the date made;

         (d) the Borrower shall (i) fail to perform or observe any term,
covenant, or agreement contained in Section 6.1, Section 6.8(e), Section 6.12 or
Article 7; or (ii) fail to perform or observe any term, covenant, or agreement
on its part to be performed or observed in this Agreement, the Security
Agreement, the Receivables Purchase Agreements or the Revolving Note and such
failure shall continue unremedied for thirty (30) consecutive days after either
(x) any Senior Officer of the Borrower has knowledge thereof or (y) the Bank has
given notice thereof to the Borrower. The Bank shall use reasonable efforts to
give the Borrower notice of any Default or Event of Default under this Section
8.1(d); PROVIDED, HOWEVER, that failure to give any such notice shall not impair
or otherwise adversely affect the Bank's rights and remedies hereunder;

         (e) the Guarantor shall (i) fail to perform or observe any term,
covenant, or agreement contained in Section 5.1 Section 5.8(j), Section 5.12 or
Section 5.13 or Article 6 of the Guaranty; or (ii) fail to perform or observe
any other term, covenant, or agreement on its part to be performed or observed
in the Guaranty or any Pledge Agreement executed and delivered by the Guarantor
and such failure shall continue unremedied for thirty (30) consecutive days
after either (x) any Senior Officer of the Borrower has knowledge thereof or (y)
the Bank has given notice thereof to the Borrower. The Bank shall use reasonable
efforts to give the Borrower and the Guarantor notice of any Default or Event of
Default under this Section 8.1(e); PROVIDED, HOWEVER, that failure to give any
such notice shall not impair or otherwise adversely affect the Bank's rights and
remedies under this Agreement or the Guaranty;

         (f) any default by any Eligible Seller under a Receivables Purchase
Agreement or any Eligible Agent Contract that has, or could reasonably be
expected to have, a Materially Adverse Effect;

         (g) any material provision of either Receivables Purchase Agreement or
any Eligible Agent Contract shall at any time for any reason have ceased to be
valid and binding on any Eligible Seller or shall be declared to be null and
void by any court or other Person having jurisdiction or any Eligible Seller
shall deny that it has any further liability or obligation under either
Receivables Purchase Agreement or any Eligible Agent Contract;

         (h) any default by any Eligible Agent Obligor under any Eligible Agent
Contract that has, or could reasonably be expected to have, a Materially Adverse
Effect;

         (i) any material provision of any Eligible Agent Contract shall at any
time for any reason have ceased to be valid and binding on the Eligible Agent
Obligor party thereto or any Eligible Agent Contract shall be declared to be
null and void by any court or other Person having jurisdiction or the Eligible
Agent Obligor party thereto shall deny that it has any or further liability or
obligation under the Eligible Agent Contract, if the occurrence of such event
has, or could reasonably be expected to have a Materially Adverse Effect;

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         (j) the Guarantor or any of its Subsidiaries (including the Borrower)
shall (i) fail to pay any indebtedness, including but not limited to
indebtedness for borrowed money (other than the payment Obligations described in
(a) above), of the Guarantor or such Subsidiary, as the case may be, or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise); or (ii) fail to perform or
observe any term, covenant or condition on its part to be performed or observed
under any agreement or instrument relating to any such indebtedness, when
required to be performed or observed and such failure continues after any
applicable notice and grace period, if the effect of such failure to perform or
observe is to accelerate, or to permit the acceleration of the maturity of such
indebtedness, or (iii) any such indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; PROVIDED, HOWEVER, that it
shall not be a Default or Event of Default under this Section 7.1(j) unless the
aggregate principal amount of indebtedness described in clauses (i) through
(iii) above shall exceed $20,000;

         (k) the Guarantor or any of its Subsidiaries, including the Borrower,
(i) shall generally not, or be unable to, or shall admit in writing its
inability to, pay its debts as such debts become due; or (ii) shall make an
assignment for the benefit of creditors or petition or apply to any tribunal for
the appointment of a custodian, receiver or trustee for it or a substantial part
of its assets; or (iii) shall commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or (iv)
shall have had any such petition or application filed or any such proceeding
shall have been commenced against it in which an adjudication or appointment is
made or order for relief is entered, or which petition, application or
proceeding remains undismissed for a period of sixty (60) consecutive days or
more; or (v) shall be the subject of any proceeding under which all or
substantially all of its assets may be subject to seizure, forfeiture or
divestiture (other than a proceeding in respect of a Lien permitted under this
Agreement); or (vi) by any act or omission shall indicate its consent to,
approval of or acquiescence in any such petition, application or proceeding or
order for relief or the appointment of a custodian, receiver or trustee for all
or any substantial part of its Property; or (vii) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a period
of sixty (60) consecutive days or more;

         (l) (A) any Insurance Commissioner shall apply for an order pursuant to
any section of the applicable insurance code, directing the rehabilitation,
conservation or liquidation of any Insurance Affiliate, and any such application
shall not be dismissed or otherwise terminated during a period of sixty (60)
consecutive days, or a court of competent jurisdiction shall enter an order
granting the relief sought; or (B) any Insurance Commissioner shall file a
complaint or petition pursuant any applicable insurance code seeking the
dissolution of any Insurance Affiliate, and such complaint or petition is not
dismissed or otherwise terminated for a period of sixty (60) consecutive days,
or a court of competent jurisdiction shall order the dissolution of any
Insurance Affiliate;

         (m) one or more  judgments,  decrees or orders for the payment of money
in excess of  $20,000 in the  aggregate  shall have been  rendered  against  the
Borrower or any of its

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Subsidiaries (excluding judgments which are covered by insurance other than
self-insurance) and such judgments, decrees or orders shall continue unsatisfied
and in effect for a period of sixty (60) consecutive days without being vacated,
discharged, satisfied or stayed or bonded pending appeal;

         (n) any of the following events shall occur or exist with respect to
the Guarantor or any ERISA Affiliate, including the Borrower: (i) any Prohibited
Transaction involving any Plan; (ii) any Reportable Event shall occur with
respect to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan (other than in a
"standard termination" referred to in Section 4041 of ERISA); (iv) any event or
circumstance exists which would constitute grounds entitling the PBGC to
institute proceedings under Section 4042 of ERISA for the termination of, or for
the appointment of a trustee to administer any Plan, or the institution by the
PBGC of any such proceedings; (v) complete or partial withdrawal under Section
4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization,
insolvency or termination of any Multiemployer Plan; and in each case above,
such event or condition, together with all other such events or conditions, if
any, would in the reasonable opinion of the Bank subject the Borrower to any
tax, penalty or other liability to a Plan, Multiemployer Plan, the PBGC or
otherwise (or any combination thereof), or subject the Guarantor or any
Subsidiary (other than the Borrower) to any tax, penalty or other liability to a
Plan, Multiemployer Plan, the PBGC or otherwise (or any combination thereof)
which in the aggregate exceed or may exceed $200,000;

         (o) any material provision of the Guaranty or the Pledge Agreements (if
delivered) shall at any time for any reason have ceased to be valid and binding
on the Guarantor or shall be declared to be null and void by any court or other
Person having jurisdiction;

         (p) any material provision of this Agreement or the Security Agreement
shall at any time for any reason have ceased to be valid and binding on the
Borrower or shall be declared to be null and void by any court or other Person
having jurisdiction;

         (q) the validity or enforceability of this Agreement, the Security
Agreement, the Guaranty or the Pledge Agreements (if delivered) shall be
contested by the Guarantor or any of its Subsidiaries, including the Borrower,
or the Guarantor or any of its Subsidiaries, including the Borrower, shall deny
it has any further liability or obligation thereunder; or

         (r)      a Change in Control shall have occurred.

         Section 8.2 REMEDIES. Without limiting any other rights or remedies of
the Bank provided for elsewhere in this Agreement, the Security Agreement, any
Pledge Agreement, the Guaranty or the Revolving Note, or by applicable law, or
in equity, or otherwise, if any Event of Default shall occur and be continuing,
the Bank may by notice to the Borrower, (i) declare the Commitment to be
terminated, whereupon the same shall forthwith terminate, (ii) declare all
amounts owing under this Agreement and the Revolving Note (whether or not such
Obligations be contingent or unmatured) to be forthwith due and payable,
whereupon all such amounts shall become and be forthwith due and payable,
without presentment, demand,

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<PAGE>



protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; PROVIDED that, in the case of an Event of Default referred to
in Section 8.1(k) above with respect to the Borrower, the Commitment shall be
immediately terminated, and all such amounts shall be immediately due and
payable without notice, presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by the Borrower.

                                    ARTICLE 9

                                  MISCELLANEOUS

         Section 9.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement, the Security Agreement, or the Revolving Note nor
consent to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Bank and the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No failure on
the part of the Bank to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof or preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

         Section 9.2 USURY. Anything herein to the contrary notwithstanding, the
Obligations of the Borrower with respect to this Agreement and the Revolving
Note shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt thereof would be contrary to provisions of
law applicable to the Bank limiting rates of interest which may be charged or
collected by the Bank.

         Section 9.3       EXPENSES; INDEMNITIES.

         (a) Unless otherwise agreed in writing, the Borrower shall promptly
reimburse the Bank for all reasonable costs, expenses and charges (including
without limitation reasonable fees and charges of its attorneys and auditors)
actually incurred by the Bank in connection with the preparation and negotiation
of this Agreement, the Security Agreement, any Pledge Agreement, the Guaranty,
the Receivables Purchase Agreements, the Revolving Note, and all related
documents, instruments and certificates. The Borrower further agrees to promptly
reimburse the Bank for all reasonable costs, expenses and charges (including
without limitation, reasonable fees and charges of external legal counsel for
the Bank) actually incurred by the Bank in connection with the performance,
modification and amendment of this Agreement, the Security Agreement, any Pledge
Agreement, the Guaranty, the Receivables Purchase Agreements, the Revolving
Note, and all related documents, instruments and certificates. The Borrower
further agrees to promptly reimburse all reasonable costs and expenses
(including reasonable counsel fees and expenses), if any, incurred by the Bank
in connection with the enforcement, including without limitation the enforcement
of judgments (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the Security Agreement, any Pledge Agreement, the Guaranty, the

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Receivables Purchase Agreements or the Revolving Note or any other document to
be delivered hereunder or thereunder. Until paid, the amount of any cost,
expense or charge shall constitute, together with all accrued interest thereon,
part of the Obligations.

         (b) The Borrower hereby agrees to indemnify the Bank against any and
all losses, costs or expenses which the Bank may at any time or from time to
time sustain or incur as a consequence of (i) any failure by the Borrower to
pay, punctually on the due date thereof, any amount payable by the Borrower to
the Bank hereunder or (ii) the acceleration, in accordance with the terms of
this Agreement, of the time of payment of any of the Obligations of the
Borrower. Such losses, costs or expenses may include, without limitation, (i)
any commercially reasonable costs incurred by the Bank in carrying funds to
cover any overdue principal, overdue interest, or any other overdue sums payable
by the Borrower to the Bank or (ii) any losses incurred or sustained by the Bank
in liquidating or reemploying funds acquired by the Bank from third parties,
except to the extent caused by the Bank's gross negligence or willful
misconduct.

         (c) The Borrower agrees to indemnify the Bank and its directors,
officers, employees, agents and Affiliates from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages, costs or expenses
incurred by any of them arising out of or by reason of any investigation or
litigation or other proceedings (including any threatened investigation or
litigation or other proceedings) relating to any transaction contemplated by
this Agreement, the Security Agreement, any Pledge Agreement, the Guaranty or
the Receivables Purchase Agreements, any actions or omissions of the Borrower,
the Guarantor or any of its Subsidiary or any of their respective directors,
officers, employees or agents in connection with this Agreement, the Security
Agreement, any Pledge Agreement, the Guaranty or the Receivables Purchase
Agreements, or any actual or proposed use by the Borrower or any Subsidiary of
the proceeds of the Revolving Loans, including without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation or litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).

         (d) The Borrower agrees to indemnify the Bank and its directors,
officers, employees, agents and Affiliates from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages, costs or expenses
(including without limitation, reasonable fees and disbursements of counsel,
engineers or similar professionals) which may be incurred by or asserted against
the Bank or any such party in connection with or arising out of or relating to
(i) the Bank's compliance with any environmental law with respect to the
Properties or operations of the Borrower or its Subsidiaries, (ii) any natural
resource damages, governmental fines or penalties or other amounts mandated by
any governmental authority, court order, demand or decree in connection with the
disposal by the Borrower or its Subsidiaries either on-site or off-site
(including leakage or seepage from any such site including third party treatment
facilities) of pollutants, contaminants or hazardous wastes and (iii) any
personal injury or property damage to third parties resulting from such
pollutants, contaminants or hazardous wastes.

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         Section 9.4 TERM; SURVIVAL. This Agreement shall continue in full force
and effect as long as any Obligations are owing by the Borrower to the Bank. No
termination of this Agreement or any other Loan Document shall in any way affect
or impair the rights and obligations of the parties hereto relating to any
transactions or events prior to such termination date, and all warranties and
representations of the Borrower shall survive such termination. All
representations and warranties made hereunder and in any document, certificate,
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement or the Revolving Note. The
obligations of the Borrower under Sections 2.11, 2.12 and 9.3 shall survive the
repayment of the Revolving Loans and the termination of the Commitment.

         Section 9.5 ASSIGNMENT; PARTICIPATIONS. This Agreement shall be binding
upon, and shall inure to the benefit of, the Borrower, the Bank and their
respective successors and assigns, except that the Borrower may not assign or
transfer its rights or obligations hereunder. Subject to the consent of the
Insurance Commissioner, if required, the Bank may (i) sell Participations in,
(ii) upon ten (10) days' notice to the Borrower may assign all, but not a part,
of any Revolving Loan to another lender, (iii) without notice to the Borrower
may assign all or any part of any Revolving Loan to any Affiliate of the Bank,
or (iv) with the prior written consent of the Borrower, which consent will not
unreasonably be withheld, may assign less than all of any Revolving Loan to
another lender, in which event (a) in the case of an assignment, the assignee
shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights, benefits and obligations as it would have if it were
the Bank hereunder; and (b) in the case of a participation, the participant
shall have no rights under this Agreement or the Revolving Note. The agreement
executed by the Bank in favor of any participant shall not give such participant
the right to require the Bank to take or omit to take any action hereunder
except action directly relating to (i) the extension of a regularly scheduled
payment date with respect to any portion of the principal of or interest on any
amount outstanding hereunder allocated to such participant, (ii) the reduction
of the principal amount allocated to such participant or (iii) the reduction of
the rate of interest payable on such amount or any amount of fees payable
hereunder to a rate or amount, as the case may be, below that which the
participant is entitled to receive under its agreement with the Bank. The Bank
may furnish any information concerning the Borrower in the possession of the
Bank from time to time to assignees and participants (including prospective
assignees and participants); PROVIDED that the Bank shall require any such
prospective assignee or such participant (prospective or otherwise) to agree in
writing to maintain the confidentiality of such information in accordance with
the provisions set forth in Section 9.14.

         Section 9.6 NOTICES. All notices, requests, demands and other
communications provided for herein shall be in writing and shall be (i) hand
delivered; (ii) sent by certified, registered or express United States mail,
return receipt requested, or reputable next-day courier service; or (iii) given
by telex, telecopy, telegraph or similar means of electronic communication. All
such communications shall be effective upon the receipt thereof. Notices shall
be addressed to the Borrower and the Bank at their respective addresses set
forth on the signature pages of this Agreement, or to such other address as the
Borrower or

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the Bank shall theretofore have transmitted to the other party in writing by any
of the means specified in this Section.

         Section 9.7 SETOFF. The Borrower agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim the
Bank may otherwise have, the Bank shall be entitled, at its option, to offset
balances (general or special, time or demand, provisional or final, and
regardless of whether such balances are then due to the Borrower) held by it for
the account of the Borrower at any of the Bank's offices, in Dollars or in any
other currency, against any amount payable by the Borrower under this Agreement
or the Revolving Note that is not paid when due, taking into account any
applicable grace period, in which case it shall promptly notify the Borrower
thereof; PROVIDED that the Bank's failure to give such notice shall not affect
the validity thereof.

         Section 9.8       JURISDICTION; IMMUNITIES.

         (a) The Borrower hereby irrevocably submits to the jurisdiction of any
Illinois State or United States Federal court sitting in Chicago over any action
or proceeding arising out of or relating to this Agreement, the Security
Agreement, any Pledge Agreement, the Guaranty, the Receivables Purchase
Agreements or the Revolving Note, and the Borrower hereby irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in such Illinois State or Federal court. The Borrower irrevocably
consents to the service of any and all process in any such action or proceeding
by the mailing of copies of such process to the Borrower at its address
specified in Section . The Borrower agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
The Borrower further waives any objection to venue in such State and any
objection to an action or proceeding in such State on the basis of FORUM NON
CONVENIENS. The Borrower further agrees that any action or proceeding brought
against the Bank shall be brought only in Illinois State or United States
Federal courts sitting in Chicago.

         (b) Nothing in this Section shall affect the right of the Bank to serve
legal process in any other manner permitted by law or affect the right of the
Bank to bring any action or proceeding against the Borrower or its Property in
the courts of any other jurisdictions.

         Section 9.9 TABLE OF CONTENTS; HEADINGS. Any table of contents and the
headings and captions hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.

         Section 9.10 SEVERABILITY. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.

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                                     - 48 -


<PAGE>



         Section 9.11 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing any such
counterpart.

         Section 9.12 INTEGRATION. This Agreement, the Security and the
Revolving Note set forth the entire agreement between the parties hereto
relating to the transactions contemplated hereby and thereby and supersede any
prior oral or written statements or agreements with respect to such
transactions.

         Section 9.13 GOVERNING  LAW. This  Agreement  shall be governed by, and
interpreted and construed in accordance with, the laws of the State of Illinois.

         Section 9.14 CONFIDENTIALITY. Subject to the following sentence, the
Bank (on behalf of itself and each of its Affiliates, directors, officers,
employees and representatives) and any assignee of the Bank becoming a party to
this Agreement agrees to use its best efforts, consistent with its normal
procedures for handling confidential information in accordance with safe and
sound bank practices, to retain in confidence and not disclose without the prior
written consent of the Borrower any written information about the Borrower and
its Subsidiaries obtained pursuant to the requirements of this Agreement, except
as permitted under Section 9.5 of this Agreement. Notwithstanding the foregoing,
the Bank (a) may disclose or otherwise use such information to the extent that
such information is required in any application, report, statement or testimony
submitted to any governmental agency having or claiming to have jurisdiction
over the Bank, (b) may disclose or otherwise use such information to the extent
that such information is required in response to any summons or subpoena or in
connection with any litigation affecting the Bank, (c) may disclose or otherwise
use such information to the extent that such information is reasonably believed
by the Bank (after notification to the Borrower, unless such notification is
prohibited by law) to be required in order to comply with any law, order,
regulation, or ruling applicable to the Bank, and (d) may disclose or otherwise
use such information to the extent that such information becomes publicly
available.

         Section 9.15 AUTHORIZATION OF THIRD PARTIES TO DELIVER OPINIONS, ETC.
The Borrower hereby authorizes and directs each Person whose preparation or
delivery to the Bank of any opinion, report or other information is a condition
or covenant under this Agreement (including under Articles 5, 6 and 7) to so
prepare or deliver such opinion, report or other information for the benefit of
the Bank. The Borrower agrees to confirm such authorizations and directions
provided for in this Section 9.15 from time to time as may be requested by the
Bank.

         Section 9.16 BORROWER'S WAIVERS. THE BORROWER ACKNOWLEDGES THAT IT HAS
BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND THIS
AGREEMENT AND THAT IT IRREVOCABLY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY
SUIT, ACTION OR PROCEEDING OR ANY MATTER ARISING IN CONNECTION WITH OR IN ANY
WAY RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REVOLVING

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                                     - 49 -


<PAGE>



NOTE, THE SECURITY AGREEMENT OR ANY OF THE BORROWER'S DOCUMENTS
RELATED THERETO AND THE ENFORCEMENT OF ANY OF THE BANK'S RIGHTS

AND REMEDIES.

         Section 9.17 STATE OF MAKING AND SUBSTANTIAL PERFORMANCE. The parties
hereto agree that this Agreement is being made and is to be substantially
performed in the State of Illinois.

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                                     - 50 -


<PAGE>



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

                                    WESTBRIDGE FUNDING CORPORATION

                                    By:
                                       Name:
                                       Title:

                                    Address for Notices:

                                    777 Main Street
                                    Fort Worth, TX  76102
                                    Attn:   Chief Financial Officer
                                    Telecopier No.: (817) 878-3880

                                    With a copy to:

                                    Milbank, Tweed, Hadley & McCloy
                                    1 Chase Manhattan Plaza
                                    New York, NY 10005-1413
                                    Attn: Robert S. Reder, Esq.
                                    Telecopier No.: (212) 530-5219

                                    LASALLE NATIONAL BANK

                                    By:
                                       Name:
                                       Title:

                                    Address for Notices:

                                    135 South LaSalle Street
                                    Chicago, Illinois  60603
                                    Attn:   Janet R. Gates
                                    Telecopier No.: (312) 904-8189

                                    With a copy to:

                                    Rudnick & Wolfe
                                    203 North LaSalle Street
                                    Suite 1800
                                    Chicago, Illinois 60601-1293
                                    Attn:  Stephen W. Schwab, Esq.
                                    Telecopier No.: (312) 236-7516

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                                     - 51 -


<PAGE>



                                  SCHEDULE 1.1

                         COMMITMENTS AND LENDING OFFICES

                                             Percentage of
Name and Address of Bank       Commitment     Aggregate
                                Amount       Commitments    Type of Loans
-----------------------------------------------------------------------------
LaSalle National Bank        $20,000,000        100%          Base Rate,
135 South LaSalle Street                                      LIBOR Rate
Chicago, Il 60603

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





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<PAGE>



                                    EXHIBIT A

                                 REVOLVING NOTE

$20,000,000.00                                             Chicago, Illinois
                                                               June __, 1997

         WESTBRIDGE FUNDING CORPORATION (the "Borrower"), for value received,
hereby unconditionally promises to pay to the order of LASALLE NATIONAL BANK, a
national banking association (the "Bank") at its office located at 135 South
LaSalle Street, Chicago, Illinois 60603, for the account of the appropriate
Lending Office of the Bank, the principal sum of TWENTY MILLION AND NO/100
Dollars ($20,000,000) or, if less, the unpaid principal amount loaned by the
Bank to the Borrower pursuant to the Agreement referred to below, in lawful
money of the United States of America and in immediately available funds, on the
date(s) and in the manner provided in said Agreement. The Borrower also promises
to pay interest on the unpaid principal balance hereof, for the period such
balance is outstanding, at said principal office for the account of said Lending
Office, in like money, at the rates of interest, on the date(s) and in the
manner provided in said Agreement; and to pay interest on any overdue principal
and interest at the Default Rate.

         The date, type, amount and maturity date for each Revolving Loan made
by the Bank to the Borrower under the Agreement referred to below, and each
payment of principal thereof, shall be recorded by the Bank on its books and,
prior to any transfer of this Revolving Note (or, at the discretion of the Bank,
at any other time), endorsed by the Bank on the schedule attached hereto or any
continuation thereof or otherwise recorded and maintained in its internal
records.

         This is the Revolving Note referred to in that certain Credit Agreement
(as amended from time to time, the "Agreement") dated as of June __, 1997
between the Borrower and the Bank and evidences the Revolving Loans made by the
Bank thereunder and is secured by a Security Agreement and a Guaranty as set
forth in the Agreement, and may be secured by a Pledge Agreement as set forth in
the Agreement, and is entitled to the benefits thereof. All terms not defined
herein shall have the meanings given to them in the Agreement.

         The Agreement provides for the acceleration of the maturity of this
Revolving Note upon the occurrence of certain Events of Default and for
prepayments on the terms and conditions specified therein.

         The Borrower waives presentment, notice of dishonor, protest and any
other notice or formality with respect to this Revolving Note.

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<PAGE>




         No waiver of any right or remedy under this Revolving Note shall in any
event be effective unless the same shall be in writing and signed by the waiving
party, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

         In accordance with the provisions of the Agreement, the Borrower shall
reimburse the Bank on demand for all reasonable costs, expenses and charges
(including without limitation, reasonable fees and charges of external legal
counsel for the Bank) incurred by the Bank in connection with the preparation,
performance or enforcement of this Revolving Note.

         This Revolving Note shall be binding on the Borrower and its permitted
successors and assigns and shall inure to the benefit of the Bank and its
permitted successors and assigns, PROVIDED that the Borrower may not delegate
any obligations hereunder without the prior written consent of the Bank.

         This Revolving Note shall be governed by, and interpreted and construed
in accordance with, the laws of the State of Illinois.

         IN WITNESS WHEREOF, the undersigned has caused this Revolving Note to
be duly executed as of the day and year first above written.

                                            WESTBRIDGE FUNDING
                                            CORPORATION

                                        By:

                                      Name:
                                            ----------------------
                                     Title:
                                            ----------------------
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                                       A-2


<PAGE>



                                   SCHEDULE TO
                                 REVOLVING NOTE

                                           REVOLVING LOANS AND PAYMENTS

         Amount and                             Payments        Unpaid
          Type of     Maturity    Principal/    Principal      Notation
DATE        LOAN        DATE      INTEREST       BALANCE          BY

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                                       A-3


<PAGE>




                                   EXHIBIT B-1

                        FORMS OF ELIGIBLE AGENT CONTRACT

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<PAGE>




                                   EXHIBIT B-2

                     FORMS OF MASTER GENERAL AGENT CONTRACT

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<PAGE>



                                   EXHIBIT B-3

            FORMS OF ELIGIBLE NON-INSURANCE COMPANY AND NON-AFFILIATE
                           INSURANCE COMPANY CONTRACT

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<PAGE>



                                    EXHIBIT C

                     SCHEDULE OF MAXIMUM ADVANCE PERCENTAGE
                                 BY POLICY TYPE


                                                                      MAXIMUM
                                                                      ADVANCE
TYPE OF POLICY                                                       PERCENTAGE


MEDICAL EXPENSE                                                        84%
         HSC, HSG, SSC, SSG, MM95, LMGMM1, AGMM1, MSE, NFLS92,
         GPPO, IPPO, GSSC

MEDICARE SUPPLEMENT                                                   150%*
         NCMSA, NCMSB, NCMSC, NCMSF, NCDMA, NCDMB, AMSSA,
         AMSSB, AMSSC


HOME HEALTH CARE/ LONG TERM                                            75%
CARE
         HHCP, LTC

CANCER                                                                 100%
         LSMCS, CSD-92, FD-95, GCC-C, C500, A100, CSH, CASH, H002, H004, HIP,
         HRT 4/94, SRV-95, ADB, FD

LIFE                                                                   100%
         EZ-100, TERM70

HMO/PPO                                                                84%
  IU2094


                  The initial Borrowing hereunder shall also include Eligible
                  Receivables from Eligible Agent Obligors authorized to sell
                  the following types of insurance policies:


CHAMPUS SUPPLEMENT                                                     75%
         CHMPS

ACCIDENT                                                               75%
         ACCT-C




*        Level  Commission  states only, in all other states the Maximum Advance
         Percentage is 100%.

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<PAGE>



                                                                       EXHIBIT D

                               ELIGIBLE RECEIVABLE

                              ELIGIBILITY CRITERIA

         As of any date of determination, each Receivable that is included in
the Borrowing Base calculation as an "Eligible Receivable" shall have all of the
following characteristics:

1. (x) has been purchased by the Borrower pursuant to the terms of (i) with
respect to any Receivable purchased from an Eligible Insurance Company Seller,
the Insurance Company Receivables Purchase Agreement, and (ii) with respect to
any Receivable purchased from an Eligible Non-Insurance Company Seller, the
Non-Insurance Company Receivables Purchase Agreement, and (y) is identified on a
duly executed Assignment substantially in the form of Exhibit A to the
applicable Receivables Purchase Agreement, a copy of which Assignment shall have
been delivered to the Bank;

2. has a  Cut-Off  Date (as  defined  in the  Receivables  Purchase  Agreements)
relating to the sale of such  Receivable  not later than six months prior to the
Revolving Loan Termination Date;

3. has not been outstanding for more than six (6) months prior to the Cut-Off
Date (as defined in the Receivables Purchase Agreements) relating to the sale of
such Receivable, except for Receivables sold on the first Closing Date under the
Receivables Purchase Agreements, which may be outstanding for up to fifteen (15)
months prior to the applicable Cut-Off Date;

4. arises pursuant to an Eligible Agent Contract (substantially in the form of
Exhibit B-1 or Exhibit B-2) properly completed and executed, a copy of which
Eligible Agent Contract (a) shall have been delivered to the Borrower on or
prior to the date such Receivable is acquired and (b) shall be the genuine,
legal, valid and binding obligation of the Eligible Agent Obligor and Eligible
Seller parties thereto, enforceable by the Borrower and its assignee 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, at law or in equity;

5. has not been sold, transferred, assigned or pledged by the selling Eligible
Seller to any Person other than the Borrower, and the Borrower has good title to
such Receivable free and clear of any Lien other than Liens created pursuant to
the Security Agreement;

6. arises in connection only with the  origination of an Insurance  Policy which
has been issued by an Insurance Affiliate or a Non-Affiliated  Insurance Company
which:

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<PAGE>




         (a)  is of a type set forth on Exhibit C,

         (b) has been originated in the United States of America by an Eligible
         Agent Obligor in the ordinary course of such Person's business of
         selling insurance as an independent insurance agent or broker,

         (c) as of the Cut-Off Date (as defined in the Receivables Purchase
         Agreements) relating to the sale of the related Receivable, is a valid,
         binding and legally enforceable obligation of the issuing insurance
         company, and such issuing insurance company had the requisite authority
         and capacity to sell and issue such Insurance Policy and such Insurance
         Policy does not violate any applicable law or contravene any other
         agreement to which the issuing insurance company is subject,

         (d) as of (X) the Cut-Off Date (as defined in the Receivables Purchase
         Agreements) relating to the sale of such Receivable and (Y) on at least
         one (1) day during the ninety (90) day period immediately preceding any
         date of determination, is not terminated by the insured or the insurer
         and is in full force and effect in accordance with its terms
         enforceable by the issuing insurance company against the insured 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,
         at law or in equity;

         (e) should generate premium revenue that, if paid by the insured in
         accordance with the terms of the Insurance Policy, will, in accordance
         with the terms of the related Eligible Agent Contract, result in the
         payment to the Eligible Agent Obligor on or prior to the Revolving Loan
         Termination Date, but not later than the date that is fifteen (15)
         months after the date of issuance of such Insurance Policy, of 100% of
         the First-Year Commissions associated with such Insurance Policy.

