Document:

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                                CREDIT AGREEMENT

                         Dated as of September 18, 2002

                                      among

                               SAFECO CORPORATION,
                                as the Borrower,

                             BANK OF AMERICA, N.A.,
                   as Administrative Agent, Swing Line Lender
                                       and
                                   L/C Issuer,

                               JPMORGAN CHASE BANK
                                       and
                                    US BANK,
                                       as
                             Co-Syndication Agents,

                          KEYBANK NATIONAL ASSOCIATION
                                       as
                              Documentation Agent,

                                       and
                         The Other Lenders Party Hereto

===============================================================================

                         BANC OF AMERICA SECURITIES LLC,
                                       as
                    Sole Lead Arranger and Sole Book Manager

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<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                TABLE OF CONTENTS
Section                                                                                                        Page

iii

ARTICLE I.           DEFINITIONS AND ACCOUNTING TERMS
         1.01         Defined Terms...............................................................................1
         1.02         Other Interpretive Provisions..............................................................16
         1.03         Accounting Terms...........................................................................16
         1.04         Rounding...................................................................................17
         1.05         References to Agreements and Laws..........................................................17
         1.06         Times of Day...............................................................................17
         1.07         Letter of Credit Amounts...................................................................17

ARTICLE II.          the COMMITMENTS and Credit Extensions
         2.01         Revolving Loans............................................................................18
         2.02         Borrowings, Conversions and Continuations of Revolving Loans...............................18
         2.03         Letters of Credit..........................................................................20
         2.04         Swing Line Loans...........................................................................29
         2.05         Prepayments................................................................................32
         2.06         Termination or Reduction of Commitments....................................................34
         2.07         Repayment of Loans.........................................................................34
         2.08         Interest...................................................................................34
         2.09         Fees.......................................................................................35
         2.10         Computation of Interest and Fees...........................................................36
         2.11         Evidence of Debt...........................................................................36
         2.12         Payments Generally.........................................................................37
         2.13         Sharing of Payments........................................................................38

ARTICLE III.         TAXES, YIELD PROTECTION AND ILLEGALITY
         3.01         Taxes......................................................................................39
         3.02         Illegality.................................................................................41
         3.03         Inability to Determine Rates...............................................................41
         3.04         Increased Cost and Reduced Return; Capital Adequacy; Reserves on  Eurodollar Rate Loans....41
         3.05         Funding Losses.............................................................................42
         3.06         Matters Applicable to all Requests for Compensation........................................43
         3.07         Survival...................................................................................43

ARTICLE IV.          CONDITIONS PRECEDENT TO Credit Extensions
         4.01         Conditions of Initial Credit Extension.....................................................43
         4.02         Conditions to all Credit Extensions........................................................45

ARTICLE V.           REPRESENTATIONS AND WARRANTIES
         5.01         Existence, Qualification and Power; Compliance with Laws...................................45
         5.02         Authorization; No Contravention............................................................46
         5.03         Governmental Authorization; Other Consents.................................................46
<PAGE>

         5.04         Binding Effect.............................................................................46
         5.05         Financial Statements; No Material Adverse Effect...........................................46
         5.06         Litigation.................................................................................47
         5.07         No Default.................................................................................47
         5.08         Ownership of Property; Liens...............................................................47
         5.09         Environmental Compliance...................................................................47
         5.10         Insurance..................................................................................48
         5.11         Taxes......................................................................................48
         5.12         ERISA Compliance...........................................................................48
         5.13         Subsidiaries...............................................................................49
         5.14         Margin Regulations; Investment Company Act; Public Utility Holding Company Act.............49
         5.15         Disclosure.................................................................................49
         5.16         Compliance with Laws.......................................................................50
         5.17         Solvent....................................................................................50
         5.18         Licenses...................................................................................50
         5.19         Employee Matters...........................................................................50
         5.20         Business...................................................................................50

ARTICLE VI.          AFFIRMATIVE COVENANTS
         6.01         Financial Statements.......................................................................50
         6.02         Certificates; Other Information............................................................52
         6.03         Notices....................................................................................53
         6.04         Payment of Obligations.....................................................................54
         6.05         Preservation of Existence, Etc.............................................................54
         6.06         Maintenance of Properties..................................................................54
         6.07         Maintenance of Insurance...................................................................54
         6.08         Compliance with Laws.......................................................................54
         6.09         Books and Records..........................................................................55
         6.10         Inspection Rights..........................................................................55
         6.11         Use of Proceeds............................................................................55

ARTICLE VII.         NEGATIVE COVENANTS
         7.01         Liens......................................................................................55
         7.02         Indebtedness...............................................................................57
         7.03         Fundamental Changes........................................................................57
         7.04         Dispositions...............................................................................57
         7.05         Change in Nature of Business...............................................................57
         7.06         Transactions with Affiliates...............................................................58
         7.07         Burdensome Agreements......................................................................58
         7.08         Use of Proceeds............................................................................58
         7.09         Shareholders' Equity.......................................................................58
         7.10         Debt to Capitalization Ratio...............................................................58
<PAGE>

         7.11         ERISA......................................................................................58
         7.12         Accounting Changes.........................................................................59

ARTICLE VIII.        EVENTS OF DEFAULT AND REMEDIES
         8.01         Events of Default..........................................................................59
         8.02         Remedies Upon Event of Default.............................................................62
         8.03         Application of Funds.......................................................................62

ARTICLE IX.          ADMINISTRATIVE AGENT
         9.01         Appointment and Authorization of Administrative Agent......................................63
         9.02         Delegation of Duties.......................................................................64
         9.03         Liability of Administrative Agent..........................................................64
         9.04         Reliance by Administrative Agent...........................................................64
         9.05         Notice of Default..........................................................................65
         9.06         Credit Decision; Disclosure of Information by Administrative Agent.........................65
         9.07         Indemnification of Administrative Agent....................................................66
         9.08         Administrative Agent in its Individual Capacity............................................66
         9.09         Successor Administrative Agent.............................................................67
         9.10         Administrative Agent May File Proofs of Claim..............................................68
         9.11         Other Agents; Arrangers and Managers.......................................................68

ARTICLE X.           MISCELLANEOUS
         10.01        Amendments, Etc............................................................................69
         10.02        Notices and Other Communications; Facsimile Copies.........................................70
         10.03        No Waiver; Cumulative Remedies.............................................................71
         10.04        Attorney Costs, Expenses and Taxes.........................................................71
         10.05        Indemnification by the Borrower............................................................72
         10.06        Payments Set Aside.........................................................................73
         10.07        Successors and Assigns.....................................................................73
         10.08        Confidentiality............................................................................77
         10.09        Set-off....................................................................................78
         10.10        Interest Rate Limitation...................................................................79
         10.11        Counterparts...............................................................................79
         10.12        Integration................................................................................79
         10.13        Survival of Representations and Warranties.................................................79
         10.14        Severability...............................................................................79
         10.15        Tax Forms..................................................................................80
         10.16        Replacement of Lenders.....................................................................82
         10.17        Governing Law..............................................................................82
         10.18        Waiver of Right to Trial by Jury...........................................................83
         10.19        Entire Agreement...........................................................................83

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SCHEDULES
         2.01     Commitments and Pro Rata Shares
         5.05     Supplement to Interim Financial Statements
         5.06     Existing Litigation
         10.02    Administrative Agent's Office, Certain Addresses for Notices

EXHIBITS
         Form of
         A        Revolving Loan Notice
         B        Swing Line Loan Notice
         C        Revolving Loan Note
         D        Swing Line Note
         E        Compliance Certificate
         F        Assignment and Assumption

<PAGE>

                                CREDIT AGREEMENT

This CREDIT AGREEMENT ("Agreement") is entered into as of September 18, 2002,
among SAFECO CORPORATION, a Washington corporation (the "Borrower"), each lender
from time to time party hereto (collectively, the "Lenders" and individually, a
"Lender"), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender
and L/C Issuer.

The Borrower has requested that the Lenders provide a revolving credit facility,
and the Lenders are willing to do so on the terms and conditions set forth
herein.

In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

                                   ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms.  As used in this  Agreement,  the following terms shall have
the meanings set forth below:

"Additional Trust Securities" means any trust securities issued after the
Closing Date which are of a type similar to the Existing Trust Securities and
which are guaranteed by the Borrower.

"Administrative  Agent" means Bank of America in its capacity as  administrative
agent under any of the Loan Documents, or any successor administrative agent.

"Administrative Agent's Office" means the Administrative Agent's address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or
account as the Administrative Agent may from time to time notify the Borrower
and the Lenders.

"Administrative  Questionnaire" means an Administrative  Questionnaire in a form
supplied by the Administrative Agent.

"Affiliate" means, with respect to any Person,  another Person that directly, or
indirectly through one or more  intermediaries,  Controls or is Controlled by or
is  under  common  Control  with  the  Person  specified.  "Control"  means  the
possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction of the management or policies of a Person, whether through the ability
to  exercise  voting  power,  by  contract  or  otherwise.   "Controlling"   and
"Controlled" have meanings correlative thereto.  Without limiting the generality
of the foregoing, a Person shall be deemed to be Controlled by another Person if
such other Person possesses,  directly or indirectly,  power to vote 10% or more
of the securities  having  ordinary  voting power for the election of directors,
managing general partners or the equivalent.

"Agent-Related Persons" means the Administrative Agent, together with its
Affiliates (including, in the case of Bank of America in its capacity as the
Administrative Agent, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.

"Aggregate Commitments" means the Commitments of all the Lenders.

"Agreement" means this Credit Agreement.

"A.M. Best" means A.M. Best Company and any successor thereto.

"Annual Statement" means the annual statutory financial statement of any
Insurance Subsidiary required to be filed with the insurance commissioner (or
similar authority) of its jurisdiction of incorporation, which statement shall
be in the form required by such Insurance Subsidiary's jurisdiction of
incorporation or, if no specific form is so required, in the form of financial
statements permitted by such insurance commissioner (or such similar authority)
to be used for filing annual statutory financial statements and shall contain
the type of information permitted by such insurance commissioner (or such
similar authority) to be disclosed therein, together with all exhibits or
schedules filed therewith.
<PAGE>

"Applicable Law" means (a) in respect of any Person, all provisions of Laws
applicable to such Person, and all orders and decrees of all courts and
determinations of arbitrators applicable to such Person and (b) in respect of
contracts made or performed in the State of Texas, "Applicable Law" shall also
mean the Laws of the United States of America, including, without limitation the
foregoing, 12 USC Sections 85 and 86, as amended to the date hereof and as the
same may be amended at any time and from time to time hereafter, and any other
statute of the United States of America now or at any time hereafter prescribing
the maximum rates of interest on loans and extensions of credit, and the Laws of
the State of Texas.

"Applicable Rate" means, from time to time, the following percentages per annum,
based upon the Debt Rating as set forth below:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                  Applicable Rate
                                                                               Eurodollar
                                                                                 Rate +         Base Rate
           Pricing         Debt Ratings      Facility Fee    Utilization                            +
            Level          S&P/Moody's                           Fee
                                                                            ------------------

                                                                               Letters of
                                                                                 Credit
         ------------- --------------------- -------------- --------------- ------------------ -------------

              1           A/A2 or better         0.100          0.125             0.400           0.000
              2               A-/A3              0.125          0.125             0.500           0.000
              3             BBB+/Baa1            0.150          0.125             0.600           0.000
              4              BBB/Baa2            0.200          0.250             0.800           0.000
              5            BBB-/Baa3 or          0.250          0.250             1.000           0.000
                              worse
</TABLE>

"Debt Rating" means, as of any date of determination, the rating as determined
by either S&P or Moody's (collectively, the "Debt Ratings") of the Borrower's
non-credit-enhanced, senior unsecured long-term debt; provided that if a Debt
Rating is issued by each of the foregoing rating agencies, then the higher of
such Debt Ratings shall apply (with the Debt Rating for Pricing Level 1 being
the highest and the Debt Rating for Pricing Level 5 being the lowest), unless
there is a split in Debt Ratings of more than one level, in which case the
Pricing Level that is one level lower than the Pricing Level of the higher Debt
Rating shall apply.

Initially,  the Applicable  Rate shall be determined  based upon the Debt Rating
specified  in  the  certificate  delivered  pursuant  to  Section  4.01(a)(vii).
Thereafter,  each  change  in the  Applicable  Rate  resulting  from a  publicly
announced  change  in the  Debt  Rating  shall be  effective,  in the case of an
upgrade, during the period commencing on the date of delivery by the Borrower to
the  Administrative  Agent of notice  thereof  pursuant  to Section  6.03(f) and
ending on the date  immediately  preceding the  effective  date of the next such
change and, in the case of a downgrade, during the period commencing on the date
of the public announcement thereof and ending on the date immediately  preceding
the effective date of the next such change.
<PAGE>

"Arranger" means Banc of America Securities LLC, in its capacity as sole lead
arranger and sole book manager.

"Assignment and Assumption" means an Assignment and Assumption  substantially in
the form of Exhibit F.

"Attorney Costs" means and includes all fees,  expenses and disbursements of any
Law firm or other external counsel.

"Attributable  Indebtedness"  means,  on any date, (a) in respect of any Capital
Lease of any Person,  the  capitalized  amount  thereof  that would  appear on a
balance sheet of such Person  prepared as of such date in accordance  with GAAP,
and (b) in respect of any Synthetic Lease Obligation,  the capitalized amount of
the remaining  lease  payments  under the relevant  lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

"Audited Financial  Statements" means the audited  consolidated balance sheet of
the Borrower and its  Subsidiaries  for the fiscal year ended December 31, 2001,
and the related consolidated  statements of income or operations,  shareholders'
equity and cash flows for such fiscal year of the Borrower and its Subsidiaries,
including the notes thereto.

"Availability  Period"  means the period from and  including the Closing Date to
the Maturity Date.

"Bank of America" means Bank of America, N.A. and its successors.

"Base Rate" means for any day a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its "prime rate." The "prime rate" is a rate set by Bank of America based
upon various factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.

"Base Rate Loan" means a Loan that bears interest based on the Base Rate.

"Borrower" has the meaning specified in the introductory paragraph hereto.

"Borrowing" means a Revolving Borrowing or a Swing Line Borrowing, as the
context may require.

"Business Day" means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent's Office is located and, if
such day relates to any Eurodollar Rate Loan, means any such day on which
dealings in Dollar deposits are conducted by and between banks in the London
interbank eurodollar market.

"Capital Lease" means, as of any date, any lease of property, real or personal,
the obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on the balance sheet of the lessee.

"Capital  Stock" means, as to any Person,  the equity  interests in such Person,
including,  without limitation, the shares of each class of capital stock in any
Person that is a corporation,  each class of partnership  interest in any Person
that is a partnership,  and each class of membership interest in any Person that
is a limited  liability  company,  and any  warrants  or options to  purchase or
otherwise acquire any such equity interests.
<PAGE>

"Cash Collateralize" has the meaning specified in Section 2.03(g).

"Change of Control" means, with respect to any Person, an event or series of
events by which:

     (a) any  "person" or "group" (as such terms are used in Sections  13(d) and
14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit
plan of such person or its subsidiaries,  and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan)
becomes  the  "beneficial  owner" (as defined in Rules 13d-3 and 13d-5 under the
Securities  Exchange Act of 1934,  except that a person or group shall be deemed
to have  "beneficial  ownership" of all securities that such person or group has
the right to acquire  (such  right,  an "option  right"),  whether such right is
exercisable  immediately  or only  after  the  passage  of  time),  directly  or
indirectly,  of 20% or more of the equity  securities of such Person entitled to
vote for members of the board of directors or equivalent  governing body of such
Person on a  fully-diluted  basis (and taking into  account all such  securities
that  such  person  or group has the right to  acquire  pursuant  to any  option
right); or

     (b) during any period of 25 consecutive  calendar months, a majority of the
members of the board of directors  or other  equivalent  governing  body of such
Person cease to be composed of individuals (i) who were members of that board or
equivalent  governing body on the first day of such period,  (ii) whose election
or  nomination  to that  board or  equivalent  governing  body was  approved  by
individuals  referred  to in clause (i) above  constituting  at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose  election or  nomination  to that board or other  equivalent
governing body was approved by  individuals  referred to in clauses (i) and (ii)
above  constituting  at the  time of such  election  or  nomination  at  least a
majority of that board or equivalent  governing body (excluding,  in the case of
both clause (ii) and clause (iii), any individual whose initial  nomination for,
or assumption of office as, a member of that board or equivalent  governing body
occurs as a result  of an  actual  or  threatened  solicitation  of  proxies  or
consents for the  election or removal of one or more  directors by any person or
group other than a solicitation  for the election of one or more directors by or
on behalf of the board of directors).

"Closing Date" means the first date all the conditions precedent in Section 4.01
are  satisfied  or waived in  accordance  with  Section 4.01 (or, in the case of
Section  4.01(b),  waived by the  Person  entitled  to  receive  the  applicable
payment).

"Code" means the Internal Revenue Code of 1986.

"Commitment" means, as to each Lender, its obligation to (a) make Revolving
Loans to the Borrower pursuant to Section 2.01, (b) purchase participations in
L/C Obligations, and (c) purchase participations in Swing Line Loans, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender's name on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable,
as such amount may be adjusted from time to time in accordance with this
Agreement.

"Compliance Certificate" means a certificate substantially in the form of
Exhibit E.

"Consolidated Indebtedness" means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, the Indebtedness of the
Borrower and its Subsidiaries as of such date.

"Consolidated  Net Income"  means,  for any  period,  for the  Borrower  and its
Subsidiaries  on a  consolidated  basis,  the net income of the Borrower and its
Subsidiaries   (but  excluding  the  effect  of  any   extraordinary   or  other
non-recurring  gain or loss  outside the ordinary  course of business)  for that
period.
<PAGE>

"Contractual Obligation" means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

"Control" has the meaning specified in the definition of "Affiliate."

"Credit Extension" means each of the following: (a) a Revolving Borrowing, (b) a
Swing Line Borrowing and (c) an L/C Credit Extension.

"Debt Rating" has the meaning set forth in the definition of "Applicable Rate."

"Debt to Capitalization  Ratio" means, as of any date of determination,  for the
Borrower  and  its  Subsidiaries  on a  consolidated  basis,  the  ratio  of (a)
Indebtedness of the Borrower and its Subsidiaries as of such date to (b) the sum
of (i)  Indebtedness  of the Borrower and its  Subsidiaries  as of such date and
(ii) Shareholders' Equity as of such date.

