Exhibit 4
                                CREDIT AGREEMENT

                                      among

                           ORION CAPITAL CORPORATION,

                            THE LENDERS NAMED HEREIN,

                           FIRST UNION NATIONAL BANK,
                            as Administrative Agent,

                         BANK OF AMERICA NATIONAL TRUST
                            AND SAVINGS ASSOCIATION,
                             as Documentation Agent,

                                       and

                              FLEET NATIONAL BANK,
                              as Syndication Agent



                  $150,000,000 Senior Unsecured Credit Facility


                                   Arranged by
              FIRST UNION CAPITAL MARKETS A division of Wheat First
                                Securities, Inc.



                        Dated as of July 8, 1998









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                                TABLE OF CONTENTS

                                                                            Page

RECITALS ....................  ................................................1

                                                     ARTICLE I

                                                    DEFINITIONS

1.1      Defined Terms.........................................................1
1.2      Accounting Terms.....................................................17
1.3      Other Terms; Construction............................................17

                                   ARTICLE II

                          AMOUNT AND TERMS OF THE LOANS

2.1      Commitments..........................................................18
2.2      Borrowings...........................................................21
2.3      Disbursements; Funding Reliance; Domicile of Loans...................22
2.4      Notes................................................................23
2.5      Termination and Reduction of Commitments.............................23
2.6      Mandatory Payments and Prepayments...................................24
2.7      Voluntary Prepayments................................................24
2.8      Interest.............................................................25
2.9      Fees.................................................................26
2.10     Interest Periods.....................................................26
2.11     Conversions and Continuations........................................27
2.12     Method of Payments; Computations.....................................28
2.13     Recovery of Payments.................................................29
2.14     Use of Proceeds......................................................30
2.15     Pro Rata Treatment...................................................30
2.16     Increased Costs; Change in Circumstances; Illegality; etc............31
2.17     Taxes................................................................33
2.18     Compensation.........................................................35

                                   ARTICLE IV

                             CONDITIONS OF BORROWING

3.1      Conditions of Initial Borrowing......................................35
3.2      Conditions of All Borrowings.........................................37



                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

4.1      Corporate Organization and Power.....................................38
4.2      Authorization; Enforceability........................................38
4.3      No Violation.........................................................39
4.4      Governmental and Third-Party Authorization; Permits..................39
4.5      Litigation...........................................................40
4.6      Taxes................................................................40
4.7      Subsidiaries.........................................................40
4.8      Full Disclosure......................................................40
4.9      Margin Regulations...................................................41
4.10     No Material Adverse Change...........................................41
4.11     Financial Matters....................................................41
4.12     Ownership of Properties..............................................42
4.13     ERISA................................................................43
4.14     Environmental Matters................................................43
4.15     Compliance With Laws.................................................44
4.16     Regulated Industries.................................................44
4.17     Insurance............................................................44

                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

5.1      Financial Statements.................................................45
5.2      Statutory Financial Statements.......................................46
5.3      Other Business and Financial Information.............................47
5.4      Corporate Existence; Franchises; Maintenance of Properties...........49
5.5      Compliance with Laws.................................................49
5.6      Payment of Obligations...............................................49
5.7      Insurance............................................................49
5.8      Maintenance of Books and Records; Inspection.........................49
5.9      Ownership of Insurance Subsidiaries..................................50
5.10     Year 2000 Compatibility..............................................50
5.11     Further Assurances...................................................50

                                   ARTICLE VII

                               FINANCIAL COVENANTS

6.1      Capitalization Ratio.................................................51
6.2      Consolidated Statutory Surplus.......................................51



                                  ARTICLE VIII

                               NEGATIVE COVENANTS

7.1      Merger; Consolidation................................................51
7.2      Indebtedness.........................................................51
7.3      Liens................................................................51
7.4      Disposition of Assets................................................53
7.5      Transactions with Affiliates.........................................53
7.6      Lines of Business....................................................54
7.7      Limitation on Certain Restrictions...................................54
7.8      Fiscal Year..........................................................55
7.9      Accounting Changes...................................................55

                                   ARTICLE IX

                                EVENTS OF DEFAULT

8.1      Events of Default....................................................55
8.2      Remedies: Termination of Commitments, Acceleration, etc..............57
8.3      Remedies: Set-Off....................................................58

                                    ARTICLE X

                            THE ADMINISTRATIVE AGENT

9.1      Appointment..........................................................58
9.2      Nature of Duties.....................................................59
9.3      Exculpatory Provisions...............................................59
9.4      Reliance by Administrative Agent.....................................59
9.5      Non-Reliance on Administrative Agent and Other Lenders...............60
9.6      Notice of Default....................................................60
9.7      Indemnification......................................................61
9.8      The Administrative Agent in its Individual Capacity..................61
9.9      Successor Administrative Agent.......................................62
9.10     Syndication Agent, Documentation Agent...............................62

                                   ARTICLE XI

                                  MISCELLANEOUS

10.1     Fees and Expenses....................................................63
10.2     Indemnification......................................................63
10.3     Governing Law; Consent to Jurisdiction...............................64
10.4     Arbitration; Preservation and Limitation of Remedies.................64
10.5     Notices..............................................................65
10.6     Amendments, Waivers, etc.............................................66
10.7     Assignments, Participations..........................................67
10.8     No Waiver............................................................69
10.9     Successors and Assigns...............................................69
10.10             Survival....................................................69
10.11             Severability................................................70
10.12             Construction................................................70
10.13             Confidentiality.............................................70
10.14             Counterparts; Effectiveness.................................70
10.15             Disclosure of Information...................................71
10.16             Entire Agreement............................................71















                                                

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                                CREDIT AGREEMENT


     THIS CREDIT AGREEMENT, dated as of the 8th  day of July, 1998 (this
"Agreement"),  is made among ORION CAPITAL  CORPORATION,  a Delaware corporation
with its principal  offices in Farmington,  Connecticut  (the  "Borrower"),  the
banks and financial  institutions  listed on the signature  pages hereto or that
become parties hereto after the date hereof (collectively, the "Lenders"), FIRST
UNION NATIONAL BANK ("First Union"), as administrative agent for the Lenders (in
such capacity, the " Administrative  Agent"), BANK OF AMERICA NATIONAL TRUST AND
SAVINGS   ASSOCIATION,   as   documentation   agent  (in  such   capacity,   the
"Documentation  Agent"),  and FLEET NATIONAL BANK, as syndication agent (in such
capacity, the "Syndication Agent").


                                    RECITALS

A. The Borrower has requested  that the Lenders make available to the Borrower a
revolving credit facility in the aggregate principal amount of $150,000,000. The
Borrower will use the proceeds of this facility for working  capital and general
corporate purposes, including acquisitions, all as more fully described herein.

B. The Lenders are willing to make available to the Borrower the credit facility
described  herein  subject to and on the terms and  conditions set forth in this
Agreement.


                                    AGREEMENT

NOW,  THEREFORE,  in  consideration  of the  mutual  provisions,  covenants  and
agreements herein contained, the parties hereto hereby agree as follows:




                                       1
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

1.1 Defined  Terms.  For  purposes of this  Agreement,  in addition to the terms
defined elsewhere herein,  the following terms shall have the meanings set forth
below (such  meanings to be equally  applicable to the singular and plural forms
thereof):

"Account  Designation  Letter"  shall  mean a letter  from the  Borrower  to the
Administrative  Agent, duly completed and signed by an Authorized Officer and in
form and substance  satisfactory to the Administrative Agent, listing any one or
more  accounts  to  which  the  Borrower  may  from  time  to time  request  the
Administrative Agent to forward the proceeds of any Loans made hereunder.

"Adjusted  LIBOR Rate" shall mean, at any time with respect to any LIBOR Loan, a
rate per  annum  equal to the  LIBOR  Rate as in  effect  at such  time plus the
Applicable Margin Percentage for LIBOR Loans as in effect at such time.

"Affiliate"  shall mean, as to any Person,  each other Person that directly,  or
indirectly through one or more intermediaries,  owns or controls,  is controlled
by or under common control with, such Person or is a director or officer of such
Person.  For purposes of this  definition,  with respect to any Person "control"
shall mean (i) the  possession,  direct or  indirect,  of the power to direct or
cause the  direction of the  management  and  policies of such  Person,  whether
through the ownership of voting  securities,  by contract or otherwise,  or (ii)
the  beneficial  ownership of  securities or other  ownership  interests of such
Person having 20% or more of the combined  voting power of the then  outstanding
securities or other  ownership  interests of such Person  ordinarily  (and apart
from rights  accruing under special  circumstances)  having the right to vote in
the election of directors or other governing body of such Person.

"Administrative Agent" shall mean First Union, in its capacity as Administrative
Agent  appointed  under Article IX, and its successors and permitted  assigns in
such capacity.

"Agreement"  shall  mean  this  Credit  Agreement,   as  amended,   modified  or
supplemented from time to time.

"Annual Statement" shall mean, with respect to any Insurance  Subsidiary for any
fiscal year, the unaudited financial statements of such Insurance Subsidiary for
such fiscal year as required to be filed with the Insurance Regulatory Authority
of its  jurisdiction  of legal domicile and in accordance  with the laws of such
jurisdiction, together with all requested exhibits and schedules thereto.

"Applicable   Margin  Percentage"  shall  mean,  at  any  time,  the  applicable
percentage  (a) to be added to the LIBOR Rate for  purposes of  determining  the
Adjusted  LIBOR  Rate,  and (b) to be used in  calculating  the  commitment  fee
payable  pursuant  to  Section  2.9(a),  in each  case as  determined  under the
following  matrix with reference to the ratings given to the  Borrower's  senior
unsecured  long-term  publicly  traded  Indebtedness  without third party credit
enhancement:



                                       2
<PAGE>

                                                               Applicable Margin
                       Applicable Margin                         Percentage for
Rating Status     Percentage for LIBOR Loans                     Commitment Fee

Level I Status             0.125%                                   0.075%

Level II Status            0.155%                                   0.085%

Level III Status           0.205%                                   0.095%

Level IV Status            0.250%                                   0.100%

Level V Status             0.325%                                   0.125%


For purposes of determining any Applicable Margin Percentage at any date:

(i) "Level I Status"  exists at such date if, as of such date the  Borrower  has
any senior  unsecured  long-term  publicly  traded  Indebtedness  that is rated,
without third party credit enhancement,  (y) A2 or higher by Moody's or (z) A or
higher by Standard & Poor's or Duff & Phelps;

(ii) "Level II Status"  exists at such date if, as of such date,  Level I Status
does not exist and the  Borrower  has any senior  unsecured  long-term  publicly
traded Indebtedness that is rated,  without third party credit enhancement,  (y)
A3 by Moody's or (z) A- by Standard & Poor's or Duff & Phelps;

(iii) "Level III Status" exists at such date if, as of such date,  neither Level
I Status nor Level II Status  exists and the Borrower  has any senior  unsecured
long-term publicly traded Indebtedness that is rated, without third party credit
enhancement,  (y) Baa1 by  Moody's  or (z) BBB+ by  Standard  & Poor's or Duff &
Phelps;

(iv) "Level IV Status" exists at such date if, as of such date,  neither Level I
Status,  Level II Status nor Level III Status  exists and the  Borrower  has any
senior unsecured long-term publicly traded  Indebtedness that is rated,  without
third  party  credit  enhancement,  (y) Baa2 by Moody's or (z) BBB by Standard &
Poor's or Duff & Phelps; and

(v) "Level V Status"  exists at such date if, as of such  date,  none of Level I
Status, Level II Status, Level III Status nor Level IV Status exists.

Any adjustment  required in the Applicable  Margin  Percentages as a result of a
change in any of such  ratings  shall be effective as of the fifth day after the
effective date of such change.

"Assignee" shall have the meaning given to such term in Section 10.7(a).

"Assignment and Acceptance" shall mean an Assignment and Acceptance entered into
between a Lender and an Assignee  and accepted by the  Administrative  Agent and
the Borrower, in substantially the form of Exhibit D.

                                       3
<PAGE>

"Authorized  Officer" shall mean, with respect to any action  specified  herein,
any  officer of the  Borrower  duly  authorized  by  resolution  of the board of
directors of the Borrower to take such action on its behalf, and whose signature
and  incumbency  shall have been  certified to the  Administrative  Agent by the
secretary or an assistant secretary of the Borrower.

"Bankruptcy  Code" shall mean 11 U.S.C ss.ss 101 et seq.,as amended from time to
time, and any successor statute.

"Base Rate" shall mean the higher of (i) the per annum  interest  rate  publicly
announced from time to time by First Union in Charlotte,  North Carolina,  to be
its prime rate (which may not necessarily be its best lending rate), as adjusted
to  conform to changes  as of the  opening of  business  on the date of any such
change in such prime rate,  or (ii) the Federal  Funds Rate plus 0.5% per annum,
as  adjusted  to conform to changes as of the opening of business on the date of
any such change in the Federal Funds Rate.

"Base Rate Loan" shall mean, at any time,  any Loan that bears  interest at such
time at the Base Rate.

"Borrower  Margin Stock" shall mean shares of capital stock of the Borrower that
are held by the Borrower or any of its Subsidiaries  and that constitute  Margin
Stock.

"Borrowing" shall mean the incurrence by the Borrower  (including as a result of
conversions and  continuations of outstanding Loans pursuant to Section 2.11) on
a single  date of a group of Loans of a single  Type  and,  in the case of LIBOR
Loans, as to which a single Interest Period is in effect.

"Borrowing Date" shall mean, with respect to any Borrowing,  the date upon which
such Borrowing is made.

"Business  Day" shall mean (i) any day other than a Saturday or Sunday,  a legal
holiday or a day on which  commercial  banks in  Charlotte,  North  Carolina are
required by law to be closed and (ii) in respect of any  determination  relevant
to a LIBOR Loan, any such day that is also a day on which tradings are conducted
in the London interbank Eurodollar market.

"Capitalization Ratio" shall mean, as of the last day of any fiscal quarter, the
ratio  of (i)  Consolidated  Indebtedness  as of such  date  to (ii)  the sum of
Consolidated  Indebtedness  and  Consolidated  Net Worth,  each as of such date;
provided,  however, that, solely for the purposes of this definition and not for
any other purpose of this Agreement, Consolidated Indebtedness shall not include
(a) any  Qualified  Junior  Subordinated  Debentures,  (b) any  Qualified  Trust
Securities,  or (c) the  Borrower's  guarantee  to the holders of any  Qualified
Trust  Securities of obligations of the issuing  Qualified  Trust under and with
respect to such Qualified Trust Securities.

"Capital Stock" shall mean (i) with respect to any Person that is a corporation,
any and all shares, interests or equivalents in capital stock (whether voting or
nonvoting,  and whether common or preferred) of such corporation,  and (ii) with
respect  to any  Person  that is not a  corporation,  any  and all  partnership,
membership,  limited liability company or other equity interests of such Person;
and in each case, any and all warrants, rights or options to purchase any of the
foregoing.

                                       4
<PAGE>

"Closing  Date" shall mean the first date  (which may be prior to or  concurrent
with the date of the initial Borrowing  hereunder) upon which the conditions set
forth in Section 3.1 are satisfied or waived as provided herein.

"Combined Net Written Premiums" shall mean, at any time, the aggregate  (without
duplication) of Net Written Premiums of each Insurance  Subsidiary at such time,
after  eliminating the effect thereupon of any transactions  among the Insurance
Subsidiaries.

"Combined  Statutory Net Income" shall mean, at any time, the aggregate (without
duplication) of Statutory Net Income of each Insurance  Subsidiary at such time,
after  eliminating the effect thereupon of any transactions  among the Insurance
Subsidiaries.

"Combined  Statutory  Surplus" shall mean, at any time,  the aggregate  (without
duplication)  of Statutory  Surplus of each  Insurance  Subsidiary at such time,
after  eliminating the effect thereupon of any transactions  among the Insurance
Subsidiaries.

"Commitment"  shall mean, with respect to any Lender at any time, the amount set
forth opposite such Lender's name on its signature page hereto under the caption
"Commitment"  or, if such Lender has  entered  into one or more  Assignment  and
Acceptances,  the amount set forth for such Lender at such time in the  Register
maintained  by the  Administrative  Agent  pursuant  to Section  10.7(b) as such
Lender's  "Commitment,"  as such  amount may be reduced at or prior to such time
pursuant to the terms hereof.

"Compliance  Certificate"  shall  mean  a  fully  completed  and  duly  executed
certificate in the form of Exhibit C-1 or Exhibit C-2, as  applicable,  together
with the applicable Covenant Compliance Worksheet.

"Consolidated  Indebtedness"  shall mean, as of any date of  determination,  the
aggregate  (without  duplication)  of all  Indebtedness  of the Borrower and its
Subsidiaries as of such date,  determined on a consolidated  basis in accordance
with GAAP.

"Consolidated  Net Income" shall mean, for any period,  net income (or loss) for
the Borrower and its Subsidiaries for such period,  determined on a consolidated
basis in accordance with GAAP.

"Consolidated  Net Worth" shall mean, as of any date of  determination,  the net
worth of the  Borrower and its  Subsidiaries  as of such date,  determined  on a
consolidated   basis  in  accordance  with  GAAP;   provided,   however,   that,
notwithstanding  the foregoing,  determinations  of Consolidated Net Worth shall
(i)  exclude  any  Disqualified   Capital  Stock,  (ii)  include  the  aggregate
outstanding amount of any Qualified Trust Securities,  and (iii) be made without
regard to the  requirements of Statement of Financial  Accounting  Standards No.
115 issued by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants.

                                       5
<PAGE>

"Consolidated  Total  Assets" shall mean,  at any time,  the aggregate  (without
duplication)  of all  assets  of the  Borrower  and its  Subsidiaries  that  are
required to be included on the asset side of the  consolidated  balance sheet of
the Borrower and its  Subsidiaries  at such time,  determined on a  consolidated
basis in accordance with GAAP.

"Contingent  Obligation"  shall mean, with respect to any Person,  any direct or
indirect liability of such Person with respect to any Indebtedness, liability or
other obligation (other than obligations  pursuant to intercompany  transactions
with Wholly Owned  Subsidiaries)  (the "primary  obligation")  of another Person
(the "primary obligor"), whether or not contingent, (a) to purchase,  repurchase
or otherwise acquire such primary obligation or any property constituting direct
or  indirect  security  therefor,  (b) to advance  or provide  funds (i) for the
payment or discharge of any such primary  obligation or (ii) to maintain working
capital or equity  capital of the primary  obligor or  otherwise to maintain the
net worth or solvency or any balance  sheet item,  level of income or  financial
condition  of the primary  obligor,  (c) to  purchase  property,  securities  or
services  primarily  for the purpose of assuring  the owner of any such  primary
obligation  of the  ability of the  primary  obligor in respect  thereof to make
payment of such primary  obligation  or (d) otherwise to assure or hold harmless
the owner of any such primary obligation against loss or failure or inability to
perform  in  respect  thereof;  provided,  however,  that,  with  respect to the
Borrower and its Subsidiaries,  the term Contingent Obligation shall not include
(x)  endorsements  for collection or deposit in the ordinary  course of business
and  (y)  obligations  entered  into  in the  ordinary  course  of an  Insurance
Subsidiary's  business  under or in respect of  insurance  policies or contracts
issued by it or to which it is a party,  including  Reinsurance  Agreements (and
security  posted by any such Insurance  Subsidiary in the ordinary course of its
business  to  secure  obligations  thereunder).  The  amount  of any  Contingent
Obligation  shall be deemed to be an amount equal to the stated or  determinable
amount of the primary obligation in respect of which such Contingent  Obligation
is made or, if not stated or determinable,  the maximum  reasonably  anticipated
liability in respect thereof.

"Covenant  Compliance  Worksheet" shall mean a fully completed  worksheet in the
form of Attachment A to Exhibit C-1 or Exhibit C-2, as applicable.

"Credit  Documents" shall mean this Agreement,  the Notes and the Fee Letter, in
each case as amended, modified, supplemented or restated from time to time.

"Default"  shall mean any event or condition  that,  with the passage of time or
giving of notice, or both, would constitute an Event of Default.

"Disqualified Capital Stock" shall mean, with respect to any Person, any Capital
Stock of such Person that,  by its terms (or by the terms of any  security  into
which it is convertible or for which it is exchangeable),  or upon the happening
of any event or otherwise,  (i) matures or is mandatorily  redeemable or subject
to any mandatory repurchase  requirement,  pursuant to a sinking fund obligation
or  otherwise,  (ii)  is  redeemable  or  subject  to any  mandatory  repurchase
requirement  at the sole option of the holder  thereof,  or (iii) is convertible
into or  exchangeable  for  (whether  at the  option of the issuer or the holder
thereof) (a) debt securities or (b) any Capital Stock referred to in (i) or (ii)
above,  in each case under (i),  (ii) or (iii)  above at any time on or prior to
the ninetieth day following of the Maturity Date; provided,  however,  that only
the portion of Capital Stock that so matures or is mandatorily redeemable, is so
redeemable  at the  option  of  the  holder  thereof,  or is so  convertible  or
exchangeable on or prior to such date shall be deemed to be Disqualified Capital
Stock.

                                       6
<PAGE>

"Dollars" or "$" shall mean dollars of the United States of America.

"Duff & Phelps" shall mean Duff & Phelps Credit Rating Co., its  successors  and
assigns.

"ERISA"  shall mean the Employee  Retirement  Income  Security  Act of 1974,  as
amended  from  time to  time,  and any  successor  statute,  and all  rules  and
regulations from time to time promulgated thereunder.

"ERISA  Affiliate"  shall  mean any  Person  (including  any trade or  business,
whether or not  incorporated)  that would be deemed to be under "common control"
with, or a member of the same "controlled  group" as, the Borrower or any of its
Subsidiaries,  within the meaning of  Sections  414(b),  (c),  (m) or (o) of the
Internal Revenue Code or Section 4001 of ERISA.

"ERISA  Event"  shall  mean  any of the  following  with  respect  to a Plan  or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer  Plan, (ii) a complete or partial  withdrawal by the Borrower
or any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section  4201 or 4204 of ERISA,  or the  receipt  by the  Borrower  or any ERISA
Affiliate of notice from a Multiemployer  Plan that it is in  reorganization  or
insolvency  pursuant  to  Section  4241 or 4245 of ERISA or that it  intends  to
terminate or has terminated under Section 4041A of ERISA, (iii) the distribution
by the Borrower or any ERISA Affiliate under Section 4041 or 4041A of ERISA of a
notice of intent to terminate  any Plan or the taking of any action to terminate
any Plan, (iv) the commencement of proceedings by the PBGC under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Borrower or any ERISA Affiliate of a notice from any
Multiemployer  Plan that such action has been taken by the PBGC with  respect to
such Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of
any  Multiemployer  Plan against the Borrower or any ERISA  Affiliate to enforce
Section 515 of ERISA,  which is not dismissed  within thirty (30) days, (vi) the
imposition upon the Borrower or any ERISA Affiliate of any liability under Title
IV of ERISA,  other than for PBGC premiums due but not delinquent  under Section
4007 of ERISA,  or the imposition or threatened  imposition of any Lien upon any
assets of the Borrower or any ERISA Affiliate as a result of any alleged failure
to comply with the Internal  Revenue Code or ERISA in respect of any Plan, (vii)
the  engaging  in  or  otherwise  becoming  liable  for a  nonexempt  Prohibited
Transaction  by the Borrower or any ERISA  Affiliate,  (viii) a violation of the
applicable  requirements of Section 404 or 405 of ERISA or the exclusive benefit
rule under Section  401(a) of the Internal  Revenue Code by any fiduciary of any
Plan for which the  Borrower or any of its ERISA  Affiliates  may be directly or
indirectly  liable  or (ix) the  adoption  of an  amendment  to any  Plan  that,
pursuant to Section  401(a)(29)  of the Internal  Revenue Code or Section 307 of
ERISA,  would result in the loss of tax-exempt status of the trust of which such
Plan is a part if the  Borrower or an ERISA  Affiliate  fails to timely  provide
security to such Plan in accordance with the provisions of such sections.

"Eligible Assignee" shall mean (i) a commercial bank organized under the laws of
the United  States or any state  thereof  and having  total  assets in excess of
$1,000,000,000,  (ii) a commercial  bank  organized  under the laws of any other
country  that is a member  of the  Organization  for  Economic  Cooperation  and
Development or any successor thereto (the "OECD") or a political  subdivision of
any such country and having total assets in excess of  $1,000,000,000,  provided
that  such bank or other  financial  institution  is acting  through a branch or
agency located in the United  States,  in the country under the laws of which it
is organized or in another country that is also a member of the OECD,  (iii) the
central bank of any country that is a member of the OECD, (iv) a finance company
or other financial institution or fund that (A) is engaged in making, purchasing
or otherwise investing in loans in the ordinary course of its business,  (B) has
total  assets  in excess of  $500,000,000,  and (C) is not,  and does not have a
substantial interest in, an insurance company, unless otherwise agreed to by the
Borrower,  (v) any  Affiliate  of an  existing  Lender or (vi) any other  Person
approved by the Required  Lenders and the Borrower,  which approval shall not be
unreasonably  withheld  (provided  that  the  Borrower's  consent  shall  not be
required in the event a Default or Event of Default  shall have  occurred and be
continuing).

                                       7
<PAGE>

"Environmental  Claims"  shall mean any and all  administrative,  regulatory  or
judicial actions,  suits, demands, demand letters,  claims, liens,  accusations,
allegations,  notices of noncompliance or violation,  investigations (other than
internal  reports  prepared by any Person in the ordinary course of its business
and not in  response  to any  third  party  action  or  request  of any kind) or
proceedings  relating  in any  way to any  actual  or  alleged  violation  of or
liability under any  Environmental  Law or relating to any permit issued, or any
approval  given,  under any such  Environmental  Law  (collectively,  "Claims"),
including,  without  limitation,  (i) any  and all  Claims  by  governmental  or
regulatory authorities or agencies for enforcement,  cleanup, removal, response,
remedial or other actions or damages  pursuant to any  applicable  Environmental
Law  and  (ii)  any  and  all  Claims  by  any  third  party  seeking   damages,
contribution,  indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous  Substances or arising from alleged injury or threat of
injury to human health or the environment.

"Environmental  Laws"  shall  mean any and all  federal,  state and local  laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals, rules of
common law and orders of courts or  governmental  or regulatory  authorities  or
agencies,  relating to the protection of human health or occupational  safety or
the  environment,  now or  hereafter  in effect and in each case as amended from
time to time,  including,  without  limitation,  requirements  pertaining to the
manufacture,   processing,  distribution,  use,  treatment,  storage,  disposal,
transportation,  handling, reporting,  licensing,  permitting,  investigation or
remediation of Hazardous Substances.

"Event of Default" shall have the meaning given to such term in Section 8.1.

"Exchange Act" shall mean the  Securities  Exchange Act of 1934, as amended from
time to time, and any successor statute, and all rules and regulations from time
to time promulgated thereunder.

"Federal  Funds Rate"  shall  mean,  for any  period,  a  fluctuating  per annum
interest  rate  (rounded  upwards,  if  necessary,  to the nearest  1/100 of one
percentage  point) equal for each day during such period to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next  preceding  Business Day) by the
Federal  Reserve Bank of New York,  or if such rate is not so published  for any
day that is a Business Day, the average of the  quotations  for such day on such
transactions  received  by the  Administrative  Agent from three  federal  funds
brokers of recognized standing selected by the Administrative Agent.

"Federal Reserve Board" shall mean the Board of Governors of the Federal Reserve
System or any successor thereto.

"Fee Letter" shall mean the letter from First Union to the  Borrower,  dated May
21,  1998,  relating to certain  fees  payable by the Borrower in respect of the
transactions   contemplated   by  this  Agreement,   as  amended,   modified  or
supplemented from time to time.

"Financial  Officer"  shall  mean,  with  respect  to the  Borrower,  the  chief
financial  officer,  vice  president  -  finance,  chief  accounting  officer or
treasurer of the Borrower.

"First  Extension  Request" shall have the meaning given to such term in Section
2.1(b).

                                       8
<PAGE>

"GAAP" shall mean generally accepted accounting principles,  as set forth in the
statements,  opinions and pronouncements of the Accounting Principles Board, the
American Institute of Certified Public Accountants and the Financial  Accounting
Standards Board, consistently applied and maintained,  and containing disclosure
of the effect on the financial position or results of operations of any material
change in the  application  of accounting  principles  and practices  during the
relevant  reporting  period,  as in  effect  from time to time  (subject  to the
provisions of Section 1.2).

"Hazardous  Substances"  shall mean any  substances or materials (i) that are or
become  defined  as  hazardous   wastes,   hazardous   substances,   pollutants,
contaminants  or toxic  substances  under any  Environmental  Law, (ii) that are
defined by any  Environmental  Law as toxic,  explosive,  corrosive,  ignitable,
infectious, radioactive, mutagenic or otherwise hazardous, (iii) the presence of
which require  investigation or response under any Environmental  Law, (iv) that
consist of underground or aboveground  storage tanks,  whether empty,  filled or
partially filled with any substance,  or (v) that contain,  without  limitation,
asbestos,   polychlorinated   biphenyls,   urea  formaldehyde  foam  insulation,
petroleum  hydrocarbons,  petroleum  derived  substances  or wastes,  crude oil,
nuclear fuel, natural gas or synthetic gas.