7.  complies at all times in all  material  respects  with all  requirements  of
applicable federal, State and local laws, and regulations thereunder,

8. the security interest securing such Receivable granted by the related
Eligible Agent Obligor in favor of the Eligible Seller has been perfected by the
Eligible Seller (the "Eligible Seller Security Interest") by the filing in the
appropriate filing office of a properly completed and duly executed financing
statement naming such Eligible Seller as secured party and such Eligible Agent
Obligor as debtor (the "Eligible Seller Financing Statement"), such Eligible
Seller Financing Statement has been properly assigned to Borrower by the
Eligible Seller and a properly completed and duly executed assignment, which
assignment has been filed in the appropriate filing office; such Receivable has
not been satisfied, subordinated or rescinded, nor has the Eligible Seller
Security Interest been released;

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                                       D-2


<PAGE>



9. has not been discharged under a bankruptcy  proceeding and the Eligible Agent
Obligor is not in a bankruptcy or insolvency proceeding;

10. has no right of rescission, setoff, counterclaim or defense which has been
asserted or threatened with respect to such Receivable by any party to the
related Eligible Agent Contract, except any right of setoff exercisable by an
Eligible Seller party thereto against the related Eligible Agent Obligor as
contemplated by the Receivables Purchase Agreements or otherwise;

11. has not been originated in, nor is such  Receivable  subject to the laws of,
any  jurisdiction  under  which  the  sale,  transfer  and  assignment  of  such
Receivable  to the Borrower or under the Security  Agreement  would be unlawful,
void or voidable;

12. bears interest at a minimum rate per annum of 7%, provided that at least 75%
of the aggregate  outstanding  Receivables shall bear interest at a minimum rate
per annum of 12%;

13. with  respect to which the  First-Year  Commissions  advanced to the related
Eligible  Agent  Obligor do not exceed the Maximum  Advance  Percentage  (as set
forth on  Exhibit  C) of  annual  premium  payments  required  to be made by the
insured under the related Insurance Policy.

GTP2436 06/05/97 1006

                                       D-3


<PAGE>



                                    EXHIBIT E

                                FORM OF GUARANTY

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<PAGE>



                                    EXHIBIT F

                               NOTICE OF BORROWING

                                                        ____________ , 19___

LaSalle National Bank
135 LaSalle Street
Chicago, Illinois 60603

Attention:        _________________

         Re:      Credit Agreement dated as of June __, 1997 (the "Agreement")
                  between Westbridge Funding Corporation (the "Borrower") and
                  LaSalle National Bank

Ladies and Gentlemen:

         Pursuant to Section 2.3 of the Agreement, the undersigned Borrower
hereby gives you irrevocable notice that the Borrower requests a Revolving Loan
under the Agreement, and in that connection Borrower sets forth below the
information relating to such Revolving Loan:

         Borrowing Date:

         Aggregate Principal
         Amount:

         Type of Loan (Base
         Rate Loan or Eurodollar

         Rate Loan):

         LIBOR Interest
         Period, if applicable:

         As required by Section 4.2 of the Agreement, the undersigned officer on
behalf of the Borrower hereby certifies that:

         (a) the  representations  and  warranties of the Borrower  contained in
Article 5 of the Agreement and Section 4 of the Security  Agreement are true and
correct in all material

GTP2436 06/05/97 1006


<PAGE>



respects on and as of the date hereof (or, if such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date);

         (b) the Borrower has complied with all conditions contained in the
Agreement that are required to be complied with by the Borrower as of this date,
and the Borrower has performed all agreements contained in the Agreement and the
Security Agreement that are required to be performed by the Borrower;

         (c) there  does not exist any  Default  or Event of  Default  under the
Agreement;

         (d)  attached  hereto is a true,  complete and correct  Borrowing  Base
Certificate in the form of EXHIBIT L to the Agreement;

         (e) attached hereto is a form of Assignment substantially in the form
of EXHIBIT A to the Receivables Purchase Agreements (including SCHEDULE I
thereto) covering any Receivables not previously included in the Borrowing Base,
which Assignment will be duly executed and delivered to the Borrower by each
Eligible Seller, as applicable, on or prior to the Borrowing Date; and

         (f) each of the other  conditions  precedent  set forth in Section  4.2
have been satisfied and complied with.

All capitalized terms used in this notice not otherwise defined herein shall
have the same meaning as assigned to them in the Agreement.

                                           WESTBRIDGE FUNDING
                                           CORPORATION

                                       By:
                                      Name:
                                     Title:

GTP2436 06/05/97 1006

                                       F-2


<PAGE>



                                    EXHIBIT G

                            FORM OF PLEDGE AGREEMENT

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<PAGE>



                                    EXHIBIT H

                           FORM OF SECURITY AGREEMENT

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<PAGE>



                                   EXHIBIT I-1

GTP2436 06/05/97 1006


<PAGE>



                                   EXHIBIT I-2

GTP2436 06/05/97 1006


<PAGE>



                                   EXHIBIT I-3

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<PAGE>



                                    EXHIBIT J

                              OFFICER'S CERTIFICATE

                         WESTBRIDGE FUNDING CORPORATION

                                                          ______ __, 199

         Pursuant to Section 6.9(a) of the Credit Agreement dated as of June __,
1997 (the "Credit Agreement") between Westbridge Funding Corporation (the
"Borrower") and LaSalle National Bank (the "Bank"),

I, _______________, DO HEREBY CERTIFY on behalf of the Borrower that:

         1.       I am the duly elected,  qualified  and acting Chief  Financial
                  Officer of the Borrower; and

         2.       Attached  hereto as Attachment 1 is a true and correct copy of
                  the consolidated GAAP financial statements of the Borrower and
                  its Subsidiaries as of the close of the fiscal  [YEAR/QUARTER]
                  ending __________, 199_; and

         3.       I have reviewed the Credit  Agreement  and Security  Agreement
                  and the  condition  and  transactions  of the Borrower and its
                  Subsidiaries for the fiscal [YEAR/QUARTER] ending _____, 199_,
                  and to the best of my knowledge  the Borrower has observed and
                  performed  all of its  covenants  and  other  agreements,  and
                  satisfied,  in all material respects, the conditions contained
                  in the  Credit  Agreement,  the  Security  Agreement  and  the
                  Revolving  Note,  and I have  not  obtained  knowledge  of any
                  condition or event which  constitutes a Default or an Event of
                  Default, except as set forth on Attachment 2 attached hereto;

         4.       Attached hereto as Attachment 3 is true and correct
                  information (with detailed calculations) establishing that the
                  Borrower was in compliance with the covenants set forth in
                  Sections 7.10 and 7.11 of the Credit Agreement during the
                  fiscal [YEAR/QUARTER] ending __________ ___, 199_; and

Except as otherwise defined herein, terms used herein shall have the meanings
set forth in the Credit Agreement, pursuant to which this certificate is
delivered.

GTP2436 06/05/97 1006


<PAGE>



         IN WITNESS WHEREOF, I have signed this certificate as of the date
hereof on behalf of .

                                      By: _______________________________

                                      Name:
                                     Title: Chief Financial Officer

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                                       K-2


<PAGE>



                                  ATTACHMENT 1
                                       TO

                              OFFICER'S CERTIFICATE

                                               FINANCIAL STATEMENTS
                                               for the period ending

                                              _____________ __, 199_

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<PAGE>



                                  ATTACHMENT 2
                                       TO

                              OFFICER'S CERTIFICATE

                                          DEFAULTS AND EVENTS OF DEFAULT

Note:    If a Default or Event of Default has occurred and is continuing, a
         statement as to the nature thereof and the action proposed to be taken
         by the Borrower with respect thereto as required.

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<PAGE>



                                  ATTACHMENT 3
                                       TO

                              OFFICER'S CERTIFICATE

                          Computations and Information
                             Showing Compliance with

                              Sections 7.10 to 7.11
                                     of the

                                Credit Agreement

Except as otherwise defined herein, terms used herein shall have the meanings
set forth in the Credit Agreement.

SECTION 7.10.     MINIMUM CONSOLIDATED GAAP NET WORTH

<TABLE>
<S>                                                                           <C>             
         1.     Consolidated GAAP Net Worth as of the fiscal quarter ending
______________, 199__.                                                          = ___________

         2.     Consolidated positive Net Income for each
fiscal quarter following the fiscal quarter ending March 31, 1997 was:
         [INCLUDE DATA FOR EACH QUARTER, AS APPLICABLE]

         2a.    The sum of the positive Net Income for each of the quarters
set forth in Line 2 above                                                       = ____________

         2b.    50% of line 2a                                                  = ____________

         3.     Paid-in capital resulting from any issuance by Borrower of its
capital stock                                                                   = ____________

         4.     Deferred Revenue for immediately preceding

four fiscal quarters                                                            = ____________

         5.     The sum of $1,000,000 and line 2b,
line 3   and line 4                                                             = ____________

         6.     Line 1 is not less than line 5.
</TABLE>


<PAGE>

SECTION 7.11.     MINIMUM INTEREST COVERAGE.


<TABLE>
<S>                                                                              <C>                     
         1.  Consolidated  GAAP EBIT plus  Deferred  Revenue of the Borrower and
Subsidiaries for the immediately preceding four fiscal quarters (ending on [FILL
IN ENDING DATE FOR FISCAL QUARTER])                                               = ____________

         2.       Total Interest Expense of the Borrower and its Subsidiaries
for the immediately succeeding four fiscal quarters ending on
[FILL IN ENDING DATE FOR  FISCAL QUARTER]                                         = ____________


         3.       The ratio of line 1 to line 2                                   = ___ : ___

         4.       The ratio in line 3 is not less than 1.10 to 1.00.
</TABLE>



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<PAGE>



                                                                     EXHIBIT K

                            Westbridge Capital Corp.

                           BORROWING BASE CERTIFICATE

                         FORM TO BE AGREED TO BY PARTIES

                              PRIOR TO CLOSING DATE

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<PAGE>



                                   EXHIBIT L-1

            INSURANCE COMPANY RECEIVABLES PURCHASE AND SALE AGREEMENT

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<PAGE>



                                   EXHIBIT L-2

          NON-INSURANCE COMPANY RECEIVABLES PURCHASE AND SALE AGREEMENT

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<PAGE>

                                                                    Exhibit 10.2

                               GUARANTY AGREEMENT

                            DATED AS OF JUNE 26, 1997

                                       BY

                            WESTBRIDGE CAPITAL CORP.

                                   IN FAVOR OF

                              LASALLE NATIONAL BANK

GTP2437 06/05/97 1043

                                        1


<PAGE>



                                TABLE OF CONTENTS

<TABLE>
<S>          <C>                                                               <C>
ARTICLE 1    DEFIN1IONS; ACCOUNTING TERMS                                       1 
Section 1.1  General                                                            1
Section 1.2  Other Definitions                                                  1
Section 1.3  Accounting Terms                                                   6
Section 1.4  Exhibits and Schedules                                             6
Section 1.5  References to "Guarantor and its Subsidiaries"                     6
Section 1.6  Miscellaneous Terms                                                6
Section 1.7  Uniform Commercial Code Definitions                                6

ARTICLE 2    THE GUARANTY                                                       7
Section 2.1  Guaranty of Payment and Performance of Obligations                 7
Section 2.2  Guaranty Continuing and Liability Unlimited                        7
Section 2.3  Unconditional Nature of Guarantor's Obligations and Liabilities    8
Section 2.4  Guarantor's Waiver                                                 9

ARTICLE 3    SECURITY                                                          10
Section 3.1  Pledge Agreement                                                  10
Section 3.2  Further Assurances                                                10

Section 3.3. Required Consents and Approvals                                   10
Section 3.4  Additional Pledges                                                10

ARTICLE 4    REPRESENTATIONS AND WARRANTIES                                    10
Section 4.1  Incorporation, Good Standing and Due Qualification                10
Section 4.2  Corporate Power and Authority; No Conflicts                       11
Section 4.3  Legally Enforceable Agreements                                    11
Section 4.4  Litigation                                                        11
Section 4.5  Financial Statements                                              12
Section 4.6  Ownership and Liens                                               12
Section 4.7  Taxes                                                             12
Section 4.8  ERISA                                                             13
Section 4.9  Subsidiaries and Ownership of Stock                               13
Section 4.10  Operation of Business                                            14
Section 4.11  No Default on Outstanding Judgments or Orders                    14
Section 4.12  No Defaults on Other Agreements                                  14
Section 4.13  Consents and Approvals                                           14
Section 4.14  Partnerships                                                     14
Section 4.15  Environmental Protection                                         14
Section 4.16  Copyrights, Patents, Trademarks, Etc                             15
Section 4.17  Compliance with Laws                                             15
Section 4.18  Events of Default                                                15
Section 4.19  No Adverse Change                                                15
Section 4.20  Ordinary Course Transaction                                      16
</TABLE>

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ARTICLE 5    AFFIRMATIVE COVENANTS                                            16
Section 5.1  Maintenance of Existence and Domicile of Eligible Sellers        16
Section 5.2  Conduct of Business                                              16
Section 5.3  Maintenance of Properties                                        16
Section 5.4  Maintenance of Records                                           17
Section 5.5  Maintenance of Insurance                                         17
Section 5.6  Compliance with Laws                                             17
Section 5.7  Right of Inspection                                              17
Section 5.8  Reporting Requirements                                           17
    (a)  Annual GAAP Statements of Guarantor                                  18
    (b)  Annual SAP Financial Statements                                      18
    (c)  Quarterly GAAP Statements of Guarantor                               19
    (d)  Quarterly SAP Statements                                             19
    (e)  Annual Convention Statements                                         19
    (f)  Annual/Quarterly Reports                                             19
    (g)  Management Letters                                                   19
    (i)  Notice of Litigation                                                 20
    (j)  Notices of Default                                                   20
    (l)  Risk-based Capital Calculation                                       20
    (m)  Additional Information                                               21

Section 5.9  Certificates                                                     21
    (a)  Officers' Certificate                                                21
    (b)  Accountant's Certificate                                             21
Section 5.10  Further Assurances                                              21
Section 5.11  Compliance with Agreements                                      22
Section 5.12  Use of Proceeds                                                 22
Section 5.13  Compliance with Receivables Purchase Agreements                 22
Section 5.14  Distributions                                                   22

ARTICLE 6    NEGATIVE COVENANTS                                               22
Section 6.1  Mergers and Consolidations                                       23
Section 6.2  Stock of Subsidiaries, Etc                                       23
Section 6.3  Minimum Consolidated GAAP Net Worth                              23
Section 6.4  Minimum Interest Coverage                                        23
Section 6.5  Investment Grade Assets                                          23
Section 6.6  RBC Ratio                                                        23
Section 6.7  Minimum A.M. Best Rating                                         24
Section 6.8  Minimum Statutory Surplus of Insurance Subsidiaries              24
Section 6.10  Credit and Collection Policy                                    24
Section 6.11  Eligible Agent Contracts                                        24

ARTICLE 7.  MISCELLANEOUS                                                     24
Section 7.1  Amendments and Waivers                                           24
Section 7.2  Expenses; Indemnities                                            24
Section 7.3  Successors and Assigns                                           25

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Section 7.4  Confidentiality                                                  25
Section 7.5  Notices                                                          26
Section 7.6  Setoff                                                           26
Section 7.7  Jurisdiction; Immunities                                         26
Section 7.8  Waiver of Rights to Subrogation and Reimbursement                27
Section 7.9  Subordination of Obligations to Guarantor                        27
Section 7.10  Table of Contents; Headings                                     27
Section 7.11  Severability                                                    27
Section 7.12  Governing Law                                                   27
Section 7.13  Authorization of Third Parties to Deliver Opinions, Etc         27
Section 7.14  Guarantor's Waivers                                             28

Schedule 4.2    Corporate Power and Authority; No Conflicts
Schedule 4.4    Litigation
Schedule 4.9    Subsidiaries
Schedule 4.14   Partnerships
Schedule 5.3    Maintenance of Properties
Schedule 6.8    Minimum Statutory Surplus Requirements

Exhibit A       Officer's Certificate

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<PAGE>



                               GUARANTY AGREEMENT

         This GUARANTY AGREEMENT (this "Guaranty Agreement") dated as of June
26, 1997 is by WESTBRIDGE CAPITAL CORP., a Delaware corporation (the
"Guarantor"), for the benefit of LASALLE NATIONAL BANK (the "Bank"), its
successors and assigns and any and all other "Beneficiaries" (as such term is
defined in Section 7.3 hereof).

                                    RECITALS

         A. Pursuant to the Credit Agreement dated as of June 6, 1997 (the
"Credit Agreement") between Westbridge Funding Corporation (the "Debtor") and
the Bank, the Bank has agreed, on certain terms and conditions to make revolving
loans to the Debtor from time to time in an aggregate principal amount at any
one time outstanding not to exceed $20,000,000 (the "Revolving Loans").

         B. The Revolving Loans are evidenced by a single promissory note in
favor of the Bank dated the date hereof, in the principal amount of $20,000,000,
due and payable in accordance with the terms of the Credit Agreement.

         C.  The Debtor is an indirect wholly-owned subsidiary of the Guarantor.

         D. As a condition to making the Revolving  Loans, the Bank has required
that the Guarantor execute and deliver this Guaranty Agreement.

         NOW, THEREFORE, the Guarantor hereby agrees, as follows:

                    ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.

          Section 1.1 GENERAL. Unless otherwise defined herein, capitalized
terms used herein which are defined in the Credit Agreement shall have the
meanings therein assigned.

          Section 1.2 OTHER DEFINITIONS. As used in this Agreement, the
following additional terms have the following meanings (terms defined in the
singular to have a correlative meaning when used in the plural and vice versa):

         "AIC" means American Insurance Company of Texas, a Texas corporation.

         "Available Dividends" at the end of any fiscal quarter means, in the
aggregate, the portion of Statutory Surplus of each Insurance Subsidiary that is
permitted by applicable laws and regulations to be distributed to shareholders.

         "Beneficiaries" has the meaning specified in Section 7.3.

         "Credit Agreement" has the meaning specified in the Recitals.

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         "Consolidated GAAP Net Worth" means the sum of (a) the capital stock
and additional paid-in capital of the Guarantor and its Subsidiaries on a
consolidated basis, plus (without duplication) (b) the amount of retained
earnings (inclusive of Deferred Revenues) (or, in the case of a deficit, minus
the deficit), minus (c) treasury stock, plus or minus (d) any other account
which is customarily added or deducted in determining shareholders' equity
(without giving effect to any increase or decrease to Consolidated GAAP Net
Worth attributable to the application of SFAS No. 115), all of which shall be
determined on a consolidated basis in accordance with GAAP.

         "Debtor" has the meaning specified in the Recitals.

         "Eligible Depository" means the Bank or any other commercial bank or
trust company having capital, surplus and undivided profits aggregating at least
Five Hundred Million Dollars ($500,000,000) and having a long term deposit or
long-term C.D. rating of "BBB+" or better by Standard and Poor's Ratings Group,
a division of McGraw Hill, Inc., or "Baa1" or better by Moody's Investor
Service, Inc.

         "Financing Statements" means the UCC-1 financing statements to be
signed by the Guarantor in connection with the security interest to be granted
to the Bank in the stock of the Borrower, NFIC and NFL, pursuant to a Pledge
Agreement (if and when delivered).

         "FLICA" means Freedom Life Insurance Company of America, a Mississippi
Corporation.

         "Funded Debt" means, with respect to any Person, all Debt which by the
terms of the agreement governing, or instrument evidencing, such Debt matures
more than one year from, or is directly or indirectly renewable or extendable at
the option of the Debtor under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of more than one
year from the date of creation thereof, including current maturities of
long-term Debt, revolving credit and short-term Debt extendable beyond one year
at the option of the Debtor.

         "Funded Debt Ratio" means, as at any date, the ratio of Funded Debt to
Total Capital, in each case, determined as of the end of the most recent fiscal
quarter ending on or prior to such date.

         "GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 4.5 (except for changes concurred in by the Guarantor's independent
public accountants).

         "Guaranty Agreement" means this Guaranty Agreement, as amended or
supplemented from time to time. References to Articles, Sections, Exhibits,
Schedules and the like refer to the Articles, Sections, Exhibits, Schedules and
the like of this Guaranty Agreement unless otherwise indicated.

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         "Insurance Commissioner" means with respect to any Insurance
Subsidiary, the head of any insurance regulatory authority and/or, if the
context so requires, such insurance regulatory authority in the relevant place
of domicile of such Insurance Subsidiary at the relevant time.

         "Insurance Subsidiary" means any of AIC, FLICA, NFIC and NFL.

         "Interest Coverage Ratio" at the end of any fiscal quarter, means the
ratio of (a) the sum of (i) Available Dividends for the immediately preceding
four fiscal quarters, PLUS (ii) total cash and cash equivalents of the Guarantor
and the Insurance Subsidiaries on a consolidated basis, PLUS (iii) dividends
paid by each Insurance Subsidiary to the Guarantor during the immediately
preceding four fiscal quarters, PLUS (iv) total taxes paid by the Insurance
Subsidiaries to the Guarantor pursuant to any intercorporate tax sharing
agreement, PLUS (v) an amount equal to the consolidated GAAP EBIT of the
Guarantor and its Subsidiaries for the immediately preceding four fiscal
quarters (ending on such date), to (b) total Interest Expense of the Guarantor
and its Subsidiaries on a consolidated basis for the immediately succeeding four
fiscal quarters (beginning on such date). For purposes of clause (b) above,
Interest Expense shall be calculated on the assumption that a LIBOR Rate Loan
for the full amount of the Commitment will be outstanding for the succeeding
four fiscal quarters and the Applicable Margin in effect on the date of the
certification required by Section 6.9(a) of the Credit Agreement with respect to
the fiscal quarter being tested will remain in effect for the succeeding four
fiscal quarters.

         "Interest Expense" means, with respect to any Person for any period,
the consolidated interest expense, including the interest portion of rental
payments under Capital Leases, as determined on a consolidated basis in
accordance with GAAP.

         "Investment" in any Person means (a) the acquisition (whether for cash,
property, services or securities or by merger or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of such Person and (b)5 any deposits with, or advance, loan or other
extension of credit to, such Person and (without duplication) any amount
committed to be advanced, lent or extended to such Person.

         "Investment Grade Securities" means any Securities having a fixed
maturity which have a rating by the NAIC of 1 or 2 or, if the NAIC rating
categories in effect on the Closing Date change, such other rating or ratings of
such Securities determined by the NAIC to be symbolic of investment grade
quality.

         "Materially Adverse Effect" means any material adverse effect upon the
business, assets, liabilities, financial condition, results of operations or, as
far as the Guarantor can reasonably foresee, prospects of the Guarantor and its
Subsidiaries taken as a whole, or upon the ability of the Debtor or the
Guarantor to perform in all material respects its obligations under this
Guaranty Agreement, the Credit Agreement, the Pledge Agreement, the Security
Agreement or the Revolving Note, as applicable, resulting from any act,
omission, situation, status, event, or undertaking, either singly or taken
together.

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<PAGE>




         "NAIC" means the National Association of Insurance Commissioners or any
successor thereto, or in lieu thereof, any other association, agency or other
organization performing substantially similar advisory, coordination or other
like functions among insurance departments, insurance commissions and similar
governmental authorities of the various states of the United States of America
toward the promotion of uniformity in the practices of such governmental
authorities.

         "Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such period, as
determined in accordance with GAAP.

         "NFL" means  National  Foundation  Life Insurance  Company,  a Delaware
corporation.

         "NFIC" means National Financial Insurance Company, a Texas corporation.

         "Obligations" has the meaning specified in Section 2.1(b).

         "Permitted Account" means an interest-bearing deposit account
established in the name of the Borrower with an Eligible Depository, which
account may include only cash or Permitted Investments.

         "Permitted Investments" means (a) direct obligations of the United
States of America, or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States of America, or of any agency
thereof, in either case maturing not more than 90 days from the date of
acquisition thereof; (b) certificates of deposit issued by or other overnight
deposits with any bank or trust company organized under the laws of the United
States of America or any state thereof and having capital, surplus and undivided
profits of at least $500,000,000 and having long term unsecured and unguaranteed
debt rated "BBB+" or better or "Baa1" or better by Standard & Poor's Ratings
Group, a division of McGraw Hill, Inc. or Moody's Investors Service, Inc.,
respectively, maturing not more than 90 days from the date of acquisition
thereof; (c) commercial paper rated A-1 or better or P-1 by Standard & Poor's
Ratings Group, a Division of McGraw Hill, Inc., or Moody's Investors Service,
Inc., respectively, maturing not more than 90 days from the date of acquisition
thereof; (d) repurchase agreements and reverse repurchase agreements with any
bank having combined capital and surplus in an amount of not less than
$500,000,000, or any primary dealer of United States government securities in
each case, having long term unsecured and unguaranteed debt rated "BBB+" or
better or "Baa1" or better by Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc. or Moody's Investors Service, Inc., respectively, relating to
marketable direct obligations issued or unconditionally guaranteed or insured by
the United States of America or any agency or instrumentality thereof and backed
by the full faith and credit of the United States of America, in each case
maturing within 60 days from the date of acquisition thereof; in each case so
long as the same (x) provide for the payment of principal and interest (and not
principal alone or interest alone) and (y) are not subject to any contingency
regarding the payment of principal or interest; and (e) long-term debt rated

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<PAGE>



"BBB+" or better or "Baa1" or  better  by  Standard  & Poor's  Rating  Group,  a
division of McGraw Hill, Inc. or Moody's Investors Services, Inc., respectively.

         "Pledge Approvals" has the meaning specified in Section 3.3.

         "Revolving Loans" has the meaning specified in the Recitals.

         "RBC Ratio" of any Person means, as at any fiscal year-end, the ratio
of "Total Adjusted Capital" of such Person as at such date to "Company Action
Level RBC" of such Person as at such date, as such terms are defined by either
the NAIC Risk Based Capital (RBC) for Insurers Model Act (the "Model Act") or
the Insurance Commissioner of the State in which such Person is incorporated, as
amended from time to time, as applicable. To the extent the Model Act definition
is used, using the annual SAP Financial Statements form prescribed by the Model
Act for the year ended December 31, 1996 (the "Convention Blank"), the RBC Ratio
as of December 31, 1996 is equal to the quotient of (a) the amount that appears
on line 28, column (1) on page 23 of the Convention Blank DIVIDED BY (b) two
times the amount that appears on line 27, column (1) on page 23 of the
Convention Blank.

         "SAP" means, for each Insurance Subsidiary, the statutory accounting
practices permitted or prescribed by the applicable Insurance Commissioner for
the preparation of annual statements and other financial reports by insurance
corporations of the same type as such Insurance Subsidiary.

         "SAP Financial Statements" means, for each Insurance Subsidiary, the
financial statements which have been submitted or are required to be submitted
to the applicable Insurance Commissioner.

         "Securities" means any capital stock, share, voting trust certificate,
bonds, debentures, notes or other evidences of indebtedness, limited partnership
interests, or any warrant, option or other right to purchase or acquire any of
the foregoing.

         "Statutory Net Income" with respect to any Insurance Subsidiary, means,
for any period the consolidated net income of such Insurance Subsidiary that
appears, or should appear, on the SAP Financial Statements. On the annual SAP
Financial Statements form prescribed for the year ended December 31, 1996, the
net income amount appears on line 33, column (1) on page 4 thereof.