"Debtor Relief Laws" means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

"Default" means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

"Default  Rate" means an  interest  rate equal to (a) the Base Rate plus (b) the
Applicable  Rate,  if any,  applicable to Base Rate Loans plus (c) 2% per annum;
provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate
shall be an interest rate equal to the interest rate  (including  any Applicable
Rate)  otherwise  applicable to such Loan plus 2% per annum, in each case to the
fullest  extent  permitted by  Applicable  Laws.  "Defaulting  Lender" means any
Lender  that  (a) has  failed  to  fund  any  portion  of the  Revolving  Loans,
participations in L/C Obligations or participations in Swing Line Loans required
to be funded by it hereunder  within one Business Day of the date required to be
funded  by  it  hereunder,   (b)  has  otherwise  failed  to  pay  over  to  the
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within one Business Day of the date when due, unless the subject of
a good faith dispute,  or (c) has been deemed insolvent or become the subject of
a bankruptcy or insolvency proceeding.

"Disposition" or "Dispose" means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

"Dividends", in respect of any Person, means (a) cash dividends or any other
distributions of property, or otherwise, on, or in respect of, any class of
Capital Stock of such Person (other than dividends or other distributions
payable solely in common stock of such Person or options, warrants or other
rights to purchase common stock of such Person), and (b) any and all funds, cash
or other payments made in respect of the redemption, repurchase or acquisition
of such Capital Stock (specifically including, without limitation, a treasury
stock purchase), unless such Capital Stock shall be redeemed or acquired through
the exchange of such Capital Stock with Capital Stock of the same class or
options or warrants to purchase such Capital Stock.
<PAGE>

"Dollar" and "$" mean lawful money of the United States.

"Eligible Assignee" has the meaning specified in Section 10.07(g).

"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, Laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any of its Subsidiaries directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

"ERISA" means the Employee Retirement Income Security Act of 1974.

"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which constitutes grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan or Multiemployer Plan; or (f) the imposition of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, upon the Borrower or any ERISA Affiliate. "Eurodollar Rate" means
for any Interest Period with respect to any Eurodollar Rate Loan:

     (a) the rate per annum equal to the rate  determined by the  Administrative
Agent to be the offered rate that appears on the page of the Telerate screen (or
any  successor  thereto) that displays an average  British  Bankers  Association
Interest  Settlement Rate for deposits in Dollars (for delivery on the first day
of  such  Interest  Period)  with a term  equivalent  to such  Interest  Period,
determined as of approximately  11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period, or

     (b) if the rate  referenced in the preceding  clause (a) does not appear on
such page or service or such page or service  shall not be  available,  the rate
per annum equal to the rate  determined  by the  Administrative  Agent to be the
offered  rate on such  other  page or other  service  that  displays  an average
British  Bankers  Association  Interest  Settlement Rate for deposits in Dollars
(for delivery on the first day of such Interest  Period) with a term  equivalent
to such Interest Period, determined as of approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period, or
<PAGE>

     (c) if the rates  referenced in the  preceding  clauses (a) and (b) are not
available, the rate per annum determined by the Administrative Agent as the rate
of interest at which  deposits in Dollars for  delivery on the first day of such
Interest  Period in same day funds in the  approximate  amount of the Eurodollar
Rate Loan being made,  continued or converted by Bank of America and with a term
equivalent to such Interest Period would be offered by Bank of America's  London
Branch to major banks in the London interbank eurodollar market at their request
at  approximately  4:00 p.m.  (London time) two Business Days prior to the first
day of such Interest Period.

"Eurodollar Rate Loan" means a Revolving Loan that bears interest at a rate
based on the Eurodollar Rate.

"Event of Default" has the meaning specified in
Section 8.01.

"Existing Trust Securities" means the 8.072% Series A Capital
Securities, dated July 15, 1997, in the initial aggregate amount of $
850,000,000, and common securities related thereto, all of which are guaranteed
by the Borrower, and which are outstanding on the Closing Date.

"Existing Credit Agreement" means that certain Five-Year Credit Agreement dated
as of September 24, 1997 among the Borrower, Bank of America, N.A., as agent,
and a syndicate of lenders, as amended.

"Facility Fee" has the meaning specified
in Section 2.09(a).

"Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on
such day on such transactions as determined by the Administrative Agent.

"Fee Letter" means the letter agreement, dated as of May 29, 2002, among the
Borrower, the Administrative Agent and the Arranger.

"Foreign Lender" has the meaning specified in Section 10.15(a)(i).

"FRB" means the Board of Governors of the Federal  Reserve  System of the United
States.

"GAAP" means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

"Governmental  Authority"  means any  nation or  government,  any state or other
political   subdivision   thereof,  any  agency,   authority,   instrumentality,
regulatory body, court,  administrative  tribunal,  central bank or other entity
exercising   executive,    legislative,    judicial,   taxing,   regulatory   or
administrative powers or functions of or pertaining to government.
<PAGE>

"Guarantee"  means,  as to any Person,  any (a) any  obligation,  contingent  or
otherwise,  of such  Person  guaranteeing  or  having  the  economic  effect  of
guaranteeing  any  Indebtedness  or other  obligation  payable or performable by
another  Person  (the  "primary  obligor")  in any manner,  whether  directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply  funds for the  purchase or payment of)
such  Indebtedness  or other  obligation,  (ii) to purchase  or lease  property,
securities  or services  for the  purpose of assuring  the obligee in respect of
such  Indebtedness  or other  obligation of the payment or  performance  of such
Indebtedness or other  obligation,  (iii) to maintain  working  capital,  equity
capital or any other  financial  statement  condition  or  liquidity or level of
income or cash flow of the primary  obligor so as to enable the primary  obligor
to pay such  Indebtedness  or other  obligation,  or (iv)  entered  into for the
purpose  of  assuring  in any  other  manner  the  obligee  in  respect  of such
Indebtedness  or other  obligation of the payment or  performance  thereof or to
protect such obligee  against loss in respect  thereof (in whole or in part), or
(b) any Lien on any assets of such Person  securing  any  Indebtedness  or other
obligation  of any  other  Person,  whether  or not such  Indebtedness  or other
obligation  is assumed by such  Person.  The  amount of any  Guarantee  shall be
deemed to be an amount equal to the stated or determinable amount of the related
primary  obligation,  or portion thereof,  in respect of which such Guarantee is
made or, if not  stated or  determinable,  the  maximum  reasonably  anticipated
liability in respect  thereof as determined by the  guaranteeing  Person in good
faith. The term "Guarantee" as a verb has a corresponding meaning.

"Hazardous  Materials"  means all explosive or radioactive  substances or wastes
and all hazardous or toxic  substances,  wastes or other  pollutants,  including
petroleum or petroleum distillates,  asbestos or asbestos-containing  materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

"Highest Lawful Rate" means at the particular time in question the maximum rate
of interest which, under Applicable Law, any Lender is then permitted to charge
on the Obligations. If the maximum rate of interest which, under Applicable Law,
any Lender is permitted to charge on the Obligations shall change after the date
hereof, the Highest Lawful Rate shall be automatically increased or decreased,
as the case may be, from time to time as of the effective time of each change in
the Highest Lawful Rate without notice to the Borrower. For purposes of
determining the Highest Lawful Rate under Applicable Law, the indicated rate
ceiling shall be the lesser of (a)(i) the "weekly ceiling", as that expression
is defined in Section 303.003 of the Texas Finance Code, as amended, or (ii) if
available in accordance with the terms thereof and at the Administrative Agent's
option after notice to the Borrower and otherwise in accordance with the terms
of Section 303.103 of the Texas Finance Code, as amended, the "annualized
ceiling" and (b)(i) if the amount outstanding under this Agreement is less than
$250,000, twenty-four percent (24%), or (ii) if the amount under this Agreement
is equal to or greater than $250,000, twenty-eight percent (28%) per annum.

"Indebtedness" means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

     (a) all  obligations of such Person for borrowed money and all  obligations
of such Person evidenced by bonds,  debentures,  notes, loan agreements or other
similar instruments;

     (b) all direct or  contingent  obligations  of such  Person  arising  under
letters of credit (including standby and commercial), bankers' acceptances, bank
guaranties, surety bonds and similar instruments;

     (c)  net  obligations  of such  Person  under  any  Swap  Contract  and any
Securities Lending Arrangement;

     (d) all  obligations  of such Person to pay the deferred  purchase price of
property or services  (other than trade accounts  payable in the ordinary course
of business);

     (e) indebtedness  (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under  conditional  sales or other title retention  agreements),  whether or not
such  indebtedness  shall  have been  assumed  by such  Person or is  limited in
recourse;

     (f) Capital Leases and Synthetic Lease Obligations;

     (g) obligations in respect of Redeemable Stock of such Person;

(h) Receivables Facility Attributed
Indebtedness; and

     (i) all Guarantees of such Person in respect of any of the  foregoing.  For
all  purposes  hereof,   the  Indebtedness  of  any  Person  shall  include  the
Indebtedness  of any  partnership  or joint venture  (other than a joint venture
that is itself a corporation or limited liability  company) in which such Person
is a general partner or a joint venturer,  unless such Indebtedness is expressly
made  non-recourse  to such Person.  The amount of any net obligation  under any
Swap  Contract  on any date  shall be  deemed to be the Swap  Termination  Value
thereof as of such date.  The amount of any  Capital  Lease or  Synthetic  Lease
Obligation  as of any date  shall be  deemed to be the  amount  of  Attributable
Indebtedness in respect thereof as of such date.

"Indebtedness"  shall not  include  amounts  owing under  insurance  policies or
contracts or Surety Instruments issued by Insurance Subsidiaries in the ordinary
course of business.  For purposes of  calculating  Indebtedness  for the Debt to
Capitalization  Ratio,  (a) 25% of the amount of the Existing  Trust  Securities
shall be treated as  Indebtedness  and (b) 100% of the amount of any  Additional
Trust Securities shall be treated as Indebtedness  unless with respect to clause
(b) the Required Lenders determine otherwise.

"Indemnified Liabilities" has the meaning set forth in Section 10.05.

"Indemnitees" has the meaning set forth in Section 10.05.

"Insurance Subsidiary" means any Subsidiary which is engaged in the business of
underwriting insurance products.

"Interest  Payment Date" means,  (a) as to any Loan other than a Base Rate Loan,
the last day of each  Interest  Period  applicable to such Loan and the Maturity
Date; provided,  however, that if any Interest Period for a Eurodollar Rate Loan
exceeds three months,  the  respective  dates that fall every three months after
the beginning of such Interest Period shall also be Interest  Payment Dates; and
(b) as to any Base Rate Loan  (including a Swing Line Loan),  the last  Business
Day of each March, June, September and December and the Maturity Date.

"Interest Period" means, as to
each Eurodollar Rate Loan, the period commencing on the date such Eurodollar
Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan
and ending on the date one, two, three or six months thereafter, as selected by
the Borrower in its Revolving Loan Notice; provided that:
<PAGE>

          (i) any Interest  Period that would otherwise end on a day that is not
     a Business Day shall be extended to the next succeeding Business Day unless
     such  Business  Day falls in  another  calendar  month,  in which case such
     Interest Period shall end on the next preceding Business Day;

          (ii) any  Interest  Period that begins on the last  Business  Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such Interest  Period) shall end on
     the last  Business  Day of the calendar  month at the end of such  Interest
     Period; and

          (iii) no Interest Period shall extend beyond the Maturity Date.

"IRS" means the United States Internal Revenue Service.

"Laws" means, collectively, all international, foreign, Federal, state and local
statutes,  treaties,  rules,  guidelines,  regulations,  ordinances,  codes  and
administrative   or  judicial   precedents   or   authorities,   including   the
interpretation or administration  thereof by any Governmental  Authority charged
with  the  enforcement,   interpretation  or  administration  thereof,  and  all
applicable   administrative  orders,   directed  duties,   requests,   licenses,
authorizations and permits of, and agreements with, any Governmental  Authority,
in each case whether or not having the force of Law.

"L/C Advance" means,  with respect to each Lender,  such Lender's funding of its
participation in any L/C Borrowing in accordance with its Pro Rata Share.

"L/C Borrowing"  means an extension of credit resulting from a drawing under any
Letter  of  Credit  which  has not  been  reimbursed  on the date  when  made or
refinanced as a Revolving Borrowing.

"L/C Credit Extension" means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date  thereof,  or the renewal or increase of
the amount thereof.

"L/C  Issuer"  means  Bank of America  in its  capacity  as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.

"L/C Obligations" means, as at any date of determination,  the aggregate undrawn
amount  of  all  outstanding  Letters  of  Credit  plus  the  aggregate  of  all
Unreimbursed Amounts, including all L/C Borrowings.

"Lender" has the meaning specified in the introductory  paragraph hereto and, as
the context requires, includes the L/C Issuer and the Swing Line Lender.

"Lending  Office" means, as to any Lender,  the office or offices of such Lender
described as such in such Lender's Administrative  Questionnaire,  or such other
office or offices as a Lender may from time to time notify the  Borrower and the
Administrative Agent.

"Letter of Credit" means any letter of credit issued hereunder.

"Letter  of Credit  Application"  means an  application  and  agreement  for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the L/C Issuer.

"Letter of Credit Expiration Date" means the day that is seven days
prior to the Maturity Date then in effect (or, if such day is not a Business
Day, the next preceding Business Day).

"Letter of Credit Sublimit" means an amount equal to $25,000,000.  The Letter of
Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.

"License"  means any license,  certificate  of authority,  permit,  franchise or
other  authorization  which is  required to be  obtained  from any  Governmental
Authority  in  connection  with  the  operation,  ownership  or  transaction  of
insurance business.
<PAGE>

"Lien"  means  any  mortgage,   pledge,   hypothecation,   assignment,   deposit
arrangement,  encumbrance,  lien  (statutory or other),  charge,  or preference,
priority or other security  interest or preferential  arrangement of any kind or
nature  whatsoever  (including  any  conditional  sale or other title  retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing).

"Loan"
means an extension of credit by a Lender to the Borrower under Article II in the
form of a Revolving Loan or a Swing Line Loan.

"Loan Documents" means this
Agreement, each Note, the Fee Letter, and all other documents executed and
delivered by the Borrower to the Administrative Agent or any Lender in
connection herewith.

"Material Adverse Effect" means (a) a material adverse
change in, or a material adverse effect upon, the operations, business,
properties, liabilities (actual or contingent), condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole; (b) a material impairment of the ability of the Borrower to
perform its obligations under any Loan Document to which it is a party; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against the Borrower of any Loan Document to which it is a party.

"Material Insurance Subsidiary" means any Insurance Subsidiary which is a
Material Subsidiary.

"Material Subsidiary" means, at any time, any Subsidiary
having at such time either (a) total (gross) revenues for the preceding four
fiscal quarter period in excess of 10% of the total (gross) revenues of the
Borrower and its Subsidiaries for such period or (b) a shareholder's equity, as
of the last day of the preceding fiscal quarter, having a book value in excess
of 10% of Shareholders' Equity, in each case, based upon the Borrower's most
recent annual or quarterly financial statements delivered to the Administrative
Agent under Section 6.01.

"Maturity Date" means the earliest of (a) September ___, 2005 or (b) the date of
termination of the Aggregate  Commitments  pursuant to Section 2.06, and (c) the
date of  termination  of the  commitment of each Lender to make Loans and of the
obligation of the L/C Issuer to make L/C Credit  Extensions  pursuant to Section
8.02.

"Moody's" means Moody's Investors Service, Inc. and any successor thereto.

"Multiemployer  Plan" means any employee  benefit plan of the type  described in
Section  4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions,  or during the preceding five plan years,
has made or been obligated to make contributions.

"NAIC" means the National Association of Insurance Commissioners or any
successor thereto, or in absence of the National Association of Insurance
Commissioners or such successor, any other association, agency or other
organization performing advisory, coordination or other like functions among
insurance departments, insurance commissioners and similar Governmental
Authorities of the various states of the United States toward the promotion of
uniformity in the practices of such Governmental Authorities.

"Net Cash Proceeds" means,  with respect to the issuance of any Capital Stock by
or of any Person, the excess of (a) cash proceeds and cash equivalents  received
by such Person in connection with such issuance  (including any cash received in
respect  of  non-cash  proceeds,  but  only and as when  received)  over (b) the
underwriting  discounts  and  commissions,  and other  reasonable  out-of-pocket
expenses incurred by such Person in connection with such issuance.
<PAGE>

"Notes" means, collectively,
the Revolving Loan Notes and the Swing Line Note.

"Obligations" means all
advances to, and debts, liabilities, obligations, covenants and duties of, the
Borrower arising under any Loan Document or otherwise with respect to any Loan
or Letter of Credit, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against the Borrower or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.

"Organization Documents" means, (a) with respect to any
corporation, the certificate or articles of incorporation and the bylaws (or
equivalent or comparable constitutive documents with respect to any non-U.S.
jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement;
and (c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable agreement of
formation or organization and any agreement, instrument, filing or notice with
respect thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

"Outstanding Amount" means (i) with respect to
Revolving Loans and Swing Line Loans on any date, the aggregate outstanding
principal amount thereof after giving effect to any borrowings and prepayments
or repayments of Revolving Loans and Swing Line Loans, as the case may be,
occurring on such date; and (ii) with respect to any L/C Obligations on any
date, the amount of such L/C Obligations on such date after giving effect to any
L/C Credit Extension occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as a result
of any reimbursements of outstanding unpaid drawings under any Letters of Credit
or any reductions in the maximum amount available for drawing under Letters of
Credit taking effect on such date.

"Participant" has the meaning specified in Section 10.07(d).

"PBGC" means the Pension Benefit Guaranty Corporation.

"Pension Plan" means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

"Permitted Liens" has the meaning specified in Section 7.01.

"Person"  means any natural  person,  corporation,  limited  liability  company,
trust, joint venture, association, company, partnership,  Governmental Authority
or other entity.

"Plan"  means any  "employee  benefit  plan" (as such term is defined in Section
3(3) of ERISA)  established  by the  Borrower  or, with respect to any such plan
that is  subject  to  Section  412 of the Code or Title IV of  ERISA,  any ERISA
Affiliate.
<PAGE>

"Pro Rata Share"  means,  with  respect to each  Lender at any time,  a fraction
(expressed  as a  percentage,  carried  out to the  ninth  decimal  place),  the
numerator of which is the amount of the  Commitment  of such Lender at such time
and the denominator of which is the amount of the Aggregate  Commitments at such
time;  provided  that if the  commitment  of each  Lender to make  Loans and the
obligation of the L/C Issuer to make L/C Credit  Extensions have been terminated
pursuant  to  Section  8.02,  then the Pro Rata  Share of each  Lender  shall be
determined based on the Pro Rata Share of such Lender  immediately prior to such
termination and after giving effect to any subsequent  assignments made pursuant
to the terms  hereof.  The  initial  Pro Rata Share of each  Lender is set forth
opposite  the name of such  Lender on  Schedule  2.01 or in the  Assignment  and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.