"Hedge  Agreement"  shall mean any interest or foreign  currency rate swap, cap,
collar,  option,  hedge,  forward rate or other similar agreement or arrangement
designed to protect against  fluctuations in interest rates or currency exchange
rates.

                                       9
<PAGE>

"Indebtedness"  shall mean, with respect to any Person,  other than intercompany
transactions  with Wholly Owned  Subsidiaries,  (without  duplication),  (i) all
indebtedness  and obligations of such Person for borrowed money or in respect of
loans or advances of any kind, (ii) all obligations of such Person  evidenced by
notes,  bonds,  debentures  or  similar  instruments,  (iii)  all  reimbursement
obligations  of such Person with  respect to surety  bonds and letters of credit
(in  each  case,  whether  or not  drawn or  matured  and in the  stated  amount
thereof), but excluding,  in the case of the Borrower and its Subsidiaries,  (w)
letters  of credit to the  extent  cash  collateralized,  (x)  letters of credit
issued for the account of Insurance Subsidiaries in the ordinary course of their
business to secure  reinsurance  obligations,  (y) up to (pound) UK 7,000,000 in
face  amount of the letter of credit  issued in favor of Lloyd's c/o The Lloyd's
Corporate  Membership  Unit for the account of Security Re, Inc.,  and (z) other
letters of credit to the extent that the  aggregate  face amount of such letters
of credit  outstanding on the  measurement  date is not in excess of $5,000,000,
(iv) all  obligations  of such  Person  to pay the  deferred  purchase  price of
property or services (other than trade or other accounts  payable arising in the
ordinary course of business),  (v) all indebtedness created or arising under any
conditional  sale or other title  retention  agreement  with respect to property
acquired by such  Person,  (vi) all  obligations  of such Person as lessee under
leases that are or are  required  to be, in  accordance  with GAAP,  recorded as
capital leases,  to the extent such  obligations are required to be so recorded,
(vii) all Disqualified  Capital Stock issued by such Person,  with the amount of
Indebtedness  represented by such Disqualified  Capital Stock being equal to the
greater of its voluntary or involuntary  liquidation  preference and its maximum
fixed repurchase  price, but excluding accrued  dividends,  if any (for purposes
hereof, the " maximum fixed repurchase price" of any Disqualified  Capital Stock
that does not have a fixed  repurchase  price shall be  calculated in accordance
with  the  terms of such  Disqualified  Capital  Stock  as if such  Disqualified
Capital Stock were purchased on any date on which Indebtedness shall be required
to be determined pursuant to this Agreement, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such fair
market value shall be  determined  reasonably  and in good faith by the board of
directors or other  governing  body of the issuer of such  Disqualified  Capital
Stock),  (viii) the net  termination  obligations of such Person under any Hedge
Agreements  (other than Hedge  Agreements  in respect of  Indebtedness  incurred
pursuant to this  Agreement),  calculated as of any date as if such agreement or
arrangement were terminated as of such date, and (ix) all indebtedness  referred
to in clauses (i) through  (viii)  above  secured by any Lien on any property or
asset  owned or held by such  Person  regardless  of  whether  the  indebtedness
secured  thereby shall have been assumed by such Person or is nonrecourse to the
credit of such Person.

"Insurance  Code" shall mean,  with  respect to any  Insurance  Subsidiary,  the
insurance  code of any state where such  Insurance  Subsidiary  is  domiciled or
conducting  business,  as amended from time to time, and any successor  statute,
together  with  all  rules  and  regulations   from  time  to  time  promulgated
thereunder.

"Insurance  Regulatory  Authority"  shall mean,  with  respect to any  Insurance
Subsidiary,  the  insurance  department  or similar  governmental  or regulatory
authority or agency charged with regulating the insurance  business of insurance
companies or insurance holding companies,  in its jurisdiction of legal domicile
and,  to the  extent  that  it has  regulatory  authority  over  such  Insurance
Subsidiary,  in each  other  jurisdiction  in which  such  Insurance  Subsidiary
conducts business or is licensed to conduct business.

                                       10
<PAGE>

"Insurance  Subsidiary" shall mean any Subsidiary of the Borrower the ability of
which to pay dividends is regulated by an Insurance Regulatory Authority or that
is otherwise  required to be regulated thereby in accordance with the applicable
Requirements of Law of its jurisdiction of legal domicile.

"Interest Period" shall have the meaning given to such term in Section 2.10.

"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute, and all rules and regulations from
time to time promulgated thereunder.

"LIBOR Loan" shall mean, at any time,  any Loan that bears interest at such time
at the Adjusted LIBOR Rate.

"LIBOR Rate" shall mean,  with respect to each LIBOR Loan comprising part of the
same Borrowing for any Interest  Period,  an interest rate per annum obtained by
dividing (i) (y) the rate of interest  appearing  on Telerate  Page 3750 (or any
successor  page)  (rounded  upward,  if  necessary,  to the nearest  1/16 of one
percentage  point) or (z) if no such  rate is  available,  the rate of  interest
determined by the Administrative  Agent to be the rate or the arithmetic mean of
rates  (rounded  upward,  if  necessary,  to the nearest 1/16 of one  percentage
point) at which Dollar  deposits in immediately  available  funds are offered by
First Union to first-tier banks in the London interbank  Eurodollar  market,  in
each case under (y) and (z) above at approximately  11:00 a.m., London time, two
(2) Business  Days prior to the first day of such  Interest  Period for a period
substantially equal to such Interest Period and in an amount substantially equal
to the amount of First Union's LIBOR Loan comprising part of such Borrowing,  by
(ii) the amount  equal to 1.00 minus the  Reserve  Requirement  (expressed  as a
decimal) for such Interest Period.

"Lender" shall mean each financial  institution  signatory hereto and each other
financial institution that becomes a "Lender" hereunder pursuant to Sections 2.1
or 10.7, and their respective successors and assigns.

"Lending  Office"  shall mean,  with  respect to any Lender,  the office of such
Lender  designated as its "Lending Office" on its signature page hereto or in an
Assignment and Acceptance,  or such other office as may be otherwise  designated
in  writing  from  time  to  time  by  such  Lender  to  the  Borrower  and  the
Administrative  Agent.  A Lender  may  designate  separate  Lending  Offices  as
provided in the  foregoing  sentence for the  purposes of making or  maintaining
different Types of Loans, and, with respect to LIBOR Loans, such office may be a
domestic or foreign branch or Affiliate of such Lender.

                                       11
<PAGE>

"Lien" shall mean any  mortgage,  pledge,  hypothecation,  assignment,  security
interest, lien (statutory or otherwise),  preference,  priority, charge or other
encumbrance of any nature, whether voluntary or involuntary,  including, without
limitation,  the  interest of any vendor or lessor  under any  conditional  sale
agreement,  title  retention  agreement,  capital  lease or any  other  lease or
arrangement having substantially the same effect as any of the foregoing.

"Loans" shall have the meaning given to such term in Section 2.1.

"Margin Stock" shall have the meaning given to such term in Regulation U.

"Material  Adverse Change" shall mean a material adverse change in the condition
(financial or otherwise),  operations, prospects, business, properties or assets
of the Borrower and its Subsidiaries, taken as a whole.

"Material  Adverse  Effect"  shall mean a material  adverse  effect upon (i) the
condition (financial or otherwise),  operations, prospects, business, properties
or assets  of the  Borrower  and its  Subsidiaries,  taken as a whole,  (ii) the
ability of the Borrower or any Subsidiary to perform its obligations  under this
Agreement or any of the other  Credit  Documents to which it is a party or (iii)
the legality,  validity or  enforceability of this Agreement or any of the other
Credit Documents or the rights and remedies of the Administrative  Agent and the
Lenders hereunder and thereunder.

"Material  Assets"  shall  mean (i) (y) any one or more  assets,  properties  or
businesses of the Borrower or any of its Subsidiaries  comprising,  individually
or in the  aggregate,  greater  than ten  percent  (10%) of  Consolidated  Total
Assets,  and (z) any issued and outstanding  shares of Capital Stock (other than
directors' and similar  qualifying  shares) of any Significant  Subsidiary,  and
(ii) any one or more  insurance  product lines to which greater than ten percent
(10%) of  Combined  Net  Written  Premiums  are  attributable,  in each  case as
determined as of (and,  with respect to Combined Net Written  Premiums,  for the
period of four  fiscal  quarters  ending on) the last day of the fiscal  quarter
then  most  recently  ended  for  which  financial  statements  and  a  Covenant
Compliance  Certificate  have been delivered  pursuant to Section 5.1 or Section
5.2, as  applicable,  and Section 5.3;  provided that in no event shall the term
"Material  Assets"  include (i) any shares of Capital Stock of a Subsidiary that
(x) has  transferred  or  assigned  all or  substantially  all of its  assets to
another  Subsidiary in a transaction or series of  transactions  permitted under
Section 7.1 or 7.4, (y) immediately prior to such transfer or assignment,  was a
Significant Subsidiary,  and (z) as a result of such transfer or assignment,  is
no longer a  Significant  Subsidiary,  or (ii) any Borrower  Margin Stock to the
extent the fair market value thereof exceeds 25% of the fair market value of the
assets of the Borrower and its Subsidiaries (including Borrower Margin Stock).

"Maturity  Date" shall mean the fifth  anniversary  of the Closing Date, as such
date may be extended pursuant to Section 2.1.

"Moody's" shall mean Moody's Investor Service, Inc., its successors and assigns.

                                       12
<PAGE>

"Multiemployer  Plan" shall mean any "multiemployer  plan" within the meaning of
Section  4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate makes,
is making or is obligated to make contributions or has made or been obligated to
make contributions.

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

"Net Income" shall mean,  for any period for any Person or business,  net income
(or  loss)  for such  Person  or  business  for  such  period,  determined  on a
consolidated basis in accordance with GAAP.

"Net Written  Premiums" shall mean, with respect to any Insurance  Subsidiary at
any time, the amount of premiums  written (after deducting or adding premiums on
business  ceded to or assumed from others) as shown on line 32, page 9, Part 2B,
column 4 of the Annual  Statement of such  Insurance  Subsidiary,  or the amount
determined in a consistent  manner for any date other than a date as of which an
Annual Statement of such Insurance Subsidiary is prepared.

"Notes" shall mean the  promissory  notes of the Borrower in  substantially  the
form of Exhibit A, together with any amendments,  modifications  and supplements
thereto, substitutions therefor and restatements thereof.

"Notice  of   Borrowing"   shall  have  the  meaning   given  to  such  term  in
Section 2.2(b).

"Notice of Conversion/Continuation" shall have the meaning given to such term in
Section 2.11(b).

"Obligations"  shall  mean all  principal  of and  interest  (including,  to the
greatest extent permitted by law,  post-petition  interest) on the Loans and all
fees,  expenses,  indemnities and other obligations owing, due or payable at any
time by the Borrower to the Administrative Agent, any Lender or any other Person
entitled thereto, under this Agreement or any of the other Credit Documents.

"PBGC" shall mean the Pension  Benefit  Guaranty  Corporation  and any successor
thereto.

"Participant" shall have the meaning given to such term in Section 10.7(d).

"Permitted Liens" shall have the meaning given to such term in Section 7.3.

"Person" shall mean any corporation,  association,  joint venture,  partnership,
limited liability company, organization, business, individual, trust, government
or agency or political subdivision thereof or any other legal entity.

"Plan"  shall mean any  "employee  pension  benefit  plan" within the meaning of
Section  3(2) of ERISA that is subject  to the  provisions  of Title IV of ERISA
(other  than a  Multiemployer  Plan)  and to which  the  Borrower  or any  ERISA
Affiliate may have any liability.

"Prohibited Transaction" shall mean any transaction described in (i) Section 406
of ERISA that is not exempt by reason of Section  408 of ERISA or by reason of a
Department of Labor prohibited transaction individual or class exemption or (ii)
Section  4975(c) of the  Internal  Revenue  Code that is not exempt by reason of
Section 4975(c)(2) or 4975(d) of the Internal Revenue Code.

                                       13
<PAGE>

"Qualified Junior Subordinated Debentures" shall mean securities of the Borrower
of the type  represented by (and  including) the Borrower's  outstanding  7.701%
Exchange Junior  Subordinated  Deferrable Interest Debentures due April 15, 2028
and 8.73%  Exchange  Junior  Subordinated  Deferrable  Interest  Debentures  due
January  1,  2037  (the  "Existing  Junior  Subordinated   Debentures"),   which
securities are issued to a Qualified Trust and have the following features:  (i)
such  securities  shall  not  by  their  terms  mature  or  become   mandatorily
redeemable,  or  be  redeemable  or  subject  to  any  mandatory  prepayment  or
repurchase  requirement at the option of the holder,  at any time on or prior to
the ninetieth day following the Maturity Date,  (ii) the Borrower shall have the
right (so long as no event of default exists with respect to such securities) to
defer  the  payment  of  interest  on such  securities  from  time to time for a
deferral period  comprised of consecutive  payment periods  aggregating at least
five  years (or such  shorter  aggregate  deferral  period as the  Borrower  may
elect),  and (iii) such  securities  shall be subordinate and junior in right of
payment to the Indebtedness  evidenced by this Agreement on terms and conditions
substantially  similar  to those set forth in the  indentures  for the  Existing
Junior Subordinated Debentures as in effect on the date hereof.

"Qualified  Trust" shall mean any statutory  business  trust,  all of the common
securities of which are owned by the  Borrower,  that is the issuer of Qualified
Trust Securities and that holds as its sole assets Qualified Junior Subordinated
Debentures, and shall include Orion Capital Trust I and Orion Capital Trust II.

"Qualified  Trust  Securities"  shall  mean  capital   securities  of  the  type
represented  by  (and  including)  the  outstanding   7.701%  Exchange   Capital
Securities of Orion Capital Trust II and the 8.73% Exchange Capital  Securities,
which securities are issued by and represent beneficial interests in a Qualified
Trust and have terms consistent, mutatis mutandis, with those terms described in
clauses  (i) and  (ii)  of the  definition  of  "Qualified  Junior  Subordinated
Debentures."

"Quarterly  Statement" shall mean, with respect to any Insurance  Subsidiary for
any fiscal quarter,  the financial  statements of such Insurance  Subsidiary for
such  fiscal  quarter  as  required  to be filed with the  Insurance  Regulatory
Authority of its  jurisdiction  of legal  domicile,  together with all requested
exhibits and schedules thereto.

"Register" shall have the meaning given to such term in Section 10.7(b).

"Regulations D, T, U and X" shall mean Regulations D, T, U and X,  respectively,
of the Federal Reserve Board, and any successor regulations.

"Remaining Lender" shall have the meaning given to such term in Section 2.1(c).

"Repaid Lender" shall have the meaning given to such term in Section 2.1(b).

"Reportable  Event" shall mean (i) any "reportable  event" within the meaning of
Section  4043(c) of ERISA for which the 30-day notice under  Section  4043(a) of
ERISA has not been waived by the PBGC (including any failure to meet the minimum
funding standard of, or timely make any required  installment under, Section 412
of the Internal Revenue Code or Section 302 of ERISA, regardless of the issuance
of any waivers in accordance with Section 412(d) of the Internal  Revenue Code),
(ii) any such " reportable  event"  subject to advance  notice to the PBGC under
Section  4043(b)(3) of ERISA,  (iii) any  application for a funding waiver or an
extension  of any  amortization  period  pursuant to Section 412 of the Internal
Revenue Code, and (iv) a cessation of operations described in Section 4062(e) of
ERISA.

                                       14
<PAGE>

"Required  Lenders"  shall  mean  the  Lenders  holding  outstanding  Loans  and
Unutilized   Commitments   (or,  after  the  termination  of  the   Commitments,
outstanding  Loans)  representing  at least a majority of the  aggregate at such
time  of all  outstanding  Loans  and  Unutilized  Commitments  (or,  after  the
termination of the  Commitments,  the aggregate at such time of all  outstanding
Loans).

"Requirement of Law" shall mean, with respect to any Person,  any statute,  law,
treaty, rule,  regulation,  order, decree, writ,  injunction or determination of
any arbitrator or court or  governmental or regulatory  authority or agency,  in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.

"Reserve  Requirement"  shall mean,  with  respect to any Interest  Period,  the
reserve  percentage  (expressed as a decimal) in effect from time to time during
such Interest  Period,  as provided by the Federal  Reserve  Board,  applied for
determining the maximum reserve  requirements  (including,  without  limitation,
basic, supplemental,  marginal and emergency reserves) applicable to First Union
under Regulation D with respect to "Eurocurrency liabilities" within the meaning
of  Regulation D, or under any similar or successor  regulation  with respect to
Eurocurrency liabilities or Eurocurrency funding.

"Responsible  Officer" shall mean, with respect to the Borrower,  the president,
the chief executive officer,  the chief operating  officer,  the chief financial
officer,  any senior executive  officer,  or any other Financial  Officer of the
Borrower.

"SAP"  shall mean,  with  respect to any  Insurance  Subsidiary,  the  statutory
accounting  practices  prescribed  or  permitted  by  the  Insurance  Regulatory
Authority  of its  jurisdiction  of legal  domicile,  consistently  applied  and
maintained in conformity  with those used in the  preparation of the most recent
financial statements described in Section 4.11(b), and containing  disclosure of
the effect on the  financial  position or results of  operations of any material
change in the  application  of accounting  principles  and practices  during the
relevant  reporting  period,  as in  effect  from time to time  (subject  to the
provisions of Section 1.2).

"Second Extension  Request" shall have the meaning given to such term in Section
2.1(c).

"Significant   Insurance  Subsidiary"  shall  mean,  at  the  relevant  time  of
determination, any Insurance Subsidiary that is a Significant Subsidiary at such
time.

                                       15
<PAGE>

"Significant Subsidiary" shall mean, at the relevant time of determination,  any
Subsidiary  of the  Borrower  having  (after  the  elimination  of  intercompany
accounts) (i) assets  comprising  greater than ten percent (10%) of Consolidated
Total Assets,  (ii) assets to which Net Written Premiums comprising greater than
ten percent (10%) of Combined Net Written  Premiums are  attributable,  or (iii)
Statutory  Surplus  comprising  greater  than  ten  percent  (10%)  of  Combined
Statutory  Surplus,  in each case as  determined  as of (and,  with  respect  to
Combined Net Written Premiums, for the period of four fiscal quarters ending on)
the last day of the fiscal quarter then most recently ended for which  financial
statements and a Covenant Compliance Certificate have been delivered pursuant to
Section 5.1 or Section 5.2, as applicable,  and Section 5.3 (it being understood
that,  for  purposes of clause (ii) above,  only a Subsidiary  having  assets to
which Net Written  Premiums  comprising ten percent (10% of Combined Net Written
Premiums are  attributable  on the  relevant  date of  determination  shall be a
Significant  Subsidiary with respect to such assets,  regardless of whether such
Subsidiary  owned or held such  assets  during  the  four-quarter  period or any
portion thereof over which Combined Written Premiums are calculated for purposes
of such clause (ii)).

"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a division of
the McGraw-Hill Companies, its successors and assigns.

"Statutory Net Income" shall mean, with respect to any Insurance  Subsidiary for
any  period,  the  amount  shown  on line 16,  column  1,  page 4 of the  Annual
Statement of such Insurance Subsidiary for such period, or the amount determined
in a  consistent  manner for any period  other than a period for which an Annual
Statement of such Insurance Subsidiary is prepared.

"Statutory Surplus" shall mean, with respect to any Insurance  Subsidiary at any
time,  the amount shown on line 25, column 1, page 3 of the Annual  Statement of
such Insurance  Subsidiary,  or the amount determined in a consistent manner for
any date other  than a date as of which an Annual  Statement  of such  Insurance
Subsidiary is prepared.

"Subsidiary"  shall mean,  with respect to any Person,  any corporation or other
Person of which more than fifty percent (50%) of the  outstanding  Capital Stock
having  ordinary  voting  power to elect a majority  of the board of  directors,
board of  managers  or other  governing  body of such  Person,  is at the  time,
directly or  indirectly,  owned or  controlled by such Person and one or more of
its other Subsidiaries or a combination thereof (irrespective of whether, at the
time,  securities of any other class or classes of any such corporation or other
Person  shall or might  have  voting  power by  reason of the  happening  of any
contingency).  When  used  without  reference  to  a  parent  entity,  the  term
"Subsidiary" shall be deemed to refer to a Subsidiary of the Borrower.

"Termination  Date"  shall  mean  the  Maturity  Date  or such  earlier  date of
termination of the Commitments pursuant to Section 2.5 or Section 8.2.

"Type" shall have the meaning given to such term in Section 2.2(a).

"Unfunded   Pension   Liability"  shall  mean,  with  respect  to  any  Plan  or
Multiemployer  Plan,  the  excess  of  its  benefit  liabilities  under  Section
4001(a)(16)  of  ERISA  over the  current  value of its  assets,  determined  in
accordance with the applicable assumptions used for funding under Section 412 of
the Code for the applicable plan year.

"Unutilized Commitment" shall mean, with respect to any Lender at any time, such
Lender's  Commitment  at such time less the  aggregate  principal  amount of all
Loans made by such Lender that are outstanding at such time.

"Wholly Owned" shall mean,  with respect to any  Subsidiary of any Person,  that
100% of the  outstanding  Capital  Stock  (other  than  directors'  and  similar
qualifying shares) of such Subsidiary is owned, directly or indirectly,  by such
Person.

                                       16
<PAGE>

1.2  Accounting  Terms.  Except  as  specifically  provided  otherwise  in  this
Agreement,  all accounting terms used herein that are not  specifically  defined
shall have the meanings  customarily given them, and all financial  computations
hereunder  shall be made, in  accordance  with GAAP (or, to the extent that such
terms  apply  solely  to any  Insurance  Subsidiary  or if  otherwise  expressly
required, SAP).  Notwithstanding anything to the contrary in this Agreement, for
purposes of calculation of the financial  covenants set forth in Article VI, all
accounting determinations and computations hereunder shall be made in accordance
with  GAAP or SAP as in  effect as of the date of this  Agreement  applied  on a
basis  consistent  with  the  application  used in  preparing  the  most  recent
financial  statements of the Borrower referred to in Section 4.11(a) or 4.11(b),
as applicable.  In the event that any changes in GAAP or SAP after such date are
required  to be  applied  to  the  Borrower  and  would  materially  affect  the
computation  of the  financial  covenants  contained in Article VI, such changes
shall be followed  only from and after the date this  Agreement  shall have been
amended  to take  into  account  any such  changes.  References  to  amounts  on
particular exhibits, schedules, lines, pages and columns of any Annual Statement
or Quarterly  Statement are based on the format  promulgated by the NAIC for the
1997 Annual  Statements  and Quarterly  Statements.  In the event such format is
changed in future years so that different information is contained in such items
or they no longer exist,  or if the Annual  Statement or Quarterly  Statement is
replaced by the NAIC or by any  Insurance  Regulatory  Authority  after the date
hereof such that  different  forms of  financial  statements  are required to be
furnished by the Insurance  Subsidiaries in lieu thereof,  such references shall
be to information  consistent  with that reported in the referenced  item in the
1997 Annual Statements or Quarterly Statements, as the case may be.

1.3 Other Terms; Construction.  Unless otherwise specified or unless the context
otherwise requires,  all references herein to sections,  annexes,  schedules and
exhibits are references to sections,  annexes,  schedules and exhibits in and to
this  Agreement,  and all terms defined in this Agreement shall have the defined
meanings  when used in any other  Credit  Document or any  certificate  or other
document made or delivered pursuant hereto.


                                       17
<PAGE>

                                   ARTICLE II

                          AMOUNT AND TERMS OF THE LOANS

2.1 Commitments.  (a) Each Lender severally agrees,  subject to and on the terms
and  conditions  of  this  Agreement,   to  make  loans  (each,  a  "Loan,"  and
collectively,  the "Loans") to the  Borrower,  from time to time on any Business
Day during the period from and  including  the Closing Date to but not including
the Termination  Date, in an aggregate  principal amount at any time outstanding
not greater  than its  Commitment  at such time,  provided  that no Borrowing of
Loans shall be made if,  immediately after giving effect thereto,  the aggregate
principal  amount of Loans  outstanding  at such time would exceed the aggregate
Commitments  at such time.  Subject to and on the terms and  conditions  of this
Agreement, the Borrower may borrow, repay and reborrow Loans.

(b) Subject to the  provisions of this  Section,  the Borrower may, in a writing
delivered to the Administrative  Agent and each Lender at any time not less than
sixty  (60) days nor more than 120 days  prior to the first  anniversary  of the
date of this  Agreement,  request the Lenders to extend the  Maturity  Date by a
period  of one (1) year (a  "First  Extension  Request"),  provided  that (i) no
Lender shall be obligated under any circumstances to approve any First Extension
Request,  and the decision to approve or deny any First Extension  Request shall
be in the sole and absolute  discretion of each Lender, (ii) no extension of the
Maturity  Date pursuant to a First  Extension  Request shall be made without the
approval  of  Lenders  holding  at  least  seventy-five  percent  (75%)  of  the
Commitments,  and (iii) in no event shall the Maturity Date be extended pursuant
to a First Extension  Request beyond the sixth  anniversary of the Closing Date.
In  the  event  the  Borrower  makes  a  First  Extension  Request  as  provided
hereinabove, each Lender will, not later than thirty (30) days after delivery of
such First Extension Request, deliver to the Administrative Agent written notice
of its  decision  whether  to  approve  or deny such  First  Extension  Request,
provided that the failure of any Lender to deliver such notice shall be deemed a
decision  to deny  such  First  Extension  Request  and  shall  not  affect  any
obligations of the Borrower  hereunder or result in any liability on the part of
any Lender to the Borrower.  The  Administrative  Agent will promptly notify the
Borrower of the decision of the Lenders.  If all the Lenders  approve such First
Extension  Request,  then the Maturity Date shall be extended by a period of one
(1) year after the  Maturity  Date then in effect.  If Lenders  holding at least
seventy-five  percent  (75%) of the  Commitments  approve  such First  Extension
Request and the number of Lenders not approving such request is one, then (i) if
such non-approving  Lender is not replaced pursuant to Section 2.1(d),  then, on
the Maturity  Date  (without  regard to the requested  extension  thereof),  the
Borrower  shall  repay  all  outstanding  Loans  of such  non-approving  Lender,
together with all accrued but unpaid interest thereon and any accrued but unpaid
fees owing to it  hereunder,  in full,  and such  Lender's  Commitment  shall be
terminated (the Lender to be repaid  hereunder shall be referred to as a "Repaid
Lender"),  and (ii) subject to compliance  with the  provisions of the preceding
clause  (i),  the  Maturity  Date shall be  extended by a period of one (1) year
after the Maturity Date then in effect. If Lenders holding at least seventy-five
(75%) of the Commitments  approve such First Extension Request and the number of
Lenders not  approving  such request is greater than one, then (i) as to any one
(but not more than one)  non-approving  Lender that is not replaced  pursuant to
Section 2.1(d), on the Maturity Date (without regard to the requested  extension
thereof),  the Borrower shall repay all outstanding Loans of such non- approving
Lender,  together with all accrued but unpaid  interest  thereon and any accrued
but unpaid fees owing to it hereunder,  in full,  and such  Lender's  Commitment
shall be terminated (the Lender to be repaid hereunder shall be referred to as a
"Repaid  Lender"),  and (ii) subject to  compliance  with the  provisions of the
preceding clause (i), the Maturity Date shall be extended by a period of one (1)
year after the  Maturity  Date then in effect,  subject  further to the Borrower
identifying one or more  Replacement  Lenders (as defined in Section 2.1(d)) for
the non-approving  Lenders (other than the one Repaid Lender to be repaid on the
Maturity Date  (without  regard to the requested  extension  thereof)  under the
preceding  clause (i)). If any one or more Lenders holding more than twenty-five
percent  (25%) of the  Commitments  denies or is deemed to have denied the First
Extension Request,  then the Maturity Date shall not be extended except pursuant
to Section 2.1(c).