         "Statutory Surplus" with respect to any Insurance Subsidiary, means,
for any period, the surplus that appears, or should appear, on the SAP Financial
Statements of such Insurance Subsidiary. On the annual SAP Financial Statements
form prescribed for the year ended December 31, 1996, such amount appears on
line 48, column (1) on page 4 thereof.

         "Total Capital" means Funded Debt plus Consolidated GAAP Net Worth.

         "Total  Invested  Assets" means, as at any date of  determination,  the
aggregate value of

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                                                         5


<PAGE>



all the Eligible Sellers' portfolio of Securities having a fixed maturity
classified as invested assets under and valued in accordance with SAP as at such
date.

          Section 1.3 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, applied on a
consistent basis, and all financial data required to be delivered hereunder
shall be prepared in accordance with GAAP, applied on a consistent basis; EXCEPT
as otherwise specifically prescribed herein. In the event that GAAP changes
during the term of this Guaranty Agreement such that the financial covenants
contained in Article 6 would then be calculated in a different manner or with
different components (a) the Guarantor and the Bank agree to enter into good
faith negotiations to amend this Guaranty Agreement in such respects as are
necessary to conform those covenants as criteria for evaluating the Guarantor's
financial condition to substantially the same criteria as were effective prior
to such change in GAAP and (b) the Guarantor shall be deemed to be in compliance
with the financial covenants contained in such Sections during the sixty (60)
days following any such change in GAAP if and to the extent that the Guarantor
would have been in compliance therewith under GAAP as in effect immediately
prior to such change; PROVIDED, HOWEVER, if an amendment shall not be agreed
upon within sixty (60) days or such longer period as shall be agreed to by the
Bank, for purposes of determining compliance with such covenants until such
amendment shall be agreed upon, such terms shall be construed in accordance with
GAAP as in effect immediately prior to such change in GAAP.

          Section 1.4 EXHIBITS AND SCHEDULES. All Exhibits and Schedules to this
Guaranty Agreement, either as originally existing or as the same may from time
to time be supplemented, modified or amended, are incorporated herein by this
reference. A matter disclosed on any Schedule shall be deemed disclosed on all
Schedules.

          Section 1.5 REFERENCES TO "GUARANTOR AND ITS SUBSIDIARIES". Any
reference herein to "Guarantor and its Subsidiaries" or the like shall refer
solely to Guarantor during such times, if any, as the Guarantor shall have no
Subsidiaries.

          Section 1.6 MISCELLANEOUS TERMS. The term "or" is disjunctive; the
term "and" is conjunctive. The term "shall" is mandatory, the term "may" is
permissive. Masculine terms also apply to females; feminine terms also apply to
males. The term "including" is by way of example and not limitation.

          Section 1.7 UNIFORM COMMERCIAL CODE DEFINITIONS. The non-capitalized
terms used in this Guaranty Agreement that are not otherwise defined in the
Guaranty Agreement and that are defined in Article 9 of the Uniform Commercial
Code as in effect in the State of Illinois are used herein as so defined.

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<PAGE>



                            ARTICLE 2. THE GUARANTY.

         Section 2.1 GUARANTY OF PAYMENT AND PERFORMANCE OF OBLIGATIONS.

         (a) The Guarantor unconditionally guarantees to each of the
Beneficiaries the full and punctual payment when due and performance of the
Obligations (as defined in subsection (b) below). This Guaranty Agreement is an
absolute, unconditional and continuing guaranty of the full and punctual payment
and performance by the Debtor of each of the Obligations, and not of
collectibility only, and is in no way conditioned upon any requirement that any
Beneficiary first attempt to collect payment from the Debtor or any other
guarantor or surety or resort to any security or other means of obtaining
payment of all or any part of the Obligations or upon any other contingency.
Upon any default by the Debtor in the full and punctual payment or performance
of any of the Obligations, the liabilities and obligations of the Guarantor
hereunder shall at the option of any Beneficiary become forthwith due and
payable without demand or notice of any nature, all such demands and notices
being expressly waived by the Guarantor.

         (b) As used herein, the term "Obligations" means any and all
indebtedness, obligations and liabilities of any kind of the Debtor to any or
all of the Beneficiaries, howsoever incurred, arising or evidenced, whether now
or hereafter existing, direct or indirect, absolute or contingent, secured or
unsecured, joint or several, due or to become due or of payment or performance,
and including without limitation the Debtor's obligation to pay (i) all
principal of, interest on and premium, if any, with respect to all sums advanced
to the Debtor under the Credit Agreement and the Revolving Note when and as the
same shall become due and payable (whether at maturity or by declaration or
otherwise), (ii) all fees and expenses due and payable under the terms of the
Credit Agreement, and (iii) all costs and expenses (including court costs,
reasonable attorneys' fees and other legal expenses) incurred by any Beneficiary
in exercising and enforcing any of its rights, powers and remedies under the
Credit Agreement, the Security Agreement or any other Obligation Agreement
including without limitation its rights and remedies following the Debtor's
default thereunder. With respect to Beneficiaries other than the Bank or its
affiliates, the term "Obligations" is limited to the Debtor's obligations and
liabilities, whether now or hereafter existing, arising under or in connection
with any of the Obligation Agreements (as defined below). The term "Obligation
Agreements" means the Revolving Note, the Credit Agreement, the Security
Agreement, the Pledge Agreement and any other agreement, document or instrument
referred to therein.

          Section 2.2  GUARANTY CONTINUING AND LIABILITY UNLIMITED.

         (a) This is a continuing guaranty and shall be binding upon the
Guarantor regardless of (i) how long after the date hereof any part of the
Obligations is incurred by the Debtor and (ii) the amount of the Obligations at
any time outstanding (whether more or less than the original principal amount of
the Revolving Note). This Guaranty Agreement may be enforced by any or all of
the Beneficiaries from time to time and as often as occasion for such
enforcement may arise.

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<PAGE>




         (b) If after receipt of any payment of, or the proceeds of any
collateral for, all or any part of the Obligations, the Beneficiaries are
compelled to surrender or voluntarily surrender such payment or proceeds to any
person because such payment or application of proceeds is or may be avoided,
invalidated, recaptured, or set aside as a preference, fraudulent conveyance,
impermissible setoff or for any other reason, whether or not such surrender is
the result of (i) any judgment, decree or order of any court or administrative
body having jurisdiction over the Beneficiaries, or (ii) any settlement or
compromise by the Beneficiaries of any claim as to any of the foregoing with any
person (including the Debtor), then the Obligations or part thereof affected
shall be reinstated and continue and this Guaranty Agreement shall be reinstated
and continue in full force as to such Obligations or part thereof as if such
payment or proceeds had not been received, notwithstanding any previous
cancellation of any instrument evidencing any such Obligation or any previous
instrument delivered to evidence the satisfaction thereof. The provisions of
this Section 2.2(b) shall survive the termination of this Guaranty Agreement and
any satisfaction and discharge of the Debtor by virtue of any payment, court
order or any federal or state law.

          Section 2.3 UNCONDITIONAL NATURE OF GUARANTOR'S OBLIGATIONS AND
LIABILITIES. The obligations and liabilities of the Guarantor hereunder shall be
absolute and unconditional, shall not be subject to any counterclaim, set-off,
deduction or defense based upon any claim the Guarantor may have against the
Debtor, any other guarantor, or any other person or entity, and shall remain in
full force and effect until all of the Obligations have been fully satisfied,
without regard to, or release or discharge by, any event, circumstance or
condition (whether or not the Guarantor shall have knowledge or notice thereof)
which but for the provisions of this Section might constitute a legal or
equitable defense or discharge of a guarantor or surety or which might in any
way limit recourse against the Guarantor, including without limitation: (a) any
amendment or modification of, or supplement to, the terms of the Credit
Agreement, the Security Agreement, the Revolving Note or any other Obligation
Agreement; (b) any waiver, consent or indulgence by any Beneficiary, or any
exercise or non-exercise by any Beneficiary of any right, power or remedy, under
or in respect of this Guaranty Agreement, the Credit Agreement, the Security
Agreement, the Revolving Note or any other Obligation Agreement (whether or not
the Guarantor or the Debtor has or have notice or knowledge of any such action
or inaction); (c) the invalidity or unenforceability, in whole or in part, of
the Credit Agreement, the Security Agreement, the Revolving Note or any other
Obligation Agreement, or the termination (except pursuant to its terms or by
written agreement between the Beneficiaries and the Debtor), cancellation or
frustration of any thereof, or any limitation or cessation of the Debtor's
liability under any thereof (other than any limitation or cessation expressly
provided for therein), including without limitation any invalidity,
unenforceability or impaired liability resulting from the Debtor's lack of
capacity, power and/or authority to enter into the Credit Agreement, the
Security Agreement or any other Obligation Agreement and/or to incur any or all
of the Obligations, or from the execution and delivery of any Obligation
Agreement by any person acting for the Debtor without or in excess of authority;
(d) any actual, purported or attempted sale, assignment or other transfer by any
or all of the Beneficiaries or by the Debtor of any Obligation Agreement or of
any of its rights, interests or obligations thereunder; (e) any defect in the
Debtor's title to any item(s) of the "Collateral" (as defined

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                                        8


<PAGE>



in the Security Agreement), or the failure of any such item to meet the
requirements of any law, regulation, judgment, administrative order or decision
or of any agreement between the Debtor and any other party; (f) any actual,
purported or attempted sale, assignment, transfer, encumbrance, redelivery or
other temporary or permanent disposition of any item(s) of the Collateral, or
any damage to or destruction, seizure condemnation, theft, repossession or any
other partial or total loss or loss of use of any thereof; (g) the Debtor's
failure to obtain, protect, preserve or enforce any rights in any item(s) of the
Collateral against any party, or the invalidity or unenforceability of any such
rights; (h) the taking or holding by any or all of the Beneficiaries of a
security interest, lien or other encumbrance in or on any other property as
security for any or all of the Obligations or any exchange, release,
non-perfection, loss or alteration of, or any other dealing with, any such
security; (i) the addition of any party as a guarantor or surety of all or any
part of the Obligations, or any limitation of the liability of any additional
guarantor or surety of all or any part of the Obligations under any other
agreement; (j) any merger, amalgamation or consolidation of the Debtor into or
with any other entity, or any sale, lease, transfer or other disposition of any
or all of Debtor's assets or any sale, transfer or other disposition of any or
all of the shares of capital stock or other securities of the Debtor to any
other person or entity; (k) any change in the financial condition of the Debtor
or (as applicable) of any subsidiary, affiliate, partner or controlling
shareholder thereof, or the Debtor's entry into an assignment for the benefit of
creditors, an arrangement or any other agreement or procedure for the
restructuring of its liabilities, or the Debtor's insolvency, bankruptcy,
reorganization, dissolution, liquidation or any similar action by or occurrence
with respect to the Debtor.

          Section 2.4 GUARANTOR'S WAIVER. The Guarantor unconditionally waives,
to the fullest extent permitted by law: (a) notice of any of the matters
referred to in Section 2.3 hereof; (b) any right to the enforcement, assertion
or exercise by any or all of the Beneficiaries of any of its rights, powers or
remedies under, against or with respect to (i) the Credit Agreement, the
Security Agreement, the Revolving Note or any other Obligation Agreement, (ii)
any other guarantor or surety, or (iii) any security for all or any part of the
Obligations; (c) any requirement of diligence and any defense based on a claim
of laches; (d) all defenses which may now or hereafter exist by virtue of any
statute of limitations, or of any stay, valuation, exemption, moratorium or
similar law, except the sole defense of full and indefeasible payment; (e) any
requirement that the Guarantor be joined as a party in any action or proceeding
against the Debtor to enforce any of the provisions of the Credit Agreement, the
Security Agreement, the Revolving Note or any other Obligation Agreement; (f)
any requirement that any Beneficiary mitigate or attempt to mitigate damages
resulting from a default by the Guarantor hereunder or from a default by the
Debtor under any of the Obligation Agreements; (g) acceptance of this Guaranty
Agreement by any Beneficiary; and (h) all presentments, protests, notices of
dishonor, demands for performance and any and all other demands upon and notices
to the Debtor, and any and all other formalities of any kind, the omission of or
delay in performance of which might but for the provisions of this Section
constitute legal or equitable grounds for relieving or discharging the Guarantor
in whole or in part from its irrevocable, absolute and continuing obligations
hereunder, it being the intention of the Guarantor that its obligations
hereunder shall not be discharged except by payment and performance and then
only to the extent thereof.

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                              ARTICLE 3. SECURITY.

          Section 3.1 PLEDGE AGREEMENT. In order to secure payment when due of
the obligations and liabilities of the Guarantor hereunder, subject to obtaining
the Pledge Approvals, the Guarantor agrees to deliver, or cause to be delivered,
to the Bank within five (5) Business Days after any Pledge Approval has been
obtained the following:

         (a)      a Pledge  Agreement  relating to the Pledge Approval which has
                  been obtained, duly executed and delivered by the Guarantor;

         (b)      the stock  certificates  representing  all of the  outstanding
                  capital stock of the Debtor, NFL and NFIC, as applicable (with
                  stock powers signed in blank); and

         (c)      favorable opinions of special counsel to and general counsel
                  of the Guarantor, dated as of such Pledge Agreement, in
                  substantially the forms set forth in EXHIBIT I-3 to the Credit
                  Agreement;

          Section 3.2 FURTHER ASSURANCES. At any time following the delivery of
the Guaranty Agreement or the Pledge Agreement to the Bank, at the request of
the Bank, the Guarantor will execute any certificate, instrument, statement or
document and will procure any such certificate, instrument, statement or
document (and pay all connected costs) which the Bank reasonably deems necessary
to preserve the security interests of the Bank contemplated hereby.

         Section 3.3. REQUIRED CONSENTS AND APPROVALS. The Guarantor agrees to
use reasonable efforts to obtain, as soon as practicable, all necessary
approvals and consents by the Insurance Commissioners permitting the pledge of
all of the capital stock of each of the Debtor, NFIC and NFL to the Bank and the
execution and delivery of the Pledge Agreement (collectively, the "Pledge
Approvals").

         Section 3.4 ADDITIONAL PLEDGES. In the event that Guarantor shall
restructure its ownership of FLICA such that FLICA becomes a direct subsidiary
of Guarantor during the term hereof, Guarantor agrees, subject to obtaining the
required Pledge Approval, to pledge all of the outstanding capital stock of
FLICA to Bank in accordance with the terms of this Article 3.

                   ARTICLE 4. REPRESENTATIONS AND WARRANTIES.

         The Guarantor hereby represents and warrants the following:

          Section 4.1 INCORPORATION, GOOD STANDING AND DUE QUALIFICATION. The
Guarantor is duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has the power and authority to own
its assets and to transact the business in which it is now engaged, and is duly
qualified as a foreign corporation and in good standing

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under the laws of each other jurisdiction in which such qualification is
required, EXCEPT where the failure to be so qualified could not reasonably be
expected to have a Materially Adverse Effect. The Guarantor has all requisite
power and authority to execute and deliver and to perform all of its obligations
under this Guaranty Agreement, the Pledge Agreement and the other writings
contemplated hereby.

          Section 4.2 CORPORATE POWER AND AUTHORITY; NO CONFLICTS. The
execution, delivery and performance by the Guarantor of this Guaranty Agreement
and the Pledge Agreement have been duly authorized by all necessary corporate
action and do not and will not (a) require any consent or approval of its
stockholders; (b) violate any provisions of its certificate of incorporation or
by-laws; (c) subject to obtaining the Pledge Approvals and any limitations
provided therein with respect to the Pledge Agreement, violate any provision of,
or require any filing, registration, consent or approval under, any material
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award presently in effect having applicability to and binding upon the
Guarantor or any Subsidiary, EXCEPT the Pledge Approvals; (d) except as set
forth in SCHEDULE 4.2, result in a breach of, or constitute a default or require
any consent under, any indenture, mortgage or loan or credit agreement or any
other material agreement, lease or instrument to which the Guarantor or any
Subsidiary is a party or by which it or its Properties may be bound; or (e)
except as contemplated hereby, result in, or require, the creation or imposition
of any Lien upon or with respect to any of the Properties now owned or hereafter
acquired by the Guarantor.

          Section 4.3  LEGALLY ENFORCEABLE AGREEMENTS.

         (a) This Guaranty Agreement constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its respective terms, EXCEPT to the extent that such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).

         (b) The Receivables Purchase Agreements constitute the legal, valid and
binding obligation of each of the Eligible Sellers party thereto, enforceable
against each of them in accordance with their respective terms, EXCEPT to the
extent that such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

          Section 4.4 LITIGATION. Except as disclosed on SCHEDULE 4.4, there are
no actions, suits or proceedings or investigations (other than routine
examinations performed by insurance regulatory authorities) pending or, to the
knowledge of the Guarantor, threatened against or affecting, the Guarantor or
any of its Subsidiaries, or any Property of any of them before any court,
governmental agency or arbitrator, which in any one case or in the aggregate
could reasonably be expected to have a Materially Adverse Effect.

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          Section 4.5 FINANCIAL STATEMENTS. The consolidated and consolidating
balance sheets of the Guarantor and its Subsidiaries as of December 31, 1996 and
December 31, 1995 and the related consolidated and consolidating statements of
operations, stockholders' equity, and cash flows of the Guarantor and its
Subsidiaries for the fiscal years then ended, and the accompanying footnotes,
together with the opinion of Price Waterhouse LLP, independent certified public
accountants, on the consolidated financial statements and the unaudited interim
consolidated financial statements of the Guarantor and its Subsidiaries as at
March 31, 1997 and the related consolidated statements of operations,
stockholders' equity and cash flows for the three (3) month period then ended,
copies of which have been furnished to the Bank, fairly present the financial
condition of the Guarantor and its Subsidiaries, taken as a whole, as at such
dates and the results of the operations of the Guarantor and its Subsidiaries,
taken as a whole, for the periods covered by such statements, all in accordance
with GAAP consistently applied (subject to year-end adjustments in the case of
the interim financial statements). There are no liabilities of the Guarantor or
any Subsidiary, fixed or contingent, which are material but are not reflected in
the financial statements or in the notes thereto, other than (i) liabilities
arising in the ordinary course of business since March 31, 1997, (ii) this
Guaranty Agreement, the Credit Agreement and the Revolving Note and (iii)
liabilities incurred in connection with the issuance and sale of the 7-1/2%
Convertible Subordinated Notes due 2004. All written financial projections
furnished by or on behalf of the Guarantor to the Bank in connection with the
negotiation of this Agreement, have been prepared in good faith and on
reasonable assumptions. Since March 31, 1997 no event or circumstance has
occurred that could reasonably be expected to have a Materially Adverse Effect.

         Section 4.6 OWNERSHIP AND LIENS. Each of the Guarantor and its
Subsidiaries has good and valid title to, or valid leasehold interests in, its
material Properties, including the material Properties reflected in the
financial statements referred to in Section 4.5 (other than any Properties
disposed of in the ordinary course of business), and none of the material
Properties and assets owned by the Guarantor or its Subsidiaries, and none of
its leasehold interests is subject to any Lien, except as disclosed in such
financial statements or in Schedule and except Permitted Liens.

          Section 4.7 TAXES. Each of the Guarantor and its Subsidiaries has
filed (or had filed on its behalf) all federal tax returns and all other
material tax returns required to be filed, has paid all due and payable taxes,
assessments and governmental charges and levies, including interest and
penalties, shown to be due in such returns or imposed upon it or upon its
properties, and has made adequate provision for the payment of such taxes,
assessments and other charges accruing but not yet due and payable, except with
respect to taxes which are being contested in good faith by the Guarantor or its
Subsidiaries and for which such Person has established and maintains adequate
reserves for payment. To the best knowledge of Guarantor, there is no tax
assessment contemplated or proposed by any governmental agency against the
Guarantor or any of its Subsidiaries that could reasonably be expected to have a
Materially Adverse Effect, other than, as of each date subsequent to the Closing
Date, such contemplated or proposed tax assessments with respect to which (i)
Guarantor has promptly notified the Bank in writing of its knowledge and (ii)
the Guarantor or the appropriate

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<PAGE>



Subsidiary of the Guarantor has in good faith commenced, or intends to commence
within the time period permitted by the applicable law or regulation, and
thereafter diligently pursued or will pursue, as the case may be, appropriate
proceedings in opposition to such assessment.

          Section 4.8 ERISA. Each of the Guarantor and its Subsidiaries is in
compliance in all material respects with all applicable provisions of ERISA.
Within the three-year period prior to the date hereof, neither a Reportable
Event nor a Prohibited Transaction has occurred with respect to any Plan; no
notice of intent to terminate a Plan has been filed nor has any Plan been
terminated; no circumstance exists which constitutes grounds under Section 4042
of ERISA entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings;
neither the Guarantor nor any ERISA Affiliate has completely or partially
withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; each
of the Guarantor and its ERISA Affiliates has met its minimum funding
requirements under ERISA with respect to all of its Plans and there are no
Unfunded Vested Liabilities and neither the Guarantor nor any ERISA Affiliate
has incurred any material liability to the PBGC under ERISA other than for
premium payments incurred in the normal course of operating the Plans.

          Section 4.9  SUBSIDIARIES AND OWNERSHIP OF STOCK.

         (a) SCHEDULE 4.9 correctly sets forth the names of all Subsidiaries of
the Guarantor. All of the outstanding shares of capital stock, or all of the
units of equity interest, as the case may be, of each Subsidiary are owned of
record and beneficially by the Guarantor or a Subsidiary of the Guarantor,
except as disclosed on said Schedule; there are no outstanding options, warrants
or other rights to purchase capital stock of any such Subsidiary; and all such
shares or equity interests so owned are duly authorized, validly issued, fully
paid, non-assessable, and were issued in compliance with all applicable state
and federal securities and other laws, and are free and clear of all Liens,
except for restrictions imposed upon the sale of stock of the Insurance
Subsidiaries by the Insurance Commissioner or other insurance regulatory
authorities.

         (b) Each Subsidiary of the Guarantor is a corporation or a limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, has the power and authority to
own its assets and to transact the business in which it is now engaged, and is
duly qualified as a foreign corporation and in good standing under the laws of
each other jurisdiction in which such qualification is required, except where
the failure to be so organized, existing, in good standing or qualified could
not reasonably be expected to have a Materially Adverse Effect.

         (c) Each Subsidiary of the Guarantor is in compliance with all laws and
other requirements applicable to its business and has obtained all
authorizations, consents, approvals, orders, licenses, and permits from, and
each Subsidiary has accomplished all filings, registrations, and qualifications
with, or obtained exemptions from any of the foregoing from, any governmental or
public agency that are necessary for the transaction of its business, except
where the failure to be in such compliance, obtain such authorizations,

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<PAGE>



consents, approvals, orders, licenses, and permits, accomplish such filings,
registrations, and qualifications, or obtain such exemptions, could not
reasonably be expected to have a Materially Adverse Effect.

          Section 4.10 OPERATION OF BUSINESS. Each of the Guarantor and its
Subsidiaries possesses all licenses, permits and franchises, or rights thereto,
necessary to conduct its business as now conducted and as presently proposed to
be conducted, except where the absence of which could not reasonably be expected
to have a Materially Adverse Effect, and neither the Guarantor nor any of its
Subsidiaries is in violation in any material respect of any valid rights of
others with respect to any of the foregoing.

          Section 4.11 NO DEFAULT ON OUTSTANDING JUDGMENTS OR ORDERS. Each of
the Guarantor and its Subsidiaries has satisfied all material judgments and
neither the Guarantor nor any Subsidiary is in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any court, arbitrator
or federal, state, municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign, which could reasonably
be expected to, in any one case or in the aggregate, have a Materially Adverse
Effect.

          Section 4.12 NO DEFAULTS ON OTHER AGREEMENTS. Neither the Guarantor
nor any of its Subsidiaries is in default in any material respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument material to its business to
which it is a party.

          Section 4.13 CONSENTS AND APPROVALS. No authorization, consent,
approval, order, license or permit from, or filing, registration or
qualification with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, or any other Person, including without
limitation, any Insurance Commissioner, is required to authorize, or is required
in connection with the execution, delivery and performance by the Guarantor, the
Borrower or any Eligible Seller of, or the legality, validity, binding effect or
enforceability of, this Guaranty Agreement, the Pledge Agreement, the Credit
Agreement, the Security Agreement, the Revolving Note or the Receivables
Purchase Agreements, other than Pledge Approvals required in connection with the
grant and perfection of security interests granted pursuant to the Pledge
Agreement, and except for (i) filings and recordings of Liens created pursuant
to the Security Agreement, (ii) those consents, approvals or other similar
actions that have been obtained and have not been modified, amended, rescinded
or revoked and are in full force and effect, and (iii) consents, approvals or
similar actions, the failure of which to obtain or perform could not reasonably
be expected to have a Materially Adverse Effect.

         Section  4.14  PARTNERSHIPS.  Except  as set  forth in  SCHEDULE  4.14,
neither  the  Guarantor  nor  any  of  its  Subsidiaries  is a  partner  in  any
partnership.

          Section 4.15 ENVIRONMENTAL PROTECTION. Each of the Guarantor and its
Subsidiaries has obtained all material permits, licenses and other
authorizations which are required under all environmental laws, including laws
relating to emissions, discharges, releases or

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<PAGE>



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, except to the extent
failure to have any such permit, license or authorization could not reasonably
be expected to have a Materially Adverse Effect. Each of the Guarantor and its
Subsidiaries is in compliance with all terms and conditions of the required
permits, licenses and authorizations, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the environmental laws or
contained in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply could not reasonably be expected to have
a Materially Adverse Effect. None of the Properties of the Guarantor or its
Subsidiaries, either owned or leased, have been included or, to the knowledge of
the Guarantor, proposed for inclusion on the National Priorities List adopted
pursuant to the Comprehensive Environmental Response Compensation and Liability
Act, as amended, or on any similar list or inventory of sites requiring response
or cleanup actions adopted by any other federal, state or local agency.

         Section  4.16  COPYRIGHTS,   PATENTS,  TRADEMARKS,  ETC.  Each  of  the
Guarantor and its Subsidiaries is duly licensed or otherwise entitled to use all
patents, trademarks, service marks, trade names, and copyrighted materials which
are used in the operation of its business as presently  conducted,  except where
the failure to be so licensed or entitled  could not  reasonably  be expected to
have a Materially  Adverse  Effect.  No claim is pending or, to the knowledge of
the  Guarantor,  threatened  against the  Guarantor  or any of its  Subsidiaries
contesting the use of any such patents,  trademarks,  service marks, trade names
or copyrighted materials, nor does the Guarantor know of any valid basis for any
such  claims,  other than  claims  which,  if  adversely  determined,  could not
reasonably be expected to have a Materially Adverse Effect.

          Section 4.17  COMPLIANCE  WITH LAWS.  Neither the Guarantor nor any of
its Subsidiaries is in violation of any laws, ordinances,  rules or regulations,
applicable to it, of any federal, state or municipal  governmental  authorities,
instrumentalities or agencies,  including without limitation,  the United States
Occupational  Safety and  Health  Act of 1970,  as  amended,  except  where such
violation could not reasonably be expected to have a Materially Adverse Effect.

         Section  4.18  EVENTS OF  DEFAULT.  No Default or Event of Default  has
occurred and is continuing under the Credit Agreement.

         Section  4.19 NO ADVERSE  CHANGE.  Since March 31, 1997 (or the date of
the most recent Borrowing under the Credit Agreement, whichever is later), there
has  occurred no event which could  reasonably  be expected to have a Materially
Adverse Effect.

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          Section 4.20  ORDINARY COURSE TRANSACTION.

         (a) The transactions contemplated by this Guaranty Agreement are being
consummated by the Guarantor in furtherance of the Guarantor's ordinary business
purposes, with no contemplation of insolvency and with no intent to hinder,
delay or defraud any of its present or future creditors. Neither before or as a
result of the transactions contemplated by this Guaranty Agreement will the
Guarantor be insolvent or have an unreasonably small capital for the conduct of
its business and the payment of its anticipated obligations. The Guarantor's
assets and cash flow enable it to meet its present obligations in the ordinary
course of business as they become due, and the Guarantor does not believe that
it will incur debts beyond its ability to pay.

         (b) The transactions contemplated by the Receivables Purchase
Agreements are being consummated by the Debtor and each of the Eligible Sellers
in furtherance of their ordinary business purposes, with no contemplation of
insolvency and with no intent to hinder, delay or defraud any of its present or
future creditors of the Eligible Sellers. Neither before or as a result of the
transactions contemplated by the Receivables Purchase Agreements will any
Eligible Sellers be insolvent or have an unreasonably small capital for the
conduct of its business and the payment of its anticipated obligations. Each of
the Eligible Seller's assets and cash flow enable it to meet its present
obligations in the ordinary course of business as they become due, and the
Guarantor does not believe that any such Eligible Seller will incur debts beyond
its ability to pay.