"Quarterly  Statement" means the quarterly  statutory financial statement of any
Insurance  Subsidiary  required to be filed with the insurance  commissioner (or
similar  authority) of its jurisdiction of incorporation or, if no specific form
is so required,  in the form of financial statements permitted by such insurance
commissioner  (or  such  similar  authority)  to be used  for  filing  quarterly
statutory  financial   statements  and  shall  contain  the  type  of  financial
information permitted by such insurance commissioner (or such similar authority)
to  be  disclosed  therein,  together  with  all  exhibits  or  schedules  filed
therewith.

"Receivables  Facility Attributed  Indebtedness" means the amount of obligations
outstanding  under a receivables  purchase facility on any date of determination
that would be  characterized  as principal if such facility were structured as a
secured lending transaction other than a purchase.

"Redeemable  Stock"  means  any  Capital  Stock  of the  Borrower  or any of its
Subsidiaries  which  prior  to  October  18,  2005 is or may be (a)  mandatorily
redeemable,  (b)  redeemable  at  the  option  of  the  holder  thereof  or  (c)
convertible into Indebtedness.

"Register" has the meaning set forth in Section 10.07(c).

"Reportable  Event"  means any of the  events  set forth in  Section  4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

"Request for Credit Extension" means (a) with respect to a Revolving  Borrowing,
conversion or continuation of Revolving Loans, a Revolving Loan Notice, (b) with
respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with
respect to a Swing Line Loan, a Swing Line Loan Notice.

"Required Lenders" means, as of any date of determination, at least two
Lenders having more than 50% of the Aggregate Commitments or, if the commitment
of each Lender to make Loans and the obligation of the L/C Issuer to make L/C
Credit Extensions have been terminated pursuant to Section 8.02, at least two
Lenders holding in the aggregate more than 50% of the Total Outstandings (with
the aggregate amount of each Lender's risk participation and funded
participation in L/C Obligations and Swing Line Loans being deemed "held" by
such Lender for purposes of this definition); provided that the Commitment of,
and the portion of the Total Outstandings held or deemed held by, any Defaulting
Lender shall be excluded for purposes of making a determination of Required
Lenders.

"Responsible Officer" means the chief executive officer, president,
chief financial officer, treasurer, controller or assistant secretary of the
Borrower. Any document delivered hereunder that is signed by a Responsible
Officer of the Borrower shall be conclusively presumed to have been authorized
by all necessary corporate action on the part of the Borrower and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
the Borrower.

"Revolving Borrowing" means a borrowing consisting of simultaneous
Revolving Loans of the same Type and, in the case of Eurodollar Rate Loans,
having the same Interest Period made by each of the Lenders pursuant to Section
2.01.

"Revolving Loan" has the meaning specified in Section 2.01.
<PAGE>

"Revolving Loan Note" means a promissory note made by the Borrower in favor of a
Lender evidencing Revolving Loans made by such Lender, substantially in the form
of Exhibit C.

"Revolving  Loan  Notice"  means a notice of (a) a  Revolving  Borrowing,  (b) a
conversion of Revolving  Loans from one Type to the other, or (c) a continuation
of Eurodollar  Rate Loans,  pursuant to Section  2.02(a),  which, if in writing,
shall be substantially in the form of Exhibit A.

"S&P" means Standard & Poor's Ratings  Services,  a division of The  McGraw-Hill
Companies, Inc. and any successor thereto.

"SAP" means, with respect to any Insurance Subsidiary,  the statutory accounting
practices  prescribed  or  permitted  by the  insurance  commissioner  (or other
similar  authority) in the  jurisdiction  of such Person for the  preparation of
annual statements and other financial reports by insurance companies of the same
type as such Person, which are applicable to the circumstances as of the date of
determination.

"SEC"  means  the  Securities  and  Exchange  Commission,  or  any  Governmental
Authority succeeding to any of its principal functions.

"Securities  Lending  Arrangement"  means an arrangement  whereby a Person, as a
securities  lender,  transfers assets to a borrower  counterparty for a premium,
and such Person,  as a securities  lender,  agrees to  repurchase  or redeem the
transferred assets from the borrower counterparty before their maturity.

"Shareholders'  Equity"  means,  as of any date of  determination,  consolidated
shareholders'  equity  of the  Borrower  and its  Subsidiaries  as of that  date
determined in accordance  with GAAP,  but excluding the effect of any adjustment
under Statement of Financial  Accounting  Standards No. 115; provided,  however,
for purposes of calculating  Shareholder's Equity for the Debt to Capitalization
Ratio and Section 7.09,  (a) 75% of the value of the Existing  Trust  Securities
shall be treated as equity and (b) no equity  value shall be  attributed  to any
Additional  Trust  Securities  unless  with  respect to clause (b) the  Required
Lenders determine otherwise.

"Solvent" means,  with respect to any Person,  as of any date of  determination,
that the fair value of the assets of such Person (at fair  valuation) is, on the
date of determination,  greater than the total amount of liabilities  (including
contingent and  unliquidated  liabilities)  of such Person as of such date, that
the present fair  saleable  value of the assets of such Person will,  as of such
date,  be greater  than the amount  that will be  required  to pay the  probable
liability of such Person on its debts as such debts become absolute and matured,
and that, as of such date,  such Person will be able to pay all  liabilities  of
such  Person  as  such  liabilities   mature  and  such  Person  does  not  have
unreasonably small capital with which to carry on its business. In computing the
amount of contingent or unliquidated  liabilities at any time, such  liabilities
will  be  computed  at  the  amount  which,  in  light  of  all  the  facts  and
circumstances  existing at such time,  represents the amount that can reasonably
be expected to become an actual or matured liability discounted to present value
at rates believed to be reasonable by such Person.

"Subsidiary" of a Person means a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for
the election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of
the Borrower.
<PAGE>

"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.

"Swap Contract" means (a) any and all rate
swap transactions, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or bond index swaps
or options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether or
not any such transaction is governed by or subject to any master agreement, and
(b) any and all transactions of any kind, and the related confirmations, which
are subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any other master
agreement (any such master agreement, together with any related schedules, a
"Master Agreement"), including any such obligations or liabilities under any
Master Agreement.

"Swap Termination Value" means, in respect of any one or more
Swap Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

"Swing Line" means the revolving credit facility made available by the
Swing Line Lender pursuant to Section 2.04.

"Swing  Line  Borrowing"  means a  borrowing  of a Swing Line Loan  pursuant  to
Section 2.04.

"Swing Line  Lender"  means Bank of America in its capacity as provider of Swing
Line Loans, or any successor swing line lender hereunder.

"Swing Line Loan" has the meaning specified in Section 2.04(a).

"Swing Line Loan Notice"  means a notice of a Swing Line  Borrowing  pursuant to
Section  2.04(b),  which, if in writing,  shall be  substantially in the form of
Exhibit B.

"Swing Line Note" means a  promissory  note made by the Borrower in favor of the
Swing Line Lender evidencing Swing Line Loans made by such Lender, substantially
in the form of Exhibit D.

"Swing Line Sublimit" means an amount equal to the lesser of (a) $25,000,000 and
(b) the  Aggregate  Commitments.  The Swing Line Sublimit is part of, and not in
addition to, the Aggregate Commitments.

"Synthetic Lease Obligation" means the monetary obligation of a Person under (a)
a so-called  synthetic,  off-balance  sheet or tax  retention  lease,  or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance  sheet of such Person but which,  upon the  insolvency  or
bankruptcy of such Person,  would be  characterized  as the indebtedness of such
Person (without regard to accounting treatment).
<PAGE>

"Total Outstandings" means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

"Type"  means,  with respect to a Revolving  Loan,  its character as a Base Rate
Loan or a Eurodollar Rate Loan.

"UCC"  means the  Uniform  Commercial  Code of Texas  or,  where  applicable  to
specific Collateral, any other relevant state.

"Unfunded  Pension  Liability"  means the  excess of a  Pension  Plan's  benefit
liabilities  under Section  4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets,  determined in accordance with the  assumptions  used for
funding the Pension Plan pursuant to Section 412 of the Code for the  applicable
plan year.

"United States" and "U.S." mean the United States of America.

"Unreimbursed Amount" has the meaning set forth in Section 2.03(c)(i).

"Unused  Portion"  means an amount equal to the  remainder of (a) the  Aggregate
Commitments minus (b) the Total Outstandings.

"Utilization Fee" has the meaning specified in Section 2.09(b).

1.02 Other Interpretive Provisions.
With reference to this Agreement and each other Loan Document, unless otherwise
specified herein or in such other Loan Document:

     (a) The meanings of defined  terms are equally  applicable  to the singular
and plural forms of the defined terms.

     (b)

          (i) The words "herein,"  "hereto,"  "hereof" and "hereunder" and words
     of similar import when used in any Loan Document shall refer to such Loan
     Document as a whole and not to any particular provision thereof.

          (ii) Article, Section, Exhibit and Schedule references are to the Loan
     Document in which such reference appears.

          (iii) The term "including" is by way of example and not limitation.

          (iv) The term "documents" includes any and all instruments, documents,
     agreements, certificates, notices, reports, financialstatements and other
     writings, however evidenced, whether in physical or electronic form.

     (c) In the  computation of periods of time from a specified date to a later
specified  date, the word "from" means "from and  including;" the words "to" and
"until"  each  mean "to but  excluding;"  and the word  "through"  means "to and
including."

     (d) Section  headings  herein and in the other Loan  Documents are included
for  convenience  of reference only and shall not affect the  interpretation  of
this Agreement or any other Loan Document.
<PAGE>

1.03     Accounting Terms.

     (a) All  accounting  terms not  specifically  or completely  defined herein
shall be  construed  in  conformity  with,  and all  financial  data  (including
financial  ratios and other  financial  calculations)  required to be  submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP or SAP, as
applicable,  applied  on a  consistent  basis,  as in effect  from time to time,
applied in a manner consistent with that used in preparing the Audited Financial
Statements, except as otherwise specifically prescribed herein.

     (b) If at any time any  change in GAAP or SAP or any  change in  accounting
treatment or practices  required by any Governmental  Authority,  as applicable,
would affect the  computation of any financial ratio or requirement set forth in
any Loan  Document,  and either the  Borrower or the Required  Lenders  shall so
request, the Administrative  Agent, the Lenders and the Borrower shall negotiate
in good faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP or SAP or  required by any  Governmental
Authority,  as  applicable  (subject to the approval of the  Required  Lenders);
provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP or SAP, as applicable,  prior to such change
therein and (ii) the Borrower shall provide to the Administrative  Agent and the
Lenders financial  statements and other documents  required under this Agreement
or as reasonably  requested  hereunder  setting forth a  reconciliation  between
calculations of such ratio or requirement made before and after giving effect to
such  change  in GAAP  or SAP or  required  by any  Governmental  Authority,  as
applicable.

1.04 Rounding.  Any financial  ratios  required to be maintained by the Borrower
pursuant to this  Agreement  shall be  calculated  by dividing  the  appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the  nearest  number  (with a  rounding-up  if there is no nearest
number).

1.05  References to Agreements and Laws.  Unless  otherwise  expressly  provided
herein, (a) references to Organization Documents, agreements (including the Loan
Documents)  and other  contractual  instruments  shall be deemed to include  all
subsequent   amendments,   restatements,   extensions,   supplements  and  other
modifications   thereto,   but  only  to  the  extent   that  such   amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document;  and (b) references to any Law shall include all statutory
and  regulatory  provisions  and  rulings  consolidating,  amending,  replacing,
supplementing or interpreting such Law.

1.06 Times of Day. Unless otherwise specified, all references herein to times of
day shall be references to Pacific time (daylight or standard, as applicable).

1.07 Letter of Credit Amounts. Unless otherwise specified, all references herein
to the  amount of a Letter  of  Credit  at any time  shall be deemed to mean the
maximum  face  amount  of such  Letter  of  Credit  after  giving  effect to all
increases thereof  contemplated by such Letter of Credit or the Letter of Credit
Application  therefor,  whether or not such  maximum face amount is in effect at
such time.
<PAGE>

                                  ARTICLE II.
                      The Commitments and Credit Extensions

2.01 Revolving Loans. Subject to the terms and conditions set forth herein, each
Lender  severally  agrees to make loans (each such loan, a "Revolving  Loan") to
the Borrower  from time to time,  on any  Business  Day during the  Availability
Period,  in an aggregate amount not to exceed at any time outstanding the amount
of such Lender's Commitment;  provided, however, that after giving effect to any
Revolving  Borrowing,  (i) the Total Outstandings shall not exceed the Aggregate
Commitments, and (ii) the aggregate Outstanding Amount of the Revolving Loans of
any Lender,  plus such Lender's Pro Rata Share of the Outstanding  Amount of all
L/C Obligations,  plus such Lender's Pro Rata Share of the Outstanding Amount of
all Swing  Line Loans  shall not exceed  such  Lender's  Commitment.  Within the
limits  of  each  Lender's  Commitment,  and  subject  to the  other  terms  and
conditions hereof, the Borrower may borrow under this Section 2.01, prepay under
Section 2.05, and reborrow under this Section 2.01.  Revolving Loans may be Base
Rate Loans or Eurodollar Rate Loans, as further provided herein.

2.02 Borrowings, Conversions and Continuations of Revolving Loans.

     (a) Each Revolving  Borrowing,  each conversion of Revolving Loans from one
Type to the other, and each  continuation of Eurodollar Rate Loans shall be made
upon the Borrower's irrevocable notice to the Administrative Agent, which may be
given by  telephone.  Each such notice  must be  received by the  Administrative
Agent not later than 11:00 a.m.

          (i) three  Business Days prior to the requested  date of any Borrowing
     of,  conversion  to or  continuation  of  Eurodollar  Rate  Loans or of any
     conversion of Eurodollar Rate Loans to Base Rate Revolving Loans, and

          (ii) on the  requested  date of any  Borrowing of Base Rate  Revolving
     Loans.

Each telephonic notice by the Borrower pursuant to this Section 2.02(b) must be
confirmed promptly by delivery to the Administrative Agent of a written
Revolving Loan Notice, appropriately completed and signed by two Responsible
Officers of the Borrower. Each Borrowing of, conversion to or continuation of
Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof. Except as provided in Sections 2.03(c)
and 2.04(c), each Borrowing of or conversion to Base Rate Revolving Loans shall
be in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof. Each Revolving Loan Notice (whether telephonic or written) shall
specify

          (i)  whether the  Borrower is  requesting  a  Revolving  Borrowing,  a
     conversion of Revolving Loans from one Type to the other, or a continuation
     of Eurodollar Rate Loans,

          (ii) the requested date of the Borrowing,  conversion or continuation,
     as the case may be (which shall be a Business Day),

          (iii)  the  principal  amount  of  Revolving  Loans  to  be  borrowed,
     converted or continued,

          (iv) the Type of Revolving  Loans to be borrowed or to which  existing
     Revolving Loans are to be converted, and

          (v) if  applicable,  the duration of the Interest  Period with respect
     thereto.
<PAGE>

If the Borrower fails to specify a Type of Revolving Loan in a Revolving Loan
Notice or if the Borrower fails to give a timely notice requesting a conversion
or continuation, then the applicable Revolving Loans shall be made as, or
converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans
shall be effective as of the last day of the Interest Period then in effect with
respect to the applicable Eurodollar Rate Loans. If the Borrower requests a
Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any
such Revolving Loan Notice, but fails to specify an Interest Period, it will be
deemed to have specified an Interest Period of one month.

     (b) Following receipt of a Revolving Loan Notice, the Administrative  Agent
shall  promptly  notify  each  Lender of the amount of its Pro Rata Share of the
applicable  Revolving  Loans,  and  if  no  timely  notice  of a  conversion  or
continuation is provided by the Borrower,  the Administrative Agent shall notify
each  Lender of the  details  of any  automatic  conversion  to Base Rate  Loans
described in the  preceding  subsection.  In the case of a Revolving  Borrowing,
each  Lender  shall  make the  amount of its  Revolving  Loan  available  to the
Administrative  Agent  in  immediately  available  funds  at the  Administrative
Agent's  Office not later than 1:00 p.m. on the  Business  Day  specified in the
applicable Revolving Loan Notice. Upon satisfaction of the applicable conditions
set  forth in  Section  4.02  (and,  if such  Borrowing  is the  initial  Credit
Extension, Section 4.01), the Administrative Agent shall make all
funds so  received  available  to the  Borrower  in like funds as
received by the Administrative  Agent either by (i) crediting the account of the
Borrower  on the books of Bank of America  with the amount of such funds or (ii)
wire  transfer  of such  funds,  in each case in  accordance  with  instructions
provided  to (and  reasonably  acceptable  to) the  Administrative  Agent by the
Borrower; provided, however, that if, on the date the Revolving Loan Notice with
respect to such Borrowing is given by the Borrower,  there are
Swing  Line  Loans or L/C  Borrowings  outstanding,  then the  proceeds  of such
Borrowing  shall  be  applied,  first,  to the  payment  in full of any such L/C
Borrowings,  second,  to the payment in full of any such Swing Line
Loans, and third, to the Borrower as provided above.

     (c) Except as otherwise  provided  herein,  a  Eurodollar  Rate Loan may be
continued  or  converted  only on the last day of an  Interest  Period  for such
Eurodollar  Rate  Loan.  During  the  existence  of a  Default,  no Loans may be
requested  as,  converted to or continued as  Eurodollar  Rate Loans without the
consent of the Required Lenders.

     (d) The  Administrative  Agent shall  promptly  notify the Borrower and the
Lenders of the interest rate  applicable to any Interest  Period for  Eurodollar
Rate Loans upon  determination  of such interest rate. The  determination of the
Eurodollar Rate by the  Administrative  Agent shall be conclusive in the absence
of  manifest  error.  At any time  that Base Rate  Loans  are  outstanding,  the
Administrative  Agent shall notify the Borrower and the Lenders of any change in
Bank of  America's  prime  rate  used in  determining  the  Base  Rate  promptly
following the public announcement of such change.
<PAGE>

     (e) After giving effect to all Revolving  Borrowings,  all  conversions  of
Revolving Loans from one Type to the other,  and all  continuations of Revolving
Loans as the same Type,  there  shall not be more than ten  Interest  Periods in
effect with respect to Revolving Loans.