                                       18
<PAGE>

(c) Subject to the  provisions of this  Section,  the Borrower may, in a writing
delivered  to the  Administrative  Agent and each  Lender  other than any Repaid
Lender (such Lenders, collectively, the "Remaining Lenders") not less than sixty
(60) days nor more than 120 days prior to the second  anniversary of the date of
this Agreement,  request the Remaining  Lenders to extend the Maturity Date by a
period of one (1) year (a  "Second  Extension  Request"),  provided  that (i) no
Remaining  Lender  shall be  obligated  under any  circumstances  to approve any
Second  Extension  Request,  and the  decision  to  approve  or deny any  Second
Extension Request shall be in the sole and absolute discretion of each Remaining
Lender,  (ii) no extension of the Maturity Date  pursuant to a Second  Extension
Request shall be made without the approval of Remaining Lenders holding at least
seventy-five  percent (75%) of the Commitments  then held by Remaining  Lenders,
and (iii) in no event shall the  Maturity  Date be  extended  beyond the seventh
anniversary  of the  Closing  Date.  In the  event the  Borrower  makes a Second
Extension Request as provided hereinabove, each Remaining Lender will, not later
than thirty (30) days after delivery of such Second Extension  Request,  deliver
to the Administrative Agent written notice of its decision whether to approve or
deny such Second Extension  Request,  provided that the failure of any Remaining
Lender to deliver  such  notice  shall be deemed a decision  to deny such Second
Extension Request and shall not affect any obligations of the Borrower hereunder
or result in any liability on the part of any Remaining  Lender to the Borrower.
The  Administrative  Agent will promptly  notify the Borrower of the decision of
the  Remaining  Lenders.  If all  the  Remaining  Lenders  approve  such  Second
Extension  Request,  then the Maturity Date shall be extended by a period of one
(1) year after the Maturity Date then in effect. If Remaining Lenders holding at
least  seventy-five  percent  (75%) of the  Commitments  then held by  Remaining
Lenders  approve  such  Second  Extension  Request  and the number of  Remaining
Lenders not  approving  such request is one (and there is no Repaid  Lender that
will be repaid pursuant to a First Extension Request under Section 2.1(b)), then
(i) if such  non-approving  Remaining Lender is not replaced pursuant to Section
2.1(d),  then, on the Maturity Date (without  regard to the requested  extension
thereof),  the Borrower shall repay all outstanding Loans of such  non-approving
Remaining Lender,  together with all accrued but unpaid interest thereon and any
accrued  but unpaid  fees owing to it  hereunder,  in full,  and such  Remaining
Lender's Commitment shall be terminated, and (ii) subject to compliance with the
provisions of the preceding clause (i), the Maturity Date shall be extended by a
period of one (1) year  after the  Maturity  Date then in effect.  If  Remaining
Lenders  holding at least  seventy-five  (75%) of the  Commitments  then held by
Remaining  Lenders  approve  such  Second  Extension  Request  and the number of
Remaining  Lenders not approving  such request is greater than one (and there is
no Repaid Lender that will be repaid pursuant to a First Extension Request under
Section  2.1(b)),  then (i) as to any one (but not more than one)  non-approving
Remaining  Lender  that is not  replaced  pursuant  to  Section  2.1(d),  on the
Maturity Date (without regard to the requested extension thereof),  the Borrower
shall  repay  all  outstanding  Loans of such  non-approving  Remaining  Lender,
together with all accrued but unpaid interest thereon and any accrued but unpaid
fees owing to it hereunder,  in full,  and such  Remaining  Lender's  Commitment
shall  thereupon  be  terminated,  and  (ii)  subject  to  compliance  with  the
provisions of the preceding clause (i), the Maturity Date shall be extended by a
period of one (1) year after the Maturity Date then in effect,  subject  further
to the  Borrower  identifying  one or more  Replacement  Lenders  (as defined in
Section 2.1(d)) for the non-approving Remaining Lenders (other than the one non-
approving  Remaining Lender to be repaid on the Maturity Date (without regard to
the requested  extension  thereof) under the preceding clause (i)). If Remaining
Lenders  holding at least  seventy-five  (75%) of the  Commitments  then held by
Remaining  Lenders approve such Second  Extension  Request and there is a Repaid
Lender that will be repaid pursuant to a First  Extension  Request under Section
2.1(b),  then the  Maturity  Date shall be  extended by a period of one (1) year
after the Maturity Date then in effect,  subject to the Borrower identifying one
or more  Replacement  Lenders  (as  defined  in Section  2.1(d))  for all of the
non-approving  Remaining  Lenders.  If any one or more Remaining Lenders holding
more than  twenty-five  percent (25%) of the Commitments  then held by Remaining
Lenders denies or is deemed to have denied the Second  Extension  Request,  then
the Maturity Date shall not be extended and, unless all of the Remaining Lenders
agree  otherwise,  the  Borrower  shall not be  entitled  to deliver any further
extension request at any time thereafter.

                                       19
<PAGE>

(d) The Borrower  may, at any time and so long as no Default or Event of Default
has then occurred and is continuing,  replace any Lender that has not approved a
First Extension  Request or any Remaining  Lender that has not approved a Second
Extension Request by written notice to such Lender and the Administrative  Agent
given not more than  ninety  (90) days after any such event  identifying  one or
more  Persons  each of  which  shall  be an  Eligible  Assignee  and  reasonably
acceptable  to  the   Administrative   Agent,  which  acceptance  shall  not  be
unreasonably  withheld  (each, a "Replacement  Lender"),  to replace such Lender
(the "Replaced  Lender"),  provided that (i) the notice from the Borrower to the
Replaced  Lender and the  Administrative  Agent provided for  hereinabove  shall
specify an  effective  date for such  replacement  (the  "Replacement  Effective
Date"),  which shall be at least five (5) but no more than thirty (30)  Business
Days after such notice is given, (ii) as of the Replacement Effective Date, each
Replacement  Lender  shall  enter into an  Assignment  and  Acceptance  with the
Replaced  Lender  pursuant to Section  10.7(a) (but shall not be required to pay
the processing  fee otherwise  payable to the  Administrative  Agent pursuant to
Section 10.7(a)),  pursuant to which such Replacement Lenders collectively shall
acquire,  in such proportion  among them as they may agree with the Borrower and
the  Administrative  Agent,  all (but not less than all) of the  Commitment  and
outstanding Loans of the Replaced Lender,  and, in connection  therewith,  shall
pay (y) to the Replaced  Lender,  as the purchase price in respect  thereof,  an
amount  equal  to  the  sum  as  of  the  Replacement  Effective  Date  (without
duplication) of (1) the unpaid  principal  amount of, and all accrued but unpaid
interest on, all  outstanding  Loans of the Replaced Lender and (2) the Replaced
Lender's  ratable  share of all accrued  but unpaid  fees owing to the  Replaced
Lender under Section 2.9(a),  and (z) to the  Administrative  Agent, for its own
account,  any amounts owing to the Administrative  Agent by the Replaced Lender,
(iii) all other  obligations of the Borrower owing to the Replaced  Lender under
this Agreement (other than those specifically  described in clause (ii) above in
respect of which the  assignment  purchase  price has been,  or is  concurrently
being,  paid) shall be paid in full by the Borrower to the Replaced Lender on or
prior to the  Replacement  Effective  Date,  and (iv) the Borrower shall pay the
Administrative Agent the processing fee provided for in Section 10.7(a).

                                       20
<PAGE>

2.2  Borrowings.  (a) The Loans shall, at the option of the Borrower and subject
to the terms and  conditions  of this  Agreement,  be either  Base Rate Loans or
LIBOR Loans (each, a "Type" of Loan), provided that (i) all Loans comprising the
same Borrowing shall, unless otherwise  specifically  provided herein, be of the
same Type,  and (ii) any Loans made on or within three (3)  Business  Days after
the Closing Date shall be made initially as Base Rate Loans.

(b) In order to make a Borrowing (other than Borrowings involving  continuations
or  conversions of  outstanding  Loans,  which shall be made pursuant to Section
2.11), the Borrower will give the Administrative  Agent written notice not later
than 1:00 p.m.,  Charlotte time, three (3) Business Days prior to each Borrowing
to be comprised of LIBOR Loans and one (1) Business Day prior to each  Borrowing
to be comprised of Base Rate Loans;  provided,  however,  that  requests for the
Borrowing of any Loans to be made on the Closing Date may, at the  discretion of
the Administrative  Agent, be given later than the times specified  hereinabove.
Each such notice (each, a "Notice of Borrowing") shall be irrevocable,  shall be
given in the form of Exhibit B-1 and shall specify (1) the  aggregate  principal
amount and initial Type of the Loans to be made pursuant to such Borrowing,  (2)
in the case of a Borrowing of LIBOR  Loans,  the initial  Interest  Period to be
applicable thereto, and (3) the requested date of such Borrowing (the "Borrowing
Date"),  which  shall be a  Business  Day.  Upon  its  receipt  of a  Notice  of
Borrowing,  the  Administrative  Agent will  promptly  notify each Lender of the
proposed Borrowing. Notwithstanding anything to the contrary contained herein:

(i)  the aggregate  principal  amount of each  Borrowing  comprised of Base Rate
     Loans  shall  not be less  than  $1,000,000  or, if  greater,  an  integral
     multiple of $500,000 in excess  thereof (or, if less,  in the amount of the
     aggregate  Unutilized  Commitments),  and the aggregate principal amount of
     each Borrowing  comprised of LIBOR Loans shall not be less than  $3,000,000
     or, if greater, an integral multiple of $1,000,000 in excess thereof;

(ii) if the Borrower shall have failed to designate the Type of Loans comprising
     a  Borrowing,  the Borrower  shall be deemed to have  requested a Borrowing
     comprised of Base Rate Loans; and

(iii)if the  Borrower  shall have failed to select the  duration of the Interest
     Period to be applicable to any Borrowing of LIBOR Loans,  then the Borrower
     shall be deemed to have selected an Interest  Period with a duration of one
     month.

(c)  Not later than 2:00 p.m.,  Charlotte time, on the requested Borrowing Date,
     each Lender will make available to the  Administrative  Agent at its office
     referred   to  in   Section 10.5   (or  at  such  other   location  as  the
     Administrative   Agent  may  designate)  an  amount,   in  Dollars  and  in
     immediately  available funds, equal to the amount of the Loan to be made by
     such Lender.  To the extent the Lenders have made such amounts available to
     the Administrative Agent as provided hereinabove,  the Administrative Agent
     will make the  aggregate  of such  amounts  available  to the  Borrower  in
     accordance  with  Section 2.3(a)  and in  like  funds  as  received  by the
     Administrative Agent.

2.3  Disbursements; Funding Reliance; Domicile of Loans. (a) The Borrower hereby
     authorizes  the  Administrative  Agent to  disburse  the  proceeds  of each
     Borrowing in accordance with the terms of any written instructions from any
     of the Authorized  Officers,  provided that the Administrative  Agent shall
     not be obligated under any  circumstances to forward amounts to any account
     not listed in an Account  Designation  Letter. The Borrower may at any time
     deliver to the Administrative  Agent an Account  Designation Letter listing
     any  additional  accounts or  deleting  any  accounts  listed in a previous
     Account Designation Letter.

                                       21
<PAGE>

(b)  Unless the Administrative Agent has received, prior to 2:00 p.m., Charlotte
     time, on the relevant  Borrowing  Date,  written  notice from a Lender that
     such  Lender  will not make  available  to the  Administrative  Agent  such
     Lender's  ratable  portion of the relevant  Borrowing,  the  Administrative
     Agent may assume that such Lender has made such  portion  available  to the
     Administrative Agent in immediately  available funds on such Borrowing Date
     in  accordance  with the  applicable  provisions  of Section   2.2, and the
     Administrative  Agent may, in reliance upon such assumption,  but shall not
     be obligated to, make a corresponding  amount  available to the Borrower on
     such  Borrowing  Date. If and to the extent that such Lender shall not have
     made  such  portion  available  to  the   Administrative   Agent,  and  the
     Administrative Agent shall have made such corresponding amount available to
     the Borrower, such Lender, on the one hand, and the Borrower, on the other,
     severally agree to pay to the Administrative Agent forthwith on demand such
     corresponding amount,  together with interest thereon for each day from the
     date such  amount is made  available  to the  Borrower  until the date such
     amount is  repaid  to the  Administrative  Agent,  (i) in  the case of such
     Lender, at the Federal Funds Rate, and (ii) in the case of the Borrower, at
     the  rate of  interest  applicable  at  such  time  to the  Type  of  Loans
     comprising   such  Borrowing,   as  determined   under  the  provisions  of
     Section 2.8.  If such Lender shall repay to the  Administrative  Agent such
     corresponding  amount,  such amount shall  constitute such Lender's Loan as
     part of such Borrowing for purposes of this  Agreement.  The failure of any
     Lender to make any Loan  required to be made by it as part of any Borrowing
     shall not relieve any other Lender of its obligation,  if any, hereunder to
     make its Loan as part of such Borrowing, but no Lender shall be responsible
     for the  failure  of any  other  Lender to make the Loan to be made by such
     other Lender as part of any Borrowing.

(c)  Each Lender may, at its option,  make and  maintain  any Loan at, to or for
     the account of any of its Lending  Offices,  provided  that any exercise of
     such option shall not affect the  obligation  of the Borrower to repay such
     Loan to or for the account of such Lender in  accordance  with the terms of
     this Agreement.

2.4  Notes.  (a) The Loans  made by each  Lender  shall be  evidenced  by a Note
     appropriately completed in substantially the form of Exhibit A.

(b)  Each Note issued to a Lender shall (i) be executed by the Borrower, (ii) be
     payable to the order of such Lender,  (iii) be dated as of the Closing Date
     (or,  in the case of a Note  issued  after  the  Closing  Date,  dated  the
     effective date of the applicable  Assignment and Acceptance),  (iv) be in a
     stated  principal  amount  equal  to  such  Lender's  Commitment,  (v) bear
     interest in accordance with the provisions of Section 2.8,  as the same may
     be  applicable  from time to time to the  Loans  made by such  Lender,  and
     (vi) be  entitled to all of the  benefits of this  Agreement  and the other
     Credit Documents and subject to the provisions hereof and thereof.

(c)  Each Lender will record on its internal records the amount and Type of each
     Loan made by it and each  payment  received  by it in respect  thereof  and
     will, in the event of any transfer of any of its Notes,  either  endorse on
     the  reverse  side  thereof  or on a  schedule  attached  thereto  (or  any
     continuation  thereof)  the  outstanding  principal  amount and Type of the
     Loans  evidenced  thereby  as of the  date  of  transfer  or  provide  such
     information on a schedule to the Assignment and Acceptance relating to such
     transfer;  provided,  however,  that the  failure of any Lender to make any
     such  recordation  or provide any such  information,  or any error therein,
     shall not affect the  Borrower's  obligations  under this  Agreement or the
     Notes.

(d)  Upon  termination  of  the  Commitments,  payment  in  full  of  the  Loans
     hereunder,  including all accrued but unpaid interest  thereon,  as well as
     any premiums or penalties,  if any, and the payment of any outstanding fees
     earned  hereunder or pursuant to the terms of any of the Credit  Documents,
     each  Lender will mark its Note "paid in full" and  promptly  return to the
     Borrower such canceled Note.

                                       22
<PAGE>

2.5  Termination  and Reduction of  Commitments.  (a) The  Commitments  shall be
     automatically and permanently  terminated at 5:00 p.m.,  Charlotte time, on
     the  Termination  Date (or at 5:00 p.m.,  Charlotte time, on July 15, 1998,
     but only if the  Closing  Date shall not have  occurred on or prior to such
     date).

(b)  At any time and from time to time after the date hereof, upon not less than
     five (5) Business Days' prior written notice to the  Administrative  Agent,
     the  Borrower  may  terminate  in whole  or  reduce  in part the  aggregate
     Unutilized  Commitments,  provided that any such partial reduction shall be
     in an  aggregate  amount of not less than  $5,000,000  or, if  greater,  an
     integral  multiple  of  $1,000,000  in excess  thereof.  The  amount of any
     termination or reduction made under this  subsection (b) may not thereafter
     be  reinstated.   Each  reduction  of  the  Commitments  pursuant  to  this
     subsection  shall be applied  ratably among the Lenders  according to their
     respective Commitments.

2.6  Mandatory  Payments and  Prepayments.  (a) Except to the extent due or paid
     sooner  pursuant  to  the  provisions  of  this  Agreement,  the  aggregate
     outstanding  principal of the Loans shall be due and payable in full on the
     Maturity Date.

(b)  In the event that,  at any time,  the aggregate  principal  amount of Loans
     outstanding  at such time shall exceed the  aggregate  Commitments  at such
     time  (after  giving  effect to any  concurrent  termination  or  reduction
     thereof),  the Borrower will immediately  prepay the outstanding  principal
     amount of the Loans in the amount of such excess.

(c)  Each payment or prepayment pursuant to the provisions of this Section shall
     be applied  ratably among the Lenders  holding the Loans being prepaid,  in
     proportion to the principal amount held by each, and shall be applied first
     to prepay all Base Rate Loans and thereafter any LIBOR Loans.

(d)  Each payment or prepayment of a LIBOR Loan made pursuant to the  provisions
     of this  Section  on a day other than the last day of the  Interest  Period
     applicable  thereto shall be made together with all amounts  required under
     Section 2.18 to be paid as a consequence thereof.

2.7  Voluntary Prepayments.  (a) At any time and from time to time, the Borrower
     shall  have the right to prepay  the  Loans,  in whole or in part,  without
     premium or penalty (except as provided in clause (iii) below), upon written
     notice  given  to the  Administrative  Agent  not  later  than  1:00  p.m.,
     Charlotte time,  three (3) Business Days prior to each intended  prepayment
     of LIBOR Loans and one (1) Business Day prior to each  intended  prepayment
     of Base Rate Loans,  provided that (i) each partial  prepayment shall be in
     an aggregate  principal  amount of not less than $1,000,000 or, if greater,
     an  integral  multiple  of  $500,000  in excess  thereof,  (ii) no  partial
     prepayment  of LIBOR  Loans made  pursuant  to any single  Borrowing  shall
     reduce the aggregate  outstanding  principal  amount of the remaining LIBOR
     Loans under such Borrowing to less than $3,000,000 or to any greater amount
     not an integral multiple of $1,000,000 in excess thereof,  and (iii) unless
     made together with all amounts  required under Section 2.18 to be paid as a
     consequence  of such  prepayment,  a prepayment of a LIBOR Loan may be made
     only on the last day of the Interest Period applicable  thereto.  Each such
     notice  shall be given in the form of  Exhibit  B-3 and shall  specify  the
     proposed date of such  prepayment  and the aggregate  principal  amount and
     Type of the  Loans to be  prepaid  (and,  in the case of LIBOR  Loans,  the
     Interest  Period of the  Borrowing  pursuant to which  made),  and shall be
     irrevocable  and shall bind the  Borrower  to make such  prepayment  on the
     terms specified therein.  Loans prepaid pursuant to this subsection (a) may
     be reborrowed, subject to the terms and conditions of this Agreement.

                                       23
<PAGE>

(b)  Each prepayment of the Loans made pursuant to subsection (a) above shall be
     applied  ratably  among the Lenders  holding the Loans  being  prepaid,  in
     proportion to the principal amount held by each.

2.8  Interest.  (a) The  Borrower  will pay  interest  in  respect of the unpaid
     principal  amount of each Loan,  from the date of Borrowing  thereof  until
     such  principal  amount shall be paid in full,  (i) at the Base Rate, as in
     effect from time to time  during the periods  that such Loan is a Base Rate
     Loan,  and (ii) at the Adjusted  LIBOR Rate, as in effect from time to time
     during the periods that such Loan is a LIBOR Loan.

(b)  Upon the  occurrence  and during the  continuance of an Event of Default as
     the result of failure by the  Borrower to pay any  principal of or interest
     on any  Loan,  any fees or other  amount  hereunder  when due  (whether  at
     maturity,  pursuant to acceleration or otherwise),  and (at the election of
     the Required Lenders) upon the occurrence and during the continuance of any
     other Event of Default, all outstanding principal amounts of the Loans and,
     to the greatest extent  permitted by law, all interest accrued on the Loans
     and all other accrued and  outstanding  fees and other  amounts  hereunder,
     shall  bear  interest  at a rate  per  annum  equal  to the  interest  rate
     applicable  from time to time  thereafter  to such Loans  (whether the Base
     Rate or the Adjusted LIBOR Rate) plus 2% (or, in the case of fees and other
     amounts,  at the Base  Rate plus  2%),  and,  in each  case,  such  default
     interest shall be payable on demand.  To the greatest  extent  permitted by
     law,  interest  shall continue to accrue after the filing by or against the
     Borrower of any petition  seeking any relief in bankruptcy or under any law
     pertaining to insolvency or debtor relief.

(c) Accrued (and theretofore unpaid) interest shall be payable as follows:

(i)  in respect of each Base Rate Loan  (including any Base Rate Loan or portion
     thereof paid or prepaid  pursuant to the provisions of Section 2.6,  except
     as  provided  hereinbelow),  in  arrears on the last  Business  Day of each
     calendar  quarter,  beginning  with the first  such day to occur  after the
     Closing Date;  provided,  that in the event the Loans are repaid or prepaid
     in full and the Commitments have been terminated,  then accrued interest in
     respect  of all  Base  Rate  Loans  shall be  payable  together  with  such
     repayment or prepayment on the date thereof;

(ii) in respect of each LIBOR Loan  (including any LIBOR Loan or portion thereof
     paid or  prepaid  pursuant  to the  provisions  of Section  2.6,  except as
     provided  hereinbelow),  in  arrears  (y) on the last  Business  Day of the
     Interest  Period  applicable  thereto  (subject to the provisions of clause
     (iv) in Section 2.10) and (z) in addition, in the case of a LIBOR Loan with
     an  Interest  Period  having a duration  of six  months,  on the date three
     months after the first day of such Interest Period;  provided,  that in the
     event all LIBOR  Loans made  pursuant to a single  Borrowing  are repaid or
     prepaid in full, then accrued interest in respect of such LIBOR Loans shall
     be payable  together with such repayment or prepayment on the date thereof;
     and

(iii)in respect of any Loan, at maturity  (whether  pursuant to  acceleration or
     otherwise) and, after maturity, on demand.

                                       24
<PAGE>

(d)  Nothing  contained in this Agreement or in any other Credit  Document shall
     be deemed to  establish or require the payment of interest to any Lender at
     a rate in excess of the maximum rate  permitted by  applicable  law. If the
     amount of interest  payable  for the account of any Lender on any  interest
     payment date would exceed the maximum amount permitted by applicable law to
     be charged by such Lender,  the amount of interest  payable for its account
     on such  interest  payment  date  shall be  automatically  reduced  to such
     maximum  permissible  amount. In the event of any such reduction  affecting
     any Lender,  if from time to time thereafter the amount of interest payable
     for the account of such Lender on any  interest  payment date would be less
     than the maximum  amount  permitted by applicable law to be charged by such
     Lender,  then the  amount  of  interest  payable  for its  account  on such
     subsequent  interest payment date shall be automatically  increased to such
     maximum  permissible  amount,  provided that at no time shall the aggregate
     amount  by which  interest  paid for the  account  of any  Lender  has been
     increased  pursuant to this sentence  exceed the aggregate  amount by which
     interest paid for its account has theretofore  been reduced pursuant to the
     previous sentence.

(e)  The Administrative Agent shall promptly notify the Borrower and the Lenders
     upon  determining the interest rate for each Borrowing of LIBOR Loans after
     its   receipt  of  the   relevant   Notice  of   Borrowing   or  Notice  of
     Conversion/Continuation,  and upon each change in the Base Rate;  provided,
     however,  that the  failure  of the  Administrative  Agent to  provide  the
     Borrower  or the  Lenders  with any such notice  shall  neither  affect any
     obligations  of the  Borrower  or the Lenders  hereunder  nor result in any
     liability  on the part of the  Administrative  Agent to the Borrower or any
     Lender.  Each  such  determination  (including  each  determination  of the
     Reserve  Requirement)  shall,  absent  manifest  error,  be conclusive  and
     binding on all parties hereto.

2.9 Fees. The Borrower agrees to pay:

(a)  To the  Administrative  Agent, for the account of each Lender, a commitment
     fee for each calendar  quarter (or portion thereof) for the period from the
     date of this Agreement to the  Termination  Date, at a per annum rate equal
     to the  Applicable  Margin  Percentage  in effect for such fee from time to
     time during such  quarter,  on such  Lender's  ratable  share (based on the
     proportion that its Commitment  bears to the aggregate  Commitments) of the
     aggregate Commitments (without regard to usage),  payable in arrears (i) on
     the last Business Day of each calendar  quarter,  beginning  with the first
     such day to occur after the Closing Date, and (ii) on the Termination Date;
     and

(b)  To the Administrative Agent, for its own account, the annual administrative
     fee  described in  paragraph  (2) of the Fee Letter,  on the terms,  in the
     amount and at the times set forth therein.

                                       25
<PAGE>

2.10 Interest Periods.  Concurrently with the giving of a Notice of Borrowing or
     Notice of  Conversion/Continuation in respect of any Borrowing comprised of
     Base Rate Loans to be converted  into,  or LIBOR Loans to be continued  as,
     LIBOR Loans,  the Borrower shall have the right to elect,  pursuant to such
     notice,  the interest period (each, an "Interest  Period") to be applicable
     to such LIBOR Loans,  which  Interest  Period  shall,  at the option of the
     Borrower,  be a one, two,  three or six-month  period;  provided,  however,
     that:

(i)  all LIBOR Loans  comprising a single  Borrowing shall at all times have the
     same Interest Period;

(ii) the initial  Interest  Period for any LIBOR Loan shall commence on the date
     of the Borrowing of such LIBOR Loan (including the date of any continuation
     of, or conversion  into,  such LIBOR Loan),  and each  successive  Interest
     Period applicable to such LIBOR Loan shall commence on the day on which the
     next preceding Interest Period applicable thereto expires;

(iii)LIBOR  Loans may not be  outstanding  under  more  than  five (5)  separate
     Interest  Periods at any one time (for which purpose Interest Periods shall
     be deemed to be separate even if they are coterminous);

(iv) if any  Interest  Period  otherwise  would  expire  on a day  that is not a
     Business  Day,  such  Interest  Period shall expire on the next  succeeding
     Business  Day unless  such next  succeeding  Business  Day falls in another
     calendar month, in which case such Interest Period shall expire on the next
     preceding Business Day;

(v)  the Borrower  may not select any  Interest  Period that begins prior to the
     Closing Date or that expires after the Maturity Date;

(vi) if any Interest  Period  begins on a day for which there is no  numerically
     corresponding  day in the calendar month during which such Interest  Period
     would  otherwise  expire,  such  Interest  Period  shall expire on the last
     Business Day of such calendar month; and

(vii)if, upon the expiration of any Interest Period applicable to a Borrowing of
     LIBOR Loans,  the Borrower shall have failed to elect a new Interest Period
     to be applicable to such LIBOR Loans,  then the Borrower shall be deemed to
     have  elected  to convert  such LIBOR  Loans into Base Rate Loans as of the
     expiration of the then current Interest Period applicable thereto.

                                       26
<PAGE>

2.11 Conversions  and  Continuations.  (a) The Borrower shall have the right, on
     any Business Day  occurring on or after the Closing  Date,  to elect (i) to
     convert all or a portion of the  outstanding  principal  amount of any Base
     Rate Loans into LIBOR  Loans,  or to convert any LIBOR  Loans the  Interest
     Periods  for which end on the same day into  Base  Rate  Loans,  or (ii) to
     continue all or a portion of the outstanding  principal amount of any LIBOR
     Loans the Interest  Periods for which end on the same day for an additional
     Interest Period,  provided that (x) any such conversion of LIBOR Loans into
     Base Rate Loans shall  involve an  aggregate  principal  amount of not less
     than $1,000,000 or, if greater,  an integral multiple of $500,000 in excess
     thereof;  any such conversion of Base Rate Loans into, or continuation  of,
     LIBOR Loans shall  involve an aggregate  principal  amount of not less than
     $3,000,000  or, if greater,  an integral  multiple of  $1,000,000 in excess
     thereof; and no partial conversion of LIBOR Loans made pursuant to a single
     Borrowing shall reduce the outstanding principal amount of such LIBOR Loans
     to less than  $3,000,000 or to any greater amount not an integral  multiple
     of  $1,000,000  in excess  thereof,  (y) except as  otherwise  provided  in
     Section 2.16(d),  LIBOR Loans may be converted into Base Rate Loans only on
     the last day of the Interest Period applicable  thereto (and, in any event,
     if a LIBOR  Loan is  converted  into a Base Rate Loan on any day other than
     the last day of the Interest Period applicable  thereto,  the Borrower will
     pay, upon such  conversion,  all amounts  required under Section 2.18 to be
     paid as a  consequence  thereof),  and (z) no conversion of Base Rate Loans
     into LIBOR Loans or continuation  of LIBOR Loans shall be permitted  during
     the continuance of a Default or Event of Default.