                        ARTICLE 5. AFFIRMATIVE COVENANTS

         On and after the execution of this Guaranty Agreement, and until
performance, payment and/or satisfaction in full of Revolving Note, amounts due
under the Credit Agreement and all other Obligations, the Guarantor covenants
and agrees that it shall, and shall cause each of its Subsidiaries to, unless
the Bank otherwise consents in writing:

          Section 5.1 MAINTENANCE OF EXISTENCE AND DOMICILE OF ELIGIBLE SELLERS.
Preserve and maintain its corporate existence and good standing in the
jurisdiction of its incorporation, and qualify and remain qualified as a foreign
corporation in each jurisdiction in which such qualification is required from
time to time, except where failure to be so qualified would not have a
Materially Adverse Effect; and preserve and maintain the domicile of each of the
Eligible Sellers as in effect on the date hereof.

          Section 5.2 CONDUCT OF BUSINESS. Continue to engage in a business of
the same general type as conducted by it on the date of this Guaranty Agreement.

          Section 5.3 MAINTENANCE OF PROPERTIES. Except as set forth in SCHEDULE
5.3, maintain, keep and preserve all of its material tangible Properties, which
are necessary or useful in the conduct of its business, in good working order
and condition, ordinary wear and tear excepted, EXCEPT that the failure to
maintain, preserve and protect a particular item of

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Property that is not of significant value, either intrinsically or to the
operations of the Guarantor or its Subsidiaries, taken as a whole, shall not
constitute a violation of this covenant.

          Section 5.4 MAINTENANCE OF RECORDS. Keep accurate and complete records
and books of account, in which complete entries will be made in accordance with
GAAP and SAP, as applicable, reflecting all financial transactions of the
Guarantor and its Subsidiaries.

          Section 5.5 MAINTENANCE OF INSURANCE. Maintain insurance (subject to
customary deductibles and retentions) with financially sound and reputable
insurance companies, in such amounts and with such coverages (including without
limitation public liability insurance, fire, hazard and extended coverage
insurance on all of its assets, necessary workers' compensation insurance and
all other coverages as are consistent with industry practice) as are maintained
by companies of established reputation engaged in similar businesses and
similarly situated; PROVIDED that such insurance may be obtained from Affiliates
of the Guarantor.

          Section 5.6 COMPLIANCE WITH LAWS. Comply in all respects with all
applicable laws, rules, regulations and orders, except where the failure to so
comply would not have a Materially Adverse Effect. Such compliance shall
include, without limitation, paying all taxes, assessments and governmental
charges imposed upon it or upon its Property (and all penalties and other costs,
if any, related thereto), unless contested in good faith by appropriate
proceedings and for which adequate reserves have been set aside.

          Section 5.7 RIGHT OF INSPECTION. From time to time upon prior notice
and in accordance with customary standards and practices within the banking
industry (including, without limitation, upon any Event of Default or whenever
the Bank may have reasonable cause to believe that an Event of Default has
occurred and is continuing), the Guarantor shall permit the Bank or any agent or
representative thereof, to examine and make copies and abstracts from the
records and books of account of, and visit the Properties of, the Guarantor and
its Subsidiaries to discuss the affairs, finances and accounts of the Guarantor
and any such Subsidiaries with any of their respective officers and directors
and the Guarantor's and its Subsidiaries' independent accountants, and to make
such verification concerning the Guarantor and its Subsidiaries as may be
reasonable under the circumstances, and upon request, furnish promptly to the
Bank true copies of all financial information made available to Senior Officers
of Guarantor and its Subsidiaries; PROVIDED, that the Bank shall use reasonable
efforts to not materially interfere with the business of the Guarantor and its
Subsidiaries and shall treat as confidential any and all information obtained
pursuant to this Section, EXCEPT to the extent disclosure is required by any
law, regulation, order, ruling, directive, guideline or request from any central
bank or other government authority (whether or not having the force of law).

          Section 5.8 REPORTING  REQUIREMENTS.  The Guarantor  shall,  and shall
cause each of its Insurance  Subsidiaries,  as  applicable,  to,  furnish to the
Bank:

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<PAGE>



                  (a) ANNUAL GAAP STATEMENTS OF GUARANTOR. Within one hundred
         twenty (120) days following the end of Guarantor's fiscal year (or such
         earlier date as the Guarantor's Form 10-K is filed with the Securities
         and Exchange Commission) copies of:

                    (i)       the consolidated and consolidating  balance sheets
                              of the  Guarantor and its  Subsidiaries  as at the
                              close of such fiscal year, and

                    (ii)      the consolidated and  consolidating  statements of
                              operations   and   consolidated    statements   of
                              stockholders'  equity and cash flows, in each case
                              of the  Guarantor  and its  Subsidiaries  for such
                              fiscal year,

         in each case setting forth in comparative form the figures for the
         preceding fiscal year and prepared in accordance with GAAP, all in
         reasonable detail and accompanied by an opinion of Price Waterhouse LLP
         or other firm of independent public accountants of recognized national
         standing selected by the Guarantor and reasonably acceptable to the
         Bank, to the effect that the consolidated financial statements have
         been prepared in accordance with GAAP (except for changes in
         application in which such accountants concur) and present fairly in all
         material respects in accordance with GAAP the financial condition of
         the Guarantor and its Subsidiaries as of the end of such fiscal year
         and the results of its operations for the fiscal year then ended and
         that the examination of such accountants in connection with such
         financial statements has been made in accordance with generally
         accepted auditing standards and, accordingly, included such tests of
         the accounting records and such other auditing procedures as were
         considered necessary under the circumstances.

                  (b) ANNUAL SAP FINANCIAL STATEMENTS. As soon as available, and
         in any event within one hundred fifty (150) days following the end of
         the fiscal year of each Insurance Subsidiary (or such earlier date as
         such are filed with the applicable insurance regulatory authority),
         copies of audited SAP Financial Statements for each such Insurance
         Subsidiary, in each case setting forth in comparative form the figures
         for the preceding fiscal year and prepared in accordance with SAP, all
         in reasonable detail and accompanied by an opinion of Price Waterhouse
         LLP or other firm of independent public accountants of recognized
         national standing selected by the Guarantor and reasonably acceptable
         to the Bank, to the effect that the financial statements have been
         prepared in accordance with SAP (except for changes in application in
         which such accountants concur) and present fairly in all material
         respects in accordance with SAP the financial condition of such
         Insurance Subsidiary as of the end of such fiscal year and the results
         of its operations for the fiscal year then ended and that the
         examination of such accountants in connection with such financial
         statements has been made in accordance with generally accepted auditing
         standards and, accordingly, included such tests of the accounting
         records and such other auditing procedures as were considered necessary
         under the circumstances.

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                  (c) QUARTERLY GAAP STATEMENTS OF GUARANTOR. As soon as
         available, and in any event within sixty (60) days after the end of
         each quarterly fiscal period of the Guarantor (other than the fourth
         fiscal quarter of any fiscal year), copies of:

                    (i)       the  consolidated  balance sheets of the Guarantor
                              and its  Subsidiaries as at the end of such fiscal
                              quarter, and

                    (ii)      the  consolidated  statements  of  operations  and
                              statements of shareholders' equity and cash flows,
                              in each case of the Guarantor and its Subsidiaries
                              for such  fiscal  quarter  and the portion of such
                              fiscal year ended with such fiscal quarter,

         in each case setting forth in comparative form the figures for the
         preceding fiscal year and prepared in accordance with GAAP all in
         reasonable detail and certified by a Senior Officer of such company, as
         presenting fairly in accordance with GAAP the financial condition of
         the Guarantor and its Subsidiaries as of the end of such period and the
         results of operations for such period subject only to normal year-end
         accruals and audit adjustments and the absence of footnotes.

                  (d) QUARTERLY SAP STATEMENTS. As soon as available, and in any
         event within sixty (60) days following the end of each fiscal quarter
         of each Insurance Subsidiary (or such earlier date as such are filed
         with the applicable insurance regulatory authority), copies of the
         unaudited SAP Financial Statements for each quarterly fiscal period of
         each such Insurance Subsidiary, in each case setting forth in
         comparative form the figures for the preceding fiscal year and prepared
         in accordance with SAP, all in reasonable detail and represented by a
         Senior Officer of such Insurance Subsidiary, as presenting fairly in
         accordance with SAP the financial condition of such Insurance
         Subsidiary, as of the end of such period and results of operations for
         such period, subject to normal year-end accruals and audit adjustments.

                  (e) ANNUAL CONVENTION STATEMENTS. As soon as available, and in
         any event by March 31 following the end of each fiscal year of each
         Insurance Subsidiary (or such date as such are filed with the
         applicable insurance regulatory authority), copies of the Annual
         Convention Statement for such Insurance Subsidiary in the form
         prescribed by, and as filed with, the applicable insurance regulatory
         authority.

                  (f) ANNUAL/QUARTERLY REPORTS. Concurrently with the delivery
         of the financial statements required pursuant to subsections (c) and
         (d) of this Section, copies of all reports required to be filed with
         the Insurance Commissioner in connection with the filing of such
         financial statements.

                  (g)  MANAGEMENT  LETTERS.  Promptly  upon  receipt  thereof,
          copies of any reports or management  letters  relating to the internal
          financial controls and procedures delivered to the Guarantor or any of
          its Subsidiaries by any independent certified

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                                       19


<PAGE>



         public accountant in connection with examination of the financial
         statements of the Guarantor or any such Subsidiary.

                  (h) SEC FILINGS. Promptly after the same are available, copies
         of each annual report, proxy or financial statement or other report or
         communication sent to the public shareholders generally of the
         Guarantor and copies of all annual, regular, periodic and special
         reports and registration statements which the Guarantor may file or be
         required to file with the Securities and Exchange Commission under
         Sections 13 and 15(d) of the Securities and Exchange Act of 1934.

                  (i) NOTICE OF LITIGATION. Promptly after the commencement
         thereof, notice of any action, suit and proceeding before any court or
         governmental department, commission, board, bureau, agency or
         instrumentality, domestic or foreign, against the Guarantor or any of
         its Subsidiaries (A) not arising out of an insurance policy issued by
         the Guarantor or any of its Subsidiaries, which could reasonably be
         expected to have a Materially Adverse Effect, (B) arising out of an
         insurance policy issued by any Subsidiary of the Guarantor, which
         demands relief, net of reinsurance obtained by the Subsidiary with
         respect to such insurance policy, which, could reasonably be expected
         to have a Materially Adverse Effect, or (C) commenced by any creditor
         or lessor under any written credit agreement with respect to borrowed
         money or material lease which asserts a default thereunder on the part
         of the Guarantor or any of its Subsidiaries.

                  (j) NOTICES OF DEFAULT. As soon as practicable and in any
         event within fifteen (15) days after the occurrence of each Default or
         Event of Default, a written notice setting forth the details of such
         Default or Event of Default and the action which is proposed to be
         taken by the Guarantor or the Debtor with respect thereto.

                  (k) OTHER FILINGS. Promptly upon the filing thereof and at any
         time upon the reasonable request of the Bank, permit the Bank the
         opportunity to review copies of all reports, including annual reports,
         and notices which the Guarantor or any Subsidiary files with or
         receives from the PBGC or the U.S. Department of Labor under ERISA; and
         as soon as practicable and in any event within fifteen (15) days after
         the Guarantor or any of its Subsidiaries knows or has reason to know
         that any Reportable Event or Prohibited Transaction has occurred with
         respect to any Plan or that the PBGC or the Guarantor or any such
         Subsidiary has instituted or will institute proceedings under Title IV
         of ERISA to terminate any Plan, the Guarantor will deliver to the Bank
         a certificate of a Senior Officer of the Guarantor setting forth
         details as to such Reportable Event or Prohibited Transaction or Plan
         termination and the action the Guarantor proposes to take with respect
         thereto.

                  (l) RISK-BASED  CAPITAL  CALCULATION.  As soon as available,
          and in any  event by April 30 of each  fiscal  year of each  Insurance
          Subsidiary  (or  such  date as such  are  filed  with  the  applicable
          insurance regulatory authority), statements showing the RBC

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                                       20


<PAGE>



         Ratio and IRIS Ratios for each of Insurance Subsidiary as of the
         immediately prior fiscal year-end.

                  (m) ADDITIONAL INFORMATION. Such additional information as the
         Bank may reasonably request concerning the Guarantor and its
         Subsidiaries and for that purpose all pertinent books, documents and
         vouchers relating to its business, affairs and Properties, including
         investments as shall from time to time be designated by the Bank.

          Section 5.9  CERTIFICATES.

                  (a) OFFICERS' CERTIFICATE. Simultaneously with each delivery
          of  financial  statements  pursuant  to SECTION  5.8(A)  AND (C),  the
          Guarantor  shall  deliver  to the  Bank  a  certificate  of its  Chief
          Financial Officer which will

                    (i)       certify  on  behalf  of the  Guarantor  that  such
                              officer has reviewed the Guaranty  Agreement,  the
                              Credit Agreement,  the Security  Agreement and the
                              Pledge    Agreement    and   the   condition   and
                              transactions of the Guarantor and its Subsidiaries
                              for  the   period   covered   by  such   financial
                              statements,  and  state  that  to the  best of his
                              knowledge   the   Guarantor  and  the  Debtor  has
                              observed or  performed  all of its  covenants  and
                              other  agreements,  and satisfied every condition,
                              contained in this Guaranty  Agreement,  the Credit
                              Agreement,  the Security  Agreement and the Pledge
                              Agreement,  and no Default or Event of Default has
                              occurred  and is  continuing  or, if a Default  or
                              Event of Default has occurred and is continuing, a
                              statement as to the nature  thereof and the action
                              which  is  proposed  to  be  taken  with   respect
                              thereto, and

                    (ii)      include information (with detailed calculations in
                              the  form  set  out  in  EXHIBIT  A)  required  to
                              establish  whether the Guarantor was in compliance
                              with the covenants set forth in Sections 6.3, 6.4,
                              6.5, 6.6, 6.8 and 6.9 of this  Guaranty  Agreement
                              during  the  period   covered  by  the   financial
                              statements then being delivered.

                  (b) ACCOUNTANT'S CERTIFICATE. Simultaneously with each
         delivery of financial statements pursuant to SECTION 5.8(A), the
         Guarantor will deliver to the Bank a certificate of the independent
         certified public accountants who certify such statements, stating
         whether, in the course of their audit of the financial statements, they
         obtained any knowledge of a condition or event which constitutes a
         Default or Event of Default and the nature thereof.

          Section 5.10 FURTHER ASSURANCES. The Guarantor shall take all such
further actions and execute and file or record, at its own cost and expense, all
such further documents and instruments as the Bank may at any time reasonably
determine may be necessary or advisable; and shall do, execute, acknowledge,
deliver, record, file, register any and all such

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                                       21


<PAGE>



further acts, deeds, conveyances, estoppel certificates, transfers,
certificates, assurances and other instruments as the Bank may reasonably
require from time to time in order to carry out more effectively the purposes of
this Guaranty Agreement or the Pledge Agreement.

          Section 5.11 COMPLIANCE WITH AGREEMENTS. Promptly and fully comply
with all contractual obligations under all agreements, mortgages, indentures,
leases and/or instruments to which any one or more of the Guarantor and its
Subsidiaries is a party, whether such agreements, mortgages, indentures, leases
or instruments are with the Bank or another Person, except where such failure to
so comply would not have a Materially Adverse Effect.

          Section 5.12 USE OF PROCEEDS. Cause the Debtor to use proceeds of the
Revolving Loans solely to (i) acquire Eligible Receivables, (ii) repay Revolving
Loans made under the Credit Agreement, (iii) pay to the Bank interest accrued on
the Revolving Loans made under the Credit Agreement, (iv) pay to the Bank the
fees described in SECTION 2.9 of the Credit Agreement, (v) pay costs, expenses
and charges described in SECTION 9.3(A) of the Credit Agreement, and (vi) pay
reasonable costs, expenses and charges of outside legal counsel to the Borrower,
the Guarantor and each Eligible Seller incurred in connection with the
preparation, negotiation and regulatory approval of the this Agreement, Credit
Agreement, the Security Agreement, the Pledge Agreement, the Receivables
Purchase Agreements and the Revolving Note. Notwithstanding the foregoing,
nothing contained in this Agreement shall prohibit the Debtor from using the
proceeds of the Revolving Loans to repay, directly or indirectly, any and all
amounts owed to Fleet National Bank under the Credit Agreement dated as of
December 28, 1995, as amended, between the Debtor and Fleet National Bank of
Connecticut.

          Section 5.13 COMPLIANCE WITH RECEIVABLES PURCHASE AGREEMENTS. To the
extent permitted by law, cause each Eligible Seller to (a) upon thirty (30) days
prior written request to the Debtor and the Guarantor by the Bank, hold in trust
for the Debtor, in a Permitted Account separate from the other assets of such
Eligible Seller, the portion of all Collections (as defined in the Receivables
Purchase Agreements) which represents Assigned Commissions ("Collected
Commissions"), (b) to pay over to the Debtor the Collected Commissions not later
than one (1) month after such amounts are received by the Eligible Seller, and
(c) comply with all of the other terms and conditions of the Receivables
Purchase Agreements.

          Section 5.14 DISTRIBUTIONS. To the extent permitted by law, cause each
of its Subsidiaries and Affiliates to make such Distributions to the Guarantor
or the Debtor as may be necessary to assure timely payment of the Obligations.

                         ARTICLE 6. NEGATIVE COVENANTS.

         On and after the execution of this Guaranty Agreement, and until
performance, payment and/or satisfaction in full of Revolving Note, amounts due
under the Credit

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                                       22


<PAGE>



Agreement and all other Obligations, the Guarantor covenants and agrees that it
shall not, and shall not permit any of its Subsidiaries to, unless the Bank
otherwise consents in writing:

          Section 6.1 MERGERS AND CONSOLIDATIONS. Merge or consolidate with any
Person; PROVIDED that any Subsidiary (other than the Debtor) may merge into the
Guarantor or any other Subsidiary, if after giving effect to such transaction,
(a) the Guarantor or, in the event a Subsidiary is merging or consolidating with
any Person other than the Guarantor, such Subsidiary is the corporation which
survives such merger or acquisition, and (b) no Default or Event of Default
would exist.

          Section 6.2 STOCK OF SUBSIDIARIES, ETC. Except as contemplated hereby,
pledge, assign, hypothecate, transfer, convey, sell or otherwise dispose of,
encumber or grant any security interest in, or deliver to any other Person, any
shares of capital stock of (a) the Insurance Subsidiaries or the Borrower, or
permit any such Insurance Subsidiaries or the Borrower to issue any additional
shares of its capital stock to any Person or (b) any other Subsidiary, or permit
any such Subsidiary to issue any additional shares of its capital stock to any
Person, other than the Guarantor or any Subsidiary.

          Section 6.3 MINIMUM CONSOLIDATED GAAP NET WORTH. As of the end of any
fiscal quarter, permit Consolidated GAAP Net Worth to be less than an amount
equal to the sum of (a) $62,500,000 PLUS (b) 50% of any cumulative positive Net
Income of the Guarantor and its Subsidiaries for each fiscal quarter following
the fiscal quarter ending March 31, 1997 PLUS (c) all net proceeds received by
the Guarantor from any issuance by the Guarantor of its capital stock after the
date of this Guaranty Agreement, after the payment of all expenses incurred in
connection therewith.

          Section 6.4 MINIMUM INTEREST COVERAGE. As of the end of each fiscal
quarter, permit the Interest Coverage Ratio to be less than 1.75 to 1.00.

          Section 6.5 INVESTMENT GRADE ASSETS. Permit total consolidated
Investment of the Eligible Sellers in Investment Grade Securities, as of the end
of any fiscal quarter, to be less than ninety five percent (95%) of the
aggregate amount of Total Invested Assets.

          Section 6.6 RBC RATIO. At any time that the Obligations remain
outstanding, permit the RBC Ratio of any Insurance Subsidiary to be less than
105%. In the event of any change after the date of this Guaranty Agreement
affecting any State's calculation (or interpretation thereof) of the RBC Ratio,
(a) the Guarantor and the Bank agree to enter into good faith negotiations to
amend this Guaranty Agreement in such respects as are necessary to conform this
Section as a measurement of the sufficiency of the risk-based capital of each
Insurance Subsidiary to substantially the same measurement as was effective
prior to such change and (b) the Guarantor shall be deemed to be in compliance
with this Section during the sixty (60) days following any such change if and to
the extent that the Guarantor would have been in compliance therewith under said
Act and interpretations as in effect immediately prior to such change; PROVIDED,
HOWEVER, if an amendment shall not be agreed upon within such sixty (60) days or
such longer period as shall be agreed to by the Bank, for purposes of

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                                       23


<PAGE>



determining compliance with this Section until such amendment shall be agreed
upon, compliance shall be determined in accordance with said Act and
interpretations as in effect on the date hereof.

          Section 6.7 MINIMUM A.M. BEST RATING. Permit the A.M. Best Rating of
any Insurance Subsidiary to be less than B- for a period in excess of 12
consecutive months; PROVIDED, HOWEVER, that on and after the date on which A.M.
Best publishes its ratings for each Insurance Affiliate for 1996, the 12-month
period referred to above shall no longer apply.

          Section 6.8 MINIMUM STATUTORY SURPLUS OF INSURANCE SUBSIDIARIES. As of
the end of any fiscal quarter, permit the Statutory Surplus of any Insurance
Subsidiary to be less than the Minimum Statutory Surplus Requirement for such
Insurance Subsidiary as specified in SCHEDULE 6.8 for the applicable fiscal
year.

          Section 6.9 FUNDED DEBT. As of the end of each fiscal quarter,  permit
the Funded Debt Ratio, to exceed .65 to 1.0.

          Section 6.10 CREDIT AND COLLECTION POLICY. Amend, modify or waive, in
any material respects, any of its credit or collection policies with respect to
Eligible Receivables generally as in effect on the Closing Date.

          Section 6.11 ELIGIBLE AGENT CONTRACTS. Amend, modify or waive any
provision of any Eligible Agent Contract, if such amendment, modification or
waiver could reasonably be expected to adversely affect the likelihood of
realization by the Bank of payment in full of any Eligible Receivable under such
Eligible Agent Contract, or enter into any other agreement with any Eligible
Agent Obligor, if the entering into such other agreement could reasonably be
expected to adversely affect the likelihood of realization by the Bank of
payment in full of any Eligible Receivable under any Eligible Agent Contract.

                            ARTICLE 7. MISCELLANEOUS.

          Section 7.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Guaranty Agreement or the Pledge Agreement nor consent to any
departure by the Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Beneficiaries and the Guarantor, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No failure on the part of any
Beneficiary to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof or preclude any other or further exercise thereof or
the exercise of any other right.

          Section 7.2  EXPENSES; INDEMNITIES.

         (a) Unless otherwise agreed in writing, the Guarantor shall promptly
reimburse the Bank for all reasonable costs, expenses and charges (including
without limitation reasonable

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                                       24


<PAGE>



fees and charges of its attorneys) actually incurred by the Bank in connection
with the preparation and negotiation of this Guaranty Agreement, the Pledge
Agreement, the Credit Agreement, the Security Agreement, the Receivables
Purchase Agreements and the Revolving Note. The Guarantor further agrees to
promptly reimburse the Bank for all reasonable costs, expenses and charges
(including without limitation, reasonable fees and charges of external legal
counsel for the Bank) actually incurred in connection with the performance,
modification and amendment of this Guaranty Agreement, the Pledge Agreement, the
Security Agreement, the Receivables Purchase Agreements and the Revolving Note.
The Guarantor further agrees to promptly reimburse the Bank for all reasonable
costs and expenses (including reasonable counsel fees and expenses), if any,
actually incurred by the Bank in connection with the enforcement, including
without limitation the enforcement of judgments (whether through negotiations,
legal proceedings or otherwise) of this Guaranty Agreement, the Pledge
Agreement, the Credit Agreement, the Security Agreement, the Receivables
Purchase Agreements or the Revolving Note or any other document to be delivered
under this Guaranty Agreement.

         (b) The Guarantor hereby agrees to indemnify the Beneficiaries upon
demand at any time, against any and all losses, costs or expenses which the
Beneficiaries may at any time or from time to time sustain or incur as a
consequence of any failure by the Guarantor to pay, punctually on the due date
thereof, any amount payable by the Guarantor hereunder. Such losses, costs or
expenses may include, without limitation, (i) any costs incurred by the Bank in
carrying funds to cover any overdue principal, overdue interest, or any other
overdue sums payable by the Guarantor or (ii) any losses incurred or sustained
by any Beneficiary in liquidating or reemploying funds acquired by such
Beneficiary from third parties, except to the extent caused by such
Beneficiary's gross negligence or willful misconduct.

          Section 7.3 SUCCESSORS AND ASSIGNS. This Guaranty Agreement shall be
binding upon the Guarantor and its successors and assigns, and shall inure to
the benefit of and be enforceable by the Bank, its successors and assigns, and
each successive holder of the Revolving Note (collectively, the
"Beneficiaries"). The Bank may furnish any information concerning the Guarantor
or its Subsidiaries in the possession of the Bank from time to time to assignees
of, and participants in, the Revolving Note (including prospective assignees and
participants); PROVIDED that the Bank shall require any such prospective
assignee or such participant (prospective or otherwise) to agree in writing to
maintain the confidentiality of such information in accordance with the
provisions set forth in Section 7.4.

         Section 7.4 CONFIDENTIALITY. Subject to the following sentence, the
Bank (on behalf of itself and each of its Affiliates, directors, officers,
employees and representatives) and any assignee of the Bank becoming a party to
this Agreement agrees to use its best efforts, consistent with its normal
procedures for handling confidential information in accordance with safe and
sound bank practices, to retain in confidence and not disclose without the prior
written consent of the Guarantor any written information about the Guarantor and
its Subsidiaries obtained pursuant to the requirements of this Agreement, except
as permitted under Section 9.5 of the Credit Agreement. Notwithstanding the
foregoing, the Bank (a) may disclose or otherwise use such information to the
extent that such information is

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                                       25


<PAGE>



required in any application, report, statement or testimony submitted to any
governmental agency having or claiming to have jurisdiction over the Bank, (b)
may disclose or otherwise use such information to the extent that such
information is required in response to any summons or subpoena or in connection
with any litigation affecting the Bank, (c) may disclose or otherwise use such
information to the extent that such information is reasonably believed by the
Bank (after notification to the Guarantor, unless such notification is
prohibited by law) to be required in order to comply with any law, order,
regulation, or ruling applicable to the Bank, and (d) may disclose or otherwise
use such information to the extent that such information becomes publicly
available.

          Section 7.5 NOTICES. All notices, requests, demands and other
communications provided for herein shall be in writing and shall be (i) hand
delivered; (ii) sent by certified, registered or express United States mail,
return receipt requested, or reputable next-day courier service; or (iii) given
by telex, telecopy, telegraph or similar means of electronic communication. All
such communications shall be effective upon the receipt thereof. Notices shall
be addressed to the Guarantor at the addresses set forth on the signature pages
of this Guaranty Agreement and to the Bank at the address specified in Section
9.6 of the Credit Agreement, or to such other address as the Guarantor or the
Bank shall theretofore have transmitted to the other party in writing by any of
the means specified in this Section.

          Section 7.6 SETOFF. The Guarantor agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim the
Beneficiaries may otherwise have, the Beneficiaries shall be entitled, at their
option, to offset balances (general or special, time or demand, provisional or
final, and regardless of whether such balances are then due to the Guarantor)
held by it for the account of the Guarantor at any of the Beneficiaries'
offices, in Dollars or in any other currency, against any amount payable by the
Guarantor under this Guaranty Agreement that is not paid when due, taking into
account any applicable grace period, in which case it shall promptly notify the
Guarantor thereof; PROVIDED that the Bank's failure to give such notice shall
not affect the validity thereof.

          Section 7.7  JURISDICTION; IMMUNITIES.

         (a) The Guarantor hereby irrevocably submits to the jurisdiction of any
Illinois State or United States Federal court sitting in Chicago over any action
or proceeding arising out of or relating to this Guaranty Agreement, the
Security Agreement, the Pledge Agreement, the Guaranty Agreement, the
Receivables Purchase Agreements or the Revolving Note, and the Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such Illinois State or Federal court. The Guarantor
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to the Guarantor at its
address specified in Section 7.5. The Guarantor agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
The Guarantor further waives any objection to venue in such State and any
objection to an action or proceeding in such State on the basis of FORUM NON
CONVENIENS. The Guarantor further agrees that any action or proceeding brought
against the

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<PAGE>



Bank shall be brought only in Illinois State or United States Federal courts
sitting in Chicago.

         (b) Nothing in this Section shall affect the right of the Guarantor to
serve legal process in any other manner permitted by law or affect the right of
the Bank to bring any action or proceeding against the Guarantor or its Property
in the courts of any other jurisdictions.

          Section 7.8 WAIVER OF RIGHTS TO SUBROGATION AND REIMBURSEMENT. Until
the payment and performance in full of all Obligations and any and all
obligations of Debtor to the Beneficiaries, the Guarantor shall not exercise any
rights against the Debtor arising as a result of payment by the Guarantor
hereunder, by way of subrogation or otherwise, and will not prove any claim in
competition with the Beneficiaries or their Affiliates in respect of any payment
hereunder in bankruptcy or insolvency proceedings of any nature; the Guarantor
will not claim any set-off or counterclaim against the Debtor in respect of any
liability of the Guarantor to the Debtor and the Guarantor waives any benefit of
any right to participate in any collateral which may be held by the
Beneficiaries or any such Affiliate.