2.03     Letters of Credit.

     (a) The Letter of Credit Commitment.

          (i) Subject to the terms and conditions set forth herein,  (A) the L/C
     Issuer  agrees,  in reliance  upon the  agreements of the other Lenders set
     forth in this  Section  2.03,  (1) from  time to time on any  Business  Day
     during  the  period  from the  Closing  Date  until  the  Letter  of Credit
     Expiration Date, to issue Letters of Credit for the account of the Borrower
     or certain Subsidiaries, and to amend or renew Letters of Credit previously
     issued by it, in accordance  with  subsection  (b) below,  and (2) to honor
     drafts under the Letters of Credit;  and (B) the Lenders severally agree to
     participate  in Letters of Credit  issued for the account of the  Borrower;
     provided  that the L/C Issuer shall not be obligated to make any L/C Credit
     Extension  with  respect to any Letter of  Credit,  and no Lender  shall be
     obligated to  participate in any Letter of Credit if as of the date of such
     L/C Credit Extension, (x) the Total Outstandings would exceed the Aggregate
     Commitments, (y) the aggregate Outstanding Amount of the Revolving Loans of
     any Lender,  plus such Lender's Pro Rata Share of the Outstanding Amount of
     all L/C  Obligations,  plus such Lender's Pro Rata Share of the Outstanding
     Amount of all Swing Line Loans would exceed such  Lender's  Commitment,  or
     (z) the Outstanding  Amount of the L/C Obligations  would exceed the Letter
     of Credit Sublimit.  Within the foregoing limits,  and subject to the terms
     and conditions  hereof,  the Borrower's ability to obtain Letters of Credit
     shall be fully  revolving,  and  accordingly  the Borrower may,  during the
     foregoing  period,  obtain  Letters of Credit to replace  Letters of Credit
     that have expired or that have been drawn upon and reimbursed.

          (ii) The L/C Issuer shall be under no  obligation  to issue any Letter
     of Credit if:
<PAGE>

               (A) any order,  judgment or decree of any Governmental  Authority
          or arbitrator shall by its terms purport to enjoin or restrain the L/C
          Issuer from issuing such Letter of Credit,  or any Law  applicable  to
          the L/C Issuer or any request or directive  (whether or not having the
          force of Law) from any Governmental  Authority with  jurisdiction over
          the L/C Issuer shall prohibit,  or request that the L/C Issuer refrain
          from,  the  issuance of letters of credit  generally or such Letter of
          Credit in  particular or shall impose upon the L/C Issuer with respect
          to  such  Letter  of  Credit  any  restriction,   reserve  or  capital
          requirement  (for  which the L/C Issuer is not  otherwise  compensated
          hereunder) not in effect on the Closing Date, or shall impose upon the
          L/C  Issuer  any  unreimbursed  loss,  cost or  expense  which was not
          applicable  on the Closing Date and which the L/C Issuer in good faith
          deems material to it;

               (B)  subject to  Section  2.03(b)(iii),  the expiry  date of such
          requested  Letter of Credit would occur more than twelve  months after
          the date of issuance or last renewal, unless the Required Lenders have
          approved such expiry date;

               (C) the  expiry  date of such  requested  Letter of Credit  would
          occur  after the  Letter of Credit  Expiration  Date,  unless  all the
          Lenders have approved such expiry date;

               (D) the  issuance of such Letter of Credit  would  violate one or
          more policies of the L/C Issuer; or

               (E) such  Letter  of  Credit is in an  initial  amount  less than
          $100,000,  in the case of a commercial  Letter of Credit, or $500,000,
          in the case of a standby Letter of Credit,  or is to be denominated in
          a currency other than Dollars.

          (iii)The L/C Issuer shall be under no  obligation  to amend any Letter
     of Credit if (A) the L/C Issuer  would have no  obligation  at such time to
     issue such Letter of Credit in its amended form under the terms hereof,  or
     (B) the  beneficiary  of such Letter of Credit does not accept the proposed
     amendment to such Letter of Credit.

     (b)   Procedures   for  Issuance  and   Amendment  of  Letters  of  Credit;
Auto-Renewal Letters of Credit.

          (i) Each Letter of Credit shall be issued or amended,  as the case may
     be, upon the request of the  Borrower  delivered  to the L/C Issuer (with a
     copy to the  Administrative  Agent)  in the  form  of a  Letter  of  Credit
     Application, appropriately completed and signed by a Responsible Officer of
     the Borrower. Such Letter of Credit Application must be received by the L/C
     Issuer and the Administrative  Agent not later than 11:00 a.m. at least two
     Business Days (or such later date and time as the L/C Issuer may agree in a
     particular  instance in its sole discretion) prior to the proposed issuance
     date or date of amendment, as the case may be. In the case of a request for
     an  initial  issuance  of  a  Letter  of  Credit,  such  Letter  of  Credit
     Application  shall  specify  in form  and  detail  satisfactory  to the L/C
     Issuer:  (A) the proposed  issuance date of the requested  Letter of Credit
     (which shall be a Business  Day);  (B) the amount  thereof;  (C) the expiry
     date thereof;  (D) the name and address of the beneficiary thereof; (E) the
     documents  to be  presented  by such  beneficiary  in  case of any  drawing
     thereunder;  (F) the full text of any  certificate  to be presented by such
     beneficiary in case of any drawing  thereunder;  and (G) such other matters
     as the L/C Issuer may require. In the case of a request for an amendment of
     any outstanding  Letter of Credit,  such Letter of Credit Application shall
     specify in form and detail satisfactory to the L/C Issuer (A) the Letter of
     Credit to be amended;  (B) the proposed  date of amendment  thereof  (which
     shall be a Business Day); (C) the nature of the proposed amendment; and (D)
     such other matters as the L/C Issuer may require.
<PAGE>

          (ii) Promptly after receipt of any Letter of Credit  Application,  the
     L/C Issuer will confirm with the  Administrative  Agent (by telephone or in
     writing) that the  Administrative  Agent has received a copy of such Letter
     of Credit  Application  from the Borrower  and, if not, the L/C Issuer will
     provide the Administrative  Agent with a copy thereof.  Upon receipt by the
     L/C Issuer of confirmation from the Administrative Agent that the requested
     issuance or amendment is permitted  in  accordance  with the terms  hereof,
     then,  subject to the terms and conditions hereof, the L/C Issuer shall, on
     the  requested  date,  issue a Letter  of  Credit  for the  account  of the
     Borrower  or enter into the  applicable  amendment,  as the case may be, in
     each case in accordance with the L/C Issuer's usual and customary  business
     practices.  Immediately  upon the  issuance of each Letter of Credit,  each
     Lender  shall be deemed  to,  and hereby  irrevocably  and  unconditionally
     agrees to, purchase from the L/C Issuer a risk participation in such Letter
     of Credit in an amount equal to the product of such Lender's Pro Rata Share
     times the amount of such Letter of Credit.

          (iii) If the Borrower so requests in any  applicable  Letter of Credit
     Application, the L/C Issuer may, in its sole and absolute discretion, agree
     to issue a Letter of Credit that has automatic renewal provisions (each, an
     "Auto-Renewal  Letter  of  Credit");  provided  that any such  Auto-Renewal
     Letter of Credit must permit the L/C Issuer to prevent any such  renewal at
     least  once  in each  twelve-month  period  (commencing  with  the  date of
     issuance  of  such  Letter  of  Credit)  by  giving  prior  notice  to  the
     beneficiary  thereof not later than a day (the "Nonrenewal Notice Date") in
     each such twelve-month  period to be agreed upon at the time such Letter of
     Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower
     shall not be required to make a specific  request to the L/C Issuer for any
     such renewal.  Once an Auto-Renewal  Letter of Credit has been issued,  the
     Lenders  shall be deemed to have  authorized  (but may not require) the L/C
     Issuer to permit  the  renewal  of such  Letter of Credit at any time to an
     expiry date not later than the Letter of Credit Expiration Date;  provided,
     however,  that the L/C Issuer  shall not permit any such renewal if (A) the
     L/C Issuer has determined  that it would have no obligation at such time to
     issue such Letter of Credit in its renewed  form under the terms hereof (by
     reason of the provisions of Section  2.03(a)(ii)  or otherwise),  or (B) it
     has received  notice (which may be by telephone or in writing) on or before
     the day that is two  Business  Days before the  Nonrenewal  Notice Date (1)
     from the Administrative Agent that the Required Lenders have elected not to
     permit such renewal or (2) from the Administrative Agent, any Lender or the
     Borrower that one or more of the applicable conditions specified in Section
     4.02 is not then satisfied.
<PAGE>

          (iv)  Promptly  after  its  delivery  of any  Letter  of Credit or any
     amendment to a Letter of Credit to an advising bank with respect thereto or
     to the  beneficiary  thereof,  the L/C  Issuer  will  also  deliver  to the
     Borrower  and the  Administrative  Agent a true and  complete  copy of such
     Letter of Credit or amendment.

     (c) Drawings and Reimbursements; Funding of Participations.

          (i) Upon receipt from the  beneficiary  of any Letter of Credit of any
     notice of a drawing  under  such  Letter of Credit,  the L/C  Issuer  shall
     notify the Borrower and the  Administrative  Agent thereof.  Not later than
     11:00 a.m. on the date of any  payment by the L/C Issuer  under a Letter of
     Credit (each such date, an "Honor Date"),  the Borrower shall reimburse the
     L/C  Issuer  through  the  Administrative  Agent in an amount  equal to the
     amount of such  drawing.  If the  Borrower  fails to so  reimburse  the L/C
     Issuer by such time, the  Administrative  Agent shall promptly  notify each
     Lender of the Honor  Date,  the  amount of the  unreimbursed  drawing  (the
     "Unreimbursed  Amount"),  and the  amount of such  Lender's  Pro Rata Share
     thereof.  In such event,  the Borrower  shall be deemed to have requested a
     Revolving Borrowing of Base Rate Loans to be disbursed on the Honor Date in
     an amount equal to the Unreimbursed  Amount,  without regard to the minimum
     and multiples  specified in Section 2.02 for the  principal  amount of Base
     Rate  Loans,  but  subject to the amount of the  unutilized  portion of the
     Aggregate  Commitments  and the conditions set forth in Section 4.02 (other
     than the delivery of a Revolving Loan Notice).  Any notice given by the L/C
     Issuer or the Administrative  Agent pursuant to this Section 2.03(c)(i) may
     be given by telephone if  immediately  confirmed in writing;  provided that
     the  lack  of  such  an  immediate   confirmation   shall  not  affect  the
     conclusiveness or binding effect of such notice.
<PAGE>

          (ii) Each Lender  (including  the Lender  acting as L/C Issuer)  shall
     upon any notice pursuant to Section  2.03(c)(i) make funds available to the
     Administrative   Agent  for  the   account   of  the  L/C   Issuer  at  the
     Administrative  Agent's  Office in an amount equal to its Pro Rata Share of
     the  Unreimbursed  Amount  not later  than 1:00 p.m.  on the  Business  Day
     specified in such notice by the Administrative Agent, whereupon, subject to
     the  provisions  of Section  2.03(c)(iii),  each Lender that so makes funds
     available  shall be deemed to have made a Base Rate  Revolving  Loan to the
     Borrower in such amount. The Administrative  Agent shall remit the funds so
     received to the L/C Issuer.

          (iii)  With  respect  to any  Unreimbursed  Amount  that is not  fully
     refinanced  by a  Revolving  Borrowing  of  Base  Rate  Loans  because  the
     conditions  set forth in Section  4.02 cannot be satisfied or for any other
     reason,  the Borrower  shall be deemed to have incurred from the L/C Issuer
     an L/C  Borrowing in the amount of the  Unreimbursed  Amount that is not so
     refinanced,  which  L/C  Borrowing  shall  be due  and  payable  on  demand
     (together  with  interest)  and shall bear interest at the Default Rate. In
     such  event,  each  Lender's  payment to the  Administrative  Agent for the
     account of the L/C Issuer pursuant to Section  2.03(c)(ii)  shall be deemed
     payment in respect of its  participation  in such L/C  Borrowing  and shall
     constitute  an  L/C  Advance  from  such  Lender  in  satisfaction  of  its
     participation obligation under this Section 2.03.

          (iv)  Until  each  Lender  funds  its  Revolving  Loan or L/C  Advance
     pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount
     drawn under any Letter of Credit,  interest in respect of such Lender's Pro
     Rata  Share of such  amount  shall be  solely  for the  account  of the L/C
     Issuer.

          (v) Each Lender's  obligation to make Revolving  Loans or L/C Advances
     to reimburse the L/C Issuer for amounts  drawn under Letters of Credit,  as
     contemplated by this Section 2.03(c),  shall be absolute and  unconditional
     and shall not be affected by any  circumstance,  including (A) any set-off,
     counterclaim, recoupment, defense or other right which such Lender may have
     against the L/C  Issuer,  the  Borrower or any other  Person for any reason
     whatsoever;  (B) the  occurrence or  continuance  of a Default,  or (C) any
     other occurrence,  event or condition, whether or not similar to any of the
     foregoing,  including  whether or not the  conditions  set forth in Section
     4.02 shall have been  satisfied.  No such  making of an L/C  Advance  shall
     relieve or otherwise impair the obligation of the Borrower to reimburse the
     L/C Issuer for the amount of any payment  made by the L/C Issuer  under any
     Letter of Credit, together with interest as provided herein.
<PAGE>

          (vi) If any Lender fails to make available to the Administrative Agent
     for the  account of the L/C Issuer any amount  required  to be paid by such
     Lender pursuant to the foregoing  provisions of this Section 2.03(c) by the
     time specified in Section 2.03(c)(ii),  the L/C Issuer shall be entitled to
     recover from such Lender  (acting  through the  Administrative  Agent),  on
     demand, such amount with interest thereon for the period from the date such
     payment  is  required  to the date on which  such  payment  is  immediately
     available to the L/C Issuer at a rate per annum equal to the Federal  Funds
     Rate from time to time in effect. A certificate of the L/C Issuer submitted
     to any  Lender  (through  the  Administrative  Agent)  with  respect to any
     amounts  owing under this clause (vi) shall be conclusive  absent  manifest
     error.

     (d) Repayment of Participations.

          (i) At any time  after the L/C  Issuer  has made a  payment  under any
     Letter of Credit and has received from any Lender such Lender's L/C Advance
     in respect of such  payment in  accordance  with  Section  2.03(c),  if the
     Administrative Agent receives for the account of the L/C Issuer any payment
     in respect of the related  Unreimbursed Amount or interest thereon (whether
     directly  from  the  Borrower  or  otherwise,  including  proceeds  of Cash
     Collateral applied thereto by the Administrative Agent), the Administrative
     Agent  will   distribute   to  such  Lender  its  Pro  Rata  Share  thereof
     (appropriately  adjusted,  in the case of interest payments, to reflect the
     period of time during which such Lender's L/C Advance was  outstanding)  in
     the same funds as those received by the Administrative Agent.

          (ii) If any  payment  received  by the  Administrative  Agent  for the
     account of the L/C Issuer pursuant to Section  2.03(c)(i) is required to be
     returned  under  any  of  the  circumstances  described  in  Section  10.06
     (including pursuant to any settlement entered into by the L/C Issuer in its
     discretion),  each  Lender  shall pay to the  Administrative  Agent for the
     account  of the L/C  Issuer  its Pro Rata  Share  thereof  on demand of the
     Administrative Agent, plus interest thereon from the date of such demand to
     the date such amount is returned by such Lender,  at a rate per annum equal
     to the Federal Funds Rate from time to time in effect.

     (e) Obligations  Absolute.  The obligation of the Borrower to reimburse the
L/C Issuer for each  drawing  under each  Letter of Credit and to repay each L/C
Borrowing shall be absolute,  unconditional  and irrevocable,  and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including the following:
<PAGE>

          (i) any lack of validity or  enforceability  of such Letter of Credit,
     this Agreement, or any other agreement or instrument relating thereto;

          (ii) the  existence of any claim,  counterclaim,  set-off,  defense or
     other right that the Borrower may have at any time against any  beneficiary
     or any transferee of such Letter of Credit (or any Person for whom any such
     beneficiary or any such  transferee  may be acting),  the L/C Issuer or any
     other Person,  whether in connection with this Agreement,  the transactions
     contemplated  hereby  or by such  Letter  of  Credit  or any  agreement  or
     instrument relating thereto, or any unrelated transaction;

          (iii) any draft, demand, certificate or other document presented under
     such  Letter  of  Credit  proving  to be  forged,  fraudulent,  invalid  or
     insufficient  in any  respect  or any  statement  therein  being  untrue or
     inaccurate  in any  respect;  or any loss or delay in the  transmission  or
     otherwise  of any document  required in order to make a drawing  under such
     Letter of Credit;

          (iv) any payment by the L/C Issuer under such Letter of Credit against
     presentation  of a draft or certificate  that does not strictly comply with
     the terms of such Letter of Credit;  or any payment  made by the L/C Issuer
     under  such  Letter of Credit to any Person  purporting  to be a trustee in
     bankruptcy,  debtor-in-possession,  assignee for the benefit of  creditors,
     liquidator,  receiver  or  other  representative  of or  successor  to  any
     beneficiary  or any  transferee  of such  Letter of Credit,  including  any
     arising in connection with any proceeding under any Debtor Relief Law; or

          (v) any other  circumstance  or happening  whatsoever,  whether or not
     similar to any of the  foregoing,  including  any other  circumstance  that
     might otherwise  constitute a defense  available to, or a discharge of, the
     Borrower.