(b)  The  Borrower  shall make each such  election by giving the  Administrative
     Agent written notice not later than 1:00 p.m.,  Charlotte  time,  three (3)
     Business  Days prior to the intended  effective  date of any  conversion of
     Base Rate Loans into, or continuation  of, LIBOR Loans and one (1) Business
     Day prior to the intended  effective  date of any conversion of LIBOR Loans
     into  Base   Rate   Loans.   Each  such   notice   (each,   a  "Notice   of
     Conversion/Continuation")  shall be irrevocable, shall be given in the form
     of  Exhibit B-2  and  shall  specify  (x) the  date of such  conversion  or
     continuation  (which  shall  be a  Business  Day),  (y) in  the  case  of a
     conversion  into, or a continuation of, LIBOR Loans, the Interest Period to
     be applicable  thereto,  and (z) the aggregate amount and Type of the Loans
     being   converted   or   continued.   Upon  the  receipt  of  a  Notice  of
     Conversion/Continuation, the Administrative Agent will promptly notify each
     Lender of the proposed  conversion or  continuation.  In the event that the
     Borrower  shall  fail to  deliver  a Notice of  Conversion/Continuation  as
     provided  herein with respect to any  outstanding  LIBOR Loans,  such LIBOR
     Loans  shall  automatically  be  converted  to Base  Rate  Loans  upon  the
     expiration of the then current Interest Period  applicable  thereto (unless
     repaid pursuant to the terms hereof).  In the event the Borrower shall have
     failed to select in a Notice of Conversion/Continuation the duration of the
     Interest  Period to be applicable to any conversion  into, or  continuation
     of, LIBOR  Loans,  then the  Borrower  shall be deemed to have  selected an
     Interest Period with a duration of one month.

                                       27
<PAGE>

2.12 Method  of  Payments;  Computations.  (a)  All  payments  by  the  Borrower
     hereunder shall be made without setoff,  counterclaim or other defense,  in
     Dollars and in immediately available funds to the Administrative Agent, for
     the account of the Lenders  entitled to such  payment  (except as otherwise
     expressly  provided  herein as to payments  required to be made directly to
     the Lenders) at its office referred to in Section 10.5, prior to 2:00 p.m.,
     Charlotte  time,  on the date  payment is due. Any payment made as required
     hereinabove,  but after 2:00 p.m.,  Charlotte time, shall be deemed to have
     been made on the next succeeding  Business Day. If any payment falls due on
     a day that is not a Business  Day,  then such due date shall be extended to
     the next succeeding Business Day (except that in the case of LIBOR Loans to
     which the  provisions of clause (iv) in Section 2.10 are  applicable,  such
     due date shall be the next  preceding  Business Day), and such extension of
     time shall then be included in the computation of payment of interest, fees
     or other applicable amounts.

(b)  The  Administrative  Agent will  distribute  to the  Lenders  like  amounts
     relating to payments  made to the  Administrative  Agent for the account of
     the  Lenders as  follows:  (i) if the  payment  is  received  by 2:00 p.m.,
     Charlotte time, in immediately  available funds, the  Administrative  Agent
     will make  available  to each  relevant  Lender on the same  date,  by wire
     transfer of immediately  available  funds,  such Lender's  ratable share of
     such  payment  (based on the  percentage  that the  amount of the  relevant
     payment  owing to such  Lender  bears to the total  amount of such  payment
     owing to all of the relevant Lenders), and (ii) if such payment is received
     after 2:00 p.m.,  Charlotte  time, or in other than  immediately  available
     funds, the Administrative Agent will make available to each such Lender its
     ratable  share of such payment by wire  transfer of  immediately  available
     funds on the next  succeeding  Business Day (or in the case of  uncollected
     funds, as soon as practicable after collected). If the Administrative Agent
     shall not have made a required  distribution to the appropriate  Lenders as
     required  hereinabove  after  receiving  a payment  for the account of such
     Lenders,  the Administrative Agent will pay to each such Lender, on demand,
     its ratable  share of such  payment  with  interest  thereon at the Federal
     Funds  Rate for each day from the  date  such  amount  was  required  to be
     disbursed by the Administrative Agent until the date repaid to such Lender.

                                       28
<PAGE>

(c)  Unless the Administrative Agent shall have received written notice from the
     Borrower  prior to the  date on  which  any  payment  is due to any  Lender
     hereunder  that such payment will not be made in full,  the  Administrative
     Agent may assume  that the  Borrower  has made such  payment in full to the
     Administrative  Agent on such date,  and the  Administrative  Agent may, in
     reliance on such  assumption,  but shall not be  obligated  to, cause to be
     distributed  to such Lender on such due date an amount  equal to the amount
     then due to such Lender.  If and to the extent the Borrower  shall not have
     so made such  payment  in full to the  Administrative  Agent,  and  without
     limiting the  obligation of the Borrower to make such payment in accordance
     with the terms hereof, such Lender shall repay to the Administrative  Agent
     forthwith on demand such amount so  distributed  to such  Lender,  together
     with  interest  thereon  for  each day from  the  date  such  amount  is so
     distributed  to such  Lender  until the date  repaid to the  Administrative
     Agent, at the Federal Funds Rate.

(d)  All computations of interest and fees hereunder (including  computations of
     the Reserve Requirement) shall be made on the basis of a year consisting of
     360 days and the  actual  number  of days  (including  the first  day,  but
     excluding the last day) elapsed.

2.13 Recovery  of  Payments.  (a) The  Borrower  agrees  that to the  extent the
     Borrower  makes  a  payment  or  payments  to or  for  the  account  of the
     Administrative  Agent or any Lender,  which payment or payments or any part
     thereof  are  subsequently  invalidated,   declared  to  be  fraudulent  or
     preferential,  set aside or required to be repaid to a trustee, receiver or
     any other  party  under any  bankruptcy,  insolvency  or  similar  state or
     federal law,  common law or equitable  cause,  then,  to the extent of such
     payment or  repayment,  the  Obligation  intended to be satisfied  shall be
     revived and  continued  in full force and effect as if such payment had not
     been received.

(b)  If any amounts  distributed by the  Administrative  Agent to any Lender are
     subsequently returned or repaid by the Administrative Agent to the Borrower
     or its  representative or successor in interest,  whether by court order or
     by  settlement  approved  by the  Lender in  question,  such  Lender  will,
     promptly upon receipt of notice thereof from the Administrative  Agent, pay
     the Administrative  Agent such amount. If any such amounts are recovered by
     the  Administrative  Agent  from  the  Borrower  or its  representative  or
     successor in interest,  the  Administrative  Agent will  redistribute  such
     amounts to the Lenders on the same basis as such  amounts  were  originally
     distributed.

                                       29
<PAGE>

2.14 Use of  Proceeds.  The  proceeds  of the  Loans  shall be used for  working
     capital  and  general  corporate  purposes  (including  acquisitions),   in
     accordance with the terms and provisions of this Agreement.

2.15 Pro Rata  Treatment.  (a) All fundings,  continuations  and  conversions of
     Loans  shall  be  made  by the  Lenders  pro  rata on the  basis  of  their
     respective  Commitments  (in  the  case of the  initial  funding  of  Loans
     pursuant to Section  2.2) or on the basis of their  respective  outstanding
     Loans (in the case of  continuations  and  conversions of Loans pursuant to
     Section  2.11),  as the case  may be from  time to time.  All  payments  on
     account  of  principal  of or  interest  on any  Loans,  fees or any  other
     Obligations owing to or for the account of any one or more Lenders shall be
     apportioned ratably among such Lenders in proportion to the amounts of such
     principal, interest, fees or other Obligations owed to them respectively.

(b)  Each Lender agrees that if it shall receive any amount  hereunder  (whether
     by voluntary payment,  realization upon security,  exercise of the right of
     setoff or banker's lien, counterclaim or cross action, or otherwise,  other
     than  pursuant  to  Section 10.7)  applicable  to the payment of any of the
     Obligations  that exceeds its ratable share (according to the proportion of
     (i) the amount of such  Obligations  due and payable to such Lender at such
     time to (ii) the  aggregate  amount of such  Obligations due and payable to
     all Lenders at such time) of payments on account of such  Obligations  then
     or  therewith  obtained  by all the  Lenders  to which  such  payments  are
     required to have been made, such Lender shall  forthwith  purchase from the
     other Lenders such participations in such Obligations as shall be necessary
     to cause  such  purchasing  Lender to share  the  excess  payment  or other
     recovery ratably with each of them; provided,  however,  that if all or any
     portion of such excess payment is thereafter recovered from such purchasing
     Lender,  such  purchase  from each such other Lender shall be rescinded and
     each such other  Lender shall repay to the  purchasing  Lender the purchase
     price to the extent of such recovery, together with an amount equal to such
     other Lender's ratable share (according to the proportion of (i) the amount
     of such other  Lender's  required  repayment  to (ii) the  total  amount so
     recovered from the purchasing  Lender) of any interest or other amount paid
     or payable  by the  purchasing  Lender in  respect  of the total  amount so
     recovered.   The   Borrower   agrees  that  any  Lender  so   purchasing  a
     participation  from  another  Lender  pursuant  to the  provisions  of this
     subsection  may, to the fullest extent  permitted by law,  exercise any and
     all rights of payment (including, without limitation, setoff, banker's lien
     or  counterclaim)  with respect to such  participation  as fully as if such
     participant  were a direct  creditor of the  Borrower in the amount of such
     participation.  If under any applicable  bankruptcy,  insolvency or similar
     law, any Lender  receives a secured claim in lieu of a setoff to which this
     subsection applies, such Lender shall, to the extent practicable,  exercise
     its rights in respect of such secured claim in a manner consistent with the
     rights  of the  Lenders  entitled  under  this  subsection  to share in the
     benefits of any recovery on such secured claim.

                                       30
<PAGE>

2.16 Increased Costs; Change in Circumstances;  Illegality;  etc. (a) If, at any
     time after the date hereof and from time to time,  the  introduction  of or
     any  change  in  any   applicable   law,  rule  or  regulation  or  in  the
     interpretation   or   administration   thereof  by  any  central   bank  or
     governmental   or   regulatory   authority  or  agency   charged  with  the
     interpretation or administration  thereof, or compliance by any Lender with
     any  guideline or request from any such  central  bank or  governmental  or
     regulatory  authority  or agency  (whether or not having the force of law),
     shall (i)  subject  such Lender to any tax or other  charge,  or change the
     basis of  taxation of  payments  to such  Lender,  in respect of any of its
     LIBOR Loans or any other  amounts  payable  hereunder or its  obligation to
     make,  fund or maintain  any LIBOR Loans (other than any change in the rate
     or basis of tax on the overall net income of such Lender or its  applicable
     Lending  Office),  (ii)  impose,  modify or deem  applicable  any  reserve,
     special  deposit  or  similar  requirement  (other  than as a result of any
     change in the Reserve  Requirement) against assets of, deposits with or for
     the  account  of, or credit  extended  by,  such  Lender or its  applicable
     Lending  Office,  or (iii) impose on such Lender or its applicable  Lending
     Office any other condition, and the result of any of the foregoing shall be
     to increase  the cost to such Lender in an amount  deemed by such Lender to
     be  material  of making or  maintaining  any LIBOR  Loans or to reduce  the
     amount of any sum  received or  receivable  by such Lender  hereunder in an
     amount deemed by such Lender to be material,  the Borrower  will,  promptly
     upon demand  therefor by such  Lender,  pay to such Lender such  additional
     amounts  as shall  compensate  such  Lender for such  increase  in costs or
     reduction in return.

(b)  If, at any time  after the date  hereof  and from time to time,  any Lender
     shall have reasonably  determined that the introduction of or any change in
     any applicable law, rule or regulation regarding capital adequacy or in the
     interpretation   or   administration   thereof  by  any  central   bank  or
     governmental   or   regulatory   authority  or  agency   charged  with  the
     interpretation or administration thereof, or compliance by such Lender with
     any  guideline or request from any such  central  bank or  governmental  or
     regulatory  authority  or agency  (whether or not having the force of law),
     has or would have the effect, as a consequence of such Lender's  Commitment
     or Loans hereunder,  of reducing,  in an amount deemed by such Lender to be
     material,  the rate of return on the  capital of such  Lender or any Person
     controlling  such  Lender  to a level  below  that  which  such  Lender  or
     controlling Person could have achieved but for such introduction, change or
     compliance  (taking  into  account such  Lender's or  controlling  Person's
     policies with respect to capital  adequacy),  the Borrower  will,  promptly
     upon  demand  therefor  by such  Lender  therefor,  pay to such Lender such
     additional amounts as will compensate such Lender or controlling Person for
     such reduction in return.

                                       31
<PAGE>

(c)  If,  on or  prior  to  the  first  day  of  any  Interest  Period,  (y) the
     Administrative  Agent shall have  determined  that adequate and  reasonable
     means do not exist for  ascertaining  the  applicable  LIBOR  Rate for such
     Interest Period or (z) the Administrative Agent shall have received written
     notice from the Required  Lenders of their  determination  that the rate of
     interest  referred to in the  definition  of "LIBOR Rate" upon the basis of
     which the Adjusted  LIBOR Rate for LIBOR Loans for such Interest  Period is
     to be determined  will not  adequately  and fairly reflect the cost to such
     Lenders of making or maintaining  LIBOR Loans during such Interest  Period,
     the  Administrative  Agent will  forthwith  so notify the  Borrower and the
     Lenders.  Upon such  notice,  (i) all  then  outstanding  LIBOR Loans shall
     automatically,  on the expiration date of the respective  Interest  Periods
     applicable  thereto  (unless then repaid in full),  be converted  into Base
     Rate Loans,  (ii) the  obligation  of the Lenders to make,  to convert Base
     Rate Loans  into,  or to  continue,  LIBOR Loans  shall be  suspended,  and
     (iii) any Notice of Borrowing or Notice of Conversion/Continuation given at
     any time  thereafter  with  respect to LIBOR  Loans shall be deemed to be a
     request for Base Rate Loans, in each case until the Administrative Agent or
     the Required  Lenders,  as the case may be, shall have  determined that the
     circumstances  giving  rise to such  suspension  no longer  exist  (and the
     Required Lenders, if making such determination,  shall have so notified the
     Administrative  Agent), and the Administrative Agent shall have so notified
     the Borrower and the Lenders.

(d)  Notwithstanding  any other  provision  in this  Agreement,  if, at any time
     after  the  date  hereof  and from  time to time,  any  Lender  shall  have
     determined  in good  faith  that the  introduction  of or any change in any
     applicable   law,  rule  or  regulation   or  in  the   interpretation   or
     administration  thereof by any central bank or  governmental  or regulatory
     authority  or agency  charged  with the  interpretation  or  administration
     thereof,  or compliance with any guideline or request from any such central
     bank or  governmental  or  regulatory  authority or agency  (whether or not
     having  the  force of law),  has or would  have the  effect  of  making  it
     unlawful  for such Lender to make or to continue to make or maintain  LIBOR
     Loans,  such Lender will forthwith so notify the  Administrative  Agent and
     the Borrower.  Upon such notice, (i) each of such Lender's then outstanding
     LIBOR Loans shall  automatically,  on the expiration date of the respective
     Interest Period  applicable  thereto (or, to the extent any such LIBOR Loan
     may not lawfully be maintained as a LIBOR Loan until such expiration  date,
     upon such notice),  be converted into a Base Rate Loan, (ii) the obligation
     of such Lender to make,  to convert  Base Rate Loans into,  or to continue,
     LIBOR Loans shall be suspended  (including  pursuant to any  Borrowing  for
     which the  Administrative  Agent has received a Notice of Borrowing but for
     which  the  Borrowing  Date  has not  arrived),  and  (iii) any  Notice  of
     Borrowing or Notice of Conversion/Continuation given at any time thereafter
     with  respect to LIBOR Loans shall,  as to such  Lender,  be deemed to be a
     request  for a Base Rate Loan,  in each case until such  Lender  shall have
     determined that the circumstances  giving rise to such suspension no longer
     exist  and  shall  have  so  notified  the  Administrative  Agent,  and the
     Administrative Agent shall have so notified the Borrower.

                                       32
<PAGE>

(e)  Determinations  by the  Administrative  Agent or any Lender for purposes of
     this  Section  of  any  increased  costs,   reduction  in  return,   market
     contingencies, illegality or any other matter shall, absent manifest error,
     be conclusive, provided that such determinations are made in good faith. No
     failure  by the  Administrative  Agent or any  Lender at any time to demand
     payment of any amounts payable under this Section shall constitute a waiver
     of its right to demand  payment of any  additional  amounts  arising at any
     subsequent  time.  Nothing in this Section shall require or be construed to
     require the Borrower to pay any interest,  fees,  costs or other amounts in
     excess of that permitted by applicable law. If any Lender becomes  entitled
     to  claim  any  increased   costs  or  reduction  in  return   pursuant  to
     subsections (a)  or (b)  above,  it shall  provide  notice  thereof  to the
     Borrower   certifying   (i) that  one  of  the  events  described  in  such
     subsections has occurred and describing in reasonable  detail the nature of
     such event, (ii) as to the increased costs or reduction in return resulting
     from such event and  (iii) as  to the  additional  amount  demanded by such
     Lender and a reasonably detailed explanation of the calculation thereof.

2.17 Taxes. (a) Any and all payments by the Borrower hereunder or under any Note
     shall be made,  in accordance  with the terms hereof and thereof,  free and
     clear of and without  deduction  for any and all  present or future  taxes,
     levies, imposts, deductions,  charges or withholdings,  and all liabilities
     with  respect  thereto,  excluding  taxes  imposed on, or measured  by, the
     overall  net income (or  franchise  taxes  imposed in lieu  thereof) of the
     Administrative  Agent or any  Lender  by reason  of any  present  or former
     connection  between  the  Administrative  Agent  or  such  Lender  and  the
     jurisdiction  of  the  governmental  authority  imposing  such  tax  or any
     political subdivision thereof,  other than such a connection arising solely
     from the Administrative Agent or such Lender having executed,  delivered or
     performed its  obligations or received a payment under,  or enforced,  this
     Agreement  or the  Notes  (all such  nonexcluded  taxes,  levies,  imposts,
     deductions,   charges,   withholdings  and  liabilities  being  hereinafter
     referred to as "Taxes"). If the Borrower shall be required by law to deduct
     any Taxes from or in respect of any sum payable hereunder or under any Note
     to the  Administrative  Agent or any Lender,  (i) the sum payable  shall be
     increased as may be necessary so that after making all required  deductions
     (including  deductions  applicable  to  additional  sums payable under this
     Section),  the  Administrative  Agent or such  Lender,  as the case may be,
     receives  an amount  equal to the sum it would  have  received  had no such
     deductions  been made, (ii) the Borrower will make such  deductions,  (iii)
     the Borrower  will pay the full amount  deducted to the  relevant  taxation
     authority or other authority in accordance with applicable law and (iv) the
     Borrower will deliver to the  Administrative  Agent or such Lender,  as the
     case may be, evidence of such payment.

                                       33
<PAGE>

(b)  The Borrower will  indemnify the  Administrative  Agent and each Lender for
     the full amount of Taxes (including,  without limitation, any Taxes imposed
     by any  jurisdiction  on amounts  payable  under this  Section) paid by the
     Administrative  Agent or such Lender, as the case may be, and any liability
     (including   penalties,   interest   and   expenses,   provided   that  the
     Administrative  Agent or such Lender,  as the case may be, uses  reasonable
     efforts to avoid the  imposition  or accrual  thereof if such efforts would
     not,  in the  determination  of the  Administrative  Agent or such  Lender,
     result in any additional costs, expense or risk to it) arising therefrom or
     with respect  thereto,  whether or not such Taxes were correctly or legally
     asserted.  This indemnification  shall be made within 30 days from the date
     the Administrative  Agent or such Lender, as the case may be, makes written
     demand therefor.

(c)  Each  of the  Administrative  Agent  and  the  Lenders  agrees  that  if it
     subsequently recovers, or receives a permanent net tax benefit with respect
     to,  any amount of Taxes  (i) previously  paid by it and as to which it has
     been  indemnified  by or on  behalf  of  the  Borrower  or  (ii) previously
     deducted by the Borrower (including, without limitation, any Taxes deducted
     from any additional sums payable under clause (i) of subsection (a) above),
     the  Administrative  Agent  or such  Lender,  as the  case  may  be,  shall
     reimburse  the Borrower to the extent of the amount of any such recovery or
     permanent  net tax benefit  (but only to the extent of  indemnity  payments
     made,  or additional  amounts  paid, by or on behalf of the Borrower  under
     this Section with respect to the Taxes giving rise to such  recovery or tax
     benefit);  provided,  however,  that the Borrower,  upon the request of the
     Administrative Agent or such Lender,  agrees to repay to the Administrative
     Agent or such  Lender,  as the case may be,  the  amount  paid  over to the
     Borrower (together with any penalties,  interest or other charges),  in the
     event the  Administrative  Agent or such  Lender is  required to repay such
     amount to the relevant taxing authority or other governmental or regulatory
     authority or agency. The determination by the  Administrative  Agent or any
     Lender of the amount of any such  recovery  or  permanent  net tax  benefit
     shall, in the absence of manifest error, be conclusive and binding.

                                       34
<PAGE>

(d)  If any Lender is incorporated or organized under the laws of a jurisdiction
     other than the United  States of America or any state  thereof (a "Non-U.S.
     Lender") and claims  exemption from United States  withholding tax pursuant
     to the Internal Revenue Code, such Non-U.S.  Lender will deliver to each of
     the Administrative Agent and the Borrower,  on or prior to the Closing Date
     (or,  in the  case of a  Non-U.S.  Lender  that  becomes  a  party  to this
     Agreement  as a result of an  assignment  after the  Closing  Date,  on the
     effective date of such  assignment),  (i) in the case of a Non-U.S.  Lender
     that is a "bank" for  purposes  of  Section  881(c)(3)(A)  of the  Internal
     Revenue Code, a properly  completed  Internal  Revenue Service Form 4224 or
     1001, as applicable  (or successor  forms),  certifying  that such Non-U.S.
     Lender is entitled to an exemption  from or a reduction of  withholding  or
     deduction  for or on  account  of United  States  federal  income  taxes in
     connection with payments under this Agreement or any of the Notes, together
     with a properly  completed  Internal  Revenue  Service  Form W-8 or W-9, as
     applicable (or successor forms), and (ii) in the case of a Non-U.S.  Lender
     that is not a "bank" for purposes of Section  881(c)(3)(A)  of the Internal
     Revenue Code, a certificate in form and substance  reasonably  satisfactory
     to the  Administrative  Agent  and  the  Borrower  and to the  effect  that
     (x) such  Non-U.S.   Lender  is  not  a  "bank"  for  purposes  of  Section
     881(c)(3)(A) of the Internal  Revenue Code, is not subject to regulatory or
     other legal  requirements as a bank in any  jurisdiction,  and has not been
     treated as a bank for purposes of any tax,  securities  law or other filing
     or submission made to any governmental authority, any application made to a
     rating agency or qualification  for any exemption from any tax,  securities
     law or other legal  requirements,  (y) is not a 10-percent  shareholder for
     purposes of Section  881(c)(3)(B)  of the Internal  Revenue Code and (z) is
     not a controlled  foreign  corporation  receiving  interest  from a related
     person for purposes of Section  881(c)(3)(C) of the Internal  Revenue Code,
     together with a properly  completed  Internal  Revenue  Service Form W-8 or
     W-9, as applicable (or successor forms). Each such Non-U.S.  Lender further
     agrees to deliver to each of the  Administrative  Agent and the Borrower an
     additional  copy of each such relevant form on or before the date that such
     form  expires  or becomes  obsolete  or after the  occurrence  of any event
     (including a change in its applicable Lending Office) requiring a change in
     the most recent forms so delivered by it, in each case certifying that such
     Non-U.S.  Lender  is  entitled  to an  exemption  from  or a  reduction  of
     withholding  or deduction for or on account of United States federal income
     taxes in connection with payments under this Agreement or any of the Notes,
     unless an event (including,  without limitation,  any change in treaty, law
     or  regulation)  has occurred  prior to the date on which any such delivery
     would   otherwise  be  required,   which  event   renders  all  such  forms
     inapplicable  or the exemption to which such forms relate  unavailable  and
     such Non-U.S.  Lender  notifies the  Administrative  Agent and the Borrower
     that  it  is  not  entitled  to  receive  payments  without   deduction  or
     withholding  of United  States  federal  income  taxes.  Each such Non-U.S.
     Lender will promptly  notify the  Administrative  Agent and the Borrower of
     any  changes in  circumstances  that  would  modify or render  invalid  any
     claimed exemption or reduction.

                                       35
<PAGE>

(e)  If any Lender is entitled to a reduction  in (and not a complete  exemption
     from) the applicable  withholding tax, the Borrower and the  Administrative
     Agent may  withhold  from any  interest  payment  to such  Lender an amount
     equivalent to the applicable withholding tax after taking into account such
     reduction.  If any of the  forms  or  other  documentation  required  under
     subsection (d)  above  are not  delivered  to the  Administrative  Agent as
     therein  required,  then the  Borrower  and the  Administrative  Agent  may
     withhold from any interest  payment to such Lender not providing such forms
     or other  documentation an amount equivalent to the applicable  withholding
     tax.

2.18 Compensation.  The Borrower will compensate each Lender upon demand for all
     losses, expenses and liabilities (including,  without limitation, any loss,
     expense or liability  incurred by reason of the liquidation or reemployment
     of  deposits  or other  funds  required  by such Lender to fund or maintain
     LIBOR  Loans)  that such  Lender may incur or sustain (i) if for any reason
     (other than a default by such  Lender) a Borrowing or  continuation  of, or
     conversion  into, a LIBOR Loan does not occur on a date specified  therefor
     in a Notice of Borrowing or Notice of Conversion/Continuation,  (ii) if any
     repayment,  prepayment  or  conversion  of any LIBOR Loan  occurs on a date
     other than the last day of an Interest Period applicable thereto (including
     as a consequence of  acceleration  of the maturity of the Loans pursuant to
     Section 8.2),  (iii) if any prepayment of any LIBOR Loan is not made on any
     date specified in a notice of prepayment given by the Borrower or (iv) as a
     consequence  of any other failure by the Borrower to make any payments with
     respect to any LIBOR Loan when due  hereunder.  Calculation  of all amounts
     payable to a Lender under this Section  shall be made as though such Lender
     had  actually  funded its  relevant  LIBOR Loan  through the  purchase of a
     Eurodollar deposit bearing interest at the LIBOR Rate in an amount equal to
     the amount of such LIBOR Loan, having a maturity comparable to the relevant
     Interest  Period;  provided,  however,  that each Lender may fund its LIBOR
     Loans in any  manner  it sees  fit and the  foregoing  assumption  shall be
     utilized only for the  calculation  of amounts  payable under this Section.
     Determinations  by any  Lender  for  purposes  of this  Section of any such
     losses,   expenses  or  liabilities   shall,   absent  manifest  error,  be
     conclusive, provided that such determinations are made in good faith.


                                       36
<PAGE>

                                   ARTICLE III

                             CONDITIONS OF BORROWING

3.1  Conditions  of Initial  Borrowing.  The  obligation  of each Lender to make
     Loans in connection with the initial Borrowing  hereunder is subject to the
     satisfaction  on or prior to the Closing Date of the  following  conditions
     precedent:

(a) The Administrative Agent shall have received the following, each dated as of
the Closing Date:

(i)  a Note for each Lender that is a party  hereto as of the Closing  Date,  in
     the amount of such Lender's  Commitment,  each duly completed in accordance
     with the relevant  provisions  of Section 2.4 and executed by the Borrower;
     and

(ii) the  favorable  opinion  of  John  McCann,  counsel  to  the  Borrower,  in
     substantially the form of Exhibit E, addressed to the Administrative  Agent
     and the Lenders and  addressing  such other  matters as the  Administrative
     Agent or any Lender may reasonably  request,  in sufficient copies for each
     Lender.

(b)  The Administrative  Agent shall have received a certificate,  signed by the
     president,  the chief executive officer,  the chief operating officer,  the
     chief  financial  officer or the  treasurer  of the  Borrower,  in form and
     substance satisfactory to the Administrative Agent, certifying that (i) all
     representations  and warranties of the Borrower contained in this Agreement
     and the other Credit Documents are true and correct as of the Closing Date,
     both immediately  before and after giving effect to the consummation of the
     transactions  contemplated hereby,  (ii) no Default or Event of Default has
     occurred and is continuing, both immediately before and after giving effect
     to the consummation of the  transactions  contemplated  hereby,  (iii) both
     immediately  before  and after  giving  effect to the  consummation  of the
     transactions  contemplated  hereby, no Material Adverse Change has occurred
     since December 31, 1997,  and there exists no event,  condition or state of
     facts that could  reasonably  be expected  to result in a Material  Adverse
     Change,  and  (iv) all  conditions  to the  initial  extensions  of  credit
     hereunder  set  forth in this  Section  have  been  satisfied  or waived as
     required hereunder.

                                       37
<PAGE>

(c)  The Administrative Agent shall have received a certificate of the secretary
     or  an  assistant  secretary  of  the  Borrower,   in  form  and  substance
     satisfactory to the  Administrative  Agent,  certifying  (i) that  attached
     thereto is a true and complete copy of the certificate of incorporation and
     all amendments thereto of the Borrower certified as of a recent date by the
     Secretary  of State  of  Delaware,  and that the same has not been  amended
     since the date of such certification,  (ii) that attached thereto is a true
     and complete copy of the bylaws of the Borrower as then in effect and as in
     effect at all times from the date on which the  resolutions  referred to in
     clause (iii)  below  were  adopted  to  and  including  the  date  of  such
     certificate, and (iii) that attached thereto is a true and complete copy of
     authorizing  resolutions  duly  adopted  by the  Borrower  authorizing  the
     execution,  delivery and performance of this Agreement and the other Credit
     Documents to which it is a party,  and as to the incumbency and genuineness
     of the signature of each officer of the Borrower  executing  this Agreement
     or any of such other Credit Documents, and attaching all such copies of the
     documents described above.