          Section 7.9 SUBORDINATION OF OBLIGATIONS TO GUARANTOR. Any and all
indebtedness and other obligations of the Debtor to the Guarantor (including
without limitation any such obligations resulting from any rights of subrogation
on the part of the Guarantor as a result of any payment by the Guarantor
hereunder) shall during the term of this Guaranty Agreement be subordinated to
the Obligations and to any other indebtedness of the Debtor to any or all of the
Beneficiaries.

          Section 7.10 TABLE OF CONTENTS; HEADINGS. Any table of contents and
the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Guaranty Agreement.

          Section 7.11 SEVERABILITY. The provisions of this Guaranty Agreement
are intended to be severable. If for any reason any provision of this Guaranty
Agreement shall be held invalid or unenforceable in whole or in part in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such invalidity or unenforceability without in any manner
affecting the validity or enforceability thereof in any other jurisdiction or
the remaining provisions hereof in any jurisdiction.

          Section 7.12 GOVERNING LAW. This Guaranty Agreement shall be governed
by, and interpreted and construed in accordance with, the laws of the State of
Illinois.

          Section 7.13 AUTHORIZATION OF THIRD PARTIES TO DELIVER OPINIONS,  ETC.
The Guarantor  hereby  authorizes  and directs each Person whose  preparation or
delivery to the Bank of any opinion,  report or other information is a condition
or covenant under this Guaranty Agreement  (including under Articles 3 and 5) to
so prepare or deliver such opinion,  report or other information for the benefit
of the Beneficiaries. The Guarantor

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<PAGE>



agrees to confirm such authorizations and directions provided for in this
Section from time to time as may be requested by any Beneficiary.

          Section 7.14 GUARANTOR'S WAIVERS. THE GUARANTOR ACKNOWLEDGES THAT IT
HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS GUARANTY
AGREEMENT AND THAT IT IRREVOCABLY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY
SUIT, ACTION OR PROCEEDING OR ANY MATTER ARISING IN CONNECTION WITH OR IN ANY
WAY RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS GUARANTY AGREEMENT, THE
PLEDGE AGREEMENT, THE CREDIT AGREEMENT, THE SECURITY AGREEMENT, THE REVOLVING
NOTE OR ANY DOCUMENTS RELATED THERETO AND THE ENFORCEMENT OF ANY OF THE
BENEFICIARIES' RIGHTS AND REMEDIES; AND

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<PAGE>



         IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement to
be duly executed on its behalf by an officer or other person thereunto duly
authorized on the day and year first above written.

                                    WESTBRIDGE CAPITAL CORP.

                                    By:
                                       Name:
                                       Title:

                                    Address for Notices:

                                    777 Main Street
                                    Fort Worth, Texas 76102
                                    Attn: Chief Financial Officer
                                    Telecopier No.: (817) 878-3880

                                    With a copy to:

                                    Milbank, Tweed, Hadley & McCloy
                                    1 Chase Manhattan Plaza
                                    New York, NY 10005-1413
                                    Attn: Robert S. Reder, Esq.
                                    Telecopier No.: (212) 530-5219

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                                       29


<PAGE>



                                                                    SCHEDULE 6.8

                     MINIMUM STATUTORY SURPLUS REQUIREMENTS
                                 (in million $)


 INSURANCE SUBSIDIARY          1997          1998
NFL                          $  14.5        $  15.0
NFIC                         $   6.0        $   6.5
AIC                          $   4.5        $   5.0
FLICA                        $   9.0        $   9.5





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                                        1


<PAGE>




                                    EXHIBIT A

                              OFFICER'S CERTIFICATE

                                             WESTBRIDGE CAPITAL CORP.

                                                  ______ __, 199

         Pursuant to SECTION 5.9(A) of the Guaranty Agreement dated June __,
1997 (the "Guaranty Agreement") by Westbridge Capital Corp. (the "Guarantor") in
favor of LaSalle National Bank (the "Bank") and its successors and assigns,

I, _______________, DO HEREBY CERTIFY on behalf of the Guarantor that:

          1.        I am the duly elected,  qualified and acting Chief Financial
                    Officer of the Guarantor; and

          2.        Attached  hereto as  Attachment 1 is a true and correct copy
                    of  the  consolidated  and   consolidating   GAAP  financial
                    statements of the Guarantor and its  Subsidiaries  as of the
                    close of the fiscal [YEAR/QUARTER] ending __________,  199_;
                    and

          3.        Attached  hereto as  Attachment 2 is a true and correct copy
                    of the SAP Financial  Statements of the FLICA, NFL, NFIC and
                    AIC as of the  close  of the  fiscal  [YEAR/QUARTER]  ending
                    __________, 199_; and

          4.        I have reviewed the Guaranty  Agreement and Credit Agreement
                    and the condition and  transactions of the Guarantor and its
                    Subsidiaries  for the fiscal  [YEAR/QUARTER]  ending  _____,
                    199_,  and to the best of my knowledge each of the Guarantor
                    and  the  Debtor  have  observed  and  performed  all of its
                    covenants  and  other   agreements,   and  satisfied   every
                    condition  contained in the Guaranty  Agreement,  the Credit
                    Agreement  and the Revolving  Note,  and I have not obtained
                    knowledge  of any  condition  or event which  constitutes  a
                    Default  or an  Event of  Default,  except  as set  forth on
                    Attachment 3 attached hereto; and

          5.        Attached   hereto  as  Attachment  4  is  true  and  correct
                    information (with detailed  calculations)  establishing that
                    the Guarantor was in compliance with the covenants set forth
                    in the Credit  Agreement  during  the fiscal  [YEAR/QUARTER]
                    ending __________ ___, 199_; and

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<PAGE>



          6.        Attached   hereto  as  Attachment  5  is  true  and  correct
                    information  (with detailed  calculations)  establishing the
                    Risk-Based Capital calculations for FLICA, NFL, NFIC and AIC
                    as of the fiscal year ending __________ ___, 199_.

Except as otherwise defined herein, terms used herein shall have the meanings
set forth in the Guaranty Agreement, pursuant to which this certificate is
delivered.

         IN WITNESS WHEREOF, I have signed this certificate as of the date
hereof on behalf of .

                                        By:

                                      Name:
                                     Title: Chief Financial Officer

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<PAGE>



                                  Attachment 1
                                       to

                              Officer's Certificate

                            GAAP FINANCIAL STATEMENTS
                              for the period ending
                             _____________ __, 199_

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<PAGE>



                                  Attachment 2
                                       to

                              Officer's Certificate

                                          DEFAULTS AND EVENTS OF DEFAULT

Note:    If a Default or Event of Default has occurred and is continuing, a
         statement as to the nature thereof and the action proposed to be taken
         by the Guarantor or the Debtor with respect thereto as required.

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<PAGE>



                                  Attachment 3
                                       to

                              Officer's Certificate

                            SAP FINANCIAL STATEMENTS
                              for the period ending
                             _____________ __, 199_

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                                  Attachment 4
                                       to
                              Officer's Certificate
                          Computations and Information
                             Showing Compliance with
                               Sections 6.3 to 6.9
                                     of the
                               Guaranty Agreement

Except as otherwise defined herein, terms used herein shall have the meanings
set forth in the Guaranty Agreement.

SECTION 6.3.  MINIMUM CONSOLIDATED GAAP NET WORTH

<TABLE>
<S>                                                                            <C>                                                
1.  Consolidated GAAP Net Worth as of the Guarantor
the fiscal quarter  ending  ______________, 199__.                              = __________

2.  Consolidated positive Net Income of the Guarantor for each fiscal quarter
following the fiscal quarter ending March 31, 1997 was:
         [INCLUDE DATA FOR EACH QUARTER, AS APPLICABLE]

2a. The sum of the positive Net Income for each of the quarters
set forth in Line 2 above                                                       = __________

2b. 50% of line 2a                                                              = __________

3.  100% of proceeds resulting from any issuance by Guarantor of its
capital stock                                                                   = __________

4.  The sum of $62,500,000 and line 2b and line 3                               = __________

5.  Line 1 is not less than line 4.

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</TABLE>
                                        1


<PAGE>



SECTION 6.4.      MINIMUM INTEREST COVERAGE.

<TABLE>
<S>                                                                            <C>      
1.  Available Dividends for the immediately preceding four
fiscal quarters ending on  [FILL IN ENDING DATE FOR  FISCAL QUARTER]            = ___________

2.  Total cash and cash equivalents of the Guarantor and the
Insurance Subsidiaries                                                          = ___________

3.  Dividends paid to the Guarantor by each Insurance Subsidiary
for the immediately preceding four quarters ending on [FILL IN ENDING DATE FOR
FISCAL QUARTER]                                                                 = ___________

4.  Total taxes paid by the Insurance Subsidiaries to the Guarantor
pursuant to any intercorporate tax sharing agreement for the immediately 
preceding four fiscal quarters (ending on [FILL IN ENDING DATE FOR 
FISCAL QUARTER])                                                                = ___________

5.  Consolidated GAAP EBIT of the Guarantor and Subsidiaries
for the immediately preceding four fiscal quarters (ending on [FILL IN ENDING 
DATE FOR FISCAL QUARTER])                                                       = ___________

6.  The sum of lines 1, 2, 4 and line 5, less line 3                            = ___________

7.  Interest Expense for the immediately succeeding four fiscal quarters        = ___________

8.  The ratio of line 6 to line 7                                               = ___ : ___

7.  The ratio in line 5 is not less than 1.75 to 1.00.
</TABLE>


SECTION 6.5.      INVESTMENT GRADE ASSETS.
<TABLE>
<S>                                                                            <C>                      
1.       Total consolidated Investment of  the Insurance Subsidiaries and 
Eligible Non-Insurance Company Sellers in Investment Grade Securities:          = ___________

2.       Total Invested Assets:                                                 = ___________

3.       The ratio of line 1 to line 2:                                         = ___ : ___

4.       The ratio in line 3 is at least .95 to 1.00.
</TABLE>





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<PAGE>




SECTION 6.6.      RBC RATIO.

                                                NFL     NFIC     AIC    FLICA

1. Adjusted Capital and Surplus as of the
   fiscal [quarter/year] ending [_____,],
   199_:

2. Authorized Control Level RBC  as of the
   fiscal year ending [_____,], 199_:

3. The ratio of line 1 to line 2.

4. The ratio in line 3 is at least 1.05 to 1.0.




SECTION 6.7.      MINIMUM A.M. BEST RATINGS.

                                                NFL      NFIC     AIC   FLICA
1. The A.M. Best Rating for each Insurance
   Subsidiary:

2. The effective date for each of the above
   ratings is:

3. The Ratings in line 1 are not less than
   "B-", and if any is less than "B-", such
   rating has not been in effect for more than
   12 consecutive months.






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<PAGE>



Section 6.8.      MINIMUM STATUTORY SURPLUS OF INSURANCE SUBSIDIARIES


                                              NFL     NFIC     AIC      FLI

A.       Positive Statutory Capital and
         Surplus of Insurance
         Subsidiary as of the fiscal
         quarter ending __________

B.       Positive Statutory Net Income
         for each fiscal quarter
         following the fiscal quarter
         ending ___________________
         was

         [INCLUDE DATA FOR EACH
         QUARTER, AS APPLICABLE]


1.       The sum of positive Statutory
         Net Income for each of the
         quarters set forth in line 2
         above

2.       50% of line 2.a.

C.       Contributions to surplus made
         by Debtor to the Insurance 
         Subsidiaries during each fiscal quarter
         following the fiscal quarter 
         ending September 30, 1996 were:

         [INCLUDE DATA FOR EACH
         QUARTER, AS APPLICABLE]

1.       The sum of the contributions
         to surplus for each of the
         quarters

D.       Applicable Annual Base
         Statutory Surplus from
         Schedule 6.8

E.       The sum of line 2.b., line 3.a.
         and line 4

F.       Line 1 is not less than line 5





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<PAGE>





Section 6.9       FUNDED DEBT RATIO

1.       Funded Debt

2.       Consolidated GAAP Net Worth

3.       Total Capitalization (the sum of line
         1 and line 2)

4.       The ratio of line 1 to line 3

5.       The ratio in line 4 is not
         greater than .65 to 1.0.

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<PAGE>


                                  Attachment 5
                                       to

                              Officer's Certificate
                         RISK-BASED CAPITAL CALCULATIONS
                              FOR THE PERIOD ENDING

                                              _____________ __, 199_

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<PAGE>


                                                                    Exhibit 10.3
                                PLEDGE AGREEMENT

         This PLEDGE AGREEMENT, dated as of ______________, 1997 is between
WESTBRIDGE CAPITAL CORP., a Delaware corporation ("Pledgor"), and LASALLE
NATIONAL BANK, a national banking association ("Pledgee"). Except as otherwise
defined herein, all terms used herein and defined in the Credit Agreement dated
as of June 6, 1997 between Westbridge Funding Corporation ("WFC") and Pledgee
(the "Credit Agreement") shall have the meaning assigned to them therein.

                                    RECITALS:

         1. Pledgor owns, on and as of the date on which this Pledge Agreement
is executed and delivered, 100% of the issued and outstanding shares of the
capital stock of ________________________________________________________ (the
"Pledged Subsidiary"), all of which shares (including any certificates and/or
other tangible evidences thereof) are more specifically described in ATTACHMENT
A hereto.

         2. Pursuant to the Credit Agreement, the Pledgee has agreed, on certain
terms and conditions to make one or more revolving loans to WFC in an aggregate
principal amount at any one time outstanding not to exceed $20,000,000 (the
"Revolving Loans"), which Revolving Loans are evidenced by a single promissory
note in favor of the Pledgee in the principal amount of $20,000,000 (the
"Revolving Note"), due and payable in accordance with the terms of the Credit
Agreement.

         3. Pursuant to the Guaranty Agreement dated as of June 26, 1997 by
Pledgor in favor of the Pledgee (said Guaranty Agreement as currently in effect
and as from time to time amended, modified or supplemented being herein called
the "Guaranty Agreement"), Pledgee has (i) guaranteed the full and punctual
payment and performance by WFC of its obligations under the Credit Agreement and
the Revolving Note and (ii) agreed to enter into this Pledge Agreement, subject
to the requisite approval by the applicable Insurance Commissioner.

         NOW, THEREFORE, in consideration of such financing and for other good
and valuable consideration, receipt of which is hereby acknowledged, Pledgor and
Pledgee agree as follows:

         1. PLEDGE AND DELIVERY. (a) To secure the prompt and complete payment
and performance when due of the Obligations (as defined in Section 1(b) hereof),
Pledgor hereby pledges, assigns and delivers to Pledgee, and grants Pledgee a
continuing security interest in, all of the following property and rights and
interests in property (all such property, rights and interests being hereinafter
collectively called the "Pledged Collateral"):

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<PAGE>




                  (i) all issued and outstanding shares of the capital stock of
the Pledged Subsidiary described in ATTACHMENT A hereto, and any additional
shares of the capital stock of any class or series of the Pledged Subsidiary
which Pledgor may at any time and from time to time hereafter purchase or
otherwise acquire, together with the certificates and/or other instruments or
writings representing them (such shares, certificates and other writings being
hereinafter collectively called the "Pledged Shares");

                  (ii) (A) all shares and other securities and all warrants,
rights and options (such shares, securities, warrants, rights and options
together with the certificates and/or other instruments or writings representing
them being hereinafter collectively called the "Additional Pledged Securities")
and (B), subject to Section 4 hereof, all money and other property, at any time
and from time to time received or receivable by or distributed or distributable
to Pledgor from the issuer of any or all of the Pledged Shares (whether in the
ordinary course of such issuer's business or representing or resulting from cash
or stock dividends, stock splits or reclassifications, the recapitalization,
reorganization, merger, consolidation, disposition of assets, liquidation or
dissolution of such issuer, the exercise by Pledgor of warrants, rights or
options, or any other action or cause) in exchange or substitution for or
otherwise in respect of any or all of the Pledged Shares or earlier-issued
Additional Pledged Securities; and

                  (iii)    all proceeds of any or all of the foregoing.

         (b) As used herein, the term "Obligations" shall mean all indebtedness,
liabilities and obligations of any kind of Pledgor to Pledgee under the Guaranty
or this Agreement, now or hereafter existing, due or to become due, howsoever
incurred, arising or evidenced, whether of principal or interest or payment or
performance.

         (c) Prior to the execution and delivery hereof by Pledgee, Pledgor
shall have delivered to Pledgee, and Pledgee by such execution and delivery
shall acknowledge its prior receipt of, the certificate(s) and/or other
instruments and documents evidencing all of the Pledged Shares, Additional
Pledged Securities and all other items of the Pledged Collateral then owned by
Pledgor. Pledgor agrees that it shall immediately deliver to Pledgee any and all
of the Pledged Shares, Additional Pledged Securities and other Pledged
Collateral (including any and all certificates and/or other instruments or
documents representing each item thereof) which it acquires in any way at any
time after such execution and delivery. Upon delivery to Pledgee, each item of
the Pledged Collateral shall be accompanied by, as appropriate, (i) undated,
duly executed stock powers endorsed by Pledgor either in blank or to Pledgee in
a manner which Pledgee deems satisfactory, and/or (ii) such other instruments or
documents as Pledgee shall reasonably request.

         2.       PLEDGOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS.

        (a) Pledgor  represents  and warrants  that:  (i) Pledgor has the right,
power and authority to execute, deliver and perform this Pledge Agreement and to
pledge, assign,

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                                        2


<PAGE>



deliver, transfer and grant a security interest in the Pledged Collateral; (ii)
this Pledge Agreement constitutes the legal, valid and binding obligation of
Pledgor, enforceable against Pledgor in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and subject to any limitation that may restrict Pledgee from
selling, voting or exercising control over the Pledged Subsidiary without
obtaining approval of the Insurance Commissioner; (iii) Pledgor has good title
to all of the Pledged Shares and is the legal record and beneficial owner of
each of the Pledged Shares (and will have good title to and be the legal record
and beneficial owner of each other item of Pledged Collateral, including any
Additional Pledged Securities), free and clear of all encumbrances except
Pledgee's security interest hereunder; (iv) each of the Pledged Shares and
Additional Pledged Securities is, or will be when acquired by Pledgor and
pledged hereunder, duly and validly issued and fully paid and non-assessable,
and there are no restrictions on the transfer of any thereof other than such
restrictions as appear on the certificates or other instruments or writings
representing them, or as are referred to in clause (ii) above or otherwise may
be imposed under applicable law; (v) no action other than the delivery of each
item of the Pledged Collateral to, and its continued possession by, Pledgee or
any of its agents or nominees is necessary to maintain a perfected,
first-priority security interest in such item in favor of Pledgee; and (vi) no
authorizations, approvals or consents of, and no filings or registrations with,
any governmental or regulatory authority or agency are necessary for the
execution, delivery or performance by the Pledgor of this Agreement or for the
validity or enforceability hereof, except those which have already been obtained
and remain in full force and effect.

         (b) Pledgor covenants and agrees that it will at its expense (i) defend
both its own rights and interests and Pledgee's rights and security interest in
and to the Pledged Collateral against the claims and demands of all other
persons and (ii) execute and deliver to Pledgee such further conveyances,
agreements, assignments, instruments and other writings, and take such further
action, as Pledgee may request in order to obtain the full benefit of this
Pledge Agreement, the Pledged Collateral, and the rights, powers and remedies
granted to Pledgee hereunder. Pledgor further covenants and agrees that until
all Obligations have been satisfied and this Pledge Agreement has been
terminated, Pledgor will not without Pledgee's prior written consent sell,
assign, transfer, exchange or otherwise temporarily or permanently dispose of
any item of the Pledged Collateral, or offer or contract to do so, and will not
without such consent create, incur, assume or permit to exist any security
interest, pledge, claim or other charge or encumbrance on or with respect to any
such item other than the security interest granted to Pledgee hereunder.

         3. NAMES IN WHICH PLEDGED SHARES AND ADDITIONAL PLEDGED SECURITIES MAY
BE REGISTERED. Upon the occurrence of any Pledgor Default (as defined in Section
9 hereof), Pledgee shall be entitled to hold any or all of the Pledged Shares
and Additional Pledged Securities in its own name, the name(s) of one or more of
its nominees or the name of Pledgor endorsed or assigned in blank or in favor of
Pledgee. With respect to any of the Pledged Shares and/or Additional Pledged
Securities which Pledgee wishes to hold in its own

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                                        3


<PAGE>



name or the name of any nominee in accordance with this Section 3, Pledgee
(acting in its own name and capacity or as Pledgor's attorney-in-fact pursuant
to the power of attorney granted to Pledgee in Section 5 hereof) may have such
Pledged Shares and Additional Pledged Securities registered accordingly on the
books of the issuer(s) thereof, and Pledgor shall cooperate fully with Pledgee
in causing such issuer(s) to effect such transfer and registration.

         4. VOTING RIGHTS; DISTRIBUTIONS, ETC. (a) Subject to Section 4(c),
Pledgor shall be entitled to exercise any and all voting and/or consensual
rights and powers accruing to an owner of the Pledged Shares and Additional
Pledged Securities for any purpose not inconsistent with (A) the provisions of
this Pledge Agreement and the Guaranty Agreement and applicable insurance and
other law and (B) the preservation of the value of and Pledgee's security
interest in the Pledged Collateral.

         (b) Subject to Section 4(c), and notwithstanding any other provision
hereof to the contrary, Pledgor shall be entitled to receive and retain all cash
dividends, interest and other cash distributions payable in respect of the
Pledged Collateral to the extent that such distributions are permitted by law.

         (c) Upon the occurrence and during the continuance of a Pledgor
Default, Pledgor may thereafter continue to exercise any and all voting and
consensual rights and powers until such time as Pledgee shall notify Pledgor in
writing that Pledgee intends to assume and, subject to Section 15, exercise the
same, and all powers described in Section 4(b) to receive the dividends,
interest and other cash distributions described in such Section shall cease, and
all such rights shall thereupon become vested in Pledgee.

         (d) Upon the occurrence and during the continuance of a Pledgor Default
and subject to Section 15, Pledgee may, in its own name and capacity or as
Pledgor's attorney-in-fact, collect, receive, endorse and deposit all Additional
Pledged Securities, money, cash proceeds, instruments and any and all other
property which is or may at any time become payable in respect of any or all of
the Pledged Collateral and which Pledgee is or may become entitled to receive
under subsection (a) or (b) of this Section 4. All such property so received by
Pledgee may be retained by Pledgee as additional Pledged Collateral, and (i) all
money and other cash proceeds so received may be applied by Pledgee to payment
of the Obligations in such order as Pledgee may elect, whether or not a Pledgor
Default shall then be continuing, and (ii) during the continuance of a Pledgor
Default, all other property so received may be sold or otherwise disposed of by
Pledgee as provided in Section 10 hereof and the proceeds thereof applied as
also provided in such Section. Any and all money and other property received by
Pledgor contrary to the provisions of this Section 4 shall be held by Pledgor in
trust for Pledgee, shall be segregated by Pledgor from Pledgor's other funds and
property and shall promptly be delivered to Pledgee in exactly the form received
by Pledgor, except for any necessary endorsements.

        5. PLEDGEE APPOINTED AS PLEDGOR'S  ATTORNEY-IN-FACT.  Subject to Section
15,  Pledgor hereby  appoints  Pledgee as Pledgor's  attorney-in-fact  with full
power in Pledgor's

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                                        4


<PAGE>



place and stead, in Pledgor's name or its own name and at Pledgor's expense, to
execute, endorse and deliver any and all agreements, assignments, pledges,
instruments and any other writings, and to take any and all other actions, which
Pledgee may deem necessary or desirable to carry out the terms and effect the
purposes of this Pledge Agreement and to exercise fully its rights and remedies
hereunder. Pledgee may delegate any or all of such power to any of its officers,
directors, employees, agents, nominees, stockholders and other representatives
(hereinafter collectively called "Representatives") and to have any such
Representative(s) exercise any such delegated power as substitute(s) for
Pledgee. Pledgor hereby ratifies all that Pledgee and all such Representatives
shall lawfully and properly do or cause to be done under this power of attorney,
which power is coupled with an interest and shall be irrevocable until all
Obligations have been satisfied and this Pledge Agreement has been terminated.
So long as no Pledgor Default (as defined in Section 9 hereof) has occurred,
Pledgee agrees to give Pledgor five business days prior notice of its intention
to exercise the power of attorney granted hereby.

         6. PLEDGEE'S RIGHTS TO PERFORM FOR PLEDGOR. If Pledgor shall at any
time fail to perform or comply with any of its covenants and agreements
hereunder, Pledgee may (but shall not be required or obligated to) take such
action, in its own name and capacity or as Pledgor's attorney-in-fact, as
Pledgee shall deem necessary or desirable to effect such performance or
compliance.

         7. REASONABLE CARE OF PLEDGED COLLATERAL. Pledgee shall be deemed to
have used reasonable care in the custody and preservation of the Pledged
Collateral in its possession to the extent it accords such Pledged Collateral
treatment which is substantially equal to that which Pledgee accords its own
property of like kind; PROVIDED, HOWEVER, that Pledgee shall have no obligation,
regardless of whether it takes any such action with respect to its own property,
(i) to ascertain or take action with respect to calls, tenders, conversions,
exchanges, maturities or other matters involving or affecting any item(s) of
such Pledged Collateral (whether or not Pledgee has actual or constructive
knowledge of any such matters), unless reasonably requested by Pledgor to do so,
or (ii) to take action to preserve rights against prior or other parties.

         8. LIMITATION OF PLEDGEE'S LIABILITY; REIMBURSEMENT OF EXPENSES AND
INDEMNIFICATION. (a) Pledgor agrees that Pledgee shall have no obligation to
take, or refrain from taking, any action with respect to the Pledged Collateral
or Pledgor's rights and interests therein except for (i) the preservation and
return of the Pledged Collateral in its possession as and to the extent
provided, respectively, in Sections 7 and 14 hereof, (ii) the execution and
delivery to Pledgor of certain instruments and other writings imposed by law and
(iii) compliance with insurance regulatory requirements, if any, described in
Section 15. Pledgor further agrees that neither Pledgee nor any of its
Representatives shall have any liability to Pledgor, or to any person claiming
rights against Pledgee by, through or under Pledgor, in any way arising out of
or in connection with Pledgee's or any such Representative's administration of
this Pledge Agreement or its exercise of any of its rights, power and remedies
hereunder except for (i) Pledgee's or any such Representative's failure to take
as and when required any of the actions referenced in the first sentence of this

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                                        5


<PAGE>



Section 8(a) or to account to Pledgor for those amounts of money and other
property -- and only for those amounts -- which it actually receives in
connection with such administration or exercise and which it is required to pay
over to Pledgor or apply to the Obligations under any other provision hereof,
(ii) its failure to exercise reasonable care as and to the extent required in
Section 7 hereof or (iii) its negligence or willful misconduct.

         (b) Pledgor shall pay or reimburse Pledgee on demand for all costs and
expenses (including without limitation reasonable attorneys' fees and legal
expenses) paid or incurred by Pledgee in connection with (i) any amendment of
this Pledge Agreement and (ii) the exercise and enforcement of any of Pledgee's
rights, powers and remedies hereunder, including without limitation its right to
perform Pledgor's covenants and agreements hereunder to the extent Pledgor fails
to do so. Pledgor further agrees to indemnify, defend and hold harmless Pledgee,
its Representatives, successors and assigns from and against any and all
liabilities, claims, actions, losses, damages, taxes, penalties, fines, costs
and expenses (including reasonable attorneys' fees and legal expenses) which in
any way arise out of or in connection with any of the actions or matters with
respect to which Pledgor has a payment or reimbursement obligation under this
Section; PROVIDED, HOWEVER, that Pledgor shall have no obligation to indemnify
Pledgee or any such Representative, successor or assign against any liabilities,
claims, etc. resulting from such party's negligence or willful misconduct or its
failure to exercise reasonable care as and to the extent required in Section 7
hereof. Until any reimbursement of costs or expenses or any indemnity payment
required under this Section is received by Pledgee in cash or immediately
available funds, the amount thereof shall bear interest at the rate specified in
the Credit Agreement for delinquent payments, and such amount and such interest
shall constitute part of the Obligations secured by the Pledged Collateral.

        9. PLEDGOR DEFAULTS. The following shall constitute a "Pledgor Default":
(i) Pledgor  fails to perform or comply with any of its  covenants or agreements
hereunder;  or (ii) a default  or event of  default  occurs  under the  Guaranty
Agreement.