The  Borrower  shall  promptly  examine a copy of each Letter of Credit and each
amendment  thereto  that is  delivered  to it and,  in the event of any claim of
noncompliance  with  the  Borrower's  instructions  or other  irregularity,  the
Borrower  will  immediately   notify  the  L/C  Issuer.The   Borrower  shall  be
conclusively deemed to have waived any such claim against the L/C Issuer and its
correspondents unless such notice is given as aforesaid.
<PAGE>

     (f) Role of L/C Issuer.  Each Lender and the Borrower agree that, in paying
any  drawing  under a  Letter  of  Credit,  the L/C  Issuer  shall  not have any
responsibility to obtain any document (other than any sight draft,  certificates
and  documents  expressly  required by the Letter of Credit) or to  ascertain or
inquire as to the validity or accuracy of any such  document or the authority of
the Person  executing or delivering any such  document.  None of the L/C Issuer,
any Agent-Related Person nor any of the respective correspondents,  participants
or  assignees of the L/C Issuer shall be liable to any Lender for (i) any action
taken or omitted in  connection  herewith at the request or with the approval of
the Lenders or the Required  Lenders,  as  applicable;  (ii) any action taken or
omitted in the absence of gross negligence or willful  misconduct;  or (iii) the
due  execution,  effectiveness,  validity or  enforceability  of any document or
instrument related to any Letter of Credit or Letter of Credit Application.  The
Borrower hereby assumes all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit;  provided,  however,
that this assumption is not intended to, and shall not,  preclude the Borrower's
pursuing  such rights and  remedies as it may have  against the  beneficiary  or
transferee  at Law or under any other  agreement.  None of the L/C  Issuer,  any
Agent-Related Person, nor any of the respective correspondents,  participants or
assignees  of the L/C  Issuer,  shall be  liable or  responsible  for any of the
matters  described  in clauses  (i) through  (v) of Section  2.03(e);  provided,
however,  that  anything in such  clauses to the contrary  notwithstanding,  the
Borrower  may have a claim  against  the L/C  Issuer,  and the L/C Issuer may be
liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to  consequential  or exemplary,  damages suffered by the Borrower which
the Borrower proves were caused by the L/C Issuer's willful  misconduct or gross
negligence or the L/C Issuer's willful failure to pay under any Letter of Credit
after  the  presentation  to  it  by  the  beneficiary  of  a  sight  draft  and
certificate(s)  strictly  complying with the terms and conditions of a Letter of
Credit.  In furtherance  and not in limitation of the foregoing,  the L/C Issuer
may  accept  documents  that  appear  on  their  face  to be in  order,  without
responsibility   for  further   investigation,   regardless  of  any  notice  or
information to the contrary, and the L/C Issuer shall not be responsible for the
validity  or  sufficiency  of  any  instrument   transferring  or  assigning  or
purporting  to  transfer  or assign a Letter of Credit or the rights or benefits
thereunder  or  proceeds  thereof,  in whole or in part,  which  may prove to be
invalid or ineffective for any reason.

     (g) Cash Collateral.  Upon the request of the Administrative  Agent, (i) if
the L/C Issuer has honored any full or partial  drawing request under any Letter
of Credit and such drawing has resulted in an L/C  Borrowing,  or (ii) if, as of
the Letter of Credit  Expiration  Date,  any Letter of Credit may for any reason
remain  outstanding  and  partially  or  wholly  undrawn,   the  Borrower  shall
immediately  Cash   Collateralize  the  then  Outstanding   Amount  of  all  L/C
Obligations (in an amount equal to such Outstanding  Amount determined as of the
date of such L/C Borrowing or the Letter of Credit  Expiration Date, as the case
may be). For purposes hereof,  "Cash  Collateralize" means to pledge and deposit
with or deliver to the  Administrative  Agent, for the benefit of the L/C Issuer
and the Lenders, as collateral for the L/C Obligations,  cash or deposit account
balances  pursuant to  documentation  in form and substance  satisfactory to the
Administrative Agent and the L/C Issuer (which documents are hereby consented to
by the  Lenders).  Derivatives  of such term have  corresponding  meanings.  The
Borrower hereby grants to the  Administrative  Agent, for the benefit of the L/C
Issuer and the Lenders,  a security interest in all such cash,  deposit accounts
and all balances  therein and all  proceeds of the  foregoing.  Cash  collateral
shall be maintained in blocked, non-interest bearing deposit accounts at Bank of
America.
<PAGE>

     (h)  Applicability of ISP98 and UCP. Unless  otherwise  expressly agreed by
the L/C Issuer and the Borrower when a Letter of Credit is issued, (i) the rules
of the  "International  Standby  Practices  1998"  published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance)  shall apply to each  standby  Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary  Credits,
as most recently published by the International  Chamber of Commerce (the "ICC")
at the time of issuance  (including the ICC decision published by the Commission
on Banking Technique and Practice on April 6, 1998 regarding the European single
currency (euro)) shall apply to each commercial Letter of Credit.

     (i) Letter of Credit  Fees.  The Borrower  shall pay to the  Administrative
Agent for the  account of each  Lender in  accordance  with its Pro Rata Share a
Letter of Credit  fee for each  Letter of Credit  equal to the  Applicable  Rate
times the daily maximum amount available to be drawn under such Letter of Credit
(whether  or not such  maximum  amount is then in effect  under  such  Letter of
Credit).  Such letter of credit  fees shall be computed on a quarterly  basis in
arrears.  Such  letter  of credit  fees  shall be due and  payable  on the first
Business  Day  after  the end of  each  March,  June,  September  and  December,
commencing  with the first such date to occur after the  issuance of such Letter
of Credit,  on the Letter of Credit Expiration Date and thereafter on demand. If
there is any change in the Applicable Rate during any quarter, the daily maximum
amount  of each  Letter  of  Credit  shall be  computed  and  multiplied  by the
Applicable  Rate  separately  for each  period  during  such  quarter  that such
Applicable Rate was in effect.

     (j) Fronting Fee and  Documentary  and  Processing  Charges  Payable to L/C
Issuer.  The Borrower shall pay directly to the L/C Issuer for its own account a
fronting  fee with respect to each Letter of Credit equal to 1/8 of 1% per annum
times the daily maximum amount available to be drawn under such Letter of Credit
(whether  or not such  maximum  amount is then in effect  under  such  Letter of
Credit).  Such  fronting fee shall be computed on a quarterly  basis in arrears,
and shall be  payable  on the first  Business  Day after the end of each  March,
June, September and December, commencing with the first such date to occur after
the issuance of such Letter of Credit,  on the Letter of Credit Expiration Date,
and  thereafter on demand.  In addition,  the Borrower shall pay directly to the
L/C Issuer for its own account the customary issuance,  presentation,  amendment
and other  processing  fees, and other  standard  costs and charges,  of the L/C
Issuer  relating  to  letters  of credit as from  time to time in  effect.  Such
customary  fees and standard costs and charges are due and payable on demand and
are nonrefundable.
<PAGE>

     (k)  Conflict  with  Letter  of  Credit  Application.  In the  event of any
conflict  between  the  terms  hereof  and the  terms of any  Letter  of  Credit
Application, the terms hereof shall control.

2.04     Swing Line Loans.

     (a) The Swing Line.  Subject to the terms and  conditions set forth herein,
the Swing Line Lender agrees to make loans (each such loan, a "Swing Line Loan")
to the Borrower  from time to time on any  Business Day during the  Availability
Period in an aggregate  amount not to exceed at any time  outstanding the amount
of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans,
when aggregated  with the Pro Rata Share of the Outstanding  Amount of Revolving
Loans and L/C Obligations of the Lender acting as Swing Line Lender,  may exceed
the amount of such Lender's  Commitment;  provided,  however,  that after giving
effect to any Swing Line Loan, (i) the Total  Outstandings  shall not exceed the
Aggregate  Commitments,  and  (ii)  the  aggregate  Outstanding  Amount  of  the
Revolving  Loans  of any  Lender,  plus  such  Lender's  Pro  Rata  Share of the
Outstanding Amount of all L/C Obligations,  plus such Lender's Pro Rata Share of
the  Outstanding  Amount of all Swing Line Loans shall not exceed such  Lender's
Commitment, and provided,  further, that the Borrower shall not use the proceeds
of any Swing Line Loan to refinance any outstanding  Swing Line Loan. Within the
foregoing  limits,  and subject to the other terms and  conditions  hereof,  the
Borrower may borrow under this Section  2.04,  prepay under  Section  2.05,  and
reborrow  under  this  Section  2.04.  Each Swing Line Loan shall be a Base Rate
Loan.  Immediately  upon the making of a Swing Line Loan,  each Lender  shall be
deemed to, and hereby irrevocably and  unconditionally  agrees to, purchase from
the Swing Line Lender a risk  participation in such Swing Line Loan in an amount
equal to the  product of such  Lender's  Pro Rata Share times the amount of such
Swing Line Loan.

     (b) Borrowing Procedures.  Each Swing Line Borrowing shall be made upon the
Borrower's  irrevocable  notice to the Swing Line Lender and the  Administrative
Agent, which may be given by telephone. Each such notice must be received by the
Swing Line Lender and the  Administrative  Agent not later than 1:00 p.m. on the
requested borrowing date, and shall specify (i) the amount to be borrowed, which
shall be a minimum of  $1,000,000  or a whole  multiple  of  $100,000  in excess
thereof),  and (ii) the requested borrowing date, which shall be a Business Day.
Each such telephonic notice must be confirmed  promptly by delivery to the Swing
Line Lender and the  Administrative  Agent of a written  Swing Line Loan Notice,
appropriately  completed and signed by two Responsible Officers of the Borrower.
Promptly  after  receipt by the Swing Line Lender of any  telephonic  Swing Line
Loan Notice,  the Swing Line Lender will confirm with the  Administrative  Agent
(by  telephone or in writing)  that the  Administrative  Agent has also received
such Swing Line Loan Notice  and, if not,  the Swing Line Lender will notify the
<PAGE>

Administrative  Agent (by  telephone  or in  writing) of the  contents  thereof.
Unless the Swing Line Lender has  received  notice (by  telephone or in writing)
from the Administrative  Agent (including at the request of any Lender) prior to
2:00 p.m. on the date of the proposed  Swing Line  Borrowing  (A)  directing the
Swing  Line  Lender  not to  make  such  Swing  Line  Loan  as a  result  of the
limitations  set forth in the proviso to the first sentence of Section  2.04(a),
or (B) that one or more of the applicable  conditions specified in Article IV is
not then satisfied,  then, subject to the terms and conditions hereof, the Swing
Line Lender will,  not later than 3:00 p.m. on the borrowing  date  specified in
such Swing Line Loan Notice, make the amount of its Swing Line Loan available to
the Borrower at its office by crediting the account of the Borrower on the books
of the Swing Line Lender in immediately available funds.

     (c) Refinancing of Swing Line Loans.

          (i) The  Swing  Line  Lender  at any  time in its  sole  and  absolute
     discretion may request, on behalf of the Borrower (which hereby irrevocably
     authorizes  the Swing Line Lender to so request on its  behalf),  that each
     Lender make a Base Rate  Revolving Loan in an amount equal to such Lender's
     Pro Rata Share of the amount of Swing  Line  Loans then  outstanding.  Such
     request shall be made in writing (which written  request shall be deemed to
     be a Revolving Loan Notice for purposes  hereof) and in accordance with the
     requirements  of Section 2.02,  without regard to the minimum and multiples
     specified  therein for the principal amount of Base Rate Loans, but subject
     to the unutilized  portion of the Aggregate  Commitments and the conditions
     set forth in Section 4.02. The Swing Line Lender shall furnish the Borrower
     with  a  copy  of the  applicable  Revolving  Loan  Notice  promptly  after
     delivering such notice to the Administrative  Agent. Each Lender shall make
     an  amount  equal to its Pro Rata  Share of the  amount  specified  in such
     Revolving Loan Notice available to the Administrative  Agent in immediately
     available   funds  for  the  account  of  the  Swing  Line  Lender  at  the
     Administrative Agent's Office not later than 1:00 p.m. on the day specified
     in such Revolving Loan Notice,  whereupon,  subject to Section 2.04(c)(ii),
     each Lender that so makes  funds  available  shall be deemed to have made a
     Base Rate Revolving Loan to the Borrower in such amount. The Administrative
     Agent shall remit the funds so received to the Swing Line Lender.
<PAGE>

          (ii) If for any  reason any Swing Line Loan  cannot be  refinanced  by
     such a Revolving  Borrowing  in  accordance  with Section  2.04(c)(i),  the
     request for Base Rate Revolving Loans submitted by the Swing Line Lender as
     set forth  herein  shall be deemed to be a request by the Swing Line Lender
     that each of the Lenders fund its risk  participation in the relevant Swing
     Line Loan and each  Lender's  payment to the  Administrative  Agent for the
     account of the Swing Line Lender  pursuant to Section  2.04(c)(i)  shall be
     deemed payment in respect of such participation.

          (iii) If any  Lender  fails to make  available  to the  Administrative
     Agent for the  account of the Swing Line  Lender any amount  required to be
     paid by such Lender  pursuant to the  foregoing  provisions of this Section
     2.04(c) by the time specified in Section 2.04(c)(i),  the Swing Line Lender
     shall  be  entitled  to  recover  from  such  Lender  (acting  through  the
     Administrative Agent), on demand, such amount with interest thereon for the
     period  from the date such  payment is  required  to the date on which such
     payment is  immediately  available  to the Swing Line  Lender at a rate per
     annum  equal to the  Federal  Funds  Rate  from time to time in  effect.  A
     certificate of the Swing Line Lender  submitted to any Lender  (through the
     Administrative  Agent) with respect to any amounts  owing under this clause
     (iii) shall be conclusive absent manifest error.

          (iv) Each Lender's  obligation to make Revolving  Loans or to purchase
     and fund risk  participations  in Swing Line Loans pursuant to this Section
     2.04(c)  shall be absolute and  unconditional  and shall not be affected by
     any  circumstance,  including  (A) any set-off,  counterclaim,  recoupment,
     defense or other right  which such  Lender may have  against the Swing Line
     Lender, the Borrower or any other Person for any reason whatsoever, (B) the
     occurrence or continuance of a Default, or (C) any other occurrence,  event
     or  condition,  whether or not similar to any of the  foregoing,  including
     whether or not the  conditions  set forth in  Section  4.02 shall have been
     satisfied.  No  such  funding  of  risk  participations  shall  relieve  or
     otherwise  impair the obligation of the Borrower to repay Swing Line Loans,
     together with interest as provided herein.

     (d) Repayment of Participations.

          (i) At any time  after any  Lender  has  purchased  and  funded a risk
     participation  in a Swing Line Loan, if the Swing Line Lender  receives any
     payment on account of such  Swing  Line Loan,  the Swing Line  Lender  will
     distribute to such Lender its Pro Rata Share of such payment (appropriately
     adjusted,  in the case of interest payments,  to reflect the period of time
     during which such Lender's risk participation was funded) in the same funds
     as those received by the Swing Line Lender.

          (ii) If any  payment  received  by the Swing Line Lender in respect of
     principal  or interest on any Swing Line Loan is required to be returned by
     the Swing Line Lender under any of the  circumstances  described in Section
     10.06 (including  pursuant to any settlement entered into by the Swing Line
     Lender in its  discretion),  each Lender shall pay to the Swing Line Lender
     its Pro Rata Share  thereof  on demand of the  Administrative  Agent,  plus
     interest  thereon  from the date of such  demand to the date such amount is
     returned,  at a rate  per  annum  equal  to the  Federal  Funds  Rate.  The
     Administrative  Agent will make such  demand  upon the request of the Swing
     Line Lender.

     (e) Interest for Account of Swing Line Lender.  The Swing Line Lender shall
be responsible  for invoicing the Borrower for interest on the Swing Line Loans.
Until  each  Lender  funds its Base Rate  Revolving  Loan or risk  participation
pursuant to this Section 2.04 to refinance  such  Lender's Pro Rata Share of any
Swing Line Loan,  interest in respect of such Pro Rata Share shall be solely for
the account of the Swing Line Lender.

     (f)  Payments  Directly to Swing Line Lender.  The Borrower  shall make all
payments of principal  and interest in respect of the Swing Line Loans  directly
to the Swing Line Lender.

2.05     Prepayments.

     (a) The Borrower may, upon notice to the Administrative  Agent, at any time
or from  time to time  voluntarily  prepay  Revolving  Loans in whole or in part
without  premium or penalty;  provided  that (i) such notice must be received by
the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior
to any  date of  prepayment  of  Eurodollar  Rate  Loans  and (B) on the date of
prepayment of Base Rate Revolving Loans;  (ii) any prepayment of Eurodollar Rate
Loans  shall be in a  principal  amount of  $5,000,000  or a whole  multiple  of
$1,000,000 in excess  thereof;  and (iii) any  prepayment of Base Rate Revolving
Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000
in excess thereof or, in each case, if less, the entire principal amount thereof
then  outstanding.  Each such notice  shall  specify the date and amount of such
prepayment and the Type(s) of Revolving Loans to be prepaid.  The Administrative
Agent will promptly  notify each Lender of its receipt of each such notice,  and
of the amount of such Lender's Pro Rata Share of such prepayment. If such notice
is given by the  Borrower,  the  Borrower  shall  make such  prepayment  and the
payment  amount  specified  in such notice  shall be due and payable on the date
specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied
by all accrued interest thereon,  together with any additional  amounts required
pursuant to Section 3.05. Each such prepayment shall be applied to the Revolving
Loans of the Lenders in accordance with their respective Pro Rata Shares.
<PAGE>

     (b) The Borrower  may, upon notice to the Swing Line Lender (with a copy to
the Administrative  Agent), at any time or from time to time, voluntarily prepay
Swing Line Loans in whole or in part without  premium or penalty;  provided that
(i) such notice must be received by the Swing Line Lender and the Administrative
Agent not later than 1:00 p.m. on the date of the prepayment,  and (ii) any such
prepayment shall be in a minimum principal amount of $100,000,  or, if less, the
entire principal amount thereof then outstanding. Each such notice shall specify
the date and amount of such prepayment. If such notice is given by the Borrower,
the Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.

     (c) If for any  reason  the  Total  Outstandings  at any  time  exceed  the
Aggregate  Commitments  then in effect,  the Borrower shall  immediately  prepay
Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal
to such excess;  provided,  however,  that the Borrower shall not be required to
Cash  Collateralize the L/C Obligations  pursuant to this Section 2.05(c) unless
after the  prepayment  in full of the  Revolving  Loans and Swing Line Loans the
Total Outstandings exceed the Aggregate Commitments then in effect.
<PAGE>

2.06  Termination or Reduction of Commitments.  The Borrower may, upon notice to
the Administrative Agent, terminate the Aggregate  Commitments,  or from time to
time permanently  reduce the Aggregate  Commitments;  provided that (i) any such
notice shall be received by the  Administrative  Agent not later than 11:00 a.m.
five Business Days prior to the date of termination or reduction,  (ii) any such
partial  reduction  shall be in an aggregate  amount of $10,000,000 or any whole
multiple of $1,000,000 in excess thereof, (iii) the Borrower shall not terminate
or reduce the Aggregate  Commitments  if, after giving effect thereto and to any
concurrent  prepayments  hereunder,  the Total  Outstandings  would  exceed  the
Aggregate Commitments,  and (iv) if, after giving effect to any reduction of the
Aggregate Commitments,  the Letter of Credit Sublimit or the Swing Line Sublimit
exceeds  the  amount  of the  Aggregate  Commitments,  such  Sublimit  shall  be
automatically  reduced by the amount of such excess.  The  Administrative  Agent
will promptly  notify the Lenders of any such notice of termination or reduction
of the Aggregate  Commitments.  Any reduction of the Aggregate Commitments shall
be applied to the Commitment of each Lender according to its Pro Rata Share. All
Facility  and  Utilization   Fees  accrued  until  the  effective  date  of  any
termination of the Aggregate  Commitments shall be paid on the effective date of
such termination.