(d)  The  Administrative  Agent shall have received  (i) a  certificate  as of a
     recent  date  of the  good  standing  of  each  of  the  Borrower  and  the
     Significant   Subsidiaries   under   the  laws  of  its   jurisdiction   of
     organization,  from the Secretary of State (or comparable  governmental  or
     regulatory   authority  or  agency)  of  such   jurisdiction,   and  (ii) a
     certificate  as of a recent date of the  qualification  of the  Borrower to
     conduct business as a foreign corporation in the State of Connecticut, from
     the Secretary of State of Connecticut.

(e)  All  legal  matters,  documentation,  and  corporate  or other  proceedings
     incident to the transactions  contemplated  hereby shall be satisfactory in
     form and substance to the Administrative Agent; all approvals,  permits and
     consents  of  any  governmental  or  regulatory   authorities  or  agencies
     (including,   without   limitation,   all  relevant  Insurance   Regulatory
     Authorities)  or other  Persons,  if any,  required in connection  with the
     execution and delivery of this Agreement and the other Credit Documents and
     the consummation of the transactions  contemplated hereby and thereby shall
     have been  obtained,  without the  imposition  of  conditions  that are not
     acceptable to the  Administrative  Agent, and all related filings,  if any,
     shall have been made, and all such approvals, permits, consents and filings
     shall be in full force and effect and the  Administrative  Agent shall have
     received such copies  thereof as it shall have  requested;  all  applicable
     waiting  periods shall have expired  without any adverse action being taken
     by any governmental or regulatory  authority or agency having jurisdiction;
     and no action, proceeding,  investigation,  regulation or legislation shall
     have  been  instituted,  threatened  or  proposed  before,  and  no  order,
     injunction  or  decree  shall  have  been  entered  by,  any court or other
     governmental  or  regulatory  authority or agency,  in each case to enjoin,
     restrain or prohibit,  to obtain substantial damages in respect of, or that
     is otherwise related to or arises out of, this Agreement,  any of the other
     Credit  Documents  or the  consummation  of the  transactions  contemplated
     hereby or thereby,  or that could reasonably be expected to have a Material
     Adverse Effect.

                                       38
<PAGE>

(f)  Since December 31, 1997, both immediately before and after giving effect to
     the consummation of the transactions contemplated by this Agreement,  there
     shall not have occurred any Material Adverse Change or any event, condition
     or state of facts that could reasonably be expected to result in a Material
     Adverse Change.

(g)  The Borrower shall have paid (i) to the  Administrative  Agent, the initial
     payment of the annual  administrative fee described in paragraph (2) of the
     Fee  Letter,  and (ii) all other fees and  expenses  of the  Administrative
     Agent and the Lenders required hereunder or under any other Credit Document
     to be paid on or prior to the Closing Date  (including  reasonable fees and
     expenses of counsel) in connection with this Agreement and the transactions
     contemplated hereby.

(h) The Administrative Agent shall have received an Account Designation Letter.

(i)  The  Administrative  Agent and each Lender shall have  received  such other
     documents,  certificates,  opinions and  instruments in connection with the
     transactions contemplated hereby as it shall have reasonably requested.

3.2  Conditions  of All  Borrowings.  The  obligation of each Lender to make any
     Loans   hereunder,   including  the  initial  Loans,   is  subject  to  the
     satisfaction  of  the  following   conditions  precedent  on  the  relevant
     Borrowing Date:

(a)  The  Administrative  Agent  shall have  received a Notice of  Borrowing  in
     accordance with Section 2.2(b);

(b)  Each of the representations and warranties contained in Article IV shall be
     true and correct on and as of such  Borrowing Date or date of issuance with
     the same effect as if made on and as of such date, both immediately  before
     and after giving effect to the Loans to be made on such date (except to the
     extent any such representation or warranty is expressly stated to have been
     made as of a specific date, in which case such  representation  or warranty
     shall be true and correct in all material respects as of such date); and

(c)  No Default or Event of Default  shall have  occurred and be  continuing  on
     such date, both immediately  before and after giving effect to the Loans to
     be made.

                                       39
<PAGE>

Each giving of a Notice of Borrowing,  and the  consummation  of each Borrowing,
shall  constitute  a  representation  made by the Borrower  that the  statements
contained in subsections (b) and (c) above are true, both as of the date of such
notice or request and as of the relevant Borrowing Date.


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

To induce the Administrative  Agent and the Lenders to enter into this Agreement
and to induce the Lenders to extend the credit contemplated hereby, the Borrower
represents and warrants to the Administrative Agent and the Lenders as follows:

4.1  Corporate Organization and Power. Each of the Borrower and its Subsidiaries
     (i) is a corporation duly organized,  validly existing and in good standing
     under the laws of the jurisdiction of its incorporation,  (ii) has the full
     corporate  power and  authority to execute,  deliver and perform the Credit
     Documents  to which it is or will be a party,  to own and hold its property
     and to engage in its  business as  presently  conducted,  and (iii) is duly
     qualified to do business as a foreign  corporation  and is in good standing
     in each  jurisdiction  where the nature of its business or the ownership of
     its properties requires it to be so qualified,  except where the failure to
     be so qualified would not, individually or in the aggregate,  be reasonably
     likely to have a Material Adverse Effect.

4.2  Authorization;  Enforceability.  The Borrower has taken,  or on the Closing
     Date will have taken, all necessary  corporate  action to execute,  deliver
     and perform each of the Credit Documents to which it is or will be a party,
     and  has,  or on the  Closing  Date (or any  later  date of  execution  and
     delivery)  will have,  validly  executed and  delivered  each of the Credit
     Documents to which it is or will be a party.  This  Agreement  constitutes,
     and each of the other Credit  Documents  upon  execution  and delivery will
     constitute,  the  legal,  valid and  binding  obligation  of the  Borrower,
     enforceable   against  it  in   accordance   with  its  terms,   except  as
     enforceability  may be limited by bankruptcy,  insolvency,  reorganization,
     moratorium or other similar laws affecting creditors' rights generally,  by
     general  equitable  principles  or by  principles  of good  faith  and fair
     dealing.

                                       40
<PAGE>

4.3  No Violation.  The execution,  delivery and  performance by the Borrower of
     this  Agreement  and each of the other  Credit  Documents to which it is or
     will be a party, and compliance by it with the terms hereof and thereof, do
     not  and  will  not  (i)  violate  any  provision  of  its  certificate  of
     incorporation or bylaws or contravene any other material Requirement of Law
     applicable to it, (ii) conflict  with,  result in a breach of or constitute
     (with  notice,  lapse  of  time or  both)  a  default  under  any  material
     indenture,  agreement or other  instrument to which it is a party, by which
     it or any of its  properties  is bound or to which it is subject,  or (iii)
     result in or require the creation or imposition of any Lien upon any of its
     properties  or assets.  Except as set forth on Schedule 4.3 or as otherwise
     permitted by this  Agreement,  no Subsidiary is a party to any agreement or
     instrument or otherwise  subject to any  restriction  or  encumbrance  that
     restricts  or  limits  its  ability  to make  dividend  payments  or  other
     distributions in respect of its Capital Stock, to repay  Indebtedness  owed
     to the Borrower or any other  Subsidiary,  to make loans or advances to the
     Borrower  or any other  Subsidiary,  or to  transfer  any of its  assets or
     properties to the Borrower or any other Subsidiary, in each case other than
     such restrictions or encumbrances existing under or by reason of the Credit
     Documents or applicable Requirements of Law.

4.4  Governmental  and  Third-Party  Authorization;  Permits.  (a)  No  consent,
     approval,  authorization  or other action by, notice to, or registration or
     filing with, any  governmental  or regulatory  authority or agency or other
     Person is or will be required as a condition to or otherwise in  connection
     with the due  execution,  delivery and  performance by each of the Borrower
     and its Subsidiaries of this Agreement or any of the other Credit Documents
     to  which  it  is  or  will  be  a  party  or  the  legality,  validity  or
     enforceability hereof or thereof.

(b)  Each of the Borrower and its Subsidiaries has, and is in good standing with
     respect   to,   all   governmental   approvals,   licenses,   permits   and
     authorizations necessary to conduct its business as presently conducted and
     to own or lease and operate its properties, except for those the failure to
     obtain  which  would  not  be  reasonably  likely,  individually  or in the
     aggregate, to have a Material Adverse Effect.

                                       41
<PAGE>

(c)  Schedule 4.4  lists with respect to each  Insurance  Subsidiary,  as of the
     Closing Date, all of the  jurisdictions in which such Insurance  Subsidiary
     holds licenses (including, without limitation,  licenses or certificates of
     authority  from  relevant  Insurance  Regulatory  Authorities),  permits or
     authorizations   to   transact    insurance   and   reinsurance    business
     (collectively,  the  "Licenses"),  and  indicates  the  line  or  lines  of
     insurance  in which  each such  Insurance  Subsidiary  is  permitted  to be
     engaged with respect to each License  therein  listed.  To the knowledge of
     the Borrower,  except as set forth on Schedule 4.4,  (i) no such License is
     the subject of a proceeding for suspension, revocation or limitation or any
     similar  proceedings,  (ii)  there  is no  sustainable  basis  for  such  a
     suspension,  revocation  or  limitation,  and  (iii)  no  such  suspension,
     revocation or limitation is threatened by any relevant Insurance Regulatory
     Authority,  except in each of (i), (ii) or (iii),  where the same would not
     be reasonably likely,  individually or in the aggregate, to have a Material
     Adverse Effect. No Insurance  Subsidiary  transacts any insurance business,
     directly or  indirectly,  in any  jurisdiction  other than those  listed on
     Schedule 4.4,  where such  business  requires any license,  permit or other
     authorization  of a Insurance  Regulatory  Authority of such  jurisdiction,
     except where the same would not be reasonably  likely,  individually  or in
     the aggregate, to have a Material Adverse Effect.

4.5  Litigation.  There are no  actions,  investigations,  suits or  proceedings
     pending or, to the knowledge of the Borrower, threatened, at law, in equity
     or in  arbitration,  before any court,  other  governmental  or  regulatory
     authority or agency or other Person, (i) against or affecting the Borrower,
     any of its Subsidiaries or any of their  respective  properties that would,
     if adversely  determined,  be reasonably  likely to have a Material Adverse
     Effect,  or (ii) with respect to this  Agreement or any of the other Credit
     Documents.

                                       42
<PAGE>

4.6  Taxes.  Each of the  Borrower  and its  Subsidiaries  has timely  filed all
     federal, state and local tax returns and reports required to be filed by it
     and has paid all taxes, assessments,  fees and other charges levied upon it
     or upon its  properties  that are shown  thereon as due and payable,  other
     than  those  (i) that are  being  contested  in good  faith  and by  proper
     proceedings  and for  which  adequate  reserves  have been  established  in
     accordance  with GAAP or (ii) the failure to file or pay which would not be
     reasonably  likely,  individually  or in the aggregate,  to have a Material
     Adverse Effect.  Such returns  accurately  reflect in all material respects
     all  liability  for  taxes of the  Borrower  and its  Subsidiaries  for the
     periods  covered  thereby.  There is no ongoing audit or examination or, to
     the knowledge of the Borrower,  other  investigation by any governmental or
     regulatory  authority or agency of the tax liability of the Borrower or any
     of its  Subsidiaries,  and there is no unresolved claim by any governmental
     or  regulatory  authority  or agency  concerning  the tax  liability of the
     Borrower  or any of its  Subsidiaries  for any period for which tax returns
     have been or were required to have been filed,  other than claims for which
     adequate  reserves have been established in accordance with GAAP and claims
     that, if adversely determined, would not be reasonably likely, individually
     or in the  aggregate,  to  have a  Material  Adverse  Effect.  Neither  the
     Borrower  nor any of its  Subsidiaries  has waived or  extended or has been
     requested  to waive or extend the  statute of  limitations  relating to the
     payment of any taxes.

4.7  Subsidiaries.  Schedule 4.7 sets forth a list,  as of the Closing  Date, of
     all of the  Subsidiaries  of the Borrower and, as to each such  Subsidiary,
     the  percentage  ownership  (direct and  indirect)  of the Borrower in each
     class of its capital  stock and each direct owner  thereof.  Except for the
     shares of capital stock  expressly  indicated on Schedule 4.7, there are no
     shares  of  capital  stock,  warrants,  rights,  options  or  other  equity
     securities,  or other  Capital  Stock  of any  Subsidiary  of the  Borrower
     outstanding or reserved for any purpose.  All outstanding shares of capital
     stock of each Subsidiary of the Borrower are duly and validly issued, fully
     paid and nonassessable.

4.8  Full Disclosure.  All factual information  heretofore or  contemporaneously
     furnished  to the  Administrative  Agent or any  Lender in writing by or on
     behalf of the  Borrower or any of its  Subsidiaries  for  purposes of or in
     connection with this Agreement and the transactions contemplated hereby is,
     and  all  other  such  factual  information   hereafter  furnished  to  the
     Administrative  Agent or any  Lender  in  writing  by or on  behalf  of the
     Borrower  or any of its  Subsidiaries  will be,  true and  accurate  in all
     material  respects  on the date as of which  such  information  is dated or
     certified (or, if such information has been amended or supplemented, on the
     date as of which any such  amendment or  supplement  is dated or certified)
     and not made  incomplete by omitting to state a material fact  necessary to
     make the statements  contained therein, in light of the circumstances under
     which such information was provided, not misleading.

                                       43
<PAGE>

4.9  Margin  Regulations.  Neither the Borrower nor any of its  Subsidiaries  is
     engaged principally, or as one of its important activities, in the business
     of extending credit for the purpose of purchasing or carrying Margin Stock.
     No proceeds of the Loans will be used, directly or indirectly,  to purchase
     or carry any Margin  Stock,  to extend  credit for such  purpose or for any
     other purpose that would violate or be inconsistent  with  Regulations T, U
     or X or any provision of the Exchange Act.

4.10 No Material Adverse Change. There has been no Material Adverse Change since
     December 31, 1997,  and there exists no event,  condition or state of facts
     that could reasonably be expected to result in a Material Adverse Change.

4.11 Financial  Matters.  (a)  The  Borrower  has  heretofore  furnished  to the
     Administrative  Agent copies of (i) the audited consolidated balance sheets
     of the Borrower and its  Subsidiaries  as of December 31, 1997,  1996,  and
     1995, and the related  statements of income,  cash flows and  stockholders'
     equity  for the fiscal  years  then  ended,  together  with the  opinion of
     Deloitte & Touche LLP thereon, and (ii) the unaudited  consolidated balance
     sheet of the Borrower and its  Subsidiaries  as of March 31, 1998,  and the
     related statements of income,  cash flows and stockholders'  equity for the
     three-month period then ended. Such financial statements have been prepared
     in accordance with GAAP (subject,  with respect to the unaudited  financial
     statements, to the absence of notes required by GAAP and to normal year-end
     adjustments) and present fairly the financial condition of the Borrower and
     its Subsidiaries on a consolidated basis as of the respective dates thereof
     and  the  consolidated  results  of  operations  of the  Borrower  and  its
     Subsidiaries  for the  respective  periods  then  ended.  Except  as  fully
     reflected in the most recent financial statements referred to above and the
     notes  thereto,  there are no  material  liabilities  or  obligations  with
     respect to the Borrower or any of its Subsidiaries of any nature whatsoever
     (whether absolute, contingent or otherwise and whether or not due).

                                       44
<PAGE>

(b)  The Borrower has heretofore furnished to the Administrative Agent copies of
     (i) the Annual Statement of each of the Significant Insurance  Subsidiaries
     as of December 31, 1997, and for the fiscal year then ended,  each as filed
     with  the  Insurance  Regulatory  Authority  of its  jurisdiction  of legal
     domicile,  and  (ii) the  Quarterly  Statement  of each of the  Significant
     Insurance Subsidiaries as of March 31, 1998, and for the three-month period
     then ended,  each as filed with the Insurance  Regulatory  Authority of its
     jurisdiction  of  legal  domicile.   Such  statutory  financial  statements
     (including, without limitation, the provisions made therein for investments
     and the  valuation  thereof,  reserves,  policy  and  contract  claims  and
     statutory liabilities) have been prepared in accordance with SAP (except as
     may be  reflected  in the notes  thereto and  subject,  with respect to the
     Quarterly Statements, to the absence of notes required by SAP and to normal
     year-end  adjustments),  were in compliance  in all material  respects with
     applicable  Requirements of Law when filed and present fairly the financial
     position  of the  respective  Significant  Insurance  Subsidiaries  covered
     thereby as of the  respective  dates thereof and the results of operations,
     changes in capital and surplus and cash flow of the respective  Significant
     Insurance  Subsidiaries  covered  thereby for the  respective  periods then
     ended. Except for liabilities and obligations  disclosed or provided for in
     the  most  recent  statutory   financial   statements   referred  to  above
     (including,  without limitation,  reserves,  policy and contract claims and
     statutory  liabilities),  there are no material  liabilities or obligations
     with  respect  to  any  Significant  Insurance  Subsidiary  of  any  nature
     whatsoever  (whether  absolute,  contingent or otherwise and whether or not
     due).  All books of account of each Insurance  Subsidiary  fully and fairly
     disclose all of its material transactions, properties, assets, investments,
     liabilities and  obligations,  are in its possession and are true,  correct
     and complete in all material respects.

(c)  The investments of each of the Insurance Subsidiaries reflected in its most
     recently  filed Annual  Statement  and  Quarterly  Statement  comply in all
     material  respects  with  all  applicable  requirements  of  the  Insurance
     Regulatory  Authority of its  jurisdiction of legal  domicile.  The amounts
     shown in the most recently filed Annual  Statement and Quarterly  Statement
     for each of the Insurance  Subsidiaries  for reserves,  policy and contract
     claims, agents' balances and uncollected premiums and statutory liabilities
     were computed in  accordance  with commonly  accepted  actuarial  standards
     consistently applied, were fairly stated in accordance with sound actuarial
     principles, were computed on the basis of assumptions consistent with those
     of the  preceding  fiscal  year,  and  meet in all  material  respects  the
     requirements of the Insurance  Regulatory  Authority of its jurisdiction of
     legal domicile.  Such reserves as established by each Insurance  Subsidiary
     were,  in the  judgment of the  Borrower,  adequate as of such date for the
     payment by such  Insurance  Subsidiary  of all of its  insurance  benefits,
     losses,  claims  and  investigative  expenses.  Marketable  securities  and
     short-term  investments  reflected  in  each  Insurance  Subsidiary's  most
     recently filed Annual Statement and Quarterly Statement are valued at cost,
     amortized cost or market value,  as required by applicable  Requirements of
     Law.

                                       45
<PAGE>

(d)  Each of the Borrower and its Significant Subsidiaries,  after giving effect
     to  the  consummation  of the  transactions  contemplated  hereby,  (i) has
     capital  sufficient to carry on its businesses as conducted and as proposed
     to be conducted,  (ii) has assets with a fair saleable value, determined on
     a going  concern  basis,  (y) not less than the amount  required to pay the
     probable  liability  on its  existing  debts as they  become  absolute  and
     matured and (z) greater than the total amount of its liabilities (including
     identified contingent liabilities, valued at the amount that can reasonably
     be expected to become absolute and matured),  and (iii) does not intend to,
     and does not believe that it will,  incur debts or  liabilities  beyond its
     ability to pay such debts and liabilities as they mature.

4.12 Ownership of Properties.  Each of the Borrower and its Subsidiaries (i) has
     good and  marketable  title to all real  property  owned by it,  (ii) holds
     interests  as lessee  under  valid  leases in full  force and  effect  with
     respect  to  all  material  leased  real  and  personal  property  used  in
     connection  with  its  business,  (iii)  possesses  or  has  rights  to use
     licenses, patents, copyrights,  trademarks,  service marks, trade names and
     other  assets  sufficient  to enable it to continue to conduct its business
     substantially  as heretofore  conducted  and without any material  conflict
     with the  rights  of  others,  and (iv) has good  title to all of its other
     properties  and assets  reflected in the most recent  financial  statements
     referred to in Section  4.11(a)  (except as sold or  otherwise  disposed of
     since the date thereof in the ordinary  course of  business),  in each case
     under (i),  (ii),  (iii) and (iv)  above free and clear of all Liens  other
     than  Permitted  Liens and in each case except to the extent the failure to
     own or hold such property would not be reasonably  likely,  individually or
     in the aggregate, to have a Material Adverse Effect.

4.13 ERISA.  (a) Each of the Borrower and its ERISA  Affiliates is in compliance
     in all material respects with the applicable  provisions of ERISA, and each
     Plan is and has been  administered  in compliance in all material  respects
     with all applicable Requirements of Law, including, without limitation, the
     applicable  provisions of ERISA and the Internal Revenue Code, in each case
     as in effect at the time the representations  contained herein are made. No
     ERISA  Event (i) has  occurred  within the  five-year  period  prior to the
     Closing  Date,  (ii)  has  occurred  and is  continuing,  or  (iii)  to the
     knowledge of the Borrower,  is reasonably expected to occur with respect to
     any Plan. No Plan has any Unfunded Pension  Liability as of the most recent
     annual valuation date applicable thereto,  and neither the Borrower nor any
     ERISA  Affiliate  has  engaged  in a  transaction  that could be subject to
     Section 4069 or 4212(c) of ERISA.

                                       46
<PAGE>

(b)  Neither the Borrower nor any ERISA  Affiliate has had a complete or partial
     withdrawal  from any  Multiemployer  Plan, and neither the Borrower nor any
     ERISA  Affiliate  would become subject to any liability  under ERISA if the
     Borrower  or any  ERISA  Affiliate  were to  withdraw  completely  from all
     Multiemployer  Plans as of the most recent valuation date. No Multiemployer
     Plan is in  "reorganization"  or is "insolvent"  within the meaning of such
     terms under ERISA.

4.14 Environmental Matters. Except as set forth on Schedule 4.14:

(a)   No  Hazardous  Substances  are or  have  been  generated,  used,  located,
     released,  treated,  disposed  of or stored by the  Borrower  or any of its
     Subsidiaries  or, to the  knowledge  of the  Borrower,  by any other Person
     (including any  predecessor in interest) or otherwise,  in, on or under any
     portion of any real  property,  leased or owned,  of the Borrower or any of
     its  Subsidiaries,  except  in  material  compliance  with  all  applicable
     Environmental  Laws,  and no portion of any such real  property  or, to the
     knowledge  of the  Borrower,  any other real  property at any time  leased,
     owned or operated  by the  Borrower  or any of its  Subsidiaries,  has been
     contaminated  by any  Hazardous  Substance;  and  no  portion  of any  real
     property,  leased or owned, of the Borrower or any of its  Subsidiaries has
     been or is presently the subject of an environmental  audit,  assessment or
     remedial action.

(b)  No portion of any real property, leased or owned, of the Borrower or any of
     its  Subsidiaries  has been used by the Borrower or any of its Subsidiaries
     or, to the  knowledge of the  Borrower,  by any other  Person,  as or for a
     mine, a landfill,  a dump or other disposal  facility,  a gasoline  service
     station,  or (other than for  petroleum  substances  stored in the ordinary
     course of business) a petroleum  products storage  facility;  no portion of
     such real property or any other real property at any time leased,  owned or
     operated by the Borrower or any of its  Subsidiaries  has,  pursuant to any
     Environmental  Law,  been  placed  on the  "National  Priorities  List"  or
     "CERCLIS  List"  (or any  similar  federal,  state or local  list) of sites
     subject  to  possible  environmental  problems;  and there are not and have
     never been any  underground  storage tanks  situated on any real  property,
     leased or owned, of the Borrower or any of its Subsidiaries.

(c)  All activities and operations of the Borrower and its  Subsidiaries  are in
     compliance  with the  requirements  of all applicable  Environmental  Laws,
     except to the extent  the  failure  so to  comply,  individually  or in the
     aggregate,  would  not be  reasonably  likely  to have a  Material  Adverse
     Effect. Each of the Borrower and its Subsidiaries has obtained all licenses
     and  permits  under   Environmental   Laws   necessary  to  its  respective
     operations;  all such  licenses  and permits are being  maintained  in good
     standing;  and each of the Borrower and its  Subsidiaries  is in compliance
     with all terms and conditions of such licenses and permits, except for such
     licenses  and permits the failure to obtain,  maintain or comply with which
     would not be reasonably likely, individually or in the aggregate, to have a
     Material  Adverse Effect.  Neither the Borrower nor any of its Subsidiaries
     is involved in any suit, action or proceeding,  or has received any notice,
     complaint  or  other  request  for  information  from any  governmental  or
     regulatory  authority or agency or other Person, with respect to any actual
     or alleged  Environmental  Claims that, if adversely  determined,  would be
     reasonably  likely,  individually  or in the aggregate,  to have a Material
     Adverse  Effect;  and,  to the  knowledge  of the  Borrower,  there  are no
     threatened  actions,  suits,  proceedings or investigations with respect to
     any such Environmental Claims, nor any basis therefor.

                                       47
<PAGE>

4.15 Compliance With Laws. Each of the Borrower and its  Subsidiaries  has filed
     all material reports, documents and other materials required to be filed by
     it under  all  applicable  Requirements  of Law with  any  governmental  or
     regulatory  authority or agency,  has  retained  all  material  records and
     documents  required to be retained by it under all applicable  Requirements
     of Law, and is otherwise in compliance with all applicable  Requirements of
     Law in  respect  of the  conduct  of its  business  and the  ownership  and
     operation  of its  properties,  except  for  such  Requirements  of Law the
     failure to comply with which,  individually or in the aggregate,  would not
     be reasonably likely to have a Material Adverse Effect.

4.16 Regulated  Industries.  Neither the Borrower nor any of its Subsidiaries is
     (i) an  "investment  company,"  a company  "controlled"  by an  "investment
     company," or an "investment  advisor," within the meaning of the Investment
     Company Act of 1940, as amended, or (ii) a "holding company," a "subsidiary
     company" of a "holding  company," or an "affiliate" of a "holding  company"
     or of a "subsidiary  company" of a "holding company," within the meaning of
     the Public Utility Holding Company Act of 1935, as amended.

4.17 Insurance.  The assets,  properties  and  business of the  Borrower and its
     Subsidiaries are insured against such hazards and  liabilities,  under such
     coverages and in such  amounts,  as are  customarily  maintained by prudent
     companies  similarly  situated  and under  policies  issued by  insurers of
     recognized responsibility.


                                       48
<PAGE>

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

The Borrower covenants and agrees that, until the termination of the Commitments
and the payment in full of all  principal and interest with respect to the Loans
together with all other amounts then due and owing hereunder:

5.1 Financial Statements. The Borrower will deliver to each Lender:

(a)  As soon as available  and in any event within sixty (60) days after the end
     of each of the first three fiscal  quarters of each fiscal year,  beginning
     with the fiscal  quarter  ending June 30, 1998,  an unaudited  consolidated
     balance  sheet of the Borrower and its  Subsidiaries  as of the end of such
     fiscal quarter and unaudited consolidated  statements of income, cash flows
     and  stockholders'  equity for the  Borrower and its  Subsidiaries  for the
     fiscal  quarter  then ended and for that  portion  of the fiscal  year then
     ended, in each case setting forth  comparative  consolidated  figures as of
     the end of and for the  corresponding  period in the preceding fiscal year,
     all in reasonable  detail and prepared in accordance  with GAAP (subject to
     the  absence  of notes  required  by GAAP and  subject  to normal  year-end
     adjustments)  applied  on a basis  consistent  with  that of the  preceding
     quarter or containing  disclosure of the effect on the financial  condition
     or results of  operations  of any change in the  application  of accounting
     principles and practices during such quarter; and

(b)  As soon as available and in any event within 105 days after the end of each
     fiscal year,  beginning  with the fiscal year ending  December 31, 1998, an
     audited  consolidated balance sheet of the Borrower and its Subsidiaries as
     of the end of such  fiscal  year and  audited  consolidated  statements  of
     income,  cash  flows and  stockholders'  equity  for the  Borrower  and its
     Subsidiaries  for the fiscal year then ended,  including the notes thereto,
     in each case setting forth comparative figures as of the end of and for the
     preceding  fiscal  year,  all in  reasonable  detail and  certified  by the
     independent  certified  public  accounting  firm regularly  retained by the
     Borrower  or  another  independent  certified  public  accounting  firm  of
     recognized national standing reasonably acceptable to the Required Lenders,
     together  with  (y) a  report  thereon  by  such  accountants  that  is not
     qualified as to going concern or scope of audit and to the effect that such
     financial  statements present fairly the consolidated  financial  condition
     and results of  operations of the Borrower and its  Subsidiaries  as of the
     dates and for the periods  indicated in  accordance  with GAAP applied on a
     basis  consistent with that of the preceding year or containing  disclosure
     of the effect on the  financial  condition or results of  operations of any
     change in the  application of accounting  principles  and practices  during
     such year, and (z) a report by such  accountants to the effect that,  based
     on and in connection with their examination of the financial  statements of
     the  Borrower  and its  Subsidiaries,  they  obtained no  knowledge  of the
     occurrence  or  existence  of any  Default or Event of Default  relating to
     accounting or financial  reporting matters,  or a statement  specifying the
     nature  and  period of  existence  of any such  Default or Event of Default
     disclosed by their audit;  provided,  however,  that such accountants shall
     not be liable by reason of the failure to obtain  knowledge  of any Default
     or Event of Default  that would not be  disclosed or revealed in the course
     of their audit examination.