         10. REMEDIES. (a) If a Pledgor Default has occurred and is continuing,
Pledgee may at any time and from time to time exercise any and all rights and
remedies available to it (i) hereunder and under the Guaranty Agreement and any
other agreement or instrument then in effect between Pledgor and Pledgee and
relating to the Obligations, including without limitation those rights and
remedies set out in subsections (b) through (f) of this Section 10, and (ii) as
a secured party under the Uniform Commercial Code as then in effect in the State
of Illinois (the "Code") and under any other applicable law or rule of law or
equity. Should Pledgee elect to proceed by action at law or in equity to
foreclose its security interest in and sell any or all of the Pledged
Collateral, Pledgor waives (to the extent permitted by law) any rights it may
then have in connection therewith to require Pledgee to post bonds, sureties or
collateral security or to demand possession of any such Pledged Collateral
pending judgment therein.

         (b) Subject to Section 15 and to the extent permitted by federal and
state securities laws, Pledgee may sell, assign, transfer, endorse and deliver
all or, from time to time any

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                                        6


<PAGE>



part, of the Pledged Collateral at public or private sale, over the counter or
at any broker's board or securities exchange, for cash, on credit or in exchange
for other property, for immediate or future delivery, without advertisement or
notice (except as provided in this subsection), and for such price and on such
terms as Pledgee deems appropriate, PROVIDED only that all aspects of any such
disposition are commercially reasonable within the requirements of Section
5/9-504 of the Code, as defined and supplemented by the standards and agreements
set forth herein. Pledgor agrees that to the extent notice of the time and place
of any such public sale, or of the time after which Pledgee intends to make any
such private sale or other disposition, is required under the Code, such notice
shall be deemed commercially reasonable if transmitted by any of the means
described in the Guaranty Agreement not less than 15 days prior thereto. Pledgee
shall not be obligated to effect any sale of any or all of the Pledged
Collateral, whether or not notice thereof has been given, and may adjourn any
public or private sale from time to time by announcement at the time and place
fixed for such sale, and such sale may be held without further notice at the
time and place to which it was so adjourned.

         (c) At any such private or public sale, subject to Section 15, Pledgee
shall be entitled to bid for and/or purchase the Pledged Collateral then being
sold and may pay the price thereof by credit against the Obligations then
outstanding. Any purchaser of any item(s) of the Pledged Collateral (including
Pledgee) shall take such item(s) free from any right or claim of Pledgor, and
Pledgor hereby waives, to the extent permitted by the Code and other applicable
law, all rights of redemption and/or to any stay, exemption or appraisal which
Pledgor now has or may hereafter acquire.

         (d) Pledgor agrees and acknowledges that requiring the issuer(s) of the
securities included in the Pledged Collateral to register such securities under
applicable provisions of federal and state securities laws would not be
practicable and therefore could not be deemed commercially reasonable. Pledgor
further agrees and acknowledges that in order to comply with applicable federal
and state securities laws without effecting such registration, Pledgee may be
required: (i) to sell or otherwise dispose of any or all of the Pledged
Collateral at one or more private rather than public sales and (ii) to limit the
prospective purchasers at such sale(s) to persons who will represent and agree
that they are purchasing the securities they intend to acquire for their own
account for investment and not with a view to the distribution or sale thereof,
and who will be compelled to accept stringent restrictions on their ability to
dispose of such securities. Accordingly, Pledgor agrees that: (i) Pledgee shall
not incur any liability to Pledgor by reason of the fact that the price obtained
for any or all the Pledged Collateral at such private sale(s) to investors
restricted as provided above may be less than the price which might be obtained
therefor at a public sale or unrestricted private sale and (ii) any and all
private sales shall be deemed commercially reasonable even if (A) the amount
received is less than the then-outstanding amount of the Obligations and/or (b)
even if Pledgee accepts the first offer received or does not offer all or any
part of the Pledged Collateral to more than one prospective purchaser, unless
the sale in question is conducted in bad faith or in a manner manifestly
unreasonable for sales of that type.

        (e) In case of any sale by the  Pledgee of any  item(s)  of the  Pledged
Collateral on

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<PAGE>



credit or for future delivery, such item(s) may be retained by the Pledgee until
the selling price is paid by the purchaser(s) thereof, but the Pledgee shall
incur no liability in case of failure of the purchaser to take up and pay for
such item(s). In case of any such failure, such item(s) may be sold again upon
notice, to the extent required by law, as provided in subsection (b) of this
Section 10.

         (f) The proceeds of the sale or other disposition of the Pledged
Collateral shall be applied first, to that part of the Obligations consisting of
Pledgee's expenses (including without limitation reasonable attorneys' fees and
legal expenses) in preparing for disposition and disposing of the Pledged
Collateral and, to the extent not previously reimbursed by Pledgor and
exercising and enforcing its rights, powers and remedies hereunder, and second,
to the satisfaction of the then outstanding amount of Pledgor's indebtedness
under the Guaranty Agreement and of all other Obligations then remaining unpaid.
Pledgee shall account for and pay to Pledgor any surplus and Pledgor shall be
liable to Pledgee for any deficiency.

         11. AMENDMENTS, ETC. No provision of this Pledge Agreement may be
amended, modified, supplemented or waived, and no consent to any departure
therefrom by Pledgor may be given, except by a writing duly executed and
delivered by the parties hereto, and any such amendment, modification,
supplement or waiver shall be effective only as and to the extent provided
therein.

         12. CUMULATIVE REMEDIES; NO WAIVERS BY PLEDGEE. All rights, powers and
remedies of Pledgee (i) under this Pledge Agreement and the Guaranty Agreement
and under any other agreements, instruments and other writings now or hereafter
existing between Pledgor and Pledgee and relating to the Obligations, and (ii)
under the Code and other applicable law, are cumulative and except as otherwise
provided by law or in such agreements may be exercised concurrently or in any
order of succession. Pledgee's failure to exercise or delay in exercising any of
such rights, powers and remedies shall not constitute or imply a waiver thereof,
nor shall Pledgee's single or partial exercise of any such right, power or
remedy preclude its other or further exercise thereof, or the exercise of any
other right, power or remedy. Pledgee's cure of any Pledgor Default shall not
constitute a waiver thereof, and its waiver of one Pledgor Default shall not
constitute a waiver of any subsequent Pledgor Default.

        13. PLEDGOR'S  WAIVERS.  Pledgor agrees that Pledgee's security interest
in the Pledged Collateral shall be absolute and unconditional  regardless of the
existence or occurrence of, and expressly  waives any defense or discharge which
might otherwise arise from, any of the following:

        (i) any lack of validity or enforceability of this Pledge Agreement, the
Guaranty  Agreement,  the Credit  Agreement or any other agreement or instrument
relating hereto or thereto or otherwise relating to the Obligations;

        (ii) any change in the time,  manner or place of  payment  of, or in any
other

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<PAGE>



terms of, any or all of the Obligations, or any other amendment or waiver of, or
any consent to departure from, this Pledge Agreement or the Guaranty Agreement,
the Credit Agreement or any other agreement, instrument or other writing now or
hereafter existing between Pledgor and Pledgee and relating to the Obligations;

        (iii) any exchange,  release or  non-perfection of any other collateral,
or any  release,  amendment  or waiver  of, or  consent  to  departure  from any
guaranty, for any or all of the Obligations;

        (iv) Pledgee's resort,  during the continuation of a Pledgor Default, to
any  or all of  the  Pledged  Collateral  for  payment  of  all or  part  of the
Obligations prior to proceeding  against any other collateral or any other party
primarily or secondarily liable for payment thereof; or

        (v) to the extent permitted by law, any other  circumstance  which might
otherwise  constitute  a defense  available  to, or a discharge  of,  Pledgor in
respect of the Obligations or this Pledge Agreement.

         14. TERMINATION; RELEASE OF PLEDGED COLLATERAL. This Agreement and the
security interest granted hereunder shall terminate on the date on which all
Obligations have been fully satisfied. Pledgee shall thereupon reassign and
redeliver (or cause to be reassigned and redelivered) to Pledgor or such
person(s) as Pledgor shall designate, against due execution and delivery by
Pledgor or such person(s) of a receipt therefor satisfactory to Pledgee in form
and substance, such items of the Pledged Collateral (if any) as are then held by
Pledgee or its Representatives, together with appropriate instruments of
reassignment and release. Any such reassignment shall be without recourse to or
warranty by Pledgee or any such Representative and at the expense of Pledgor.

         15. INSURANCE REGULATORY REQUIREMENTS. Anything in this Agreement to
the contrary notwithstanding, Pledgee may not exercise any of the rights or
powers described in Sections 4, 5 and 10 hereof or otherwise foreclose upon or
sell the Pledged Shares or the Additional Pledged Securities, unless and until
the Pledgee (and, in the cases of a sale of the Pledged Shares or the Additional
Pledged Securities, the purchaser thereof) has complied, to the extent legally
required, with all filing requirements of all applicable laws of the
jurisdiction regulating the acquisition of voting securities or control of any
insurance company, and the acquisition of the Pledged Collateral and the
Additional Pledged Securities and control of any Pledged Subsidiary by the
Pledgee hereunder (or by the purchaser in any such sale) has, to the extent
legally required, been duly approved in accordance with all applicable statutory
and regulatory requirements and any other applicable laws.

        16. NOTICES. All notices,  requests,  directions,  consents, waivers and
other  communications  hereunder shall be in writing and shall be transmitted by
the  means and to the  addresses  from time to time  specified  in the  Guaranty
Agreement.

        17. BINDING AGREEMENT;  ASSIGNMENT. This Agreement shall be binding upon
and

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<PAGE>



inure to the benefit of the parties hereto and their respective successors and
assigns; PROVIDED, HOWEVER, that Pledgor shall not assign or otherwise transfer
any of its obligations, rights or interests hereunder without the prior written
consent of Pledgee.

         18. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by
and construed in accordance with the laws of the State of Illinois. Wherever
possible each provision of this Pledge Agreement shall be construed in such
manner as to be valid and enforceable under applicable law, but if any provision
hereof shall be deemed invalid or unenforceable to any extent in any
jurisdiction, such provision shall be ineffective only to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remainder of such provision or any of the other provisions hereof, and any
such invalidity or unenforceability in one jurisdiction shall not render such
provision ineffective in any other jurisdiction.

         19. JURISDICTION; IMMUNITIES. (a) The Pledgor hereby irrevocably
submits to the jurisdiction of any Illinois State or United States Federal court
sitting in Chicago, Illinois over any action or proceeding arising out of or
relating to this Pledge Agreement, and the Pledgor hereby irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in such Illinois State or Federal court. The Pledgor irrevocably
consents to the service of any and all process in any such action or proceeding
by the mailing of copies of such process to the Pledgor at its address specified
in Section 9.6 of the Credit Agreement. The Pledgor agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. The Pledgor further waives any objection to venue in such State and any
objection to an action or proceeding in such State on the basis of forum non
conveniens. The Pledgor further agrees that any action or proceeding brought
against the Pledgee shall be brought only in Illinois State or United States
Federal courts sitting in Chicago, Illinois.

         (b) Nothing in this Section shall affect the right of the Pledgee to
serve legal process in any other manner permitted by law or affect the right of
the Pledgee to bring any action or proceeding against the Pledgor or its
Property in the courts of any other jurisdictions.

         20. TITLES; COUNTERPARTS. Section titles are for convenience only and
shall not define, limit, amplify, supplement or otherwise modify or affect the
substance or intent of this Pledge Agreement or any provision hereof. This
Pledge Agreement may be executed in two or more counterparts, each of which
shall when executed by both parties be deemed to be an original but all of which
together shall constitute one and the same agreement.

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<PAGE>




         IN WITNESS WHEREOF, each of the parties hereto has caused this Pledge
Agreement to be duly executed by its respective authorized officer as of the
date first above written.

                                                       WESTBRIDGE CAPITAL CORP.

                                                 By:
                                                 Name:
                                                 Title:

                                                       LASALLE NATIONAL BANK

                                                 By:
                                                 Name:
                                                 Title:

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                                                                    ATTACHMENT A

                             ISSUED AND OUTSTANDING SHARES
                                   OF CAPITAL STOCK
NAME OF ISSUER                      NO. OF SHARES                  CERTIFICATE
NO.(S)

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<PAGE>

                                                                    Exhibit 10.4
                               SECURITY AGREEMENT

         SECURITY AGREEMENT, dated as of June 26, 1997, made by Westbridge
Funding Corporation (the "Debtor"), a Delaware corporation, for the benefit of
LaSalle National Bank (the "Secured Party"), a national banking association, and
its successors and assigns.

         PRELIMINARY STATEMENT. The Secured Party has entered into a Credit
Agreement dated as of June 6, 1997 (the "Credit Agreement") with the Debtor.
Capitalized terms defined in the Credit Agreement and not otherwise defined
herein are used herein as defined in the Credit Agreement.

         NOW, THEREFORE, in consideration of the premises and in order to induce
the Secured Party to extend the financing contemplated by the Credit Agreement,
the Debtor hereby agree as follows:

         SECTION 1. GRANT OF SECURITY. The Debtor hereby assigns and pledges to
the Secured Party and hereby grants to the Secured Party a continuing security
interest in, all of the Debtor's right, title and interest in and to the
following assets (the "Collateral"):

        (a)  all  Agent  Receivables  (as  hereinafter  defined)  now  owned  or
        hereafter acquired by the Debtor wherever located,

        (b) the  Assigned  Commissions  now or  hereafter  existing,  and all of
        Debtor's rights in, to and under all other collateral  security therefor
        and all guarantees thereof,

        (c) amounts  deposited  from time to time by any Eligible  Seller in any
        deposit  account  maintained by such Eligible  Seller in the name of the
        Debtor pursuant to the terms of the Receivables Purchase Agreement,

        (d) all other accounts,  contract  rights,  chattel paper,  instruments,
        general  intangibles and other  obligations of any kind now or hereafter
        acquired by the Debtor  pursuant to the terms of a Receivables  Purchase
        Agreement,

        (e)  all  rights  now or  hereafter  existing  in  and  to all  security
        agreements,  and other contracts  securing or otherwise  relating to any
        property described in clauses (a), (b), (c) and (d) above,

        (f) the Receivables Purchase Agreements,

        (g) all moneys  and  property  of any kind,  now or at any time or times
        hereafter, in

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<PAGE>



        the possession or under the control of the Secured Party,  any bank or a
        bailee of Secured Party or any bank, or  otherwise,  including,  without
        limitation, the Pledged Account and the Cash Collateral Account;

        (h) all accessions, to, substitutions for and all replacements, products
        and proceeds of the property  described in clauses (a),  (b),  (c), (d),
        (e),  (f) and (g)  above,  including  without  limitation,  proceeds  or
        insurance policies insuring the Collateral; and

        (i) all books  and  records  (including,  without  limitation,  computer
        programs,  printouts,  and other computer  materials and records) of the
        Debtor pertaining to any of the property  described in clauses (a), (b),
        (c), (d), (e), (f), (g) and (h) above.

         Anything in the foregoing description of Collateral to the contrary
notwithstanding, the Collateral shall not include any contract right the
assignment of which, for collateral purposes, would require or cause a
forfeiture of rights thereunder.

         "Agent Obligor" means an agent of an Eligible Seller, including without
limitation a general agent of an Eligible Seller and any other agent with whom
said general agent has contracted, to whom such Eligible Seller has advanced
First-year Commissions.

         "Agent Receivable" means the obligation of an Agent Obligor to repay
the principal amount of, and interest and other finance charges on, advances
made by an Eligible Seller to such Agent Obligor with respect to First-year
Commissions.

         SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment
and performance of all indebtedness, liabilities and obligations of any kind of
the Debtor to the Secured Party, (whether directly as principal or maker or
indirectly as guarantor, surety, endorser or otherwise), now or hereafter
existing, due or to become due, howsoever incurred, arising or evidenced,
whether of principal or interest or payment or performance, and all obligations
of the Debtor now or hereafter existing under this Agreement (all such
obligations of the Debtor being collectively referred to as the "Obligations").

         SECTION 3. DEBTOR REMAIN LIABLE. Anything herein to the contrary
notwithstanding, (a) the Debtor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Secured Party of any of
the rights hereunder shall not release the Debtor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) the Secured Party shall not have any obligation or liability under the
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall the Secured Party be obligated to perform any of the obligations or
duties of the Debtor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.

        SECTION 4.  REPRESENTATIONS  AND WARRANTIES.  The Debtor  represents and
warrants as follows:

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<PAGE>




                  (a) The chief places of business and chief executive offices
of the Debtor and the offices where the Debtor keeps its records concerning the
Agent Receivables, the Assigned Commissions, and all originals of all documents
which evidence the Agent Receivables, is at 777 Main Street, Fort Worth, Texas
76102. There is no chattel paper which evidences Agent Receivables. No Agent
Receivables are evidenced by a promissory note or other instrument;

                  (b) Except as acknowledged or authorized by the Credit
Agreement and except for the security interest created by this Agreement, the
Debtor owns the Collateral free and clear of any lien, security interest, charge
or encumbrance. No effective financing statement or other instrument similar in
effect covering all or any part of the Debtor's right, title or interest in the
Collateral is on file in any recording office, except such as may have been
filed in favor of the Secured Party relating to this Agreement. The Debtor has
no trade names and has not had or operated under any other name during the last
5 years, except that prior to November 15, 1995 it was formerly known as
"National Legal Services Company, Inc.";

                  (c) Except as acknowledged or authorized by the Credit
Agreement, this Agreement creates a valid first priority security interest in
the Collateral, securing the payment of the Obligations, and all filings and
other actions necessary or desirable to perfect and protect such security
interest have been or will be duly taken; and

                  (d) No authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required either (i) for the grant by the Debtor of the security interests
granted hereby or for the execution, delivery or performance of this Agreement
by the Debtor or (ii) for the perfection of or the exercise by the Secured Party
of its rights and remedies hereunder, except UCC financing statements on Form
UCC-l which have been previously made or are being made in connection with this
Agreement.

         SECTION 5. FURTHER ASSURANCES. (a) The Debtor agrees from time to time,
at its own expense, to promptly execute and deliver all further instruments and
documents, and take all further action, that may be reasonably necessary or
desirable or that the Secured Party may request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable the
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing, the
Debtor will: (i) if any Agent Receivable shall be evidenced by a promissory note
or other instrument, deliver to the Secured Party and conditionally pledge to
the Secured Party hereunder such note or instrument and accompanied by duly
executed instruments of conditional transfer or assignment, all in form and
substance satisfactory to the Secured Party, and (ii) execute and file such
financing, or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable as the Secured Party
may request, in order to perfect and preserve the security interests granted or
purported to be granted hereby.

                  (b) The Debtor hereby authorizes the Secured Party to file
one or more

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<PAGE>



financing or continuation statements and amendments thereto, relative to all or
any part of the Collateral without the signature of the Debtor where permitted
by law.

                  (c) The Debtor will furnish to the Secured Party from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Secured Party
may reasonably request, all in reasonable detail.

         SECTION 6.  TRANSFERS AND OTHER LIENS.  Except as otherwise provided 
in the Credit Agreement, the Debtor shall not:

                  (a)      Sell, transfer (by operation of law or otherwise) or
 otherwise dispose of any of the Collateral; or

                  (b) Create or suffer to exist any lien, security interest or
other charge or encumbrance upon or with respect to any of the Collateral to
secure Debt of any person or entity, except for the security interest created by
this Agreement or authorized pursuant to the Credit Agreement.

         SECTION 7.  OTHER COVENANTS.

                  (a) Without the prior written consent of the Secured Party,
the Debtor will not change the location of its chief executive office, its
principal place of business, or the Collateral or any part thereof; provided,
however, that Debtor may, upon not less than thirty days' prior written notice
to the Secured Party, relocate its chief executive offices to any location in
Texas or to any other jurisdiction in the United States in which the Uniform
Commercial Code, as from time to time amended or revised, is then in effect
(Texas and each such other jurisdiction being hereinafter called a "Permitted
Jurisdiction");

                  (b) The Debtor will, with respect to each and every relocation
of Debtor's chief executive offices or any item(s) of the Collateral, take such
action, at Secured Party's request and direction and at Debtor's expense as
provided in Section 5 hereof (and including without limitation the preparation
and filing where appropriate of new or amended financing statements), as may
then be necessary or desirable to ensure the uninterrupted continuation of the
Secured Party's security interest in all of the Collateral with the same
priority as it had prior to any such relocation.

                  (c) In addition to any other notices required pursuant to this
Agreement or the Credit Agreement, the Debtor will promptly advise the Secured
Party in reasonable detail (i) of the assertion or imposition of any claim,
lien, security interest or other encumbrance against any or all of the
Collateral; (ii) of any material adverse change in the composition of the
Collateral; (iii) concerning the commencement of or any material development in
any investigation of the Debtor, or any administrative or judicial proceeding
against Debtor, by any governmental authority if such investigation or
proceeding may result in the imposition of any Lien against the Collateral or
any part thereof (whether or not any such Lien has then

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<PAGE>



been claimed or asserted); and (iv) concerning any other event reasonably likely
to have a material adverse effect on the aggregate value of the Collateral
and/or on the perfection and/or priority of the Secured Party's security
interest therein.

         SECTION 8. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. The Debtor hereby
irrevocably appoints the Secured Party the Debtor's attorney-in-fact, with full
authority in the place and stead of the Debtor and in the name of the Debtor,
the Secured Party or otherwise, from time to time in the Secured Party's
discretion, to take any action and to execute any instrument which the Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:

                (i) to ask, demand, collect, sue for, recover, compound, receive
        and give acquittance and receipts for moneys due and to become due under
        or in respect of any of the Collateral;

                (ii) to  receive,  endorse,  and  collect  any  drafts  or other
        instruments,  documents and chattel  paper,  in connection  with Section
        5(a) of this Agreement; and

                (iii) to file any  claims or take any  action or  institute  any
        proceedings  which the Secured Party may deem necessary or desirable for
        the  collection  of any of the  Collateral  or  otherwise to enforce the
        rights of the Secured Party with respect to any of the Collateral.

So long as no Event of Default has occurred, the Secured Party agrees to give
the Debtor five business days prior notice of its intention to exercise the
power of attorney granted hereby.

         SECTION 9. SECURED PARTY MAY PERFORM. If the Debtor fails to perform
any agreement contained herein, the Secured Party may upon notice to the Debtor,
itself perform, or cause performance of, such agreement, and the expenses of the
Secured Party incurred in connection therewith shall be payable by the Debtor
pursuant to Section 12(b) herein.

         SECTION 10. THE SECURED PARTY'S DUTIES. The powers conferred on the
Secured Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon the Secured Party to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral.

        SECTION 11. REMEDIES. If any Event of Default shall have occurred and be
continuing:

                  (a) The Secured Party may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available, all the rights and remedies of a secured party on default
under the Uniform Commercial Code (the "Code")

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<PAGE>



(whether or not the Code applies to the affected Collateral) and also may (i)
require the Debtor to, and the Debtor hereby agrees that it will at its expense
and upon request of the Secured Party forthwith, assemble all or part of the
Collateral as directed by the Secured Party and make it available to the Secured
Party at a place to be designated by the Secured Party which is reasonably
convenient to both parties and (ii) without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Secured Party's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Secured Party
may deem commercially reasonable. The Debtor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to the Debtor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Secured Party may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.

                  (b) All cash proceeds received by the Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of the Secured Party, be held by the
Secured Party as collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Secured Party pursuant to Section
12) in whole or in part by the Secured Party against, all or any part of the
Obligations in such order as the Secured Party shall elect. Any surplus of such
cash or cash proceeds held by the Secured Party and remaining after payment in
full of all the Obligations shall be paid over to the Debtor or to whomsoever
may be lawfully entitled to receive such surplus.

         SECTION 12.  INDEMNITY AND EXPENSES.

                  (a) The Debtor agrees to indemnify the Secured Party from and
against any and all claims, losses and liabilities arising out of or resulting
from this Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting from the Secured
Party's gross negligence or willful misconduct.

                  (b) The Debtor agrees to reimburse the Secured Party for any
and all reasonable expenses, including the reasonable fees and disbursements of
its counsel and of any experts and agents, which the Secured Party may incur in
connection with (i) the exercise or enforcement of any of the rights hereunder
or (ii) the failure by the Debtor to perform or observe any of the provisions
hereof.

         SECTION 13. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Debtor herefrom shall in any
event be effective unless the same shall be in writing and signed by the Secured
Party and the Debtor, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No release
of any amount of Collateral shall be effective unless the same shall be in
writing and signed by the Secured Party and the Debtor, and then

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<PAGE>



such release shall be effective only in the specific instance and for the
specific purpose for which given.

         SECTION 14. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing and mailed, telecopied, or
telegraphed or delivered to the appropriate party hereto, addressed to it as
stated on the signature page herein, or at such other address as shall be
designated by such party in a written notice to each other party complying as to
delivery with the terms of this Section. All such notices and other
communications shall, when mailed, telecopied, or telegraphed, respectively, be
effective when deposited in the mails, confirmed received by telecopy, or
delivered to the telegraph company, respectively, addressed as aforesaid.

         SECTION 15. CONTINUING SECURITY INTEREST; TRANSFER OF NOTE; CONFLICTING
SECURITY INTERESTS. This Agreement shall create a continuing security interest
in the Collateral and shall (A) remain in full force and effect until payment in
full of the Obligations, (B) be binding upon the Debtor, its successors and
assigns, and (C) inure to the benefit of the Secured Party and its successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(C), the Secured Party may assign or otherwise transfer the Revolving Note (or
any substitute or replacement therefor) to any other person or entity with or
without notice upon the occurrence of any event which constitutes an Event of
Default or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both, and such other person or entity shall
thereupon become vested with all the benefits in respect thereof granted to the
Secured Party herein or otherwise. Upon termination of the Commitment under the
Credit Agreement and the payment in full of the Obligations, this Agreement and
the security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the Debtor. Upon any such termination, the Secured
Party will, at the Debtor's expense, deliver UCC termination statements and
execute and deliver to the Debtor such documents as the Debtor shall reasonably
request to evidence such termination. To the extent that there exist conflicting
security interests in the Collateral that suggest a different priority than
provided in this Agreement, this Agreement shall prevail.

         SECTION 16. GOVERNING LAW; TERMS. This Agreement shall be governed by
and construed in accordance with the laws of the State of Illinois, except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of Illinois. Unless otherwise defined herein,
or mandated by the preceding sentence, terms used in Article 9 of the Code in
the State of Illinois are used herein as therein defined.

GTP2438 06/05/97 1326

                                        7


<PAGE>


         IN WITNESS WHEREOF, each party has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                             WESTBRIDGE FUNDING CORPORATION

                                         By:
                                       Name:
                                      Title:

                                    Address for Notices:
                                              777 Main Street
                                              Fort Worth, Texas 76102
                                              Attn: Chief Financial Officer
                                              Telecopier No.: (817) 878-3880

                                    With a copy to:

                                    Milbank, Tweed, Hadley & McCloy
                                    1 Chase Manhattan Plaza
                                    New York, NY 10005-1413
                                    Attn: Robert S. Reder, Esq.
                                    Telecopier No.: (212) 530-5219

                                    LASALLE NATIONAL BANK

                                        By:
                                      Name:
                                     Title:

                                    Address for Notices:
                                              135 South LaSalle Street
                                              Chicago, Illinois  60603
                                              Attn:   Janet R. Gates
                                              Telecopier No.: (312) 904-8189

                                    With a copy to:

                                    Stephen W. Schwab, Esq.
                                    Rudnick & Wolfe
                                    203 North LaSalle Street, Suite 1800
                                    Chicago, Illinois 60601-1293
                                    Telecopier No.: (312) 236-7516

GTP2438 06/05/97 1326

                                        8


<PAGE>

                                                                    Exhibit 10.5
                           SECOND AMENDED AND RESTATED

                     RECEIVABLES PURCHASE AND SALE AGREEMENT

                  This Second Amended and Restated Receivables Purchase and Sale
Agreement, dated as of June 26, 1997 (this "AGREEMENT"), is entered into by and
between National Foundation Life Insurance Company, a Delaware corporation
("NFL"), National Financial Insurance Company, a Texas corporation ("NFIC"),
American Insurance Company of Texas, a Texas corporation ("AICT"), Freedom Life
Insurance Company of America, a Mississippi corporation ("FLICA") (each of NFL,
NFIC, AICT and FLICA, and any additional party added pursuant to SECTION 5.12 is
referred to herein as a "SELLER" and are collectively referred to herein as the
"SELLERS"), and Westbridge Funding Corporation, a Delaware corporation (the
"PURCHASER"). Capitalized terms not otherwise defined herein shall have the
meanings set forth in SECTION 1.1.