2.07     Repayment of Loans.

     (a) The  Borrower  shall  repay to the  Lenders  on the  Maturity  Date the
aggregate principal amount of Revolving Loans outstanding on such date.

     (b) The  Borrower  shall repay each Swing Line Loan on the earlier to occur
of (i) the date five Business Days after such Loan is made and (ii) the Maturity
Date.

2.08     Interest.

     (a) Subject to the provisions of subsection (b) below,  (i) each Eurodollar
Rate Loan shall bear interest on the  outstanding  principal  amount thereof for
each Interest  Period at a rate per annum equal to the Eurodollar  Rate for such
Interest  Period plus the  Applicable  Rate;  (ii) each Base Rate Revolving Loan
shall  bear  interest  on the  outstanding  principal  amount  thereof  from the
applicable  borrowing  date at a rate per annum  equal to the Base Rate plus the
Applicable  Rate;  and (iii) each Swing  Line Loan  shall bear  interest  on the
outstanding  principal  amount thereof from the  applicable  borrowing date at a
rate per annum equal to the Base Rate plus the Applicable Rate.

     (b) If any amount  payable by the Borrower  under any Loan  Document is not
paid when due  (without  regard to any  applicable  grace  periods),  whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter bear
interest  at a  fluctuating  interest  rate per annum at all times  equal to the
Default Rate to the fullest extent  permitted by applicable  Laws.  Furthermore,
upon the request of the Required Lenders, while any Event of Default exists, the
Borrower  shall  pay  interest  on  the  principal  amount  of  all  outstanding
Obligations  hereunder  at a  fluctuating  interest  rate per annum at all times
equal to the Default Rate to the fullest  extent  permitted by applicable  Laws.
Accrued and unpaid interest on past due amounts (including  interest on past due
interest) shall be due and payable upon demand.
<PAGE>

     (c)  Interest  on each Loan  shall be due and  payable  in  arrears on each
Interest  Payment  Date  applicable  thereto  and at such other  times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the  terms  hereof  before  and  after  judgment,   and  before  and  after  the
commencement of any proceeding under any Debtor Relief Law.

2.09 Fees. In addition to certain fees described in  subsections  (i) and (j) of
Section 2.03:

     (a) Facility Fee. The Borrower  shall pay to the  Administrative  Agent for
the account of each Lender in accordance with its Pro Rata Share, a facility fee
("Facility  Fee") equal to the Applicable  Rate times the actual daily amount of
the Aggregate Commitments (or, if the Aggregate Commitments have terminated,  on
the  Outstanding  Amount  of all  Revolving  Loans,  Swing  Line  Loans  and L/C
Obligations),  regardless  of usage.  The Facility Fee shall accrue at all times
during the  Availability  Period (and thereafter so long as any Revolving Loans,
Swing Line Loans or L/C Obligations remain  outstanding),  including at any time
during which one or more of the  conditions  in Article IV is not met, and shall
be due and payable  quarterly in arrears on the last Business Day of each March,
June, September and December, commencing with the first such date to occur after
the Closing Date,  and on the Maturity Date (and, if  applicable,  thereafter on
demand). The Facility Fee shall be calculated quarterly in arrears, and if there
is any change in the Applicable Rate during any quarter, the actual daily amount
shall be computed and  multiplied by the  Applicable  Rate  separately  for each
period during such quarter that such Applicable Rate was in effect.

     (b) Utilization Fee. The Borrower shall pay to the Administrative Agent for
the account of each Lender in accordance  with its Pro Rata Share, a utilization
fee   ("Utilization   Fee")  equal  to  the  Applicable  Rate  times  the  Total
Outstandings  on each day that the Total  Outstandings  exceed 33% of the actual
daily amount of the Aggregate Commitments.  The Utilization Fee shall be due and
payable  quarterly  in arrears on the last  Business  Day of each  March,  June,
September and December,  commencing  with the first such date to occur after the
Closing Date, and on the Maturity Date. The  Utilization Fee shall be calculated
quarterly  in arrears and if there is any change in the  Applicable  Rate during
any quarter, the daily amount shall be computed and multiplied by the Applicable
Rate for each  period  during  which such  Applicable  Rate was in  effect.  The
Utilization  Fee shall  accrue at all times,  including at any time during which
one or more of the conditions in Article IV is not met.
<PAGE>

     (c) Other Fees.

          (i) The  Borrower  shall pay to the  Arranger  and the  Administrative
     Agent for their own  respective  accounts  fees in the  amounts  and at the
     times  specified  in the Fee Letter.  Such fees shall be fully  earned when
     paid and shall not be refundable for any reason whatsoever.

          (ii) The  Borrower  shall pay to the  Lenders  such fees as shall have
     been  separately  agreed upon in writing in the amounts and at the times so
     specified.  Such  fees  shall be fully  earned  when  paid and shall not be
     refundable for any reason whatsoever.

2.10  Computation  of Interest and Fees. All  computations  of interest for Base
Rate Loans when the Base Rate is  determined  by Bank of America's  "prime rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed.  Subject to Section 10.10,  all other  computations of fees
and  interest  shall be made on the  basis of a  360-day  year and  actual  days
elapsed (which results in more fees or interest, as applicable,  being paid than
if computed on the basis of a 365-day year).  Interest shall accrue on each Loan
for the day on which the Loan is made,  and shall not  accrue on a Loan,  or any
portion thereof, for the day on which the Loan or such portion is paid, provided
that any Loan that is repaid on the same day on which it is made shall,  subject
to Section 2.12(a), bear interest for one day.

2.11     Evidence of Debt.

     (a) The Credit  Extensions made by each Lender shall be evidenced by one or
more  accounts or records  maintained  by such Lender and by the  Administrative
Agent in the ordinary course of business.  The accounts or records maintained by
the  Administrative  Agent and each Lender shall be conclusive  absent  manifest
error of the amount of the Credit Extensions made by the Lenders to the Borrower
and the interest and payments thereon.  Any failure to so record or any error in
doing so shall not,  however,  limit or otherwise  affect the  obligation of the
Borrower  hereunder to pay any amount owing with respect to the Obligations.  In
the event of any conflict  between the accounts  and records  maintained  by any
Lender and the  accounts and records of the  Administrative  Agent in respect of
such matters, the accounts and records of the Administrative Agent shall control
in the absence of manifest  error.  Upon the request of any Lender made  through
the Administrative  Agent, the Borrower shall execute and deliver to such Lender
(through  the  Administrative  Agent) a Revolving  Loan Note and/or a Swing Line
Note, as  applicable,  which shall  evidence such Lender's  Loans in addition to
such  accounts or  records.  Each  Lender may attach  schedules  to its Note and
endorse thereon the date, Type (if applicable), amount and maturity of its Loans
and payments with respect thereto.
<PAGE>

     (b) In addition to the accounts and records  referred to in subsection (a),
each Lender and the  Administrative  Agent shall maintain in accordance with its
usual  practice  accounts or records  evidencing the purchases and sales by such
Lender of participations in Letters of Credit and Swing Line Loans. In the event
of  any  conflict   between  the  accounts   and  records   maintained   by  the
Administrative  Agent and the  accounts  and records of any Lender in respect of
such matters, the accounts and records of the Administrative Agent shall control
in the absence of manifest error.

2.12     Payments Generally.

     (a) All payments to be made by the Borrower shall be made without condition
or deduction for any  counterclaim,  defense,  recoupment  or setoff.  Except as
otherwise  expressly  provided  herein,  all payments by the Borrower  hereunder
shall be made to the  Administrative  Agent,  for the account of the  respective
Lenders to which such payment is owed, at the  Administrative  Agent's Office in
Dollars and in immediately  available funds not later than 2:00 p.m. on the date
specified  herein.  The  Administrative  Agent will promptly  distribute to each
Lender its Pro Rata Share (or other applicable share as provided herein) of such
payment in like funds as received  by wire  transfer  to such  Lender's  Lending
Office. All payments received by the Administrative  Agent after 2:00 p.m. shall
be  deemed  received  on the next  succeeding  Business  Day and any  applicable
interest or fee shall continue to accrue.

     (b) If any payment to be made by the Borrower shall come due on a day other
than a Business Day,  payment shall be made on the next following  Business Day,
and such extension of time shall be reflected in computing  interest or fees, as
the case may be.

     (c) Unless the  Borrower  or any Lender  has  notified  the  Administrative
Agent,  prior  to the  date  any  payment  is  required  to be made by it to the
Administrative  Agent hereunder,  that the Borrower or such Lender,  as the case
may be, will not make such payment, the Administrative Agent may assume that the
Borrower or such  Lender,  as the case may be, has timely made such  payment and
may (but shall not be so required  to), in reliance  thereon,  make  available a
corresponding  amount to the Person entitled thereto.  If and to the extent that
such  payment was not in fact made to the  Administrative  Agent in  immediately
available funds, then:

          (i) if the  Borrower  failed to make such  payment,  each Lender shall
     forthwith on demand repay to the  Administrative  Agent the portion of such
     assumed  payment  that was made  available  to such  Lender in  immediately
     available funds, together with interest thereon in respect of each day from
     and including the date such amount was made available by the Administrative
     Agent  to  such   Lender  to  the  date  such   amount  is  repaid  to  the
     Administrative  Agent in immediately  available  funds at the Federal Funds
     Rate from time to time in effect; and
<PAGE>

          (ii) if any Lender  failed to make such  payment,  such  Lender  shall
     forthwith on demand pay to the  Administrative  Agent the amount thereof in
     immediately  available funds, together with interest thereon for the period
     from the date such amount was made available by the Administrative Agent to
     the  Borrower to the date such amount is  recovered  by the  Administrative
     Agent (the "Compensation  Period") at a rate per annum equal to the Federal
     Funds Rate from time to time in effect.  If such Lender pays such amount to
     the  Administrative  Agent, then such amount shall constitute such Lender's
     Revolving  Loan included in the applicable  Borrowing.  If such Lender does
     not pay such  amount  forthwith  upon  the  Administrative  Agent's  demand
     therefor,  the  Administrative  Agent may make a demand  therefor  upon the
     Borrower,  and the  Borrower  shall pay such  amount to the  Administrative
     Agent, together with interest thereon for the Compensation Period at a rate
     per  annum  equal  to the rate of  interest  applicable  to the  applicable
     Borrowing.  Nothing  herein  shall be deemed to relieve any Lender from its
     obligation  to fulfill its  Commitment or to prejudice any rights which the
     Administrative  Agent or the  Borrower  may have  against  any  Lender as a
     result  of  any  default  by  such  Lender  hereunder.

A notice of the Administrative  Agent to any Lender or the Borrower with respect
to any  amount  owing  under this  subsection  (c) shall be  conclusive,  absent
manifest error.

          (d) If any Lender makes  available to the  Administrative  Agent funds
     for  any  Loan  to be made by such  Lender  as  provided  in the  foregoing
     provisions of this Article II, and such funds are not made available to the
     Borrower  by  the  Administrative  Agent  because  the  conditions  to  the
     applicable  Credit  Extension  set forth in Article IV are not satisfied or
     waived in accordance with the terms hereof, the Administrative  Agent shall
     return  such funds (in like  funds as  received  from such  Lender) to such
     Lender, without interest.

          (e) The  obligations of the Lenders  hereunder to make Revolving Loans
     and to fund  participations  in  Letters of Credit and Swing Line Loans are
     several and not joint. The failure of any Lender to make any Revolving Loan
     or to fund any such  participation on any date required hereunder shall not
     relieve any other Lender of its  corresponding  obligation to do so on such
     date,  and no Lender  shall be  responsible  for the  failure  of any other
     Lender to so make its Revolving Loan or purchase its participation.

          (f) Nothing  herein  shall be deemed to obligate  any Lender to obtain
     the funds for any Loan in any particular place or manner or to constitute a
     representation  by any Lender that it has obtained or will obtain the funds
     for any Loan in any particular place or manner.
<PAGE>

2.13 Sharing of Payments. If, other than as expressly provided elsewhere herein,
any Lender  shall  obtain on account of the  Revolving  Loans made by it, or the
participations in L/C Obligations or in Swing Line Loans held by it, any payment
(whether voluntary,  involuntary,  through the exercise of any right of set-off,
or  otherwise)  in excess of its  ratable  share  (or other  share  contemplated
hereunder) thereof,  such Lender shall immediately (a) notify the Administrative
Agent of such fact, and (b) purchase from the other Lenders such  participations
in the  Revolving  Loans  made  by them  and/or  such  subparticipations  in the
participations  in L/C Obligations or Swing Line Loans held by them, as the case
may be,  as shall be  necessary  to cause  such  purchasing  Lender to share the
excess payment in respect of such Revolving Loans or such participations, as the
case may be, pro rata with each of them; provided,  however,  that if all or any
portion of such  excess  payment is  thereafter  recovered  from the  purchasing
Lender  under any of the  circumstances  described in Section  10.06  (including
pursuant  to any  settlement  entered  into  by  the  purchasing  Lender  in its
discretion),  such  purchase  shall to that extent be  rescinded  and each other
Lender shall repay to the  purchasing  Lender the purchase  price paid therefor,
together with an amount equal to such paying Lender's  ratable share  (according
to the proportion of (i) the amount of such paying 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,  without further interest  thereon.  The Borrower
agrees that any Lender so purchasing a participation from another Lender may, to
the  fullest  extent  permitted  by Law,  exercise  all its  rights  of  payment
(including  the right of set-off,  but subject to Section 10.09) with respect to
such  participation  as fully as if such Lender were the direct  creditor of the
Borrower in the amount of such participation. The Administrative Agent will keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations  purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments. Each Lender that purchases a
participation  pursuant to this Section  shall from and after such purchase have
the  right  to  give  all  notices,  requests,  demands,  directions  and  other
communications  under  this  Agreement  with  respect  to  the  portion  of  the
Obligations  purchased to the same extent as though the  purchasing  Lender were
the original owner of the Obligations purchased.

                                  ARTICLE III.
                     TAXES, YIELD PROTECTION AND ILLEGALITY
3.01     Taxes.

     (a) Any and all  payments  by the  Borrower  to or for the  account  of the
Administrative  Agent or any Lender under any Loan  Document  shall be made free
and clear of and  without  deduction  for any and all  present or future  taxes,
duties, levies, imposts, deductions,  assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case of the
Administrative  Agent and each  Lender,  taxes  imposed  on or  measured  by its
overall net income,  and  franchise  taxes  imposed on it (in lieu of net income
taxes),  by the  jurisdiction (or any political  subdivision  thereof) under the
Laws of which the  Administrative  Agent or such Lender,  as the case may be, is
organized or maintains a lending office (all such  non-excluded  taxes,  duties,
levies, imposts, deductions, assessments, fees, withholdings or similar charges,
<PAGE>

and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall
be  required  by any Laws to deduct  any  Taxes  from or in  respect  of any sum
payable under any Loan Document to the  Administrative  Agent or any Lender, (i)
the sum  payable  shall be  increased  as  necessary  so that  after  making all
required deductions  (including deductions applicable to additional sums payable
under this Section),  each of the Administrative  Agent and such Lender receives
an amount equal to the sum it would have  received had no such  deductions  been
made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay
the full amount deducted to the relevant  taxation  authority or other authority
in accordance  with  applicable  Laws, and (iv) within 30 days after the date of
such  payment,  the Borrower  shall furnish to the  Administrative  Agent (which
shall  forward the same to such  Lender) the  original or a certified  copy of a
receipt evidencing payment thereof.

     (b) In addition,  the Borrower  agrees to pay any and all present or future
stamp,  court or  documentary  taxes and any other  excise or property  taxes or
charges or similar  levies  which  arise  from any  payment  made under any Loan
Document  or  from  the  execution,   delivery,   performance,   enforcement  or
registration  of, or otherwise  with respect to, any Loan Document  (hereinafter
referred to as "Other Taxes").

     (c) If the  Borrower  shall be required to deduct or pay any Taxes or Other
Taxes from or in  respect  of any sum  payable  under any Loan  Document  to the
Administrative  Agent  or  any  Lender,  the  Borrower  shall  also  pay  to the
Administrative Agent or to such Lender, as the case may be, at the time interest
is paid, such  additional  amount that the  Administrative  Agent or such Lender
specifies is necessary to preserve the after-tax  yield (after  factoring in all
taxes,  including  taxes  imposed  on  or  measured  by  net  income)  that  the
Administrative  Agent or such Lender would have  received if such Taxes or Other
Taxes had not been imposed.

     (d) The Borrower  agrees to  indemnify  the  Administrative  Agent and each
Lender for (i) the full amount of Taxes and Other Taxes  (including any Taxes or
Other Taxes  imposed or asserted by any  jurisdiction  on amounts  payable under
this Section)  paid by the  Administrative  Agent and such Lender,  (ii) amounts
payable under Section  3.01(c) and (iii) any liability  (including  additions to
tax,  penalties,  interest  and  expenses)  arising  therefrom  or with  respect
thereto, in each case whether or not such Taxes or Other Taxes were correctly or
legally  imposed or asserted by the  relevant  Governmental  Authority.  Payment
under this subsection (d) shall be made within 30 days after the date the Lender
or the Administrative Agent makes a demand therefor.
<PAGE>

3.02 Illegality.  If any Lender determines that any Law has made it unlawful, or
that any Governmental Authority has asserted that it is unlawful, for any Lender
or its  applicable  Lending  Office to make,  maintain or fund  Eurodollar  Rate
Loans, or to determine or charge interest rates based upon the Eurodollar  Rate,
then,   on  notice   thereof  by  such  Lender  to  the  Borrower   through  the
Administrative  Agent,  any  obligation  of such  Lender  to  make  or  continue
Eurodollar Rate Loans or to convert Base Rate Revolving Loans to Eurodollar Rate
Loans shall be suspended until such Lender notifies the Administrative Agent and
the Borrower that the circumstances  giving rise to such determination no longer
exist.  Upon receipt of such notice,  the Borrower shall,  upon demand from such
Lender  (with a copy to the  Administrative  Agent),  prepay or, if  applicable,
convert all Eurodollar  Rate Loans of such Lender to Base Rate Loans,  either on
the last day of the  Interest  Period  therefor,  if such  Lender  may  lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately,  if
such Lender may not lawfully  continue to maintain such  Eurodollar  Rate Loans.
Upon any such  prepayment  or  conversion,  the Borrower  shall also pay accrued
interest on the amount so prepaid or converted.  Each Lender agrees to designate
a  different  Lending  Office if such  designation  will avoid the need for such
notice and will not, in the good faith  judgment of such  Lender,  otherwise  be
materially disadvantageous to such Lender.