                                       49
<PAGE>

5.2  Statutory Financial Statements. The Borrower will deliver to each Lender:

(a)  As soon as  practicable  and in any event  within sixty (60) days after the
     end of each of the  first  three  fiscal  quarters  of  each  fiscal  year,
     beginning  with the  fiscal  quarter  ending  June 30,  1998,  a  Quarterly
     Statement of each  Significant  Insurance  Subsidiary as of the end of such
     fiscal  quarter and for that portion of the fiscal year then ended,  in the
     form filed with the Insurance  Regulatory  Authority of its jurisdiction of
     legal  domicile,  prepared  in  accordance  with  SAP  applied  on a  basis
     consistent with that of the preceding  quarter or containing  disclosure of
     the effect on the  financial  condition  or results  of  operations  of any
     change in the  application of accounting  principles  and practices  during
     such quarter;

(b)  As soon as practicable and in any event within seventy-five (75) days after
     the end of each fiscal year, beginning with the fiscal year ending December
     31, 1998, an Annual Statement of each Significant  Insurance  Subsidiary as
     of the end of such fiscal  year and for the fiscal year then ended,  in the
     form filed with the Insurance  Regulatory  Authority of its jurisdiction of
     legal  domicile,  prepared  in  accordance  with  SAP  applied  on a  basis
     consistent with that of the preceding year or containing  disclosure of the
     effect on the financial condition or results of operations of any change in
     the application of accounting principles and practices during such year;

(c)  As soon as  practicable  and in any event  within 106 days after the end of
     each fiscal year,  beginning with the fiscal year ending December 31, 1998,
     the  insurance   expense  exhibits,   actuarial   opinions  and  management
     discussion and analysis  required to be filed with the Annual  Statement of
     each Significant Insurance Subsidiary as of the end of such fiscal year and
     for the  fiscal  year then  ended,  in the form  filed  with the  Insurance
     Regulatory Authority of its jurisdiction of legal domicile; and

(d)  As soon as  practicable  and in any event  within 135 days after the end of
     each fiscal year,  beginning with the fiscal year ending December 31, 1998,
     the combined Annual  Statement of the Insurance  Subsidiaries as of the end
     of such fiscal  year and for the fiscal year then ended,  in the form filed
     with the Connecticut  Department of Insurance,  prepared in accordance with
     SAP  applied  on a basis  consistent  with  that of the  preceding  year or
     containing  disclosure of the effect on the financial  condition or results
     of operations of any change in the application of accounting principles and
     practices  during such year,  together  with a  certificate  of a Financial
     Officer of the  Borrower to the effect that such  Annual  Statement  fairly
     presents  the  statutory  combined  financial  condition  of the  Insurance
     Subsidiaries in accordance with SAP.

                                       50
<PAGE>

5.3  Other Business and Financial Information. The Borrower will deliver to each
     Lender:

(a)  Concurrently  with each delivery of the financial  statements  described in
     Sections 5.1,  5.2(a) and 5.2(b),  a Compliance  Certificate in the form of
     Exhibit C-1  (in  the  case  of  the  financial   statements  described  in
     Section 5.1)  or  Exhibit C-2  (in  the  case of the  financial  statements
     described in Sections 5.2(a) and 5.2(b)) with respect to the period covered
     by the financial  statements then being delivered,  executed by a Financial
     Officer of the Borrower,  together, in the case of the financial statements
     described in Section 5.1,  with a Covenant Compliance  Worksheet reflecting
     the  computation  of the financial  covenant set forth in Section 6.1 as of
     the last day of the period covered by such financial statements, and in the
     case of the financial  statements  described in Sections 5.2(a) and 5.2(b),
     with a Covenant  Compliance  Worksheet  reflecting  the  computation of the
     financial  covenant  set  forth  in  Section 6.2  as of the last day of the
     period covered by such financial statements;

(b)  Promptly upon receipt  thereof,  copies of the final  executed  "management
     letter"  submitted to the Borrower by its certified  public  accountants in
     connection with each annual audit;

(c)  Promptly  upon the sending,  filing or receipt  thereof,  copies of (i) all
     financial  statements,  reports,  notices  and  proxy  statements  that the
     Borrower  shall  send  or make  available  generally  to its  shareholders,
     (ii) all  Forms  10-K,  10-Q  and  8-K  and  registration   statements  and
     prospectuses  (after such  documents  become  effective)  that the Borrower
     shall  file with the  Securities  and  Exchange  Commission,  the  National
     Association  of  Securities  Dealers,   Inc.  or  any  national  securities
     exchange,   (iii)   all  significant  reports  on  examination  or  similar
     significant  reports,  final financial  examination  reports or significant
     market conduct examination reports by the NAIC or any Insurance  Regulatory
     Authority  or any  governmental  or  regulatory  authority  or agency  with
     respect  to  any  Insurance  Subsidiary's   insurance  business,   (iv) all
     significant  filings made under applicable state insurance  holding company
     acts  by  the  Borrower  or any of  its  Subsidiaries,  including,  without
     limitation,  filings seeking approval of transactions with Affiliates,  and
     (v) all financial press releases made by the Borrower;

                                       51
<PAGE>

(d)  Promptly  upon (and in any event within five (5)  Business  Days after) any
     Responsible  Officer of the Borrower obtaining  knowledge thereof,  written
     notice of any of the following:

(i)  the occurrence of any Default or Event of Default,  together with a written
     statement of a Responsible Officer of the Borrower specifying the nature of
     such Default or Event of Default,  the period of existence  thereof and the
     action  that the  Borrower  has taken  and  proposes  to take with  respect
     thereto;

(ii) the institution of any action, suit, investigation or proceeding against or
     affecting  the  Borrower  or any of its  Subsidiaries,  including  any such
     investigation or proceeding by any Insurance  Regulatory Authority or other
     governmental  or  regulatory  authority  or agency  (other than  routine or
     periodic  inquiries,  investigations or reviews),  that would, if adversely
     determined, be reasonably likely, individually or in the aggregate, to have
     a Material Adverse Effect,  and any material  development in any litigation
     or other  proceeding  previously  reported  pursuant to Section 4.5 or this
     subsection;

(iii)the  receipt  by  the  Borrower  or  any  of  its  Subsidiaries   from  any
     governmental or regulatory  authority or agency of (y) any notice asserting
     any failure by the Borrower or any of its  Subsidiaries to be in compliance
     with  applicable  Requirements  of Law or that  threatens the taking of any
     action against the Borrower or such Subsidiary or sets forth  circumstances
     that, if taken or adversely determined,  would be reasonably likely to have
     a Material  Adverse  Effect,  or (z) any notice of any actual or threatened
     suspension, limitation or revocation of, failure to renew, or imposition of
     any restraining  order,  escrow or impoundment of funds in connection with,
     any license,  permit,  accreditation or authorization  (including,  without
     limitation, any License) of the Borrower or any of its Subsidiaries,  where
     such action would be reasonably likely to have a Material Adverse Effect;

(iv) The  occurrence of any changes in any Insurance Code governing the dividend
     practices of any of the  Insurance  Subsidiaries  that would be  reasonably
     likely to have a Material Adverse Effect;

                                       52
<PAGE>

(v)  Any change in the rating of any  Insurance  Subsidiary  by A.M. Best & Co.,
     Inc.;

(vi) Any change in the rating of the Borrower's senior unsecured  long-term debt
     by Standard & Poor's, Moody's or Duff & Phelps;

(vii)the occurrence of any ERISA Event, together with (x) a written statement of
     a Responsible  Officer of the Borrower specifying the details of such ERISA
     Event and the action that the  Borrower has taken and proposes to take with
     respect thereto,  (y) a copy of any notice with respect to such ERISA Event
     that may be required to be filed with the PBGC and (z) a copy of any notice
     delivered by the PBGC to the Borrower or such ERISA  Affiliate with respect
     to such ERISA Event; and

(viii) any other  matter or event  that has,  or would be  reasonably  likely to
     have, a Material  Adverse  Effect,  together with a written  statement of a
     Responsible  Officer of the Borrower setting forth the nature and period of
     existence  thereof and the action that the  Borrower has taken and proposes
     to take with respect thereto;

(e)  Within sixty (60) days after request  therefor by the Required Lenders from
     time to time  (but not more  than  once per  year)  consolidated  projected
     financial  statements for the Borrower and its  Subsidiaries  in such scope
     and detail as may be prepared for its own internal purposes; and

(f)  As  promptly  as  reasonably  possible,  such other  information  about the
     business,  condition (financial or otherwise),  operations or properties of
     the  Borrower  or any of its  Subsidiaries  (including  any  Plan  and  any
     information  required to be filed under ERISA) as the Administrative  Agent
     or any Lender may from time to time reasonably request.

5.4  Corporate Existence;  Franchises;  Maintenance of Properties.  The Borrower
     will, and will cause each of its Significant  Subsidiaries to, (i) maintain
     and preserve in full force and effect its  corporate  existence,  except as
     expressly permitted otherwise by Sections 7.1 or 7.4, (ii) obtain, maintain
     and  preserve  in full  force  and  effect  all other  rights,  franchises,
     licenses, permits, certifications, approvals and authorizations required by
     governmental  or  regulatory  authorities  or agencies and necessary to the
     ownership,  occupation  or use  of its  properties  or the  conduct  of its
     business, except to the extent the failure to do so would not be reasonably
     likely to have a  Material  Adverse  Effect,  and (iii)  keep all  material
     properties  in good  working  order  and  condition  (normal  wear and tear
     excepted) and from time to time make all necessary  repairs to and renewals
     and replacements of such properties,  except to the extent that any of such
     properties are obsolete or are being replaced.

                                       53
<PAGE>

5.5  Compliance  with  Laws.  The  Borrower  will,  and will  cause  each of its
     Subsidiaries  to,  comply  in all  respects  with all  Requirements  of Law
     applicable  in respect of the conduct of its business and the ownership and
     operation of its properties,  except to the extent the failure so to comply
     would not be reasonably likely to have a Material Adverse Effect.

5.6  Payment of Obligations.  Except to the extent failure to do so would not be
     reasonably likely to have a Material Adverse Effect, the Borrower will, and
     will cause each of its  Subsidiaries  to, (i) pay all  Indebtedness  as and
     when due (subject to any applicable subordination provisions) and otherwise
     comply with and perform all contracts,  agreements and instruments creating
     or  evidencing  Indebtedness  to  which  it is a  party,  and  (ii) pay and
     discharge all taxes, assessments and governmental charges or levies imposed
     upon it, upon its income or profits or upon any of its properties, prior to
     the date on which  penalties  would attach  thereto,  and all lawful claims
     that, if unpaid, might become a Lien (other than a Permitted Lien) upon any
     of the  properties  of the Borrower or any of its  Subsidiaries;  provided,
     however,  that neither the Borrower  nor any of its  Subsidiaries  shall be
     required  to pay any such tax,  assessment,  charge,  levy or claim that is
     being contested in good faith and by proper proceedings and as to which the
     Borrower or such Subsidiary is maintaining  adequate  reserves with respect
     thereto in accordance with GAAP.

5.7  Insurance.  The Borrower will, and will cause each of its  Subsidiaries to,
     maintain with financially sound and reputable insurance companies insurance
     with respect to its assets,  properties and business,  against such hazards
     and  liabilities,  of such  types and in such  amounts,  as is  customarily
     maintained  by  companies  in the  same  or  similar  businesses  similarly
     situated.

5.8  Maintenance of Books and Records;  Inspection.  The Borrower will, and will
     cause each of its  Subsidiaries to, (i) maintain  adequate books,  accounts
     and records,  in which full,  true and correct entries shall be made of all
     financial  transactions  in relation to its  business and  properties,  and
     prepare all financial  statements  required under this  Agreement,  in each
     case in accordance with GAAP or SAP, as applicable,  and in compliance with
     the  requirements  of any  governmental  or regulatory  authority or agency
     having  jurisdiction  over it, and (ii) permit  employees  or agents of the
     Administrative Agent or any Lender to inspect its properties and examine or
     audit its books,  records,  working papers and accounts and make copies and
     memoranda of them,  and to discuss its affairs,  finances and accounts with
     its  officers  and  employees  and,  upon  notice  to  the  Borrower,   the
     independent public accountants of the Borrower and its Subsidiaries (and by
     this  provision the Borrower  authorizes  such  accountants  to discuss the
     finances  and affairs of the Borrower  and its  Subsidiaries),  all at such
     times and from time to time,  upon  reasonable  notice and during  business
     hours, as may be reasonably requested.

                                       54
<PAGE>

5.9  Ownership of Insurance Subsidiaries. Except as permitted by Sections 7.1 or
     7.4, the Borrower  will, and will cause each of its  Subsidiaries  to, take
     such action from time to time as shall be  necessary to ensure that it owns
     at all times at least the same percentage of issued and outstanding  shares
     of each class of Capital Stock of its Insurance Subsidiaries as is owned on
     the date hereof.

5.10 Year 2000  Compatibility.  Each of the Borrower and its Subsidiaries  shall
     take such action as is necessary to assure that its computer  based systems
     are able to operate and  effectively  process  data  including  dates on or
     after  January 1, 2000 if such  operating or  processing  failure  would be
     reasonably  likely,  individually  or in the aggregate,  to have a Material
     Adverse Effect.  At the  Administrative  Agent's request,  the Borrower and
     each  of  its  Subsidiaries  shall  provide  to  the  Administrative  Agent
     reasonable assurance of its Year 2000 compatibility or progress thereto.

5.11 Further  Assurances.  The  Borrower  will,  and  will  cause  each  of  its
     Subsidiaries  to,  make,  execute,  endorse,  acknowledge  and  deliver any
     amendments, modifications or supplements hereto and restatements hereof and
     any other agreements,  instruments or documents,  and take any and all such
     other  actions,  as may from time to time be  reasonably  requested  by the
     Administrative Agent or the Required Lenders to effect,  confirm or further
     assure or protect and  preserve the  interests,  rights and remedies of the
     Administrative  Agent and the Lenders  under this  Agreement  and the other
     Credit Documents.


                                       55
<PAGE>

                                   ARTICLE VI

                               FINANCIAL COVENANTS

The Borrower covenants and agrees that, until the termination of the Commitments
and the payment in full of all  principal and interest with respect to the Loans
together with all other amounts then due and owing hereunder:

6.1  Capitalization Ratio. The Borrower will not permit the Capitalization Ratio
     to be  greater  than 0.4 to 1.0 as of the last day of any  fiscal  quarter,
     beginning with the fiscal quarter ending June 30, 1998.

6.2  Combined Statutory Surplus. The Borrower will not permit Combined Statutory
     Surplus,  at any time from and after the Closing  Date, to be less than (i)
     $650,000,000  plus (ii) 30% of the  aggregate  of  Combined  Statutory  Net
     Income for each fiscal year ending on or after  December 31, 1998 up to and
     including the date of determination  (provided that Combined  Statutory Net
     Income for any such fiscal year shall be taken into account for purposes of
     this calculation only if positive).


                                   ARTICLE VII

                               NEGATIVE COVENANTS

The Borrower covenants and agrees that, until the termination of the Commitments
and the payment in full of all  principal and interest with respect to the Loans
together with all other amounts then due and owing hereunder:

7.1  Merger; Consolidation.  The Borrower will not, and will not permit or cause
     any of its Significant Subsidiaries to, liquidate,  wind up or dissolve, or
     enter into any consolidation,  merger or other combination,  or agree to do
     any  of  the  foregoing;  provided,  however,  that  the  Borrower  or  any
     Significant Subsidiary may merge or consolidate with another Person so long
     as (x) the  surviving  entity is the Borrower or a Wholly Owned  Subsidiary
     (and  in  any  event,  if  the  Borrower  is a  party  to  such  merger  or
     consolidation,  the  surviving  entity  shall  be the  Borrower),  and  (y)
     immediately  after giving  effect  thereto,  no Default or Event of Default
     would exist.

                                       56
<PAGE>

7.2  Secured  Indebtedness.  The Borrower will not, and will not permit or cause
     any of its  Subsidiaries to, create,  incur,  assume or suffer to exist any
     Indebtedness  or  Contingent  Obligations  secured by a Lien of or upon any
     assets  ,  properties,  shares  of  Capital  Stock or  Indebtedness  of any
     Subsidiary  which assets,  properties,  shares or Indebtedness are owned or
     held by the  Borrower  or any other  Subsidiary  ("Secured  Indebtedness"),
     except for (i) Secured  Indebtedness  secured by Liens expressly  permitted
     under  clause (vi) of Section  7.3,  and (ii)  Secured  Indebtedness  in an
     aggregate  principal  amount  outstanding  at any  time not  exceeding  ten
     percent  (10%) of  Consolidated  Net Worth as of the last day of the fiscal
     quarter  then most  recently  ended for which  financial  statements  and a
     Compliance  Certificate  have been delivered  pursuant to Sections 5.1  and
     5.3.

7.3  Liens.  The  Borrower  will  not,  and will not  permit or cause any of its
     Subsidiaries to, directly or indirectly,  make,  create,  incur,  assume or
     suffer to exist,  any Lien upon or with respect to any part of its property
     or assets,  whether now owned or hereafter acquired,  or file or permit the
     filing of, or permit to remain in effect, any financing  statement or other
     similar notice of any Lien with respect to any such property, asset, income
     or  profits  under the  Uniform  Commercial  Code of any state or under any
     similar  recording or notice statute,  or agree to do any of the foregoing,
     other than the following (collectively, "Permitted Liens"):

(i)  Liens in existence on the Closing Date and set forth on Schedule 7.3;

(ii) Liens imposed by law, such as Liens of carriers,  warehousemen,  mechanics,
     materialmen and landlords, and other similar Liens incurred in the ordinary
     course of business for sums not  constituting  borrowed  money that are not
     overdue  for a period  of more  than  thirty  (30)  days or that are  being
     contested in good faith by appropriate  proceedings  and for which adequate
     reserves have been established in accordance with GAAP (if so required);

(iii)Liens (other than any Lien imposed by ERISA,  the creation or incurrence of
     which would result in an Event of Default under Section 8.1(k)) incurred in
     the ordinary course of business in connection  with worker's  compensation,
     unemployment   insurance  or  other  forms  of  governmental  insurance  or
     benefits, or to secure the performance of letters of credit, bids, tenders,
     statutory  obligations,   surety  and  appeal  bonds,  leases,   government
     contracts  and  other  similar  obligations  (other  than  obligations  for
     borrowed money) entered into in the ordinary course of business;

                                       57
<PAGE>

(iv) Liens for taxes,  assessments  or other  governmental  charges or statutory
     obligations  that are not delinquent or remain payable  without any penalty
     or that are being  contested in good faith by appropriate  proceedings  and
     for which adequate  reserves have been  established in accordance with GAAP
     (if so required);

(v)  Liens  securing  Indebtedness  permitted  under  clause (ii) of Section 7.2
     (which Liens shall include  purchase  money Liens not  expressly  permitted
     under clause (vi) of this Section 7.3);

(vi) Liens upon  equipment,  real property or other fixed assets acquired by the
     Borrower  or any of its  Subsidiaries,  securing  Indebtedness  incurred to
     finance the payment of all or part of the purchase price thereof (including
     in  connection  with capital  leases),  which Liens secure  purchase  money
     Indebtedness   not   exceeding   $1,000,000   with  respect  to  each  Lien
     individually  or  $10,000,000  with  respect  to  all  such  Liens  in  the
     aggregate;

(vii)any attachment or judgment Lien not  constituting an Event of Default under
     Section  8.1(j)  that is  being  contested  in good  faith  by  appropriate
     proceedings  and for  which  adequate  reserves  have been  established  in
     accordance with GAAP (if so required);

(viii) Liens  arising from the filing,  for notice  purposes  only, of financing
     statements in respect of true leases;

(ix) Liens arising under insurance holding company statutes or regulations;

(x)  Liens upon cash and United States  government and agency  securities of the
     Borrower and its Subsidiaries,  securing obligations incurred in connection
     with  reverse   repurchase   transactions  and  other  similar   investment
     management  transactions of such types and in such amounts as are customary
     for  companies  similar to the  Borrower in size and lines of business  and
     that are entered into by the Borrower and its  Subsidiaries in the ordinary
     course of business;

                                       58
<PAGE>

(xi) Liens on Borrower Margin Stock, to the extent the fair market value thereof
     exceeds 25% of the fair market  value of the assets of the Borrower and its
     Subsidiaries (including Borrower Margin Stock);

(xii)with  respect to any real  property  occupied by the Borrower or any of its
     Subsidiaries,   all  easements,   rights  of  way,   licenses  and  similar
     encumbrances  on  title  that  do not  materially  impair  the  use of such
     property for its intended purposes; and

(xiii) interests of  counterparties  under  leases,  licenses and  franchises to
     which the Borrower or any of its Subsidiaries is a party.

7.4  Disposition of Assets.  The Borrower will not, and will not permit or cause
     any of its Subsidiaries to, directly or indirectly,  sell,  assign,  lease,
     convey,  transfer  or  otherwise  dispose of (whether in one or a series of
     related  transactions)  any Material Assets,  or enter into any arrangement
     with any Person  providing for the lease by the Borrower or any  Subsidiary
     as lessee of any Material  Assets that have been sold or transferred by the
     Borrower  or such  Subsidiary  to such  Person,  or  agree to do any of the
     foregoing;  provided,  however, that the Borrower or any Subsidiary may, to
     the extent  permitted by applicable  Requirements  of Law and each relevant
     Insurance Regulatory Authority, sell, assign or otherwise dispose of any of
     its Material  Assets to the Borrower or another Wholly Owned  Subsidiary so
     long as (y) if the Material Assets assigned are the assets or Capital Stock
     of an Insurance  Subsidiary,  such sale, assignment or disposition will not
     materially  reduce the aggregate amount of dividends or distributions  that
     could  be  realized,  directly  or  indirectly,  by the  Borrower  from its
     Subsidiaries,  and (z) immediately after giving effect thereto,  no Default
     or Event of Default would exist.

7.5  Transactions with Affiliates. The Borrower will not, and will not permit or
     cause any of its  Subsidiaries  to, enter into any transaction  material to
     the  Borrower  and its  Subsidiaries,  taken as a whole,  with any officer,
     director, stockholder or other Affiliate of the Borrower or any Subsidiary,
     except in the ordinary  course of its business and upon fair and reasonable
     terms that are not substantially  less favorable to it than would obtain in
     a comparable arm's length transaction with a Person other than an Affiliate
     of the  Borrower  or  such  Subsidiary;  provided,  however,  that  nothing
     contained in this Section shall prohibit:

                                       59
<PAGE>

(i)  transactions  described on  Schedule 7.5 or otherwise  expressly  permitted
     under this Agreement;

(ii) transactions  pursuant to employee benefit plans,  employment contracts and
     other employment  arrangements  established or entered into in the ordinary
     course of business;

(iii)the payment by the Borrower of reasonable  and customary fees to members of
     its board of directors; and

(iv) transactions   between  or  among  the   Borrower   and  its  Wholly  Owned
     Subsidiaries.

7.6  Lines of Business.  The Borrower will not, and will not permit or cause any
     of its Significant  Subsidiaries  to, engage in any business other than the
     property and  casualty  insurance  business,  the  businesses  in which the
     Borrower and its  Subsidiaries are engaged on the Closing Date, or (in each
     instance)  a  business  reasonably   incidental  or  related  thereto  (the
     "Permitted Lines of Business");  provided, however, that if the Borrower or
     any  Subsidiary  shall  acquire the Capital  Stock or assets of a Person or
     business that (i) is engaged in a business  other than the Permitted  Lines
     of Business and (ii) after giving pro forma effect to such  acquisition  as
     if it were  consummated  on the  first  day of the  period  of four  fiscal
     quarters  ending on the last day of the fiscal  quarter then most  recently
     ended, has (A) assets as of the date of such acquisition comprising greater
     than five percent (5%) of  Consolidated  Total Assets as of the last day of
     the fiscal  quarter then most recently  ended or (B) Net Income  comprising
     greater than five percent (5%) of Consolidated Net Income for the period of
     four fiscal quarters ending on the last day of the fiscal quarter then most
     recently  ended,  the  Borrower or such  Subsidiary  shall be  permitted to
     engage  in such  business  for a period  of 180 days  from the date of such
     acquisition;  but provided further that, notwithstanding the foregoing, the
     Borrower  will not permit the  aggregate of the  businesses  other than the
     Permitted Lines of Business engaged in by the Borrower and its Subsidiaries
     to have, as of the last day of any fiscal  quarter,  (x) assets  comprising
     greater than twenty percent (20%) of  Consolidated  Total Assets as of such
     date or (y) Net Income  for the four  fiscal  quarters  ending on such date
     comprising greater than twenty percent (20%) of Consolidated Net Income for
     such period.

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<PAGE>

7.7  Limitation  on Certain  Restrictions.  The Borrower  will not, and will not
     permit or cause any of its Subsidiaries to, directly or indirectly,  create
     or otherwise cause or suffer to exist or (become  effective any contractual
     restriction  or  encumbrance  on (i) the  ability of the  Borrower  and its
     Subsidiaries to perform and comply with their respective  obligations under
     the Credit  Documents or (ii) the ability of any Subsidiary of the Borrower
     to make any  dividend  payments  or other  distributions  in respect of its
     Capital  Stock,  to repay  Indebtedness  owed to the  Borrower or any other
     Subsidiary,  to  make  loans  or  advances  to the  Borrower  or any  other
     Subsidiary,  or to transfer any of its assets or properties to the Borrower
     or any other  Subsidiary,  in each case  other  than such  restrictions  or
     encumbrances  existing  under  or by  reason  of the  Credit  Documents  or
     applicable  Requirements  of Law and such  restrictions  or encumbrances as
     would not be reasonably likely, individually or in the aggregate, to have a
     Material Adverse Effect.

7.8  Fiscal Year. The Borrower will not, and will not permit or cause any of its
     Subsidiaries  to, change the ending date of its fiscal year to a date other
     than  December  31 unless (i) the  Borrower  shall  have given the  Lenders
     written  notice of its  intention to change such fiscal year at least sixty
     (60)  days  prior to the  effective  date  thereof  and (ii)  prior to such
     effective date this  Agreement  shall have been amended to make any changes
     in the  financial  covenants  and other terms and  conditions to the extent
     necessary,  in the reasonable  determination  of the Required  Lenders,  to
     reflect the new fiscal year ending date.

7.9  Accounting Changes. The Borrower will not, and will not permit or cause any
     of  its  Subsidiaries  to,  make  or  permit  any  material  change  in its
     accounting  policies or reporting  practices,  except as may be required or
     permitted by GAAP or SAP, as applicable.