                  WHEREAS, the Sellers are in the business of underwriting
and/or selling insurance products, and in the ordinary course of such business
(i) generate and receive premiums from insureds, a portion of which premiums
represent commissions (the "COMMISSIONS") due or to become due to their agents,
including without limitation their general agents and other agents with whom
said general agents have contracted (collectively, the "AGENTS") and (ii)
generate accounts receivable resulting from advances of first-year Commissions
paid to the Sellers' Agents (each, an "AGENT OBLIGOR") in respect of insurance
policies sold by such Agent Obligors (the obligations of such Agent Obligors to
repay the principal amount of, and interest and other finance charges on, such
advances being referred to herein as "AGENT RECEIVABLES");

                  WHEREAS, pursuant to the Receivables Purchase and Sale
Agreement, dated as of November 15, 1995, as amended by the Amended and Restated
Receivables Purchase and Sale Agreement, dated as of November 16, 1996 (the
"Original Agreement"), the Sellers agreed to sell to the Purchaser, and, subject
to the terms and conditions set forth therein, the Purchaser agreed to purchase
from the Sellers, from time to time on a non-recourse basis, all of each
Seller's right, title and interest in, to and under their respective Agent
Receivables;

                  WHEREAS, in connection with such sale of Agent Receivables and
as collateral for the repayment thereof, the Sellers agreed to assign to the
Purchaser, and the Purchaser agreed to assume, all of each Seller's rights in,
to and under all guarantees thereof and all collateral security therefor,
including, without limitation, the Assigned Commissions and Agent Contract
Rights (each as defined below); and

                  WHEREAS, the Sellers and Purchaser desire to (i)
further amend the Original Agreement to, among other things,

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<PAGE>



extend the Purchase Termination Date and (ii) restate the
Original Agreement in its entirety;

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreements, and for other good and valuable
consideration, the receipt and sufficiency of which is are hereby acknowledged,
the parties hereto agree as follows:

                                    ARTICLE I

                               CERTAIN DEFINITIONS

                  Section 1.1.  Definitions.  The following terms shall
have the definitions set forth below:

                  "AGENT CONTRACT RIGHTS" means all of each Seller's rights
under each contract, financing agreement, note, instrument, or other agreement
by which any Agent Obligor is bound to make payments to such Seller to repay
advances of first-year Commissions made by such Seller to such Agent Obligor or
any other Agent Obligor and to pay interest and/or other finance charges to the
Seller.

                  "ASSIGNED COMMISSIONS" means the Commissions due or to become
due to the Agent Obligors with respect to Insurance Policies sold by such Agent
Obligors, including without limitation all renewal Commissions, but only to the
extent that such Commissions have been assigned by such Agent Obligors to a
Seller as collateral to secure the payment of the Agent Receivables owing by
such Agent Obligors.

                  "BUSINESS DAY" means any day on which commercial banks are
open for business in the States of Illinois and Texas.

                  "COLLECTIONS" means all the payments and collections received
by a Seller, from time to time, under any Insurance Policies arising out of a
sale of insurance products or services, which includes (i) premiums, (ii)
Commissions, (iii) any interest or finance charges on such Commissions, and (iv)
any other obligations of the insureds thereunder.

                  "CUT-OFF DATE" means, with respect to each Closing, the last
day of a calendar month designated by the Purchaser, which designated calendar
month must be either of the two calendar months immediately preceding the month
in which such Closing occurs.

                  "INSURANCE POLICIES" means the insurance policies issued by
any Seller and sold by any Agent Obligor.

                  "PERSON" means any individual, partnership,
corporation, limited liability company, business trust, joint

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<PAGE>



stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.

                  "PURCHASE TERMINATION DATE" means June 5, 2000 or such later
date as the parties to this Agreement mutually agree.

                                   ARTICLE II

                           PURCHASE AND SALE; CLOSINGS

                  Section 2.1. PURCHASE AND SALE. On the terms and subject to
the conditions of this Agreement, each Seller hereby agrees to sell to the
Purchaser, and the Purchaser hereby agrees to purchase from each Seller, from
time to time on a non-recourse basis, all of such Seller's right, title and
interest in, to and under certain outstanding Agent Receivables to be designated
by the Purchaser from time to time, and in connection therewith and as
collateral therefor, the Seller agrees to assign to the Purchaser at the time of
each sale, and the Purchaser agrees to assume from the Seller, all of the
Sellers right, title and interest in, to and under including, without
limitation, all interest accrued or accruing on such Agent Receivables, all
monies due and to become due thereunder, all guarantees thereof, all collateral
security therefor (including, without limitation, all Assigned Commissions and
Agent Contract Rights), and all proceeds thereof. Each sale and purchase of
Agent Receivables hereunder shall take place in the manner set forth in SECTION
2.2 below.

                  Section 2.2. CLOSINGS. (a) A closing of the sale and purchase
of Agent Receivables (each, a "CLOSING") shall take place from time to time on
the Business Days to be specified by the Purchaser and agreed to by Sellers
(each, a "CLOSING DATE"). At the time a Closing Date is established, the
Purchaser shall specify (i) the Agent Receivables to be purchased from Sellers
on such Closing Date and (ii) the applicable Cut-Off Date for such Agent
Receivables.

                  (b)  On each Closing Date:

                  (i) each Seller shall deliver to the Purchaser an Assignment
         substantially in the form of EXHIBIT A hereto, dated the Closing Date,
         which specifies in reasonable detail (A) each Agent Receivable
         outstanding as of the Cut-Off Date immediately prior to such Closing
         Date and being purchased from such Seller on the applicable Closing
         Date, (B) the outstanding amount of each such Agent Receivable as of
         such Cut-Off Date, and (C) the Assigned Commissions and Agent Contract
         Rights relating to each such Agent Receivable which have not been
         previously assigned by each Seller; and

                  (ii) the Purchaser shall deliver to each Seller, in
         immediately available funds, the aggregate purchase price for the Agent
         Receivables being purchased from such Seller

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                                        3


<PAGE>



         on such date, such amount to be mutually agreed upon among Sellers and
         Purchaser and equal to or greater than 90% of the aggregate amount of
         such Agent Receivables as of the Cut-Off Date.

                  (c) (i) the obligations of the Sellers and the Purchaser to
         consummate the sale and purchase of any Agent Receivables on each
         Closing Date shall be subject to the satisfaction of the following
         conditions: (A) the transactions contemplated by this Agreement not
         being prohibited by or in conflict with any applicable law, order,
         decree or governmental regulation; and (B) the receipt and continued
         effectiveness of all consents, approvals and actions of, filings with
         and notices to any third party, including, without limitation, any
         governmental or regulatory authority, necessary to permit the Sellers
         and the Purchaser to perform their respective obligations under this
         Agreement and to consummate the transactions contemplated hereby, all
         in form and substance reasonably satisfactory to the Purchaser and the
         Sellers, as applicable; and

                  (ii) the obligations of the Purchaser to consummate the
         purchase of Agent Receivables on each Closing Date shall be subject to
         the Purchaser having available sufficient funds to pay the purchase
         price on such Closing Date.

                  (d) Prior to the initial Closing Date, each Seller shall
deliver to the Purchaser a UCC-1 financing statement of the Purchaser as secured
party/assignee and such Seller as the debtor/assignor with respect to the Agent
Receivables, and the Assigned Commissions and Agent Contract Rights relating
thereto, to be assigned by such Seller hereunder.

                  Section 2.3. SECURITY INTEREST. The parties hereto agree that
this Agreement is intended to constitute the sale of and shall transfer
ownership to the Purchaser of all right, title and interest of each Seller in,
to and under the Agent Receivables sold hereunder. In addition, the parties
hereto agree that (a) this Agreement constitutes a grant by each Seller to the
Purchaser of a perfected first priority security interest in all of such
Seller's right, title and interest in, to and under each Agent Receivable sold
hereunder, including, without limitation, all interest accrued or accruing
thereon, all monies due and to become due thereunder, all guarantees thereof,
all collateral security therefor (including, without limitation, all Assigned
Commissions and Agent Contract Rights), and all "proceeds" (as defined in
Section 9-306 of the Uniform Commercial Code as in effect in the applicable
jurisdiction) thereof, in each case, whether now existing or hereafter arising,
(b) such security interest is intended to secure, without limitation, all now
and hereafter outstanding obligations of each Seller to the Purchaser and (c)
this Agreement shall constitute a security agreement under applicable law.

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                                        4


<PAGE>





                                   ARTICLE III

                              ADDITIONAL COVENANTS

                  Section 3.1. APPOINTMENT OF SELLERS AS SERVICING AGENTS. The
Purchaser hereby appoints each Seller, and each Seller hereby accepts such
appointment, as the Purchaser's agent to service, administer and collect the
Agent Receivables sold by it hereunder and the Assigned Commissions assigned by
it hereunder (in such capacity, each Seller is referred to herein as a
"SERVICING AGENT") pursuant to the terms of this SECTION 3.1.

                  Section 3.2. RIGHTS AND DUTIES OF SERVICING AGENT. (a) Each
Servicing Agent shall take or cause to be taken all such actions as may be
necessary or advisable to service, administer, account, collect and remit to the
Purchaser from time to time the Assigned Commissions relating to the Agent
Receivables sold by it hereunder, all with reasonable care and diligence and in
accordance with its sound credit and collection policies, which policies shall
not be amended, modified or waived in any material respect without the prior
written consent of the Purchaser. Unless and until otherwise specified by the
Purchaser, each Servicing Agent shall enforce the Purchaser's rights and
interests in and under the Agent Receivables sold by it hereunder and the
related collateral security and guarantees (including the Assigned Commissions
and Agent Contract Rights).

                  (b) Each Servicing Agent shall collect, and hold in trust for
the account of the Purchaser in an interest bearing account of the Servicing
Agent, the portion of all Collections received after the respective Cut-Off for
the Agent Receivables purchased by the Purchaser hereunder which represent
Assigned Commissions (together with all interest and/or other finance charges
paid by the Agent Obligors thereon, the "COLLECTED COMMISSIONS"). Not later than
the fifteenth day of each calendar month, each Servicing Agent will (i) furnish
or cause to be furnished to the Purchaser a statement setting forth a detailed
itemization of the amounts which it has received in respect of the repayment of
Agent Receivables and such other information as the Purchaser may reasonably
request; and (ii) pay to the Purchaser such amounts, together with any and all
interest received thereon during the period for which such amounts were held by
such Servicing Agent.

                  (c) Promptly following each calendar quarter, each Servicing
Agent shall reconcile the aggregate Collected Commissions received by it to the
amount of Assigned Commissions which should have been received by it in
repayment of Agent Receivables. To the extent necessary and in accordance with
the Agent Contract Rights relating to such Agent Receivables, each Servicing
Agent shall take such steps as shall be necessary to recover from each Agent
Obligor any shortfall in the repayment of Agent Receivables. Not later than the
fifteenth day of each

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                                        5


<PAGE>



calendar month, each Servicing Agent will (i) furnish or cause to be furnished
to the Purchaser a statement setting forth a detailed itemization of the amounts
which it has recovered in respect of shortfalls in the repayment of Agent
Receivables and such other information as the Purchaser may reasonably request;
and (ii) pay to the Purchaser such recovered amounts, together with any and all
interest received thereon during the period for which such recovered amounts
were held by such Servicing Agent. The Purchaser hereby authorizes each
Servicing Agent to enforce each Agent Obligor's obligations under the respective
Agent Receivables and related Agent Contract Rights and to collect all amounts
due under the Agent Receivables sold by it hereunder, including, without
limitation, endorsing any instruments representing Collections.

                  Section 3.3. RIGHTS OF THE PURCHASER. (a) At any time or from
time to time, the Purchaser may notify (or cause each Servicing Agent to notify)
the Agent Obligors of its ownership of the Agent Receivables purchased by it
hereunder, and may direct such Agent Obligors to pay all amounts due or to
become due thereunder directly to the Purchaser or its designee.

                  (b) Each Servicing Agent shall, at the Purchaser's request,
(i) assemble all of the documents, instruments and other records (including,
without limitation, computer tapes and disks) which evidence the Agent
Receivables purchased by the Purchaser hereunder and the related Agent Contract
Rights and collateral security (and such other information which the Purchaser
may reasonably request), and make the same available to the Purchaser or its
designee, and (ii) segregate all cash, checks and other instruments received by
it from time to time constituting Collections of Agent Receivables purchased by
the Purchaser hereunder in a manner acceptable to the Purchaser and shall, remit
all such cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Purchaser or its designee.

                  (c) Anything herein to the contrary notwithstanding, the
exercise by the Purchaser of any of its rights hereunder shall not relieve the
Servicing Agent from any of its duties or obligations with respect to the Agent
Contract Rights relating to the Agent Receivables sold by it hereunder.

                  Section 3.4. FURTHER ASSURANCES. At any time or from time to
time after the date hereof, at the Purchaser's request and without further
consideration, each of the Sellers shall execute and deliver to the Purchaser
such other instruments of sale, transfer, conveyance, assignment and
confirmation, provide such materials and information and take such other actions
as the Purchaser may reasonably deem necessary or desirable in order more
effectively to transfer, convey and assign to the Purchaser, and to confirm the
Purchaser's title to, all of the Agent Receivables and Assigned Commissions and
Agent Contract Rights relating thereto, and, to the full extent permitted by
law, to

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                                        6


<PAGE>



cause each of the Sellers to fulfill its obligations under this Agreement,
including, without limitation, the execution of any financing statements or
continuation statements relating to Agent Receivables or Assigned Commissions or
Agent Contract Rights for filing under the provisions of the Uniform Commercial
Code of any

applicable jurisdiction.

                  Section 3.5. STANDARD OF CARE. Each Seller will exercise and
give the same care and attention to its obligations pursuant to Article III as
it gives to all other corporate obligations of a comparable nature, PROVIDED,
that it shall not be held responsible for any losses arising from any action
taken by it hereunder in good faith absent willful misconduct or gross
negligence.

                                   ARTICLE IV

                    REPRESENTATIONS, WARRANTIES AND COVENANTS

                  Section 4.1.  REPRESENTATIONS, WARRANTIES AND
COVENANTS.  Each of the Sellers severally, and not jointly,
hereby represents, warrants and covenants to the Purchaser as
follows:

                  (a) on the Cut-Off Date relating to the sale of Agent
Receivables hereunder, each Insurance Policy giving rise to such Agent
Receivables and the related Assigned Commissions will be in full force and
effect in accordance with its terms and, to its knowledge free from any lien,
security interest, encumbrance or other right, title or interest of any Person,
and neither it nor, to its knowledge, any insured had or will have done or
failed to do anything that would or might permit any such insured or it to
terminate any such Insurance Policy or suspend or reduce any payments or
obligations due or to become due thereunder.

                  (b) on the Cut-Off Date relating to the sale of Agent
Receivables hereunder, each Insurance Policy sold by such Seller giving rise to
such Agent Receivables is a valid, binding and legally enforceable obligation of
it and it had all requisite authority and capacity to issue or sell such
Insurance Policy and no such Insurance Policy violates any applicable law or
contravenes any other agreement to which it is subject.

                  (c) the execution and delivery of this Agreement by it, and
the performance by it of its obligations hereunder, have been duly authorized by
all necessary corporate and other action and do not and, subject to the approval
of the relevant state insurance commissioners and receipt of the consents set
forth in SCHEDULE 4.1(C), will not require any consent or approval not
heretofore obtained of any governmental authority or other Person.

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                                        7


<PAGE>



                  (d) this Agreement is the valid, binding and enforceable
obligation of it, and does not violate any applicable law or contravene any
other agreement to which it is a party.

                  (e) other than financing statements on file at any public
office covering its security interests in Assigned Commissions and Agent
Contract Rights which will be assigned to the Purchaser hereunder, there are no
financing statements now on file, or intended so to be, and neither it nor any
of its subsidiaries or affiliates will execute or consent to the filing in any
public office of any financing statement under the laws of any jurisdiction,
relating to the Agent Receivables and the Assigned Commissions, Agent Contract
Rights and other collateral relating thereto.

                  (f) on each Closing Date, SCHEDULE I to the Assignment
delivered on such Closing Date will contain a complete and correct statement of
the Agent Receivables being sold on such Closing Date and the Assigned
Commissions and Agent Contracts

Rights relating thereto.

                  (g) upon payment on each Closing Date of the dollar amount to
be paid on such date as described in SECTION 2.2(B)(II) hereof for the purchase
of the Agent Receivables sold to the Purchaser on such date, the Purchaser will
have at such time good title to the Agent Receivables set forth in SCHEDULE I to
the Assignment delivered on such Closing Date.

                                    ARTICLE V

                                  MISCELLANEOUS

                  Section 5.1.  TERMINATION.  This Agreement will
terminate on the Purchase Termination Date, or on such other date
as the parties shall agree to in writing.

                  Section 5.2 NOTICES. All notices, requests and other
communications hereunder must be in writing and will be deemed to have been duly
given only if delivered personally or by facsimile transmission or mailed (first
class postage prepaid) to the other parties at the respective addresses set
forth on the signature pages hereof. All such notices, requests and other
communications will be deemed given upon receipt.

                  Section 5.3. WAIVER. Any term or condition of this Agreement
may be waived at any time by the party that is entitled to the benefit thereof,
but no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement

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                                        8


<PAGE>



or by Law or otherwise afforded, will be cumulative and not
alternative.

                  Section 5.4.  AMENDMENT.  This Agreement may be
amended, supplemented or modified only by a written instrument
duly executed by or on behalf of each party hereto.

                  Section 5.5. NO THIRD PARTY BENEFICIARY. The terms and
provisions of this Agreement are intended solely for the benefit of each party
hereto and their respective successors or permitted assigns, and except as set
forth in SECTION 5.11 it is not the intention of the parties to confer
third-party beneficiary rights upon any other Person.

                  Section 5.6. SUCCESSORS AND ASSIGNS. This Agreement shall
inure to the benefit of and shall be binding upon the parties hereto and their
respective successors, heirs, personal representatives and permitted assigns.

                  Section 5.7. ENTIRE AGREEMENT. This Agreement supersedes all
prior discussions and agreements between the parties with respect to the subject
matter hereof between the parties, and contains the sole and entire agreement
between the parties hereto with respect to the subject matter hereof.

                  Section 5.8.  HEADINGS.  The headings used in this
Agreement have been inserted for convenience of reference only
and do not define or limit the provisions hereof.

                  Section 5.9.  GOVERNING LAW.  This Agreement shall be
governed by and construed in accordance with the laws of the

State of Texas.

                  Section 5.10. INVALID PROVISIONS. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future Law, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (a) such
provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom.

                  Section 5.11. SELLERS' OBLIGATIONS. Notwithstanding that all
sales of Agent Receivables pursuant to SECTION 2.1 of this Agreement will be on
a non-recourse basis, nothing contained herein shall be construed to relieve any
Seller from liability for any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on its part

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                                        9


<PAGE>



contained in ARTICLE IV. Each Seller understands that the Purchaser intends to
assign to and grant to a lending institution or institutions a security interest
in all of its rights, title and interest to this Agreement. Each Seller hereby
consents to such assignment and grant, and further agrees that all
representations, warranties, covenants and agreements of such Seller made herein
shall also be for the benefit of and inure to such lending institution or
institutions and all holders from time to time of notes issued by Purchaser to
such institution or institutions.

                  Section 5.12. ADDITIONAL SELLERS. From time to time with the
consent of Purchaser, additional insurance companies which are affiliates of
Purchaser may become a party to this Agreement by executing and delivering to
Purchaser a counterpart to the Agreement. Such delivery shall be deemed (a) to
amend the Agreement to include the insurance company affiliate as a party to the
Agreement, (b) to bind such insurance company affiliate to, and require it to
comply with, all applicable provisions of the Agreement, and (c) to entitle such
insurance company affiliate to all rights under, and subject it to the terms and
conditions of, the Agreement as if such insurance company affiliate were an
original signatory thereto.

                  Section 5.13.  COUNTERPARTS.  This Agreement may be
executed in any number of counterparts, each of which will be
deemed an original, but all of which together will constitute one
and the same instrument.

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                                       10


<PAGE>



                  IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party as of the date first
above written.

                                        SELLERS:
                                        NATIONAL FOUNDATION LIFE INSURANCE
                                           COMPANY
                                        By:
                                        Name:  Patrick J. Mitchell
                                        Title: President

                                        Address for Notices:
                                        777 Main Street
                                        Suite 900
                                        Fort Worth, Texas  76102
 
                                        NATIONAL FINANCIAL INSURANCE
                                           COMPANY
                                        By:
                                        Name:  Patrick J. Mitchell
                                        Title: President

                                        Address for Notices:
                                        777 Main Street
                                        Suite 900
                                        Fort Worth, Texas  76102

                                        AMERICAN INSURANCE COMPANY OF TEXAS
                                        By:
                                        Name:  Patrick J. Mitchell
                                        Title: President

                                        Address for Notices:
                                        777 Main Street
                                        Suite 900
                                        Fort Worth, Texas  76102

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<PAGE>




                                        FREEDOM LIFE INSURANCE COMPANY OF
                                           AMERICA
                                        By:
                                        Name:  Patrick J. Mitchell
                                        Title: President

                                        Address for Notices:
                                        777 Main Street
                                        Suite 900
                                        Fort Worth, Texas  76102

                                        PURCHASER:
                                        WESTBRIDGE FUNDING CORPORATION
                                        By:
                                        Name:  Patrick J. Mitchell
                                        Title: Vice President

                                        Address for Notices:
                                        777 Main Street
                                        Suite 900
                                        Fort Worth, Texas  76102

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                                       12


<PAGE>



                                                                       EXHIBIT A

                               FORM OF ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned (the "SELLER") does hereby
sell, transfer, convey, assign and deliver to the Purchaser free and clear of
all mortgages, pledges, assessments, security interests, leases, liens, adverse
claims, levies, charges or other encumbrances of any kind ("LIENS"), other than
permitted Liens, on a non-recourse basis, all of the Seller's right, title and
interest in, to and under the Agent Receivables listed in SCHEDULE I hereto,
together with all interest accrued or accruing thereon, all monies due and to
become due thereunder, all guarantees thereof, all collateral security therefor
(including, without limitation, all Assigned Commissions and Agent Contract
Rights), and all proceeds thereof in each case, listed in SCHEDULE I hereto (the
"ASSIGNED ASSETS"), TO HAVE AND TO HOLD the same unto the Purchaser, its
successors and assigns, forever.

                  The terms Seller, Agent Receivables, Assigned Commissions and
Agent Contract Rights shall have the respective meanings assigned thereto in the
Second Amended and Restated Receivables Purchase and Sale Agreement, dated as of
June 26, 1997 between National Foundation Life Insurance Company, a Delaware
corporation, National Financial Insurance Company, a Texas corporation, American
Insurance Company of Texas, a Texas corporation, Freedom Life Insurance Company
of America, a Mississippi corporation and Westbridge Funding Corporation, a
Delaware corporation (the "PURCHASER").

                  The Purchaser hereby accepts the sale, transfer, conveyance,
assignment and delivery of the Assigned Assets.

                  At any time or from time to time after the date hereof, at the
Purchaser's request and without further consideration, the Seller shall execute
and deliver to the Purchaser such other instruments of sale, transfer,
conveyance, assignment and confirmation, provide such materials and information
and take such other actions as the Purchaser may reasonably deem necessary or
desirable in order more effectively to transfer, convey and assign to the
Purchaser, and to confirm the Purchaser's title to, all of the Assigned Assets,
and, to the full extent permitted by law, to put the Purchaser in actual
possession and operating control of the Assigned Assets and to assist the
Purchaser in exercising all rights with respect thereto.

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<PAGE>



                  This Assignment shall be governed by and construed in
accordance with the laws of the State of Texas applicable to a contract executed
and performed in such State without giving effect to the conflicts of laws
principles thereof, except that if it is necessary in any other jurisdiction to
have the law of such other jurisdiction govern this Assignment in order for this
Assignment to be effective in any respect, then the laws of such other
jurisdiction shall govern this Assignment to such extent.

                  IN WITNESS WHEREOF, the undersigned has caused its duly
authorized officer to execute this Assignment on this ______ day of _________,
____.

                                          [SELLER]

                                           By:____________________________
                                                        Name:
                                                        Title:

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<PAGE>


                                                                 SCHEDULE 4.1(C)

1.       General Agent's Agreement, dated April 5, 1976 by and between NFL and
         Phillip David Elkins of Little Rock Arkansas. (Pursuant to section 10,
         NFL must obtain, and has obtained, prior written consent to assign this
         Agreement.)

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<PAGE>


                                                                    Exhibit 10.6
                              AMENDED AND RESTATED
                          NON-INSURANCE COMPANY SELLERS

                     RECEIVABLES PURCHASE AND SALE AGREEMENT

                  This Amended and Restated Non-Insurance Company Sellers
Receivables Purchase and Sale Agreement, dated as of June 26, 1997 (this
"AGREEMENT"), is entered into by and between American Senior Security Plans,
L.L.C. ("ASSP"), Freedom Marketing Inc., a Texas corporation ("FREEDOM"), Health
Care-One Insurance Agency, Inc., a California corporation ("HCO"), Health Care
One Marketing Group Inc., a Texas corporation ("HCO MARKETING"), LSMG, Inc., a
Texas corporation ("LSMG"), Senior Benefits of Texas, Inc., a Texas corporation
("SBT"), and Westbridge Marketing Corporation, a Delaware corporation ("WMC")
(each of ASSP, Freedom, HCO, HCO Marketing, LSMG, SBT and WMC and any additional
party added pursuant to SECTION 5.12 is referred to herein as a "NONINSURANCE
COMPANY SELLER" and are collectively referred to herein as the "NON-INSURANCE
COMPANY SELLERS"), and Westbridge Funding Corporation, a Delaware corporation
(the "PURCHASER"). Capitalized terms not otherwise defined herein shall have the
meanings set forth in SECTION 1.1.

                  WHEREAS, the Non-Insurance Company Sellers are in the business
of selling insurance products, and in the ordinary course of such business (i)
are granted certain rights, pursuant to the terms of the Agency Contracts
(defined below) to receive from the insurance companies for which they sell
insurance products, the portion of the premiums paid by the insureds which
represent commissions (the "COMMISSIONS") due or to become due to the
Non-Insurance Company Sellers' agents, including without limitation their
general agents and other agents with whom said general agents have contracted
(collectively, the "AGENTS") (the obligations of such insurance companies to pay
the portion of premiums representing Commissions being referred to herein as
"INSURANCE COMPANY RECEIVABLES"), and (ii) generate accounts receivable
resulting from advances of first-year Commissions paid to the Non-Insurance
Company Sellers' Agents (each, an "AGENT OBLIGOR") in respect of insurance
policies sold by such Agent Obligors (the obligations of such Agent Obligors to
repay the principal amount of, and interest and other finance charges on, such
advances being referred to herein as "AGENT RECEIVABLES");

                  WHEREAS, pursuant to the Non-Insurance Company Sellers
Receivables Purchase and Sale Agreement dated as of November 14, 1996 (the
"ORIGINAL AGREEMENT"), the Non-Insurance Company Sellers agreed to sell to the
Purchaser, and, subject to the terms and conditions set forth therein, the
Purchaser agreed to purchase from the Non-Insurance Company Sellers, from time
to time on a full recourse basis, all of each Non-Insurance Company Seller's
right, title and interest in, to and under their respective Agent Receivables;

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<PAGE>



                  WHEREAS, in connection with such sale of Agent Receivables and
as collateral for the repayment thereof, the NonInsurance Company Sellers agreed
to assign to the Purchaser, and the Purchaser agreed to assume, all of each
Non-Insurance Company Seller's rights in, to and under all guarantees thereof
and all collateral security therefor, including, without limitation, the
Assigned Commissions and Agent Contract Rights (each as defined below) and the
Insurance Company Receivables; and

                  WHEREAS, the Sellers and Purchaser desire to (i) amend the
Original Agreement to, among other things, extend the Purchase Termination Date
and (ii) restate the Original Agreement in its entirety;

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreements, and for other good and valuable
consideration, the receipt and sufficiency of which is are hereby acknowledged,
the parties hereto agree as follows:

                                    ARTICLE I

                               CERTAIN DEFINITIONS

                  Section 1.1.  Definitions.  The following terms shall
have the definitions set forth below:

                  "AGENCY CONTRACTS" means the agreements identified on Schedule
1 hereto between the Non-Insurance Company Sellers and the insurance companies
identified therein.

                  "AGENT CONTRACT RIGHTS" means all of each Non-Insurance
Company Seller's rights under each contract, financing agreement, note,
instrument, or other agreement by which any Agent Obligor is bound to make
payments to such Non-Insurance Company Seller to repay advances of first-year
Commissions made by such NonInsurance Company Seller to such Agent Obligor or
any other Agent Obligor and to pay interest and/or other finance charges to the
Non-Insurance Company Seller.

                  "ASSIGNED COMMISSIONS" means the Commissions due or to become
due to the Agent Obligors with respect to Insurance Policies sold by such Agent
Obligors, including without limitation all renewal Commissions, but only to the
extent that such Commissions have been assigned by such Agent Obligors to a
Non-Insurance Company Seller as collateral to secure the payment of the Agent
Receivables owing by such Agent Obligors.

                  "BUSINESS DAY" means any day on which commercial banks are
open for business in the States of Illinois and Texas.

                  "COLLECTIONS" means all the payments and collections received
by a Non-Insurance Company Seller, from time to time, in respect of Insurance
Company Receivables.

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<PAGE>




                  "CUT-OFF DATE" means, with respect to each Closing, the last
day of a calendar month designated by the Purchaser, which designated calendar
month must be either of the two calendar months immediately preceding the month
in which such Closing occurs.

                  "INSURANCE POLICIES" means the insurance policies issued by
any insurance company and sold by any Agent Obligor.