3.03 Inability to Determine  Rates. If the Required  Lenders  determine that for
any  reason  adequate  and  reasonable  means do not exist for  determining  the
Eurodollar  Rate for any  requested  Interest  Period with respect to a proposed
Eurodollar  Rate Loan, or that the  Eurodollar  Rate for any requested  Interest
Period with respect to a proposed  Eurodollar  Rate Loan does not adequately and
fairly reflect the cost to such Lenders of funding such Loan, the Administrative
Agent will  promptly so notify the  Borrower and each  Lender.  Thereafter,  the
obligation  of the  Lenders to make or maintain  Eurodollar  Rate Loans shall be
suspended until the  Administrative  Agent (upon the instruction of the Required
Lenders)  revokes  such notice.  Upon  receipt of such notice,  the Borrower may
revoke any pending request for a Borrowing of,  conversion to or continuation of
Eurodollar  Rate Loans or,  failing that,  will be deemed to have converted such
request  into a request  for a  Revolving  Borrowing  of Base Rate  Loans in the
amount specified therein.

3.04     Increased Cost and Reduced Return; Capital Adequacy; Reserves on
                  Eurodollar Rate Loans.

     (a) If any Lender determines that as a result of the introduction of or any
change  in or in the  interpretation  of any Law,  or such  Lender's  compliance
therewith, there shall be any increase in the cost to such Lender of agreeing to
make or making, funding or maintaining Eurodollar Rate Loans or (as the case may
be) issuing or participating in Letters of Credit,  or a reduction in the amount
received or receivable  by such Lender in  connection  with any of the foregoing
(excluding  for  purposes of this  subsection  (a) any such  increased  costs or
reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section
<PAGE>

3.01 shall govern),  (ii) changes in the basis of taxation of overall net income
or overall gross income by the United States or any foreign  jurisdiction or any
political  subdivision  of either thereof under the Laws of which such Lender is
organized or has its Lending Office, and (iii) reserve requirements contemplated
by Section  3.04(c)),  then from time to time upon demand of such Lender (with a
copy of such demand to the Administrative Agent), the Borrower shall pay to such
Lender such additional amounts as will compensate such Lender for such increased
cost or reduction.

     (b) If any Lender  determines  that the  introduction  of any Law regarding
capital  adequacy or any change  therein or in the  interpretation  thereof,  or
compliance by such Lender (or its Lending Office)  therewith,  has the effect of
reducing  the rate of return on the  capital of such  Lender or any  corporation
controlling such Lender as a consequence of such Lender's obligations  hereunder
(taking into  consideration  its policies  with respect to capital  adequacy and
such Lender's desired return on capital),  then from time to time upon demand of
such  Lender  (with a copy of such  demand  to the  Administrative  Agent),  the
Borrower  shall pay to such Lender such  additional  amounts as will  compensate
such Lender for such reduction.

     (c) The Borrower shall pay to each Lender,  as long as such Lender shall be
required to maintain  reserves with respect to liabilities or assets  consisting
of or including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"),  additional  interest  on the  unpaid  principal  amount  of each
Eurodollar  Rate Loan equal to the actual  costs of such  reserves  allocated to
such Loan by such Lender (as  determined  by such  Lender in good  faith,  which
determination shall be conclusive),  which shall be due and payable on each date
on which  interest is payable on such Loan,  provided  the  Borrower  shall have
received  at least  15 days'  prior  notice  (with a copy to the  Administrative
Agent) of such additional  interest from such Lender.  If a Lender fails to give
notice 15 days prior to the relevant  Interest  Payment  Date,  such  additional
interest shall be due and payable 15 days from receipt of such notice.

3.05  Funding   Losses.   Upon  demand  of  any  Lender  (with  a  copy  to  the
Administrative  Agent) from time to time, setting forth in reasonable detail the
amount  payable to such Lender,  the Borrower  shall  promptly  compensate  such
Lender for and hold such Lender harmless from any loss, cost or expense incurred
by it as a result of:

     (a) any continuation,  conversion,  payment or prepayment of any Loan other
than a Base Rate Loan on a day other  than the last day of the  Interest  Period
for  such  Loan  (whether  voluntary,   mandatory,   automatic,   by  reason  of
acceleration, or otherwise);

     (b) any  failure by the  Borrower  (for a reason  other than the failure of
such  Lender to make a Loan) to prepay,  borrow,  continue  or convert  any Loan
other  than a Base  Rate  Loan on the  date  or in the  amount  notified  by the
Borrower; or
<PAGE>

     (c) any  assignment of a Eurodollar  Rate Loan on a day other than the last
day of the  Interest  Period  therefor as a result of a request by the  Borrower
pursuant to Section 10.16;

including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit
or other borrowing in the London interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan was
in fact so funded.

3.06     Matters Applicable to all Requests for Compensation.

     (a) A  certificate  of the  Administrative  Agent  or any  Lender  claiming
compensation  under this Article III and setting forth in reasonable  detail the
additional  amount or amounts to be paid to it hereunder  shall be conclusive in
the absence of manifest error. In determining  such amount,  the  Administrative
Agent or such Lender may use any reasonable averaging and attribution methods.

     (b) Upon any Lender's making a claim for compensation under Section 3.01 or
3.04, the Borrower may replace such Lender in accordance with Section 10.16.

3.07 Survival.  All of the Borrower's  obligations  under this Article III shall
survive  termination  of the  Aggregate  Commitments  and repayment of all other
Obligations hereunder.

                                  ARTICLE IV.
                    CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01  Conditions of Initial Credit  Extension.  The obligation of each Lender to
make its initial Credit  Extension  hereunder is subject to  satisfaction of the
following conditions precedent:

     (a) The  Administrative  Agent's  receipt of the  following,  each of which
shall be  originals  or  facsimiles  (followed  promptly  by  originals)  unless
otherwise  specified,  each properly  executed by a  Responsible  Officer of the
Borrower,  each  dated the  Closing  Date (or,  in the case of  certificates  of
governmental  officials, a recent date before the Closing Date) and each in form
and substance satisfactory to the Administrative Agent and its legal counsel:

          (i) executed counterparts of this Agreement,  sufficient in number for
     distribution to the Administrative Agent, each Lender and the Borrower;

          (ii)  a  Note  executed  by the  Borrower  in  favor  of  each  Lender
     requesting a Note;
<PAGE>

          (iii) such  certificates  of resolutions  or other action,  incumbency
     certificates  and/or  other  certificates  of  Responsible  Officers of the
     Borrower as the  Administrative  Agent may require evidencing the identity,
     authority and capacity of each such Responsible  Officer  authorized to act
     as a Responsible  Officer in connection  with this  Agreement and the other
     Loan Documents to which the Borrower is a party;

          (iv) such documents and certifications as the Administrative Agent may
     reasonably  require to  evidence  that the  Borrower is duly  organized  or
     formed,  and that the Borrower and each  Material  Insurance  Subsidiary is
     validly existing and in good standing in its state of incorporation  and/or
     domicile;

          (v) a favorable  opinion of counsel to the Borrower,  addressed to the
     Administrative Agent and each Lender, as to matters concerning the Borrower
     and the Loan Documents as the Required Lenders may reasonably request;

          (vi) a certificate of a Responsible Officer of the Borrower either (A)
     attaching  copies of all  consents,  licenses  and  approvals  required  in
     connection with the execution, delivery and performance by the Borrower and
     the validity  against the  Borrower of the Loan  Documents to which it is a
     party, and such consents, licenses and approvals shall be in full force and
     effect, or (B) stating that no such consents,  licenses or approvals are so
     required;

          (vii) a certificate  signed by a  Responsible  Officer of the Borrower
     certifying  (A) that the conditions  specified in Sections  4.02(a) and (b)
     have been  satisfied,  and (B) that there has been no event or circumstance
     since the date of the Audited Financial Statements that has had or could be
     reasonably  expected to have,  either  individually or in the aggregate,  a
     Material Adverse Effect; and (C) the current Debt Ratings;

          (viii)  evidence  that  the  Existing  Credit  Agreement  has  been or
     concurrently with the Closing Date is being terminated and that obligations
     under the Existing  Credit  Agreement  have been or  concurrently  with the
     Closing Date are being satisfied; and

          (ix) such  other  assurances,  certificates,  documents,  consents  or
     opinions as the Administrative Agent, the L/C Issuer, the Swing Line Lender
     or the Required Lenders reasonably may require.

     (b) Any fees  required to be paid on or before the Closing  Date shall have
been paid.

     (c) Unless waived by the Administrative Agent, the Borrower shall have paid
all Attorney Costs of the  Administrative  Agent to the extent invoiced prior to
or on the Closing Date, plus such additional  amounts of Attorney Costs as shall
constitute its reasonable  estimate of Attorney Costs incurred or to be incurred
by it through the closing  proceedings  (provided  that such estimate  shall not
thereafter  preclude a final  settling of accounts  between the Borrower and the
Administrative Agent).
<PAGE>

     (d) The Closing Date shall have occurred on or before September 30, 2002.

4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor
any Request for Credit Extension (other than a Revolving Loan Notice  requesting
only a conversion  of Revolving  Loans to the other Type, or a  continuation  of
Eurodollar Rate Loans) is subject to the following conditions precedent:

     (a) The representations and warranties of the Borrower contained in Article
V or any other Loan Document,  or which are contained in any document  furnished
at any time under or in  connection  herewith  or  therewith,  shall be true and
correct  on and as of the date of such  Credit  Extension,  except to the extent
that such representations and warranties  specifically refer to an earlier date,
in which case they shall be true and correct as of such earlier date, and except
that for purposes of this  Section  4.02,  the  representations  and  warranties
contained  in  subsections  (a),  (b) and (c) of Section 5.05 shall be deemed to
refer to the most recent statements  furnished  pursuant to clauses (a), (b) and
(c), respectively, of Section 6.01.

     (b) No Default  shall  exist,  or would  result from such  proposed  Credit
Extension.

     (c) The  Administrative  Agent and,  if  applicable,  the L/C Issuer or the
Swing  Line  Lender  shall  have  received a Request  for  Credit  Extension  in
accordance with the requirements hereof.

Each Request for Credit Extension (other than a Revolving Loan Notice requesting
only a conversion of Revolving Loans to the other Type or a continuation of
Eurodollar Rate Loans) submitted by the Borrower shall be deemed to be a
representation and warranty that the conditions specified in Sections 4.02(a)
and (b) have been satisfied on and as of the date of the applicable Credit
Extension.

                                   ARTICLE V.
                         REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and the Lenders
that:

5.01 Existence,  Qualification and Power; Compliance with Laws. The Borrower and
each of its Material Subsidiaries (a) is a corporation duly organized or formed,
validly  existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and all
requisite governmental licenses,  authorizations,  consents and approvals to (i)
own its assets and carry on its business and (ii)  execute,  deliver and perform
its  obligations  under the Loan  Documents to which it is a party,  (c) is duly
qualified  and is  licensed  and  in  good  standing  under  the  Laws  of  each
jurisdiction  where its  ownership,  lease or  operation  of  properties  or the
conduct of its business  requires such  qualification or license,  and (d) is in
compliance with all Laws; except in each case referred to in clause (b)(i),  (c)
or (d), to the extent that failure to do so could not  reasonably be expected to
have a Material Adverse Effect.
<PAGE>

5.02 Authorization; No Contravention. The execution, delivery and performance by
the  Borrower  of each  Loan  Document  to which it is  party,  have  been  duly
authorized by all necessary corporate or other organizational action, and do not
and will not (a)  contravene  the  terms of any of the  Borrower's  Organization
Documents; (b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, (i) any Contractual Obligation to which the Borrower
is a party or (ii) any  order,  injunction,  writ or decree of any  Governmental
Authority  or any  arbitral  award to which  the  Borrower  or its  property  is
subject; or (c) violate any Law.

5.03  Governmental   Authorization;   Other  Consents.  No  approval,   consent,
exemption,  authorization, or other action by, or notice to, or filing with, any
Governmental  Authority  or  any  other  Person  is  necessary  or  required  in
connection  with the  execution,  delivery  or  performance  by, or  enforcement
against, the Borrower of this Agreement or any other Loan Document.

5.04 Binding  Effect.  This  Agreement has been, and each other Loan Document to
which the Borrower is a party,  when delivered  hereunder,  will have been, duly
executed and delivered by the Borrower.  This  Agreement  constitutes,  and each
other Loan  Document  to which the  Borrower is a party when so  delivered  will
constitute,  a legal, valid and binding obligation of the Borrower,  enforceable
against the Borrower in accordance with its terms,  except as enforceability may
be limited by Debtor Relief Laws.

5.05     Financial Statements; No Material Adverse Effect.

     (a) The Audited  Financial  Statements (i) were prepared in accordance with
GAAP  consistently  applied  throughout  the period covered  thereby,  except as
otherwise  expressly noted therein;  (ii) fairly present the financial condition
of the Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance  with GAAP  consistently
applied  throughout the period covered  thereby,  except as otherwise  expressly
noted therein;  and (iii) show all material  indebtedness and other liabilities,
direct  or  contingent,  of the  Borrower  and its  Subsidiaries  as of the date
thereof, including liabilities for taxes, material commitments and Indebtedness.

     (b) The  unaudited  consolidated  balance  sheet  of the  Borrower  and its
Subsidiaries  dated June 30, 2002,  and the related  consolidated  statements of
income or operations, shareholders' equity and cash flows for the fiscal quarter
ended on that  date (i) were  prepared  in  accordance  with  GAAP  consistently
applied  throughout the period covered  thereby,  except as otherwise  expressly
noted therein,  and (ii) fairly present the financial  condition of the Borrower
and its  Subsidiaries as of the date thereof and their results of operations for
the period covered thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal  year-end  audit  adjustments.  Schedule 5.05
sets forth all material indebtedness and other material  liabilities,  direct or
contingent,  of the Borrower and its consolidated  Subsidiaries not reflected on
the June 30, 2002  financial  statements  referred to above,  incurred after the
date of such  financial  statements  but prior to the  Closing  Date,  including
liabilities for material commitments and Indebtedness.
<PAGE>

     (c) The  December  31, 2001 Annual  Statement  of each  Material  Insurance
Subsidiary and the June 30, 2002 Quarterly Statements of each Material Insurance
Subsidiary (i) were prepared in accordance with SAP consistently applied through
the periods covered thereby,  except as otherwise expressly noted therein;  (ii)
fairly present the financial condition of each Material Insurance  Subsidiary as
of the date  thereof  and their  results of  operations  for the period  covered
thereby,  subject, in the case of such Quarterly  Statements for clauses (i) and
(ii), to the absence of footnotes  and normal  year-end  adjustments;  and (iii)
show all material indebtedness and other liabilities,  direct or contingent,  of
each Material Insurance Subsidiary as of the date of such financial  statements,
including liabilities for taxes, material commitments and Indebtedness.

     (d) Since the date of the Audited Financial  Statements,  there has been no
event or circumstance,  either individually or in the aggregate, that has had or
could reasonably be expected to have a Material Adverse Effect.

5.06  Litigation.  Except as set forth in Schedule  5.06,  there are no actions,
suits,  proceedings,  claims or  disputes  pending or, to the  knowledge  of the
Borrower,  threatened or  contemplated,  at Law, in equity,  in  arbitration  or
before any  Governmental  Authority,  by or against  the  Borrower or any of its
Subsidiaries or against any of their respective  properties or revenues that (a)
purport to affect or pertain to this  Agreement or any other Loan  Document,  or
any of the transactions  contemplated  hereby, or (b) either  individually or in
the aggregate,  if determined adversely,  could reasonably be expected to have a
Material Adverse Effect.

5.07 No Default.  Neither the Borrower nor any Subsidiary is in default under or
with respect to any Contractual Obligation that could, either individually or in
the  aggregate,  reasonably be expected to have a Material  Adverse  Effect.  No
Default has occurred and is continuing or would result from the  consummation of
the transactions contemplated by this Agreement or any other Loan Document.

5.08 Ownership of Property;  Liens. Each of the Borrower and each Subsidiary has
good record and indefeasible title to, or valid leasehold interests in, all real
property  necessary or used in the ordinary conduct of its business,  except for
such defects in title as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.  The property of the Borrower and
its Material Subsidiaries is subject to no Liens, other than Permitted Liens.

5.09 Environmental Compliance. To the Borrower's knowledge, the Borrower and its
Subsidiaries  have  complied  with  all   Environmental   Laws  except  for  any
Environmental Liability as a result of any non-compliance  therewith which could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
<PAGE>

5.10 Insurance. The properties of the Borrower and its Material Subsidiaries are
insured with financially sound and reputable  insurance companies not Affiliates
of the Borrower,  in such amounts, with such deductibles and covering such risks
as are  customarily  carried by  companies  of similar  size  engaged in similar
businesses and owning similar properties in localities where the Borrower or the
applicable Subsidiary operates.

5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal,  state and
other material tax returns and reports  required to be filed,  and have paid all
Federal,   state  and  other  material  taxes,   assessments,   fees  and  other
governmental charges levied or imposed upon them or their properties,  income or
assets otherwise due and payable, except those which are being contested in good
faith by  appropriate  proceedings  diligently  conducted and for which adequate
reserves have been provided in accordance with GAAP or SAP, as applicable. There
is no proposed tax assessment against the Borrower or any Subsidiary that would,
if made, have a Material Adverse Effect.

5.12     ERISA Compliance.

     (a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify  under  Section  401(a) of the Code has received a favorable
determination  letter  from  the IRS or an  application  for  such a  letter  is
currently  being  processed  by the IRS with  respect  thereto  and, to the best
knowledge of the Borrower,  nothing has occurred which would  prevent,  or cause
the loss of, such qualification. The Borrower and each ERISA Affiliate have made
all required  contributions to each Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any  amortization  period
pursuant to Section 412 of the Code has been made with respect to any Plan.

     (b)  There  are no  pending  or,  to the best  knowledge  of the  Borrower,
threatened claims, actions or Lawsuits, or action by any Governmental Authority,
with respect to any Plan that could be reasonably be expected to have a Material
Adverse  Effect.  There has been no prohibited  transaction  or violation of the
fiduciary  responsibility  rules with  respect to any Plan that has  resulted or
could reasonably be expected to result in a Material Adverse Effect.