                                       61
<PAGE>

                                  ARTICLE VIII

                                EVENTS OF DEFAULT

8.1  Events  of  Default.  The  occurrence  of any one or more of the  following
     events shall constitute an "Event of Default":

(a)  The Borrower shall fail to pay any principal of the Loans when due;

(b)  The Borrower  shall fail to pay any interest on the Loans,  any fees or any
     other  Obligation when due, and such failure shall continue  unremedied for
     three (3) Business Days;

(c)  The Borrower  shall fail to observe,  perform or comply with any condition,
     covenant or agreement  contained in any of Sections 2.14, 5.4(i), 5.9 or in
     Article VI or Article VII;

(d)  The Borrower or any of its Subsidiaries  shall fail to observe,  perform or
     comply  with  any  condition,  covenant  or  agreement  contained  in  this
     Agreement or any of the other Credit  Documents other than those enumerated
     in  subsections (a)   and  (b)  above,  and  such  failure  shall  continue
     unremedied for any grace period  specifically  applicable thereto or, if no
     such grace period is applicable, for a period of thirty (30) days after the
     earlier  of (y) the  date on which a  Responsible  Officer of the  Borrower
     acquires knowledge thereof and (z) the date on which written notice thereof
     is delivered by the Administrative Agent or any Lender to the Borrower;

(e)  Any  representation or warranty made by or on behalf of the Borrower or any
     of its Subsidiaries in this Agreement, any of the other Credit Documents or
     in any  certificate,  instrument,  report or other  document  furnished  in
     connection  herewith or therewith or in  connection  with the  transactions
     contemplated hereby or thereby shall prove to have been false or misleading
     in any material respect as of the time made or furnished;

                                       62
<PAGE>

(f)  The  Borrower  or any of its  Subsidiaries  shall  (i) fail to pay when due
     (whether by scheduled maturity,  acceleration or otherwise and after giving
     effect to any applicable  grace period) any principal of or interest on any
     Indebtedness  (other  than  the  Indebtedness  incurred  pursuant  to  this
     Agreement  and  intercompany  Indebtedness)  having an aggregate  principal
     amount of at least  $20,000,000 or (ii) fail to observe,  perform or comply
     with any  condition,  covenant or agreement  contained in any  agreement or
     instrument  evidencing or relating to any such  Indebtedness,  or any other
     event shall occur or condition exist in respect thereof,  and the effect of
     such  failure,  event or  condition  is to cause,  or permit  the holder or
     holders of such Indebtedness (or a trustee or agent on its or their behalf)
     to cause  (with  the  giving  of  notice,  lapse of time,  or  both),  such
     Indebtedness  to become  due,  or to be  prepaid,  redeemed,  purchased  or
     defeased, prior to its stated maturity;

(g)  The  Borrower  or any of its  Significant  Subsidiaries  shall  (i) file  a
     voluntary  petition  or  commence a  voluntary  case  seeking  liquidation,
     winding-up, reorganization, dissolution, arrangement, readjustment of debts
     or any other relief under the Bankruptcy Code or under any other applicable
     bankruptcy,   insolvency  or  similar  law  now  or  hereafter  in  effect,
     (ii) consent  to the  institution of, or fail to controvert in a timely and
     appropriate  manner,  any  petition  or  case  of  the  type  described  in
     subsection (g)  below,  (iii) apply for or consent to the appointment of or
     taking possession by a custodian, trustee, receiver or similar official for
     or of itself or all or a  substantial  part of its  properties  or  assets,
     (iv) fail  generally,  or admit in writing its inability,  to pay its debts
     generally as they become due, (v) make a general assignment for the benefit
     of creditors or (vi) take any corporate  action to authorize or approve any
     of the foregoing;

(h)  Any  involuntary  petition or case shall be filed or commenced  against the
     Borrower  or any  of  its  Significant  Subsidiaries  seeking  liquidation,
     winding-up,  reorganization,   dissolution,  arrangement,  readjustment  of
     debts,  the  appointment  of a  custodian,  trustee,  receiver  or  similar
     official for it or all or a substantial part of its properties or any other
     relief under the Bankruptcy Code or under any other applicable  bankruptcy,
     insolvency or similar law now or hereafter in effect,  and such petition or
     case shall  continue  undismissed  and  unstayed for a period of sixty (60)
     days;  or an order,  judgment or decree  approving  or ordering  any of the
     foregoing shall be entered in any such proceeding;

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(i)  Any  Insurance  Regulatory  Authority or other  governmental  or regulatory
     authority  or  agency  having   jurisdiction   shall  issue  any  order  of
     conservation, supervision, rehabilitation or liquidation or any other order
     of similar effect in respect of any Significant Insurance  Subsidiary,  and
     such action,  individually or in the aggregate,  has or would be reasonably
     likely to have a Material Adverse Effect;

(j)  Any  one  or  more  money  judgments,  writs  or  warrants  of  attachment,
     executions or similar processes involving an aggregate amount (exclusive of
     amounts  fully  bonded or  covered by  insurance  as to which the surety or
     insurer,  as the case may be, has acknowledged its liability in writing) in
     excess of $20,000,000 shall be entered or filed against the Borrower or any
     of its Subsidiaries or any of their respective  properties and (i) the same
     shall not be  dismissed,  stayed or  discharged  for a period of sixty (60)
     days or is not otherwise being appropriately contested in good faith and in
     a manner reasonably  satisfactory to the Required Lenders, or (ii) the same
     is not  dismissed,  stayed or discharged  within five (5) days prior to the
     date of any  proposed  sale of assets  of the  Borrower  or any  Subsidiary
     pursuant thereto;

(k)  Any ERISA Event or any other event or  condition  shall occur or exist with
     respect  to any  Plan or  Multiemployer  Plan  and,  as a  result  thereof,
     together  with all other ERISA Events and other events or  conditions  then
     existing,  the Borrower and its ERISA  Affiliates have incurred or would be
     reasonably  likely  to  incur  liability  to  any  one  or  more  Plans  or
     Multiemployer  Plans  or to the  PBGC (or to any  combination  thereof)  in
     excess of $20,000,000;

(l)  Any one or more licenses, permits,  accreditations or authorizations of the
     Borrower  or  any  of its  Subsidiaries  shall  be  suspended,  limited  or
     terminated or shall not be renewed,  or any other action shall be taken, by
     any  governmental  or  regulatory  authority  or agency in  response to any
     alleged  failure  by the  Borrower  or any  of  its  Subsidiaries  to be in
     compliance   with   applicable   Requirements  of  Law,  and  such  action,
     individually or in the aggregate, has or would be reasonably likely to have
     a Material Adverse Effect; or

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<PAGE>

(m)  Any of the following shall occur: (i) any Person or group of Persons acting
     in concert as a partnership  or other group shall,  as a result of a tender
     or exchange offer, open market purchases, privately negotiated purchases or
     otherwise,  have become,  after the date  hereof,  the  "beneficial  owner"
     (within the meaning of such term under Rule 13d-3 under the  Exchange  Act)
     of  securities  of the  Borrower  representing  20% or more of the combined
     voting power of the then outstanding  securities of the Borrower ordinarily
     (and apart from rights  accruing  under special  circumstances)  having the
     right to vote in the election of directors;  or (ii) the Board of Directors
     of the Borrower shall cease to consist of a majority of the individuals who
     constituted  the Board of Directors as of the date hereof or who shall have
     become a member  thereof  subsequent  to the date hereof  after having been
     nominated,  or  otherwise  approved in  writing,  by at least a majority of
     individuals  who  constituted  the Board of Directors of the Borrower as of
     the date hereof (or their replacements approved as herein required).

8.2  Remedies:  Termination of Commitments,  Acceleration,  etc. Upon and at any
     time  after the  occurrence  and  during  the  continuance  of any Event of
     Default, the Administrative  Agent shall at the direction,  or may with the
     consent, of the Required Lenders,  take any or all of the following actions
     at the same or different times:

(a)  Declare  the  Commitments  to  be  terminated,  whereupon  the  same  shall
     terminate  (provided  that,  upon the  occurrence  of an  Event of  Default
     pursuant  to  Section  8.1(g) or  Section  8.1(h),  the  Commitments  shall
     automatically be terminated);

(b)  Declare all or any part of the outstanding principal amount of the Loans to
     be immediately due and payable,  whereupon the principal amount so declared
     to be  immediately  due and payable,  together  with all  interest  accrued
     thereon and all other amounts payable under this  Agreement,  the Notes and
     the other  Credit  Documents,  shall  become  immediately  due and  payable
     without  presentment,  demand,  protest,  notice of intent to accelerate or
     other  notice  or  legal  process  of any  kind,  all of which  are  hereby
     knowingly and expressly  waived by the Borrower  (provided  that,  upon the
     occurrence  of  an  Event  of  Default   pursuant  to   Section 8.1(g)   or
     Section 8.1(h),  all of the outstanding  principal  amount of the Loans and
     all other  amounts  described in this  subsection (b)  shall  automatically
     become immediately due and payable without  presentment,  demand,  protest,
     notice of intent to  accelerate  or other  notice or legal  process  of any
     kind,  all of which  are  hereby  knowingly  and  expressly  waived  by the
     Borrower);

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(c)  Take any and all action necessary to obtain, at the Borrower's  expense and
     as soon as reasonably possible,  with respect to each Significant Insurance
     Subsidiary,  a current  actuarial  review and  valuation  statement of, and
     opinion as to the adequacy of, such  Insurance  Subsidiary's  loss and loss
     adjustment expense reserve positions with respect to the insurance business
     then in force,  and  covering  such  other  subjects  as are  customary  in
     actuarial reviews and as may be requested by the Required Lenders, prepared
     by an  independent  actuarial  firm  acceptable to the Required  Lenders in
     accordance  with  reasonable  actuarial  assumptions  and  procedures  (the
     Borrower hereby agreeing to cooperate in connection therewith); and

(d)  Exercise all rights and remedies available to it under this Agreement,  the
     other Credit Documents and applicable law.

8.3  Remedies:  Set-Off.  In addition to all other rights and remedies available
     under the Credit Documents or applicable law or otherwise,  upon and at any
     time  after the  occurrence  and  during  the  continuance  of any Event of
     Default, each Lender may, and each is hereby authorized by the Borrower, at
     any such time and from time to time,  to the fullest  extent  permitted  by
     applicable law, without presentment, demand, protest or other notice of any
     kind,  all of which  are  hereby  knowingly  and  expressly  waived  by the
     Borrower, to set off and to apply any and all deposits (general or special,
     time or demand,  provisional  or final) and any other  property at any time
     held  (including at any branches or agencies,  wherever  located),  and any
     other  indebtedness  at any time owing, by such Lender to or for the credit
     or the account of the  Borrower  against any or all of the  Obligations  to
     such Lender now or hereafter existing,  whether or not such Obligations may
     be contingent or unmatured,  the Borrower  hereby granting to each Lender a
     continuing  security  interest in and Lien upon all such deposits and other
     property as security for such  Obligations.  Each Lender agrees promptly to
     notify the Borrower and the Administrative Agent after any such set-off and
     application;  provided, however, that the failure to give such notice shall
     not affect the validity of such set-off and application.


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                                   ARTICLE IX

                            THE ADMINISTRATIVE AGENT

9.1  Appointment.  Each Lender hereby irrevocably  appoints and authorizes First
     Union to act as  Administrative  Agent hereunder and under the other Credit
     Documents  and to take such  actions as agent on its behalf  hereunder  and
     under the other  Credit  Documents,  and to  exercise  such  powers  and to
     perform such duties,  as are specifically  delegated to the  Administrative
     Agent by the terms hereof or thereof,  together  with such other powers and
     duties as are reasonably incidental thereto.

9.2  Nature  of  Duties.  The  Administrative  Agent  shall  have no  duties  or
     responsibilities other than those expressly set forth in this Agreement and
     the other Credit  Documents.  The  Administrative  Agent shall not have, by
     reason  of  this  Agreement  or any  other  Credit  Document,  a  fiduciary
     relationship in respect of any Lender; and nothing in this Agreement or any
     other Credit  Document,  express or implied,  is intended to or shall be so
     construed as to impose upon the  Administrative  Agent any  obligations  or
     liabilities  in  respect of this  Agreement  or any other  Credit  Document
     except as expressly set forth herein or therein.  The Administrative  Agent
     may  execute any of its duties  under this  Agreement  or any other  Credit
     Document  by or  through  agents  or  attorneys-in-fact  and  shall  not be
     responsible   for  the   negligence   or   misconduct   of  any  agents  or
     attorneys-in-fact  that it selects with reasonable care. The Administrative
     Agent shall be entitled to consult with legal counsel,  independent  public
     accountants  and other  experts  selected by it with respect to all matters
     pertaining to this Agreement and the other Credit  Documents and its duties
     hereunder  and  thereunder  and shall not be liable for any action taken or
     omitted  to be taken in good faith by it in  accordance  with the advice of
     such counsel,  accountants or experts.  The Lenders hereby acknowledge that
     the  Administrative  Agent  shall  not  be  under  any  duty  to  take  any
     discretionary action permitted to be taken by it pursuant to the provisions
     of this Agreement or any other Credit Document unless it shall be requested
     in writing to do so by the Required Lenders (or, where a higher  percentage
     of the Lenders is expressly required hereunder, such Lenders).

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<PAGE>

9.3  Exculpatory  Provisions.  Neither the  Administrative  Agent nor any of its
     officers,  directors,  employees,  agents,  attorneys-in-fact or Affiliates
     shall be (i) liable  for any  action  taken or omitted to be taken by it or
     such Person under or in connection  with the Credit  Documents,  except for
     its or such  Person's  own gross  negligence  or willful  misconduct,  (ii)
     responsible  in any  manner to any  Lender  for any  recitals,  statements,
     information,  representations  or warranties  herein or in any other Credit
     Document  or in any  document,  instrument,  certificate,  report  or other
     writing delivered in connection  herewith or therewith,  for the execution,
     effectiveness, genuineness, validity, enforceability or sufficiency of this
     Agreement or any other Credit Document,  or for the financial  condition of
     the Borrower,  its  Subsidiaries or any other Person,  or (iii) required to
     ascertain or make any inquiry  concerning the  performance or observance of
     any of the terms,  provisions or conditions of this  Agreement or any other
     Credit  Document or the  existence or possible  existence of any Default or
     Event of  Default,  or to inspect the  properties,  books or records of the
     Borrower or any of its Subsidiaries.

9.4  Reliance  by  Administrative  Agent.  The  Administrative  Agent  shall  be
     entitled to rely, and shall be fully protected in relying, upon any notice,
     statement,  consent or other communication (including,  without limitation,
     any thereof by telephone,  telecopy,  telex, telegram or cable) believed by
     it in good faith to be genuine and correct and to have been signed, sent or
     made by the proper Person or Persons. The Administrative Agent may deem and
     treat each Lender as the owner of its interest  hereunder  for all purposes
     hereof unless and until a written notice of the assignment,  negotiation or
     transfer  thereof  shall  have been  given to the  Administrative  Agent in
     accordance with the provisions of this Agreement.  The Administrative Agent
     shall be entitled to refrain  from taking or omitting to take any action in
     connection  with this  Agreement or any other  Credit  Document (i) if such
     action or omission would, in the reasonable  opinion of the  Administrative
     Agent, violate any applicable law or any provision of this Agreement or any
     other Credit  Document or (ii) unless and until it shall have received such
     advice  or  concurrence  of  the  Required  Lenders  (or,  where  a  higher
     percentage of the Lenders is expressly required hereunder, such Lenders) as
     it deems  appropriate  or it  shall  first  have  been  indemnified  to its
     satisfaction  by the  Lenders  against  any and all  liability  and expense
     (other than liability and expense arising from its own gross  negligence or
     willful  misconduct)  that  may be  incurred  by it by  reason  of  taking,
     continuing  to take or omitting to take any such action.  Without  limiting
     the foregoing,  no Lender shall have any right of action whatsoever against
     the Administrative  Agent as a result of the Administrative  Agent's acting
     or refraining  from acting  hereunder or under any other Credit Document in
     accordance  with the  instructions  of the Required  Lenders  (or,  where a
     higher  percentage  of the Lenders is expressly  required  hereunder,  such
     Lenders),  and such  instructions  and any  action  taken or failure to act
     pursuant  thereto shall be binding upon all of the Lenders  (including  all
     subsequent Lenders).

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<PAGE>

9.5  Non-Reliance  on  Administrative  Agent  and  Other  Lenders.  Each  Lender
     expressly acknowledges that neither the Administrative Agent nor any of its
     officers, directors, employees, agents, attorneys-in-fact or Affiliates has
     made  any  representation  or  warranty  to it  and  that  no  act  by  the
     Administrative  Agent or any such Person hereinafter  taken,  including any
     review of the affairs of the Borrower and its Subsidiaries, shall be deemed
     to constitute any representation or warranty by the Administrative Agent to
     any Lender. Each Lender represents to the Administrative  Agent that (i) it
     has,  independently and without reliance upon the  Administrative  Agent or
     any other  Lender and based on such  documents  and  information  as it has
     deemed  appropriate,  made its own appraisal of and investigation  into the
     business, prospects, operations,  properties, financial and other condition
     and  creditworthiness of the Borrower and its Subsidiaries and made its own
     decision to enter into this  Agreement  and extend  credit to the  Borrower
     hereunder,  and (ii) it will,  independently  and without reliance upon the
     Administrative  Agent or any other Lender and based on such  documents  and
     information as it shall deem appropriate at the time,  continue to make its
     own  credit  analysis,  appraisals  and  decisions  in taking or not taking
     action  hereunder  and under the other  Credit  Documents  and to make such
     investigation  as it deems  necessary to inform  itself as to the business,
     prospects,  operations,  properties,  financial  and  other  condition  and
     creditworthiness of the Borrower and its Subsidiaries.  Except as expressly
     provided  in  this   Agreement   and  the  other  Credit   Documents,   the
     Administrative Agent shall have no duty or responsibility, either initially
     or on a  continuing  basis,  to provide any Lender with any credit or other
     information  concerning the business,  prospects,  operations,  properties,
     financial  or other  condition or  creditworthiness  of the  Borrower,  its
     Subsidiaries  or any  other  Person  that  may at any  time  come  into the
     possession of the Administrative  Agent or any of its officers,  directors,
     employees, agents, attorneys-in-fact or Affiliates.

9.6  Notice of  Default.  The  Administrative  Agent shall not be deemed to have
     knowledge  or notice of the  occurrence  of any Default or Event of Default
     unless the Administrative Agent shall have received written notice from the
     Borrower or a Lender  referring to this Agreement,  describing such Default
     or Event of Default and stating  that such notice is a "notice of default."
     In the event that the  Administrative  Agent  receives  such a notice,  the
     Administrative  Agent will give  notice  thereof to the  Lenders as soon as
     reasonably practicable; provided, however, that if any such notice has also
     been  furnished  to the  Lenders,  the  Administrative  Agent shall have no
     obligation to notify the Lenders with respect thereto.  The  Administrative
     Agent  shall  (subject  to  Sections  9.4 and 10.6) take such  action  with
     respect to such Default or Event of Default as shall reasonably be directed
     by the Required Lenders; provided that, unless and until the Administrative
     Agent shall have received such  directions,  the  Administrative  Agent may
     (but shall not be obligated  to) take such  action,  or refrain from taking
     such  action,  with respect to such Default or Event of Default as it shall
     deem  advisable in the best  interests of the Lenders  except to the extent
     that this Agreement expressly requires that such action be taken, or not be
     taken,  only with the  consent or upon the  authorization  of the  Required
     Lenders or all of the Lenders.

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<PAGE>

9.7  Indemnification.  To the extent the Administrative  Agent is not reimbursed
     by or on behalf of the Borrower, and without limiting the obligation of the
     Borrower to do so, the Lenders  agree (i) to indemnify  the  Administrative
     Agent and its officers, directors, employees, agents, attorneys-in-fact and
     Affiliates,  ratably in proportion to their respective  percentages as used
     in determining the Required Lenders as of the date of  determination,  from
     and  against  any  and  all  liabilities,   obligations,  losses,  damages,
     penalties,  actions, judgments, suits, costs, expenses (including,  without
     limitation,  attorneys' fees and expenses) or  disbursements of any kind or
     nature whatsoever that may at any time (including,  without limitation,  at
     any time  following the repayment in full of the Loans and the  termination
     of the  Commitments)  be imposed on,  incurred  by or asserted  against the
     Administrative  Agent  in any  way  relating  to or  arising  out  of  this
     Agreement or any other Credit Document or any documents  contemplated by or
     referred to herein or the  transactions  contemplated  hereby or thereby or
     any  action  taken  or  omitted  by the  Administrative  Agent  under or in
     connection   with  any  of  the  foregoing,   and  (ii)  to  reimburse  the
     Administrative Agent upon demand, ratably in proportion to their respective
     percentages as used in determining  the Required  Lenders as of the date of
     determination,  for any expenses  incurred by the  Administrative  Agent in
     connection  with  the  preparation,   negotiation,   execution,   delivery,
     administration,  amendment,  modification,  waiver or enforcement  (whether
     through  negotiations,  legal proceedings or otherwise) of, or legal advice
     in respect of rights or  responsibilities  under,  this Agreement or any of
     the other  Credit  Documents  (including,  without  limitation,  reasonable
     attorneys' fees and expenses and  compensation of agents and employees paid
     for services rendered on behalf of the Lenders); provided, however, that no
     Lender  shall be liable for any portion of such  liabilities,  obligations,
     losses, damages,  penalties,  actions, judgments, suits, costs, expenses or
     disbursements  to the extent resulting from the gross negligence or willful
     misconduct of the party to be indemnified.

9.8  The Administrative  Agent in its Individual  Capacity.  With respect to its
     Commitment,  the Loans  made by it and the Note or Notes  issued to it, the
     Administrative  Agent in its individual  capacity and not as Administrative
     Agent shall have the same rights and powers  under the Credit  Documents as
     any other Lender and may exercise the same as though it were not performing
     the agency duties  specified  herein;  and the terms  "Lenders,"  "Required
     Lenders,"  "holders  of Notes"  and any  similar  terms  shall,  unless the
     context clearly otherwise  indicates,  include the Administrative  Agent in
     its individual  capacity.  The Administrative  Agent and its Affiliates may
     accept  deposits from,  lend money to, make  investments  in, and generally
     engage in any kind of banking,  trust, financial advisory or other business
     with the  Borrower,  any of its  Subsidiaries  or any of  their  respective
     Affiliates as if the  Administrative  Agent were not  performing the agency
     duties specified herein,  and may accept fees and other  consideration from
     any of them for services in  connection  with this  Agreement and otherwise
     without having to account for the same to the Lenders.

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9.9  Successor  Administrative Agent. The Administrative Agent may resign at any
     time by giving ten (10) days' prior written  notice to the Borrower and the
     Lenders.  Upon any such notice of resignation,  the Required  Lenders will,
     with the prior written  consent of the Borrower (which consent shall not be
     unreasonably  withheld),  appoint from among the Lenders a successor to the
     Administrative  Agent  (provided that the  Borrower's  consent shall not be
     required in the event a Default or Event of Default shall have occurred and
     be continuing). If no successor to the Administrative Agent shall have been
     so  appointed  by  the  Required  Lenders  and  shall  have  accepted  such
     appointment  within such ten-day period,  then the retiring  Administrative
     Agent may, on behalf of the Lenders and after  consulting  with the Lenders
     and the Borrower,  appoint a successor  Administrative Agent from among the
     Lenders.  Upon the acceptance of any appointment as Administrative Agent by
     a successor Administrative Agent, such successor Administrative Agent shall
     thereupon  succeed  to and  become  vested  with  all the  rights,  powers,
     privileges  and  duties  of the  retiring  Administrative  Agent,  and  the
     retiring  Administrative  Agent  shall be  discharged  from its  duties and
     obligations  hereunder  and  under the other  Credit  Documents.  After any
     retiring  Administrative  Agent's resignation as Administrative  Agent, the
     provisions  of this  Article  shall  inure to its benefit as to any actions
     taken or omitted to be taken by it while it was Administrative Agent. If no
     successor  to  the  Administrative   Agent  has  accepted   appointment  as
     Administrative  Agent by the  thirtieth  (30th)  day  following  a retiring
     Administrative Agent's notice of resignation,  the retiring  Administrative
     Agent's resignation shall nevertheless thereupon become effective,  and the
     Lenders shall  thereafter  perform all of the duties of the  Administrative
     Agent  hereunder and under the other Credit  Documents  until such time, if
     any, as the Required  Lenders appoint a successor  Administrative  Agent as
     provided for hereinabove.

9.10 Syndication Agent, Documentation Agent. Notwithstanding any other provision
     of this  Agreement or any of the other Credit  Documents,  the  Syndication
     Agent  and the  Documentation  Agent  are  named  as such  for  recognition
     purposes  only,  and in their  capacities  as such  shall  have no  powers,
     rights,  duties,  responsibilities  or  liabilities  with  respect  to this
     Agreement and the other Credit Documents and the transactions  contemplated
     hereby and thereby.


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                                    ARTICLE X

                                  MISCELLANEOUS

10.1 Fees and Expenses.  The Borrower agrees (i) whether or not the transactions
     contemplated by this Agreement shall be consummated, to pay upon demand all
     reasonable  out-of-pocket  costs and expenses of the  Administrative  Agent
     (including, without limitation, the reasonable fees and expenses of counsel
     to  the   Administrative   Agent)  in  connection  with  the   preparation,
     negotiation,  execution, delivery and syndication of this Agreement and the
     other Credit Documents, and any amendment, modification or waiver hereof or
     thereof or consent with respect hereto or thereto,  (ii) to pay upon demand
     all reasonable out-of-pocket costs and expenses of the Administrative Agent
     and each Lender (including, without limitation,  reasonable attorneys' fees
     and expenses) in connection  with (y) any refinancing or  restructuring  of
     the credit arrangement provided under this Agreement, whether in the nature
     of a "work-out,"  in any  insolvency or bankruptcy  proceeding or otherwise
     and  whether  or  not  consummated,  and  (z)  the  enforcement,  attempted
     enforcement or  preservation of any rights or remedies under this Agreement
     or any of the  other  Credit  Documents,  whether  in any  action,  suit or
     proceeding   (including  any   bankruptcy  or  insolvency   proceeding)  or
     otherwise,  and  (iii) to pay and hold the  Administrative  Agent  and each
     Lender  harmless  from  and  against  all  liability  for any  intangibles,
     documentary,  stamp or other  similar  taxes,  fees  and  excises,  if any,
     including any interest and penalties,  and any finder's or brokerage  fees,
     commissions and expenses  (other than any fees,  commissions or expenses of
     finders or brokers engaged by the Administrative Agent or any Lender), that
     may be payable in connection  with the  transactions  contemplated  by this
     Agreement and the other Credit Documents.

10.2 Indemnification.  The  Borrower  agrees,  whether  or not the  transactions
     contemplated by this Agreement shall be consummated,  to indemnify and hold
     the  Administrative  Agent  and each  Lender  and each of their  respective
     directors,   officers,   employees,   agents  and  Affiliates   (each,   an
     "Indemnified Person") harmless from and against any and all claims, losses,
     damages,   obligations,   liabilities,   penalties,   costs  and   expenses
     (including, without limitation, reasonable attorneys' fees and expenses) of
     any kind or nature  whatsoever,  whether direct,  indirect or consequential
     (collectively,  "Indemnified  Costs"),  that may at any time be imposed on,
     incurred by or asserted against any such Indemnified Person as a result of,
     arising  from  or in  any  way  relating  to  the  preparation,  execution,
     performance  or  enforcement  of this  Agreement or any of the other Credit
     Documents,  any of the transactions  contemplated  herein or therein or any
     transaction  financed or to be  financed  in whole or in part,  directly or
     indirectly,  with  the  proceeds  of any  Loans,  or any  action,  suit  or
     proceeding (including any inquiry or investigation) by any Person,  whether
     threatened or initiated,  related to any of the foregoing,  and in any case
     whether  or not such  Indemnified  Person  is a party  to any such  action,
     proceeding  or suit or a  subject  of any such  inquiry  or  investigation;
     provided,  however,  that no Indemnified  Person shall have the right to be
     indemnified  hereunder for any  Indemnified  Costs to the extent  resulting
     from the gross negligence or willful misconduct of such Indemnified Person.
     All of the foregoing  Indemnified Costs of any Indemnified  Person shall be
     paid or reimbursed by the Borrower, as and when incurred and upon demand.

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10.3 Governing Law; Consent to Jurisdiction. THIS AGREEMENT AND THE OTHER CREDIT
     DOCUMENTS  HAVE BEEN  EXECUTED,  DELIVERED  AND  ACCEPTED  IN, AND SHALL BE
     DEEMED TO HAVE BEEN MADE IN,  NORTH  CAROLINA  AND SHALL BE GOVERNED BY AND
     CONSTRUED  AND ENFORCED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NORTH
     CAROLINA (WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF).  EACH
     PARTY  HEREBY  CONSENTS TO THE  NONEXCLUSIVE  JURISDICTION  OF ANY STATE OR
     FEDERAL COURT LOCATED WITHIN THE STATE OF NORTH CAROLINA FOR ANY PROCEEDING
     INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS, OR ARISING
     OUT OF OR IN  CONNECTION  WITH THIS  AGREEMENT  OR ANY OF THE OTHER  CREDIT
     DOCUMENTS,  OR ANY  PROCEEDING  TO WHICH  THE  ADMINISTRATIVE  AGENT OR ANY
     LENDER OR THE  BORROWER  IS A PARTY,  INCLUDING  ANY  ACTIONS  BASED  UPON,
     ARISING  OUT OF, OR IN  CONNECTION  WITH ANY COURSE OF  CONDUCT,  COURSE OF
     DEALING,   STATEMENT   (WHETHER   ORAL  OR   WRITTEN)  OR  ACTIONS  OF  THE
     ADMINISTRATIVE AGENT OR ANY LENDER OR THE BORROWER. THE

BORROWER  WAIVES ANY OBJECTION THAT IT MAY HAVE BASED ON LACK OF JURISDICTION OR
IMPROPER  VENUE OR FORUM NON  CONVENIENS TO THE CONDUCT OF ANY SUCH  PROCEEDING.
THE  BORROWER  CONSENTS  THAT ALL  SERVICE OF PROCESS BE MADE BY  REGISTERED  OR
CERTIFIED MAIL DIRECTED TO IT AT ITS ADDRESS SET FORTH HEREINBELOW,  AND SERVICE
SO MADE  SHALL BE DEEMED TO BE  COMPLETED  UPON THE  EARLIER  OF ACTUAL  RECEIPT
THEREOF OR THREE (3) DAYS  AFTER  DEPOSIT IN THE  UNITED  STATES  MAILS,  PROPER
POSTAGE PREPAID AND PROPERLY ADDRESSED. NOTHING IN THIS SECTION SHALL AFFECT THE
RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER  PERMITTED BY LAW OR AFFECT THE
RIGHT OF ANY PARTY TO BRING ANY ACTION OR PROCEEDING  AGAINST ANY OTHER PARTY IN
THE COURTS OF ANY OTHER JURISDICTION.