                  "PERSON" means any individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority or other
entity of whatever nature.

                  "PURCHASE TERMINATION DATE" means June 5, 2000 or such later
date as the parties to this Agreement mutually agree.

                                   ARTICLE II

                           PURCHASE AND SALE; CLOSINGS

                  Section 2.1. PURCHASE AND SALE. On the terms and subject to
the conditions of this Agreement, each Non-Insurance Company Seller hereby
agrees to sell to the Purchaser, and the Purchaser hereby agrees to purchase
from each Non-Insurance Company Seller, from time to time on a full recourse
basis, all of such Non-Insurance Company Seller's right, title and interest in,
to and under certain outstanding Agent Receivables to be designated by the
Purchaser from time to time, and in connection therewith and as collateral
therefor, the Non-Insurance Company Seller agrees to assign to the Purchaser at
the time of each sale, and the Purchaser agrees to assume from the Non-Insurance
Company Seller, all of the Non-Insurance Company Seller's right, title and
interest in, to and under including, without limitation, all interest accrued or
accruing on such Agent Receivables, all monies due and to become due thereunder,
all guarantees thereof, all collateral security therefor (including, without
limitation, all Assigned Commissions and Agent Contract Rights), and all
proceeds thereof. Each sale and purchase of Agent Receivables hereunder shall
take place in the manner set forth in SECTION 2.2 below.

                  Section 2.2. CLOSINGS. (a) A closing of the sale and purchase
of Agent Receivables (each, a "CLOSING") shall take place from time to time on
the Business Days to be specified by the Purchaser and agreed to by the
Non-Insurance Company Sellers (each, a "CLOSING DATE"). At the time a Closing
Date is established, the Purchaser shall specify (i) the Agent Receivables to be
purchased from the Non-Insurance Company Sellers on such Closing Date and (ii)
the applicable Cut-Off Date for such Agent Receivables.

                  (b)  On each Closing Date:

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<PAGE>



                  (i) each Non-Insurance Company Seller shall deliver to the
         Purchaser an Assignment substantially in the form of EXHIBIT A hereto,
         dated the Closing Date, which specifies in reasonable detail (A) each
         Agent Receivable outstanding as of the Cut-Off Date relating to such
         Closing Date and being purchased from such Non-Insurance Company Seller
         on the applicable Closing Date, (B) the outstanding amount of each such
         Agent Receivable as of such Cut-Off Date, and (C) the Assigned
         Commissions, Agent Contract Rights and Insurance Company Receivables
         relating to each such Agent Receivable which have not been previously
         assigned by each NonInsurance Company Seller; and

                  (ii) the Purchaser shall deliver to each Non-Insurance Company
         Seller, in immediately available funds, the aggregate purchase price
         for the Agent Receivables being purchased from such Non-Insurance
         Company Seller on such date, such amount to be mutually agreed upon
         among Sellers and Purchaser and equal to or greater than 90% of the
         aggregate amount of such Agent Receivables as of the Cut-Off Date.

                  (c) (i) the obligations of the Non-Insurance Company Sellers
         and the Purchaser to consummate the sale and purchase of any Agent
         Receivables on each Closing Date shall be subject to the satisfaction
         of the following conditions: (A) the transactions contemplated by this
         Agreement not being prohibited by or in conflict with any applicable
         law, order, decree or governmental regulation; and (B) the receipt and
         continued effectiveness of all consents, approvals and actions of,
         filings with and notices to any third party, including, without
         limitation, any governmental or regulatory authority, necessary to
         permit the NonInsurance Company Sellers and the Purchaser to perform
         their respective obligations under this Agreement and to consummate the
         transactions contemplated hereby, all in form and substance reasonably
         satisfactory to the Purchaser and the Non-Insurance Company Sellers, as
         applicable; and

                  (ii) the obligations of the Purchaser to consummate the
         purchase of Agent Receivables on each Closing Date shall be subject to
         the Purchaser having available sufficient funds to pay the purchase
         price on such Closing Date.

                  (d) Prior to selling Agent Receivables hereunder, each
Non-Insurance Company Seller shall deliver to the Purchaser a UCC-1 financing
statement of the Purchaser as secured party/assignee and such Non-Insurance
Company Seller as the debtor/assignor with respect to the Agent Receivables, and
the Assigned Commissions and Agent Contract Rights relating thereto, and the
Insurance Company Receivables to be assigned by such NonInsurance Company Seller
hereunder.

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                                        4


<PAGE>



                  Section 2.3. SECURITY INTEREST. The parties hereto agree that
this Agreement is intended to constitute the sale of and shall transfer
ownership to the Purchaser of all right, title and interest of each
Non-Insurance Company Seller in, to and under the Agent Receivables sold
hereunder. In addition, the parties hereto agree that (a) this Agreement
constitutes a grant by each Non-Insurance Company Seller to the Purchaser of a
perfected first priority security interest in all of such NonInsurance Company
Seller's right, title and interest in, to and under each Agent Receivable sold
hereunder and the Insurance Company Receivables, including, without limitation,
all interest accrued or accruing thereon, all monies due and to become due
thereunder, all guarantees thereof, all collateral security therefor (including,
without limitation, all Assigned Commissions and Agent Contract Rights), and all
"proceeds" (as defined in Section 9-306 of the Uniform Commercial Code as in
effect in the applicable jurisdiction) thereof, in each case, whether now
existing or hereafter arising, (b) such security interest is intended to secure,
without limitation, all now and hereafter outstanding obligations of each
Non-Insurance Company Seller to the Purchaser and (c) this Agreement shall
constitute a security agreement under applicable law.

                  Section 2.4. GUARANTY. Each Non-Insurance Company Seller
hereby unconditionally guarantees to the Purchaser the full and punctual payment
of the Agent Receivables sold by it hereunder. This guaranty is an absolute,
unconditional and continuing guaranty of the full and punctual payment not later
than the Revolving Loan Termination Date (as such term is defined in the Credit
Agreement dated as of June 6, 1997 between the Purchaser and LaSalle National
Bank, as amended) of each of the Agent Receivables sold by it hereunder, and is
in no way conditioned upon any requirement that the Purchaser first attempt to
collect payment from the Agent Obligor or any other guaranty or surety or resort
to any security or other means of obtaining payment of all or any part of the
Agent Receivables sold by it hereunder or upon any other contingency. Each
Non-Insurance Company Seller hereby waives all demands or notices of any nature
which may otherwise be required to cause payment of such Agent Receivables to be
due and payable.

                  (b) If after receipt of any payment of all or any part of the
Agent Receivables, Purchaser is compelled to surrender or voluntarily surrenders
such payment to any person because such payment is or may be avoided or set
aside as a preference, fraudulent conveyance, impermissible set-off or for any
other reason, then the Agent Receivables or part thereof affected shall be
reinstated and continue and the obligations of each NonInsurance Company Seller
under this SECTION 2.4 shall continue in full force as to such Agent Receivables
or part thereof as if such payment had not been received. The provisions of this
SECTION 2.4(B) shall survive the termination of provisions of this Agreement and
any satisfaction and discharge of Purchaser by virtue of any payment, court
order or any federal or state law.

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                                        5


<PAGE>




                  (c) The obligations and liabilities of each NonInsurance
Company Seller under this SECTION 2.4 shall be absolute and unconditional, shall
not be subject to any counterclaim, set-off, deduction or defense based upon any
claim such Non-Insurance Company Seller may have against the Purchaser or any
other person or entity, and shall remain in full force and effect until such
obligations and liabilities and all Agent Receivables of the NonInsurance
Company Seller have been fully satisfied, without regard to, or release or
discharge by, any event, circumstance or condition (whether or not the
Non-Insurance Company Seller shall have knowledge of notice thereof) which but
for the provisions of this Section might constitute a legal or equitable defense
or discharge of a guarantor or surety or which might in any way limit recourse
against the Non-Insurance Company Seller, including without limitation (a) any
amendment, modification or extension of or supplement to the terms of this
Agreement or any other agreement, instrument or other writing relating to the
Agent Receivables or (b) any waiver, consent or indulgence by Purchaser, or any
exercise or non-exercise by Purchaser of any right, power or remedy, under or in
respect o this Agreement, or any other agreements, instruments or writings
relating to the Agent Receivables (whether or not such Non-Insurance Company
Seller has notice or knowledge of any such action or inaction).

                  (d) As collateral to further secure full performance and
payment by each Non-Insurance Company Seller of all now and hereafter
outstanding obligations of such Non-Insurance Company Seller under this SECTION
2.4, each Non-Insurance Company Seller grants to the Purchaser a first priority
security interest in all of such Non-Insurance Company Seller's right, title and
interest in and to all commissions, policy fees, service fees, and reversions or
claims therefor and all other amounts due such NonInsurance Company Seller,
whether accrued or accruing, under the agreement(s) identified on Schedule 1
hereto (the "AGENCY CONTRACTS"), and all rights and benefits of such
Non-Insurance Company Seller under such Agency Contracts with respect to the
collection and payment of such commissions, policy fees service fees and
reversion, and the "proceeds" (as defined in Section 9- 306 of the Uniform
Commercial Code as in effect in the applicable jurisdiction) of the conversion,
voluntary or involuntary, of the foregoing into cash or other liquidated
property. This SECTION 2.4(D) shall constitute a security agreement under
applicable law. Prior to the initial Closing Date, each NonInsurance Company
Seller shall deliver to the Purchaser a UCC-1 financing statement in form and
substance legally sufficient to perfect the Purchaser's security interest in the
applicable Agency Contracts as described in this SECTION 2.4(D), and naming the
Purchaser as secured party and such Non-Insurance Company Seller as the debtor.

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<PAGE>



                                   ARTICLE III

                              ADDITIONAL COVENANTS

                  Section 3.1. APPOINTMENT OF NON-INSURANCE COMPANY SELLERS AS
SERVICING AGENTS. The Purchaser hereby appoints each Non-Insurance Company
Seller, and each Non-Insurance Company Seller hereby accepts such appointment,
as the Purchaser's agent to service, administer and collect the Agent
Receivables sold by it hereunder and the Assigned Commissions and Insurance
Company Receivables assigned by it hereunder (in such capacity, each
NonInsurance Company Seller is referred to herein as a "SERVICING AGENT")
pursuant to the terms of this SECTION 3.1.

                  Section 3.2. RIGHTS AND DUTIES OF SERVICING AGENT. (a) Each
Servicing Agent shall take or cause to be taken all such actions as may be
necessary or advisable to service, administer, account, collect and remit to the
Purchaser from time to time the Assigned Commissions relating to the Agent
Receivables sold by it hereunder, all with reasonable care and diligence and in
accordance with its sound credit and collection policies, which policies shall
not be amended, modified or waived in any material respect without the prior
written consent of the Purchaser. Unless and until otherwise specified by the
Purchaser, each Servicing Agent shall enforce the Purchaser's rights and
interests in and under the Agent Receivables sold by it hereunder and the
related collateral security and guarantees (including the Assigned Commissions
and Agent Contract Rights) and the Insurance Company Receivables.

                  (b) Each Servicing Agent shall collect, and hold in trust for
the account of the Purchaser in an interest bearing account of the Servicing
Agent, the portion of all Collections received after the respective Cut-Off Date
for the Agent Receivables purchased by Purchaser hereunder which represent
Assigned Commissions (together with all interest and/or other finance charges
paid by the Agent Obligors thereon, the "COLLECTED COMMISSIONS"). Not later than
the fifteenth day of each calendar month, each Servicing Agent will (i) furnish
or cause to be furnished to the Purchaser a statement setting forth a detailed
itemization of the amounts which it has received in respect of the repayment of
Agent Receivables and such other information as the Purchaser may reasonably
request; and (ii) pay to the Purchaser such amounts, together with any and all
interest received thereon during the period for which such amounts were held by
such Servicing Agent.

                  (c) Promptly following each calendar quarter, each Servicing
Agent shall reconcile the aggregate Collected Commissions received by it to the
amount of Assigned Commissions which should have been received by it in
repayment of Agent Receivables. To the extent necessary and in accordance with
the Agent Contract Rights relating to such Agent Receivables, each Servicing
Agent shall take such steps as shall be necessary to

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<PAGE>



recover from each Agent Obligor any shortfall in the repayment of Agent
Receivables. Not later than the fifteenth day of each calendar month, each
Servicing Agent will (i) furnish or cause to be furnished to the Purchaser a
statement setting forth a detailed itemization of the amounts which it has
recovered in respect of shortfalls in the repayment of Agent Receivables and
such other information as the Purchaser may reasonably request; and (ii) pay to
the Purchaser such recovered amounts, together with any and all interest
received thereon during the period for which such recovered amounts were held by
such Servicing Agent. The Purchaser hereby authorizes each Servicing Agent to
enforce each Agent Obligor's obligations under the respective Agent Receivables
and related Agent Contract Rights and to collect all amounts due under the Agent
Receivables sold by it hereunder, including, without limitation, endorsing any
instruments representing Collections.

                  Section 3.3. RIGHTS OF THE PURCHASER. (a) At any time or from
time to time, the Purchaser may notify (or cause each Servicing Agent to notify)
the Agent Obligors of its ownership of the Agent Receivables purchased by it
hereunder, and may direct such Agent Obligors to pay all amounts due or to
become due thereunder directly to the Purchaser or its designee.

                  (b) Each Servicing Agent shall, at the Purchaser's request,
(i) assemble all of the documents, instruments and other records (including,
without limitation, computer tapes and disks) which evidence the Agent
Receivables purchased by the Purchaser hereunder and the related Agent Contract
Rights and collateral security (and such other information which the Purchaser
may reasonably request), and make the same available to the Purchaser or its
designee, and (ii) segregate all cash, checks and other instruments received by
it from time to time constituting Collections of Agent Receivables purchased by
the Purchaser hereunder in a manner acceptable to the Purchaser and shall, remit
all such cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Purchaser or its designee.

                  (c) Anything herein to the contrary notwithstanding, the
exercise by the Purchaser of any of its rights hereunder shall not relieve the
Servicing Agent from any of its duties or obligations with respect to the Agent
Contract Rights relating to the Agent Receivables sold by it hereunder.

                  Section 3.4. FURTHER ASSURANCES. At any time or from time to
time after the date hereof, at the Purchaser's request and without further
consideration, each of the Non-Insurance Company Sellers shall execute and
deliver to the Purchaser such other instruments of sale, transfer, conveyance,
assignment and confirmation, provide such materials and information and take
such other actions as the Purchaser may reasonably deem necessary or desirable
in order more effectively to transfer, convey and assign to the Purchaser, and
to confirm the Purchaser's title to,

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                                        8


<PAGE>



all of the Agent Receivables and Assigned Commissions and Agent Contract Rights
relating thereto and the Insurance Company Receivables, and, to the full extent
permitted by law, to cause each of the Non-Insurance Company Sellers to fulfill
its obligations under this Agreement, including, without limitation, the
execution of any financing statements or continuation statements relating to
Agent Receivables or Assigned Commissions, Agent Contract Rights or Insurance
Company Receivables for filing under the provisions of the Uniform Commercial
Code of any applicable jurisdiction.

                  Section 3.5. STANDARD OF CARE. Each Non-Insurance Company
Seller will exercise and give the same care and attention to its obligations
pursuant to Article III as it gives to all other corporate obligations of a
comparable nature, PROVIDED, that it shall not be held responsible for any
losses arising from any action taken by it hereunder in good faith absent
willful misconduct or gross negligence.

                                   ARTICLE IV

                    REPRESENTATIONS, WARRANTIES AND COVENANTS

                  Section 4.1.  REPRESENTATIONS, WARRANTIES AND
COVENANTS.  Each of the Non-Insurance Company Sellers severally,
and not jointly, hereby represents, warrants and covenants to the
Purchaser as follows:

                  (a) on the Cut-Off Date relating to the sale of Agent
Receivables hereunder, each Insurance Policy giving rise to such Agent
Receivables and the related Assigned Commissions will be in full force and
effect in accordance with its terms and, to its knowledge free from any lien,
security interest, encumbrance or other right, title or interest of any Person,
and neither it nor, to its knowledge, any insured had or will have done or
failed to do anything that would or might permit any such insured or it to
terminate any such Insurance Policy or suspend or reduce any payments or
obligations due or to become due thereunder.

                  (b) on the Cut-Off Date relating to the sale of Agent
Receivables hereunder, each Insurance Policy sold by such NonInsurance Company
Seller giving rise to such Agent Receivables is a valid, binding and legally
enforceable obligation of an insurance company and such Non-Insurance Company
Seller had all requisite authority and capacity to issue or sell such Insurance
Policy and no such Insurance Policy violates any applicable law or contravenes
any other agreement to which it is subject.

                  (c) the execution and delivery of this Agreement by it, and
the performance by it of its obligations hereunder, have been duly authorized by
all necessary corporate and other action and do not and, subject to receipt of
the consents set forth in SCHEDULE 4.1(C), will not require any consent or
approval not

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                                        9


<PAGE>



heretofore obtained of any governmental authority or other
Person.

                  (d) this Agreement is the valid, binding and enforceable
obligation of it, and does not violate any applicable law or contravene any
other agreement to which it is a party.

                  (e) other than financing statements on file at any public
office covering its security interests in Assigned Commissions and Agent
Contract Rights which will be assigned to the Purchaser hereunder, there are no
financing statements now on file, or intended so to be, and neither it nor any
of its subsidiaries or affiliates will execute or consent to the filing in any
public office of any financing statement under the laws of any jurisdiction,
relating to the Agent Receivables and the Assigned Commissions, Contract Rights,
Insurance Company Receivables and other collateral relating thereto.

                  (f) on each Closing Date, SCHEDULE I to the Assignment
delivered on such Closing Date will contain a complete and correct statement of
the Agent Receivables being sold on such Closing Date and the Assigned
Commissions and Agent Contracts

relating thereto.

                  (g) upon payment on each Closing Date of the dollar amount to
be paid on such date as described in SECTION 2.2(B)(II) hereof for the purchase
of the Agent Receivables sold to the Purchaser on such date, the Purchaser will
have at such time good title to the Agent Receivables set forth in SCHEDULE I to
the Assignment delivered on such Closing Date.

                                    ARTICLE V

                                  MISCELLANEOUS

                  Section 5.1.  TERMINATION.  This Agreement will
terminate on the Purchase Termination Date, or on such other date
as the parties shall agree to in writing.

                  Section 5.2 NOTICES. All notices, requests and other
communications hereunder must be in writing and will be deemed to have been duly
given only if delivered personally or by facsimile transmission or mailed (first
class postage prepaid) to the other parties at the respective addresses set
forth on the signature pages hereof. All such notices, requests and other
communications will be deemed given upon receipt.

                  Section 5.3. WAIVER. Any term or condition of this Agreement
may be waived at any time by the party that is entitled to the benefit thereof,
but no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any one

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<PAGE>



or more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by Law or otherwise afforded, will be
cumulative and not alternative.

                  Section 5.4.  AMENDMENT.  This Agreement may be
amended, supplemented or modified only by a written instrument
duly executed by or on behalf of each party hereto.

                  Section 5.5. NO THIRD PARTY BENEFICIARY. The terms and
provisions of this Agreement are intended solely for the benefit of each party
hereto and their respective successors or permitted assigns, and except as set
forth in SECTION 5.11 it is not the intention of the parties to confer
third-party beneficiary rights upon any other Person.

                  Section 5.6. SUCCESSORS AND ASSIGNS. This Agreement shall
inure to the benefit of and shall be binding upon the parties hereto and their
respective successors, heirs, personal representatives and permitted assigns.

                  Section 5.7. ENTIRE AGREEMENT. This Agreement supersedes all
prior discussions and agreements between the parties with respect to the subject
matter hereof between the parties, and contains the sole and entire agreement
between the parties hereto with respect to the subject matter hereof.

                  Section 5.8.  HEADINGS.  The headings used in this
Agreement have been inserted for convenience of reference only
and do not define or limit the provisions hereof.

                  Section 5.9.  GOVERNING LAW.  This Agreement shall be
governed by and construed in accordance with the laws of the

State of Texas.

                  Section 5.10. INVALID PROVISIONS. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future Law, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (a) such
provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom.

                  Section 5.11.  NON-INSURANCE COMPANY SELLERS'
OBLIGATIONS.  Each Non-Insurance Company Seller understands that
the Purchaser intends to assign to and grant to a lending

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institution or institutions a security interest in all of its rights, title and
interest to this Agreement. Each Non-Insurance Company Seller hereby consents to
such assignment and grant, and further agrees that all representations,
warranties, covenants and agreements of such Non-Insurance Company Seller made
herein shall also be for the benefit of and inure to such lending institution or
institutions and all holders from time to time of notes issued by Purchaser to
such institution or institutions.

                  Section 5.12. ADDITIONAL SELLERS. From time to time with the
consent of Purchaser, additional insurance companies which are affiliates of
Purchaser may become a party to this Agreement by executing and delivering to
Purchaser a counterpart to the Agreement. Such delivery shall be deemed (a) to
amend the Agreement to include the insurance company affiliate as a party to the
Agreement, (b) to bind such insurance company affiliate to, and require it to
comply with, all applicable provisions of the Agreement, and (c) to entitle such
insurance company affiliate to all rights under, and subject it to the terms and
conditions of, the Agreement as if such insurance company affiliate were an
original signatory thereto.

                  Section 5.13.  COUNTERPARTS.  This Agreement may be
executed in any number of counterparts, each of which will be
deemed an original, but all of which together will constitute one
and the same instrument.

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                  IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party as of the date first
above written.

                                     NON-INSURANCE COMPANY SELLERS:

                                     AMERICAN SENIOR SECURITY PLANS, LLC
                                     By:
                                     Name:
                                     Title:

                                     Address for Notices:
                                     777 Main Street
                                     Suite 900
                                     Fort Worth, Texas  76102

                                     FREEDOM MARKETING, INC.
                                     By:
                                     Name:
                                     Title:

                                     Address for Notices:
                                     777 Main Street
                                     Suite 900
                                     Fort Worth, Texas  76102

                                     HEALTH CARE-ONE INSURANCE AGENCY, INC.
                                     By:
                                     Name:
                                     Title:

                                     Address for Notices:
                                     777 Main Street
                                     Suite 900
                                     Fort Worth, Texas  76102

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<PAGE>



                                     HEALTH CARE ONE MARKETING GROUP INC.
                                     By:
                                     Name:  Stephen D. Davidson
                                     Title: President

                                     Address for Notices:
                                     777 Main Street
                                     Suite 900
                                     Fort Worth, Texas  76102

                                     LSMG, INC.
                                     By:
                                     Name:  M. Curtiss Duwe
                                     Title: President

                                     Address for Notices:
                                     777 Main Street
                                     Suite 900
                                     Fort Worth, Texas  76102

                                     SENIOR BENEFITS OF TEXAS, INC.
                                     By:
                                     Name:  Stephen D. Davidson
                                     Title: President

                                     Address for Notices:
                                     777 Main Street
                                     Suite 900
                                     Fort Worth, Texas  76102

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<PAGE>


                                     WESTBRIDGE MARKETING CORPORATION
                                     By:
                                     Name:  Stephen D. Davidson
                                     Title: President

                                     Address for Notices:
                                     777 Main Street
                                     Suite 900
                                     Fort Worth, Texas  76102

                                     PURCHASER:
 
                                     WESTBRIDGE FUNDING CORPORATION
                                     By:
                                     Name:
                                     Title:

                                     Address for Notices:
                                     777 Main Street
                                     Suite 900
                                     Fort Worth, Texas  76102

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<PAGE>



                                                                       EXHIBIT A

                               FORM OF ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned (the "NON-INSURANCE
COMPANY SELLER") does hereby sell, transfer, convey, assign and deliver to the
Purchaser free and clear of all mortgages, pledges, assessments, security
interests, leases, liens, adverse claims, levies, charges or other encumbrances
of any kind ("LIENS"), other than permitted Liens, on a full recourse basis, all
of the Non-Insurance Company Seller's right, title and interest in, to and under
the Agent Receivables listed in SCHEDULE I hereto, together with all interest
accrued or accruing thereon, all monies due and to become due thereunder, all
guarantees thereof, all collateral security therefor (including, without
limitation, all Assigned Commissions) and Agent Contract Rights, and all
proceeds thereof in each case, listed in SCHEDULE I hereto (the "ASSIGNED
ASSETS"), TO HAVE AND TO HOLD the same unto the Purchaser, its successors and
assigns, forever.

                  The terms Non-Insurance Company Seller, Agent Receivables,
Assigned Commissions and Agent Contract Rights shall have the respective
meanings assigned thereto in the NonInsurance Company Sellers Receivables
Purchase and Sale Agreement, dated as of June 6, 1997, between American Senior
Security Plans, L.L.C., Freedom Marketing, Inc., Health Care-One Insurance
Agency, Inc., a California corporation, Health Care One Marketing Group Inc. a
Texas corporation, LSMG, Inc., a Texas corporation, Senior Benefits of Texas,
Inc., a Texas corporation, and Westbridge Marketing Corporation, a Delaware
corporation and Westbridge Funding Corporation, a Delaware corporation (the
"PURCHASER").

                  The Purchaser hereby accepts the sale, transfer, conveyance,
assignment and delivery of the Assigned Assets.

                  At any time or from time to time after the date hereof, at the
Purchaser's request and without further consideration, the Non-Insurance Company
Seller shall execute and deliver to the Purchaser such other instruments of
sale, transfer, conveyance, assignment and confirmation, provide such materials
and information and take such other actions as the Purchaser may reasonably deem
necessary or desirable in order more effectively to transfer, convey and assign
to the Purchaser, and to confirm the Purchaser's title to, all of the Assigned
Assets, and, to the full extent permitted by law, to put the Purchaser in actual
possession and operating control of the Assigned Assets and to

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<PAGE>



assist the Purchaser in exercising all rights with respect
thereto.

                  This Assignment shall be governed by and construed in
accordance with the laws of the State of Texas applicable to a contract executed
and performed in such State without giving effect to the conflicts of laws
principles thereof, except that if it is necessary in any other jurisdiction to
have the law of such other jurisdiction govern this Assignment in order for this
Assignment to be effective in any respect, then the laws of such other
jurisdiction shall govern this Assignment to such extent.

                  IN WITNESS WHEREOF, the undersigned has caused its duly
authorized officer to execute this Assignment on this ______ day of _________,
____.

                                                  [Non-Insurance Company Seller]

                                                 By:____________________________
                                                        Name:
                                                        Title:

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                                                                      SCHEDULE 1

                                             LIST OF AGENCY CONTRACTS

                  1.       Agent Agreement by and between Blue Cross of
                           California and Health Care-One Insurance Agency,
                           Inc. dated September 1, 1995 and Loan Amendment
                           thereto.  (The contract incorrectly indicates that
                           HMO-ONE is a party to the agreement.  However,
                           Health Care-One Insurance Agency, Inc. is the
                           proper party to the agreement).*

                  2.       Agent Agreement by and between UniCARE Insurance
                           Company and Health Care One Marketing Group Inc.
                           dated February 1, 1996 and the Loan Amendment
                           thereto.*

                  3.       Agent Agreement by and between UniCARE Insurance
                           Company and L.M.S.G., Inc. dated November 1, 1995
                           and the Loan Amendment thereto.  (The contract
                           incorrectly indicates that L.M.G., Inc. is a party
                           to the agreement.  However, LSMG, Inc. is the
                           proper party to the agreement.)*

                  4.       Agent Agreement by and between UniCARE Life &
                           Health Insurance Company and Senior Benefits of
                           Texas, Inc. dated August 6, 1996 and Loan
                           Amendment and Westbridge Guarantee thereto.*

                  5.       General Agent Agreement by and between Westbridge
                           Marketing Corporation and FOUNDATION Health
                           National Life Insurance Company dated September 1,

                           1996.*

                  6.       Agent Agreement by and between MEDFIRST Health
                           Plans of Louisiana, Inc. and Westbridge Marketing
                           Corporation dated March 13, 1997.  (The contract
                           incorrectly indicates that Westbridge Marketing,
                           Inc. is a party to the agreement.  However,
                           Westbridge Marketing Corporation is the proper
                           party to the agreement.)*

                  7.       Agent Agreement by and between UniCARE Life &
                           Health Insurance Company and Westbridge Marketing
                           Corporation dated October 1, 1996 and Loan
                           Amendment thereto.  (The contract incorrectly
                           indicates that Westbridge Marketing, Inc. is a
                           party to the agreement.  However, Westbridge

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<PAGE>



                           Marketing Corporation is the proper party to the
                           agreement.)*

                  8.       Agent Agreement by and between UniCARE Life &
                           Health Insurance Company and Westbridge Marketing
                           Corporation dated August 26, 1996.  (The contract
                           incorrectly indicates that Westbridge Capital
                           Corporation is a party to the agreement.  However,
                           Westbridge Marketing Corporation is the proper
                           party to the agreement.)*

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                                                                 SCHEDULE 4.1(c)

                                CONSENTS REQUIRED

Each of the Agency Contracts marked with an asterisk in Schedule 1 require the
prior written consent of the insurance company parties thereto to permit the
assignment of rights thereunder to the Purchaser.

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