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10.4 Arbitration;  Preservation  and Limitation of Remedies.  (a) Upon demand of
     any party hereto,  whether made before or after institution of any judicial
     proceeding,  any dispute,  claim or controversy  arising out of,  connected
     with  or  relating  to  this   Agreement  or  any  other  Credit   Document
     ("Disputes")  between  or  among  the  Borrower,   its  Subsidiaries,   the
     Administrative  Agent and the Lenders, or any of them, shall be resolved by
     binding   arbitration  as  provided  herein.   Institution  of  a  judicial
     proceeding  by a party  does not  waive  the  right of any  party to demand
     arbitration  hereunder.  Disputes may  include,  without  limitation,  tort
     claims, counterclaims, claims brought as class actions, claims arising from
     documents  executed  in the  future,  disputes  as to  whether  a matter is
     subject to  arbitration,  or claims  arising out of or  connected  with the
     transactions contemplated by this Agreement and the other Credit Documents.
     Arbitration  shall  be  conducted  under  and  governed  by the  Commercial
     Financial  Disputes  Arbitration  Rules  (the  "Arbitration  Rules") of the
     American  Arbitration  Association  (the "AAA"),  as in effect from time to
     time,  and the  Federal  Arbitration  Act,  Title 9 of the  U.S.  Code,  as
     amended.  All arbitration  hearings shall be conducted in the city in which
     the  principal  office of the  Administrative  Agent is located.  A hearing
     shall  begin  within  ninety  (90) days of demand for  arbitration  and all
     hearings  shall be  concluded  within 120 days of demand  for  arbitration.
     These time  limitations  may not be extended unless a party shows cause for
     extension  and  then  for no more  than a total of  sixty  (60)  days.  The
     expedited  procedures set forth in Rule 51 et seq. of the Arbitration Rules
     shall be  applicable  to  claims of less than  $1,000,000.  All  applicable
     statutes of  limitation  shall apply to any  Dispute.  A judgment  upon the
     award may be entered in any court having jurisdiction. The panel from which
     all  arbitrators  are selected  shall be  comprised  of licensed  attorneys
     selected from the Commercial  Financial  Dispute  Arbitration  Panel of the
     AAA. The single  arbitrator  selected for  expedited  procedure  shall be a
     retired  judge from the  highest  court of general  jurisdiction,  state or
     federal, of the state where the hearing will be conducted.  Notwithstanding
     the foregoing,  this arbitration provision does not apply to Disputes under
     or related to any Hedge Agreement that is a Credit Document. The parties do
     not waive  applicable  federal or state  substantive law except as provided
     herein.

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(b)  Notwithstanding the preceding binding arbitration  provisions,  the parties
     hereto agree to preserve,  without  diminution,  certain  remedies that any
     party hereto may employ or exercise  freely,  either alone,  in conjunction
     with or during a Dispute.  Any party hereto shall have the right to proceed
     in any  court  of  proper  jurisdiction  or by  self-help  to  exercise  or
     prosecute  the  following  remedies,  as  applicable:   (i) all  rights  of
     self-help, including peaceful occupation of real property and collection of
     rents,   set-off,   and   peaceful   possession   of   personal   property;
     (ii) obtaining  provisional  or ancillary  remedies,  including  injunctive
     relief, sequestration,  garnishment,  attachment, appointment of a receiver
     and filing an involuntary bankruptcy proceeding; and (iii) when applicable,
     a judgment by confession of judgment.  Any claim or controversy with regard
     to any party's  entitlement to such remedies is a Dispute.  Preservation of
     these  remedies  does not limit the power of an arbitrator to grant similar
     remedies that may be requested by a party in a Dispute.  The parties hereto
     agree that, except in the case of willful misconduct, no party shall have a
     remedy of  punitive  or  exemplary  damages  against any other party in any
     Dispute,  and each party  hereby  waives any right or claim to  punitive or
     exemplary  damages  that it has now or that  may  arise  in the  future  in
     connection   with  any  Dispute,   whether  such  Dispute  is  resolved  by
     arbitration  or  judicially.  The parties  acknowledge  that by agreeing to
     binding arbitration they have irrevocably waived any right they may have to
     a jury trial with regard to a Dispute.

10.5 Notices. All notices and other communications  provided for hereunder shall
     be in writing  (including  telegraphic,  telex,  facsimile  transmission or
     cable communication) and mailed, telegraphed,  telexed, telecopied,  cabled
     or delivered to the party to be notified at the following addresses:

(a)  if to the Borrower, to 9 Farm Springs Road, Farmington,  Connecticut 06032,
     Attention:  Treasurer,  Telecopy  No.  (860)  674-6991,  with a copy to the
     attention of the Secretary, Telecopy No. (860) 674-6890;

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<PAGE>

(b)  if to the  Administrative  Agent,  to First Union  National Bank, One First
     Union Center,  DC-4, 301 South College  Street,  Charlotte,  North Carolina
     28288-0680,  Attention:  Syndication  Agency  Services,  Telecopy No. (704)
     383-0288; and

(c)  if to any  Lender,  to it at the address  set forth on its  signature  page
     hereto (or if to any Lender not a party  hereto as of the date  hereof,  at
     the address set forth in its Assignment and Acceptance);

     or   in each case,  to such other  address as any party may  designate  for
          itself by like notice to all other  parties  hereto.  All such notices
          and  communications  shall be  effective  upon receipt by the party to
          whom sent.

10.6 Amendments, Waivers, etc. No amendment,  modification,  waiver or discharge
     or  termination  of, or consent to any departure by the Borrower  from, any
     provision  of  this  Agreement  or any  other  Credit  Document,  shall  be
     effective  unless in a writing  signed by the  Required  Lenders (or by the
     Administrative  Agent at the  direction or with the consent of the Required
     Lenders),  and then  the  same  shall  be  effective  only in the  specific
     instance and for the specific  purpose for which given;  provided  however,
     that no such amendment,  modification,  waiver,  discharge,  termination or
     consent shall:

(a)  unless agreed to by each Lender directly  affected  thereby,  (i) reduce or
     forgive the principal amount of any Loan, reduce the rate of or forgive any
     interest thereon, or reduce or forgive any fees or other Obligations (other
     than fees  payable to the  Administrative  Agent for its own  account),  or
     (ii) except  as set forth in Section 2.1,  extend the Maturity  Date or any
     other date fixed for the  payment of any  principal  of or  interest on any
     Loan (other than additional  interest payable under  Section 2.8(b)  at the
     election of the Required  Lenders,  as provided  therein),  any fees (other
     than fees payable to the  Administrative  Agent for its own account) or any
     other Obligations;

(b)  unless  agreed  to by  all of  the  Lenders,  (i) increase  or  extend  any
     Commitment of any Lender (it being understood that a waiver of any Event of
     Default,  if  agreed  to by the  requisite  Lenders  hereunder,  shall  not
     constitute  such an increase),  (ii) change the percentage of the aggregate
     Commitments or of the aggregate  unpaid  principal  amount of the Loans, or
     the number or percentage of Lenders, that shall be required for the Lenders
     or any of them to take or approve,  or direct the  Administrative  Agent to
     take,  any action  hereunder  (including as set forth in the  definition of
     "Required  Lenders" and in  Section 2.1),  or (iii) change any provision of
     Section 2.15 or this Section; and

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<PAGE>

(c)  unless  agreed to by the  Administrative  Agent in  addition to the Lenders
     required as provided hereinabove to take such action,  affect the rights or
     obligations of the Administrative Agent hereunder or under any of the other
     Credit Documents;

     and  provided  further that the Fee Letter may be amended or modified,  and
          any  rights  thereunder  waived,  in a writing  signed by the  parties
          thereto.

10.7 Assignments,  Participations.  (a) Each  Lender  may  assign to one or more
     other Eligible  Assignees  (each,  an  "Assignee")  all or a portion of its
     rights and obligations under this Agreement (including, without limitation,
     all or a portion of its Commitment,  the  outstanding  Loans made by it and
     the  Note or  Notes  held by it);  provided,  however,  that  (i) any  such
     assignment  (other  than an  assignment  to a Lender or an  Affiliate  of a
     Lender)  shall  not be  made  without  the  prior  written  consent  of the
     Administrative   Agent  and  the   Borrower   (to  be   evidenced   by  its
     counterexecution of the relevant Assignment and Acceptance),  which consent
     shall not be unreasonably  withheld  (provided that the Borrower's  consent
     shall not be required in the event a Default or Event of Default shall have
     occurred  and be  continuing),  (ii)  each  such  assignment  shall be of a
     uniform,  and not  varying,  percentage  of all of the  assigning  Lender's
     rights and obligations under this Agreement, (iii) no such assignment shall
     be in an  aggregate  principal  amount  (determined  as of the  date of the
     Assignment  and  Acceptance  with  respect  to such  assignment)  less than
     $5,000,000,  determined by combining  the amount of the assigning  Lender's
     outstanding Loans and Unutilized Commitment being assigned pursuant to such
     assignment  (or, if less, the entire  Commitment of the assigning  Lender),
     and (iv) the parties to each such  assignment  will  execute and deliver to
     the Administrative Agent, for its acceptance and recording in the Register,
     an Assignment  and  Acceptance,  together with any Note or Notes subject to
     such  assignment,   and  the  Assignor  and/or  the  Assignee  will  pay  a
     nonrefundable  processing fee of $3,000 to the Administrative Agent for its
     own account. Upon such execution, delivery, acceptance and recording of the
     Assignment  and  Acceptance,  from and after the effective  date  specified
     therein,  which  effective  date shall be at least five Business Days after
     the execution  thereof  (unless the  Administrative  Agent shall  otherwise
     agree),  (A) the  Assignee  thereunder  shall be a party hereto and, to the
     extent  that  rights and  obligations  hereunder  have been  assigned to it
     pursuant  to such  Assignment  and  Acceptance,  shall  have the rights and
     obligations of the assigning  Lender hereunder with respect thereto and (B)
     the  assigning  Lender  shall,  to the extent that  rights and  obligations
     hereunder  have  been  assigned  by it  pursuant  to  such  Assignment  and
     Acceptance,  relinquish  its rights (other than rights under the provisions
     of  this   Agreement   and  the  other   Credit   Documents   relating   to
     indemnification or payment of fees, costs and expenses,  to the extent such
     rights  relate to the time prior to the effective  date of such  Assignment
     and Acceptance)  and be released from its obligations  under this Agreement
     (and,  in the case of an  Assignment  and  Acceptance  covering  all or the
     remaining  portion of such assigning  Lender's rights and obligations under
     this  Agreement,  such Lender shall cease to be a party hereto).  The terms
     and  provisions  of  each  Assignment  and  Acceptance   shall,   upon  the
     effectiveness  thereof,  be  incorporated  into  and  made a part  of  this
     Agreement, and the covenants, agreements and obligations of each Lender set
     forth  therein  shall  be  deemed  made  to  and  for  the  benefit  of the
     Administrative Agent and the other parties hereto as if set forth at length
     herein.

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<PAGE>

(b)  The Administrative  Agent will maintain at its address for notices referred
     to  herein  a copy of  each  Assignment  and  Acceptance  delivered  to and
     accepted  by it  and a  register  for  the  recordation  of the  names  and
     addresses of the Lenders and the  Commitments  of, and principal  amount of
     the Loans owing to, each  Lender  from time to time (the  "Register").  The
     entries in the Register  shall be conclusive  and binding for all purposes,
     absent manifest error, and the Borrower,  the Administrative  Agent and the
     Lenders may treat each Person  whose name is recorded in the  Register as a
     Lender hereunder for all purposes of this Agreement.  The Register shall be
     available for  inspection by the Borrower and each Lender at any reasonable
     time and from time to time upon reasonable prior notice.

(c)  Upon its receipt of a duly completed  Assignment and Acceptance executed by
     an assigning  Lender and an Assignee and, if required,  counterexecuted  by
     the Borrower,  together  with the Note or Notes subject to such  assignment
     and  the  processing  fee  referred  to  in   subsection (a)   above,   the
     Administrative  Agent  will  (i) accept  such  Assignment  and  Acceptance,
     (ii) on  the  effective  date  thereof,  record the  information  contained
     therein in the Register and  (iii) give  notice thereof to the Borrower and
     the  Lenders.  Within  five (5)  Business  Days  after its  receipt of such
     notice, the Borrower,  at its own expense,  will execute and deliver to the
     Administrative  Agent, in exchange for the surrendered Note or Notes, a new
     Note or Notes to the order of the Assignee  (and, if the  assigning  Lender
     has retained any portion of its rights and  obligations  hereunder,  to the
     order of the assigning Lender),  prepared in accordance with the provisions
     of  Section 2.4  as  necessary  to  reflect,  after  giving  effect  to the
     assignment,  the  Commitments  of the  Assignee  and (to the  extent of any
     retained  interests) the assigning  Lender,  dated the date of the replaced
     Note or Notes and otherwise in  substantially  the form of  Exhibit A.  The
     Administrative Agent will return canceled Notes to the Borrower.

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<PAGE>

(d)  Each Lender may,  without the consent of the Borrower,  the  Administrative
     Agent or any other Lender,  sell to one or more other Persons other than an
     insurance company,  insurance holding company or any financial  institution
     that has a substantial  interest in an insurance company,  unless agreed to
     by the  Borrower  (each,  a  "Participant")  participations  in any portion
     comprising less than all of its rights and obligations under this Agreement
     (including,   without  limitation,   a  portion  of  its  Commitment,   the
     outstanding  Loans made by it and the Note or Notes held by it);  provided,
     however,   that  (i) such   Lender's   obligations   under  this  Agreement
     (including,  without  limitation,  those under Section  10.13) shall remain
     unchanged  and  such  Lender  shall  remain  solely   responsible  for  the
     performance   of  such   obligations,   (ii) no   Lender   shall  sell  any
     participation that, when taken together with all other  participations,  if
     any,  sold  by  such  Lender,  covers  all  of  such  Lender's  rights  and
     obligations under this Agreement,  (iii) the  Borrower,  the Administrative
     Agent and the other Lenders shall continue to deal solely and directly with
     such Lender in connection with such Lender's  rights and obligations  under
     this  Agreement,  and no Lender  shall permit any  Participant  to have any
     voting  rights or any right to control the vote of such Lender with respect
     to any amendment,  modification,  waiver, consent or other action hereunder
     or under any  other  Credit  Document  (except  as to  actions  that  would
     (x) reduce or forgive the principal amount of any Loan,  reduce the rate of
     or forgive  any  interest  thereon,  or reduce or forgive any fees or other
     Obligations,  (y) extend  the Maturity Date or any other date fixed for the
     payment of any principal of or interest on any Loan,  any fees or any other
     Obligations,  or (z) increase or extend any Commitment of any Lender),  and
     (iv) no  Participant  shall have any rights under this  Agreement or any of
     the other Credit Documents,  each Participant's rights against the granting
     Lender  in  respect  of any  participation  to be  those  set  forth in the
     participation  agreement, and all amounts payable by the Borrower hereunder
     shall be determined  as if such Lender had not granted such  participation.
     Notwithstanding the foregoing,  each Participant shall have the rights of a
     Lender for purposes of Sections 2.16(a),  2.16(b),  2.17, 2.18 and 8.3, and
     shall be entitled to the  benefits  thereto,  to the extent that the Lender
     granting  such  participation  would be  entitled  to such  benefits if the
     participation  had not been made,  provided  that no  Participant  shall be
     entitled  to receive any greater  amount  pursuant to any of such  Sections
     than the Lender  granting  such  participation  would have been entitled to
     receive in respect of the amount of the  participation  made by such Lender
     to such Participant had such participation not been made.

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<PAGE>

(e)  Nothing in this  Agreement  shall be  construed to prohibit any Lender from
     pledging  or  assigning  all or any  portion  of its  rights  and  interest
     hereunder  or under any Note to any Federal  Reserve  Bank as security  for
     borrowings therefrom;  provided, however, that no such pledge or assignment
     shall release a Lender from any of its obligations hereunder.

(f)  Any  Lender or  participant  may,  in  connection  with any  assignment  or
     participation  or proposed  assignment  or  participation  pursuant to this
     Section,  disclose to the Assignee or Participant  or proposed  Assignee or
     Participant any information  relating to the Borrower and its  Subsidiaries
     furnished to it by or on behalf of any other party  hereto,  provided  that
     such Assignee or Participant or proposed Assignee or Participant  agrees in
     writing to keep such  information  confidential to the same extent required
     of the Lenders under Section 10.13.

10.8 No Waiver.  The rights and  remedies  of the  Administrative  Agent and the
     Lenders  expressly  set  forth  in  this  Agreement  and the  other  Credit
     Documents  are  cumulative  and in addition to, and not  exclusive  of, all
     other rights and  remedies  available  at law, in equity or  otherwise.  No
     failure or delay on the part of the  Administrative  Agent or any Lender in
     exercising any right, power or privilege shall operate as a waiver thereof,
     nor shall any  single  or  partial  exercise  of any such  right,  power or
     privilege preclude other or further exercise thereof or the exercise of any
     other  right,  power or  privilege  or be  construed  to be a waiver of any
     Default  or Event of  Default.  No course  of  dealing  between  any of the
     Borrower  and the  Administrative  Agent or the Lenders or their  agents or
     employees shall be effective to amend, modify or discharge any provision of
     this  Agreement or any other Credit  Document or to  constitute a waiver of
     any Default or Event of Default.  No notice to or demand upon the  Borrower
     in any case shall  entitle the  Borrower to any other or further  notice or
     demand in  similar or other  circumstances  or  constitute  a waiver of the
     right of the  Administrative  Agent or any Lender to exercise  any right or
     remedy or take any other or  further  action in any  circumstances  without
     notice or demand.

10.9 Successors and Assigns.  This Agreement shall be binding upon, inure to the
     benefit of and be enforceable  by the respective  successors and assigns of
     the parties hereto,  and all references herein to any party shall be deemed
     to include its  successors  and assigns;  provided,  however,  that (i) the
     Borrower shall not sell,  assign or transfer any of its rights,  interests,
     duties or  obligations  under  this  Agreement  without  the prior  written
     consent of all of the Lenders and (ii) any Assignees and Participants shall
     have such rights and  obligations  with respect to this  Agreement  and the
     other  Credit  Documents  as are  provided  for under and  pursuant  to the
     provisions of Section 10.7.

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<PAGE>

10.10Survival.  All  representations,  warranties and  agreements  made by or on
     behalf of the Borrower or any of its  Subsidiaries in this Agreement and in
     the other Credit  Documents shall survive the execution and delivery hereof
     or  thereof  and the  making  and  repayment  of the  Loans.  In  addition,
     notwithstanding  anything  herein or under  applicable law to the contrary,
     the provisions of this Agreement and the other Credit Documents relating to
     indemnification or payment of fees, costs and expenses,  including, without
     limitation,  the provisions of Sections 2.16(a),  2.16(b), 2.17, 2.18, 9.7,
     10.1  and  10.2,  shall  survive  the  payment  in full of all  Loans,  the
     termination of the Commitments and any termination of this Agreement or any
     of the other Credit Documents.

10.11Severability.  To the extent any provision of this  Agreement is prohibited
     by or invalid under the applicable law of any jurisdiction,  such provision
     shall be ineffective  only to the extent of such  prohibition or invalidity
     and only in such  jurisdiction,  without  prohibiting or invalidating  such
     provision in any other  jurisdiction  or the  remaining  provisions of this
     Agreement in any jurisdiction.

10.12Construction.   The  headings  of  the  various   articles,   sections  and
     subsections of this Agreement have been inserted for  convenience  only and
     shall not in any way  affect  the  meaning  or  construction  of any of the
     provisions hereof. Except as otherwise expressly provided herein and in the
     other  Credit  Documents,  in the event of any  inconsistency  or  conflict
     between any  provision of this  Agreement  and any  provision of any of the
     other Credit Documents, the provision of this Agreement shall control.

10.13Confidentiality.  Each Lender  agrees to exercise such care to maintain the
     confidentiality  of all  confidential  information  provided to it by or on
     behalf of the Borrower or any of its  Subsidiaries  in connection with this
     Agreement or any other Credit  Document that it would exercise with respect
     to its  own  confidential  information,  and  agrees  not to use  any  such
     information  for any purpose or in any manner  other than as  permitted  by
     this  Agreement;  provided,  however,  that any  Lender may  disclose  such
     information (i) to its directors, employees and agents and to its auditors,
     counsel and other  professional  advisors  (provided that such Persons have
     been  made  aware  of  the  nonpublic  and  confidential   nature  of  such
     information and of the  restrictions  herein against  disclosure  thereof),
     (ii) at the demand or request of any bank  regulatory  authority,  court or
     governmental  or  regulatory   authority  or  agency  having  or  asserting
     jurisdiction  over such Lender,  as may be required pursuant to subpoena or
     other legal  process,  or otherwise in order to comply with any  applicable
     Requirement  of Law  (provided  that  notice of any such  subpoena or other
     legal  process  shall be promptly  furnished to the  Borrower,  unless such
     notice is legally prohibited,  so that the Borrower may seek an appropriate
     protective  order),  (iii) in connection with any proceeding to enforce its
     rights hereunder or under any other Credit Document or any other litigation
     or  proceeding  related  hereto  to  which  it  is a  party,  (iv)  to  the
     Administrative  Agent or any other  Lender,  (v) to the extent the same has
     become  publicly  available  other  than as a result  of a  breach  of this
     Agreement and (vi) pursuant to and in accordance  with the  provisions  and
     limitations of Section 10.7(f).

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<PAGE>

10.14Counterparts;  Effectiveness.  This Agreement may be executed in any number
     of counterparts and by different  parties hereto on separate  counterparts,
     each of which when so executed and delivered shall be an original,  but all
     of  which  shall  together  constitute  one and the same  instrument.  This
     Agreement shall become effective upon the execution of a counterpart hereof
     by each of the parties hereto and receipt by the  Administrative  Agent and
     the Borrower of written or telephonic  notification  of such  execution and
     authorization of delivery thereof.

10.15Disclosure of  Information.  With the prior consent of the Borrower,  which
     shall not be unreasonably  withheld,  the Administrative Agent may disclose
     information  relating to this  transaction to Gold Sheets and other similar
     bank trade  publications.  Such  information will consist of deal terms and
     other information customarily found in such publications.

10.16Entire  Agreement.  THIS AGREEMENT AND THE OTHER  DOCUMENTS AND INSTRUMENTS
     EXECUTED  AND  DELIVERED  IN  CONNECTION  HEREWITH  (A)  EMBODY  THE ENTIRE
     AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND THERETO RELATING
     TO THE SUBJECT  MATTER HEREOF AND THEREOF,  (B) SUPERSEDE ANY AND ALL PRIOR
     AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, ORAL OR WRITTEN, RELATING TO
     THE SUBJECT MATTER HEREOF AND THEREOF,  INCLUDING,  WITHOUT LIMITATION, THE
     COMMITMENT  LETTER FROM FIRST UNION TO THE BORROWER DATED MAY 21, 1998, BUT
     SPECIFICALLY  EXCLUDING  THE  FEE  LETTER,  AND  (C)  MAY  NOT BE  AMENDED,
     SUPPLEMENTED,  CONTRADICTED  OR  OTHERWISE  MODIFIED  BY EVIDENCE OF PRIOR,
     CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.



<PAGE>





IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.


                                         ORION CAPITAL CORPORATION


                                         By: /s/ Craig A. Nyman
                                         ----------------------

                                         Title: V.P.& Treasure 
                                         ---------------------
































                                                   (signatures continued)



<PAGE>





                                          FIRST UNION NATIONAL BANK, as
                                       Administrative Agent and as a Lender


                                       By: /s/ Gail M. Golightly
                                       -------------------------
Commitment:
$30,000,000                            Title: Senior Vice President
                                       ----------------------------


                                       Instructions for wire  transfers to the
                                         Administrative Agent:

                                       First Union National Bank
                                       ABA Routing No. 053000219
                                       Charlotte, North Carolina
                                       Account No.: 5000000015265
                                       Account Name: Orion Capital Corporation
                                       Attention: Syndication Agency Services

                                       Address for notices as a Lender:

                                       First Union National Bank
                                       One First Union Center, 5th Floor
                                       301 South College Street
                                       Charlotte, North Carolina 28288-0735
                                       Attention: Stuart A. Napshin
                                       Telephone: (704) 383-3936
                                       Telecopy: (704) 383-7611

                                       Lending Office:

                                       First Union National Bank
                                       One First Union Center, 5th Floor
                                       301 South College Street
                                       Charlotte, North Carolina 28288-0735
                                       Attention: Stuart A. Napshin
                                       Telephone: (704) 383-3936
                                       Telecopy: (704) 383-7611





                                                   (signatures continued)



<PAGE>





                                          BANK OF AMERICA NATIONAL TRUST
                                           AND SAVINGS ASSOCIATION, as
                                        Documentation Agent and as a Lender


                                        By: /s/ Elizabeth W.F. Bishop
                                        -----------------------------
Commitment:
$30,000,000                             Title: Vice President
                                        ---------------------


                                        Address for notices:

                                        Bank of America National Trust and
                                        Savings Association
                                        231 South LaSalle
                                        Chicago, Illinois  60697
                                        Attention: Elizabeth Bishop
                                        Telephone: (312) 828-6550
                                        Telecopy: (312) 987-0889

                                        Lending Office:

                                        Bank of America National Trust and
                                        Savings Association
                                        231 South LaSalle
                                        Chicago, Illinois  60697
                                        Attention: Elizabeth Bishop
                                        Telephone: (312) 828-6550
                                        Telecopy: (312) 987-0889














                                                   (signatures continued)



<PAGE>





                                            FLEET NATIONAL BANK, as Syndication
                                                 Agent and as a Lender


                                                 By: /s/ Anson Harris  
                                                 --------------------
Commitment:
$30,000,000                                      Title: Vice President
                                                 ---------------------


                                                 Address for notices:

                                                 Fleet National Bank
                                                 Mail Code:  CTMO 0250
                                                 777 Main Street
                                                 Hartford, Connecticut  06115
                                                 Attention: Anson Harris
                                                 Telephone: (860) 986-7518
                                                 Telecopy: (860) 986-1264

                                                 Lending Office:

                                                 Fleet National Bank
                                                 777 Main Street
                                                 Hartford, Connecticut  06115
                                                 Attention: Anson Harris
                                                 Telephone: (860) 986-7518
                                                 Telecopy: (860) 986-1264

















                                                   (signatures continued)



<PAGE>





                                            THE FIRST NATIONAL BANK OF CHICAGO


                                            By: /s/ Cynthia W. Priest 
                                            -------------------------
Commitment:
$20,000,000                                 Title: Vice President
                                            ---------------------


                                            Address for notices:

                                            The First National Bank of Chicago
                                            One First National Plaza
                                            Suite 0085
                                            Chicago, Illinois  60670
                                            Attention: Cynthia W. Priest
                                            Telephone: (312) 732-9565
                                            Telecopy: (312) 732-4033

                                            Lending Office:

                                            The First National Bank of Chicago
                                            One First National Plaza
                                            Suite 0085
                                            Chicago, Illinois  60670
                                            Attention: Cynthia W. Priest
                                            Telephone: (312) 732-9565
                                            Telecopy: (312) 732-4033

















                                                   (signatures continued)



<PAGE>





                                         MELLON BANK, N.A.


                                         By: /s/ Susan M. Whitewood
                                         --------------------------
Commitment:
$20,000,000                              Title: Vice President
                                         ---------------------


                                         Address for notices:

                                         Mellon Bank, N.A.
                                         One Mellon Bank Center
                                         Room 370
                                         Pittsburgh, Pennsylvania  15258
                                         Attention: Susan Whitewood
                                         Telephone: (412) 234-7112
                                         Telecopy: (412) 234-8087

                                         Lending Office:
                                         Mellon Bank, N.A.
                                         One Mellon Bank Center
                                         Room 370
                                         Pittsburgh, Pennsylvania  15258
                                         Attention: Susan Whitewood
                                         Telephone: (412) 234-7112
                                         Telecopy: (412) 234-8087

















                                                   (signatures continued)



<PAGE>




                                        STATE STREET BANK AND TRUST
                                                 COMPANY


                                        By: /s/ Edward M. Anderson
                                        --------------------------
Commitment
$20,000,000                             Title: Vice President
                                        ---------------------


                                        Address for notices:

                                        State Street Bank and Trust Company
                                        105 Rosemont Road
                                        Westwood, Massachusetts  02090-02318
                                        Attention: Edward M. Anderson
                                        Telephone: (781) 302-5305
                                        Telecopy: (781) 302-8015

                                        Lending Office:

                                        State Street Bank and Trust Company
                                        105 Rosemont Road
                                        Westwood, Massachusetts  02090-02318
                                        Attention: Edward M. Anderson
                                        Telephone: (781) 302-5305
                                        Telecopy: (781) 302-8015






















<PAGE>