     (c) (i) No ERISA  Event has  occurred or is  reasonably  expected to occur;
(ii) no Pension Plan has any Unfunded  Pension  Liability  which has resulted or
which could  reasonably  be expected to have a Material  Adverse  Effect;  (iii)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not  delinquent  under Section 4007 of ERISA) which
has resulted or which could  reasonably  be expected to have a Material  Adverse
<PAGE>

Effect;  (iv) neither the  Borrower nor any ERISA  Affiliate  has  incurred,  or
reasonably  expects to incur,  any liability  (and no event has occurred  which,
with the giving of notice  under  Section  4219 of ERISA,  would  result in such
liability)  under Sections 4201 or 4243 of ERISA with respect to a Multiemployer
Plan which has resulted or which could reasonably be expected to have a Material
Adverse Effect; and (v) neither the Borrower nor any ERISA Affiliate has engaged
in a  transaction  that could be subject  to  Sections  4069 or 4212(c) of ERISA
which has  resulted  or which  could  reasonably  be expected to have a Material
Adverse Effect.

5.13  Subsidiaries.  As of the  Closing  Date,  the  Borrower  has  no  Material
Subsidiaries  other than SAFECO Insurance Company of America,  General Insurance
Company of America,  American  States  Insurance  Company of  Indiana,  American
Economy Insurance Company of Indiana and SAFECO Life Insurance Company.

5.14 Margin Regulations;  Investment Company Act; Public Utility Holding Company
Act.

     (a) The Borrower is not engaged and will not engage,  principally or as one
of its important  activities,  in the business of purchasing or carrying  margin
stock  (within  the meaning of  Regulation  U issued by the FRB),  or  extending
credit for the purpose of  purchasing or carrying  margin  stock.  Following the
application  of the proceeds of each  Borrowing or drawing  under each Letter of
Credit,  not more than 25% of the value of the assets  (either  of the  Borrower
only or of the Borrower and its Subsidiaries on a consolidated basis) subject to
the  provisions  of Section 7.01 or Section  7.05 or subject to any  restriction
contained in any agreement or instrument  between the Borrower and any Lender or
any  Affiliate of any Lender  relating to  Indebtedness  and within the scope of
Section 8.01(e) will be margin stock.

     (b) None of the  Borrower,  any Person  Controlling  the  Borrower,  or any
Subsidiary (i) is a "holding  company," or 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,  or (ii) is or is  required  to be  registered  as an  "investment
company" under the Investment Company Act of 1940.

5.15 Disclosure.  The Borrower has disclosed to the Administrative Agent and the
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its  Subsidiaries  is subject,  and all other  matters known to it,
that,  individually or in the aggregate,  could reasonably be expected to result
in a Material Adverse Effect.  No report,  financial  statement,  certificate or
other  information  furnished  (whether in writing or orally) by or on behalf of
<PAGE>

the Borrower to the  Administrative  Agent or any Lender in connection  with the
transactions  contemplated  hereby  and the  negotiation  of this  Agreement  or
delivered  hereunder  (as  modified  or  supplemented  by other  information  so
furnished)  contains  any  material  misstatement  of fact or omits to state any
material  fact  necessary to make the  statements  therein,  in the light of the
circumstances  under which they were made, not  misleading;  provided that, with
respect to projected  financial  information,  the Borrower represents only that
such information was prepared in good faith based upon  assumptions  believed to
be reasonable at the time.

5.16 Compliance with Laws. Each of the Borrower and each Material  Subsidiary is
in compliance in all material respects with the requirements of all Laws and all
orders,  writs,  injunctions and decrees  applicable to it or to its properties,
except in such instances in which (a) such  requirement  of Law or order,  writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

5.17 Solvent.  The Borrower is, and the Borrower and its  Subsidiaries  are on a
consolidated basis, Solvent.

5.18  Licenses.  No License,  the loss of which could  reasonably be expected to
have a Material Adverse Effect, is the subject of a proceeding for suspension or
revocation. To the Borrower's knowledge,  there is no sustainable basis for such
suspension  or  revocation,  and no  such  suspension  or  revocation  has  been
threatened by any Governmental Authority.

5.19  Employee  Matters.  As of the Closing  Date,  there are no  strikes,  work
stoppages,  election or decertification  petitions or proceedings,  unfair labor
charges,  equal  employment  opportunity  proceedings,  wage payment or material
unemployment   compensation   proceedings,    material   workers'   compensation
proceedings or other material  labor/employee  related controversies pending or,
to the knowledge of the Borrower,  threatened between the Borrower or any of its
Subsidiaries  and  any  of  their  respective  employees,  other  than  employee
grievances  which could not in the  aggregate  reasonably  be expected to have a
Material Adverse Effect.

5.20  Business.   The  Borrower  is  presently   engaged   directly  or  through
Subsidiaries in the following business: property and casualty insurance, surety,
life insurance and asset management.

                                  ARTICLE VI.
                              AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, the Borrower shall, and shall (except in the case of
the covenants set forth in Sections 6.01, 6.02, 6.03 and 6.11) cause each
Material Subsidiary to:

6.01 Financial  Statements.  Deliver to the Administrative Agent with sufficient
copies for each Lender,  in form and detail  satisfactory to the  Administrative
Agent and the Required Lenders:
<PAGE>

     (a) as soon as available,  but in any event within 90 days after the end of
each fiscal year of the Borrower,  a consolidated  balance sheet of the Borrower
and its  Subsidiaries  as at the  end of  such  fiscal  year,  and  the  related
consolidated  statements of income or operations,  shareholders' equity and cash
flows for such fiscal year,  setting forth in each case in comparative  form the
figures for the previous  fiscal year, all in reasonable  detail and prepared in
accordance  with GAAP,  audited  and  accompanied  by a report and opinion of an
independent  certified  public  accountant  of  nationally  recognized  standing
reasonably acceptable to the Required Lenders, which report and opinion shall be
prepared in accordance with generally  accepted auditing standards and shall not
be subject to any "going  concern" or like  qualification  or  exception  or any
qualification or exception as to the scope of such audit;

     (b) as soon as available,  but in any event within 45 days after the end of
each of the first three fiscal  quarters of each fiscal year of the Borrower,  a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such  fiscal  quarter,  and the  related  consolidated  statements  of income or
operations,  shareholders' equity and cash flows for such fiscal quarter and for
the portion of the Borrower's fiscal year then ended, setting forth in each case
in  comparative  form (other than with respect to the balance sheet) the figures
for the  corresponding  fiscal  quarter  of the  previous  fiscal  year  and the
corresponding  portion of the previous fiscal year, all in reasonable detail and
certified  by a  Responsible  Officer of the Borrower as fairly  presenting  the
financial condition, results of operations,  shareholders' equity and cash flows
of the Borrower and its  Subsidiaries in accordance  with GAAP,  subject only to
normal year-end audit adjustments and the absence of footnotes;

     (c) upon the  earlier of (i) 15 days after the  regulatory  filing  date or
(ii) 75 days  after the close of each  fiscal  year of each  Material  Insurance
Subsidiary,  copies of the unaudited Annual Statement of such Material Insurance
Subsidiary,  certified by the secretary or treasurer of such Material  Insurance
Subsidiary,   all  such  statements  to  be  prepared  in  accordance  with  SAP
consistently  applied  throughout the periods reflected therein and, if required
by the applicable Governmental  Authority,  audited and certified by independent
certified public accountants of recognized national standing; and

     (d) upon the  earlier of (i) 10 days after the  regulatory  filing  date or
(ii) 60 days after the close of each of the first  three (3) fiscal  quarters of
each fiscal year of each Material Insurance Subsidiary,  copies of the Quarterly
Statement  of each of the  Material  Insurance  Subsidiaries,  certified  by the
secretary  or  treasurer  of  such  Material  Insurance  Subsidiary,   all  such
statements to be prepared in accordance  with SAP  consistently  applied through
the period reflected herein.

As to any information contained in materials furnished pursuant to Section
6.02(d), the Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the Borrower to furnish the information and
materials described in subsections (a) and (b) above at the times specified
therein.
<PAGE>

6.02 Certificates;  Other Information.  Deliver to the Administrative  Agent, in
form and  detail  satisfactory  to the  Administrative  Agent  and the  Required
Lenders:

     (a) concurrently with the delivery of the financial  statements referred to
in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a
Responsible Officer of the Borrower;

     (b) promptly after any request by the  Administrative  Agent or any Lender,
copies of any detailed audit reports of the Borrower by independent  accountants
in connection with the accounts or books of the Borrower or any  Subsidiary,  or
any audit of any of them;

     (c)  promptly  after  the same are  available,  copies  of each (i)  annual
report, proxy or financial statement or, at the Administrative  Agent's request,
copies of each other report or  communication  sent to the  stockholders  of the
Borrower,  and copies of all  annual,  regular,  periodic  and  special  reports
(including Forms 10K, 10Q and 8K) and registration statements which the Borrower
may file or be  required  to file with the SEC under  Section 13 or 15(d) of the
Securities  Exchange Act of 1934, and not otherwise  required to be delivered to
the  Administrative  Agent pursuant hereto other than such financial  statements
relating to SAFECO  mutual  funds and (ii)  without  duplication,  copies of any
certifications  or affidavits  required by the SEC in connection with the filing
of Forms 10K, 10Q and 8K; and

     (d) promptly, such additional information regarding the business, financial
or corporate  affairs of the Borrower or any Subsidiary,  or compliance with the
terms of the Loan Documents,  as the Administrative Agent or any Lender may from
time to time reasonably request.

Documents required to be delivered pursuant to Section 6.01(a), (b), (c) or (d)
or Section 6.02(c) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower's
website on the Internet at the website address listed on Schedule 10.02; or (ii)
on which such documents are posted on the Borrower's behalf on
IntraLinks/IntraAgency or another relevant website, if any, to which each Lender
and the Administrative Agent have access (whether a commercial, third-party
website or whether sponsored by the Administrative Agent); provided that: (i)
the Borrower shall deliver paper copies of such documents to the Administrative
Agent for any Lender that requests the Borrower to deliver such paper copies
until a written request to cease delivering paper copies is given by the
Administrative Agent or such Lender and (ii) the Borrower shall notify (which
may be by facsimile or electronic mail) the Administrative Agent and each Lender
of the posting of any such documents and provide to the Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance the Borrower shall
be required to provide paper copies of the Compliance Certificates required by
Section 6.02(a) to the Administrative Agent and each of the Lenders. Except for
such Compliance Certificates, the Administrative Agent shall have no obligation
to request the delivery or to maintain copies of the documents referred to
above, and in any event shall have no responsibility to monitor compliance by
the Borrower with any such request for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such
documents.
<PAGE>

6.03 Notices. Promptly notify the Administrative Agent:

     (a) of the occurrence of any Default;

     (b) of any matter  that has  resulted  or could  reasonably  be expected to
result in a Material Adverse Effect, including (i) breach or non-performance of,
or  any  default  under,  a  Contractual  Obligation  of  the  Borrower  or  any
Subsidiary;  (ii)  any  dispute,   litigation,   investigation,   proceeding  or
suspension   between  the  Borrower  or  any  Subsidiary  and  any  Governmental
Authority;  or (iii) the  commencement  of, or any material  development in, any
litigation or proceeding  affecting  the Borrower or any  Subsidiary,  including
pursuant to any applicable Environmental Laws;

     (c) of the occurrence of any ERISA Event;

     (d) of an increase in Unfunded Pension Liabilities of any Pension Plan that
would  cause the  Unfunded  Pension  Liabilities  of all  Pension  Plans to have
increased by more than $50,000,000 in the aggregate after the Closing Date;

     (e) of any material  change in accounting  policies or financial  reporting
practices by the Borrower or any Subsidiary;

     (f) of any announcement by Moody's or S&P of any change in a Debt Rating;

     (g) of any  announcement  by A.M.  Best of any  change in the rating of any
Material Insurance Subsidiary;

     (h) the  receipt  of any  notice  from any  Governmental  Authority  of the
expiration  without renewal,  revocation or suspension of, or the institution of
any proceedings to revoke or suspend,  any License now or thereafter held by any
Insurance  Subsidiary  which  is  required  to  conduct  insurance  business  in
compliance  with  all  applicable  Laws  and  regulations  and  the  expiration,
revocation  or  suspension  of which  could  reasonably  be  expected  to have a
Material Adverse Effect;

     (i) the  receipt  of any  notice  from any  Governmental  Authority  of the
institution  of  any  disciplinary  proceedings  against  or in  respect  of any
Insurance Subsidiary,  or the issuance of any order, the taking of any action or
any request for an extraordinary  audit for cause by any Governmental  Authority
which, if adversely determined,  could reasonably be expected to have a Material
Adverse Effect; or

     (j) any  judicial  or  administrative  order  limiting or  controlling  the
insurance  business of any Insurance  Subsidiary (and not the insurance industry
generally)  which has been  issued or adopted  and which has had, or which could
reasonably be expected to have, a Material Adverse Effect.
<PAGE>

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto. Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

6.04 Payment of Obligations.  Pay and discharge as the same shall become due and
payable,  all  its  material  obligations  and  liabilities,  including  (a) all
material tax liabilities, assessments and governmental charges or levies upon it
or its properties or assets,  unless the same are being  contested in good faith
by  appropriate  proceedings  diligently  conducted  and  adequate  reserves  in
accordance with GAAP or SAP, as applicable, are being maintained by the Borrower
or such Material  Subsidiary;  (b) all lawful claims which, if unpaid,  would by
Law become a Lien upon its property, unless the same are being contested in good
faith by appropriate  proceedings  diligently conducted and adequate reserves in
accordance with GAAP or SAP, as applicable, are being maintained by the Borrower
or such Material Subsidiary; and (c) all material Indebtedness,  as and when due
and  payable,  but  subject to any  subordination  provisions  contained  in any
instrument or agreement evidencing such Indebtedness.

6.05  Preservation of Existence,  Etc. (a) Preserve,  renew and maintain in full
force and effect its legal  existence  and good  standing  under the Laws of the
jurisdiction of its  organization  except in a transaction  permitted by Section
7.04 or 7.05; (b) take all reasonable action to maintain all rights, privileges,
permits, licenses and franchises necessary or desirable in the normal conduct of
its business, except to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (c) preserve or renew all of its
registered   patents,   trademarks,   trade   names  and  service   marks,   the
non-preservation  of which  could  reasonably  be  expected  to have a  Material
Adverse Effect.

6.06  Maintenance of Properties.  (a) Maintain,  preserve and protect all of its
material  properties and equipment necessary in the operation of its business in
good working order and condition,  ordinary wear and tear excepted and except in
connection with  transactions  permitted by Sections 7.04 and 7.05; and (b) make
all necessary repairs thereto and renewals and replacements thereof except where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect.

6.07  Maintenance of Insurance.  Maintain with  financially  sound and reputable
insurance  companies not  Affiliates of the Borrower,  insurance with respect to
its  properties  and business  against  loss or damage of the kinds  customarily
insured  against by Persons  engaged  in the same or similar  business,  of such
types and in such amounts as are customarily carried under similar circumstances
by such other Persons.

6.08 Compliance with Laws. Comply in all material respects with the requirements
of all Laws and all orders,  writs,  injunctions and decrees applicable to it or
to its  business  or  property,  except  in such  instances  in  which  (a) such
requirement of Law or order,  write,  injunction or decree is being contested in
good faith by appropriate  proceedings diligently conducted;  or (b) the failure
to comply  therewith could not reasonably be expected to have a Material Adverse
Effect.
<PAGE>

6.09 Books and  Records.  (a) Maintain  proper  books of record and account,  in
which  full,  true and  correct  entries  in  conformity  with  GAAP or SAP,  as
applicable, consistently applied shall be made of all financial transactions and
matters  involving  the assets and  business of the  Borrower  or such  Material
Subsidiary,  as the case may be;  and (b)  maintain  such  books of  record  and
account  in  material  conformity  with  all  applicable   requirements  of  any
Governmental Authority having regulatory  jurisdiction over the Borrower or such
Material Subsidiary, as the case may be.

6.10 Inspection Rights.  Permit  representatives and independent  contractors of
the  Administrative  Agent  and each  Lender  to visit  and  inspect  any of its
properties, to examine its corporate,  financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs,  finances and
accounts with its directors,  officers, and independent public accountants,  all
at such  reasonable  times during normal  business  hours and as often as may be
reasonably  desired,  upon reasonable advance notice to the Borrower;  provided,
however,  that when an Event of Default exists the  Administrative  Agent or any
Lender (or any of their respective  representatives or independent  contractors)
may do any of the  foregoing  at the expense of the  Borrower at any time during
normal business hours upon no less than two days advance notice.

6.11 Use of  Proceeds.  Use the  proceeds of the Credit  Extensions  for general
corporate purposes not in contravention of any Law or of any Loan Document.

                                  ARTICLE VII.
                               NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding:

7.01 Liens.  The  Borrower  shall not,  nor shall it permit any  Subsidiary  to,
directly or indirectly,  create,  incur, assume or suffer to exist any Lien upon
any of its  property,  assets  or  revenues,  whether  now  owned  or  hereafter
acquired, other than the following ("Permitted Liens"):

     (a) Liens  existing on property of the  Borrower or any  Subsidiary  (other
than SAFECO Properties,  Inc.) on the Closing Date securing Indebtedness with an
aggregate principal amount not to exceed $10,000,000 outstanding on such date;

     (b) any Lien created under any Loan Document;

     (c) Liens for taxes, fees,  assessments or other governmental charges which
are not  delinquent or remain  payable  without  penalty,  or to the extent that
non-payment  thereof is permitted by Section 6.04;  provided,  that no notice of
Lien has been filed or recorded;
<PAGE>

     (d)  carriers',  warehousemen's,   mechanics',  landlords',  materialmen's,
repairmen's  or other similar  Liens arising in the ordinary  course of business
which are not  delinquent or remain payable  without  penalty or which are being
contested in good faith and by appropriate  proceedings,  which proceedings have
the effect of preventing the forfeiture or sale of the property subject thereto;

     (e) Liens (other than any Lien imposed by ERISA)  consisting  of pledges or
deposits required in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other social security legislation;

     (f) Liens on the  property of the Borrower or any  Subsidiary  securing (i)
the non-delinquent performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, (ii) contingent obligations on surety and
appeal bonds, and (iii) other  non-delinquent  obligations of a like nature;  in
each case, incurred in the ordinary course of business,  provided all such Liens
in the aggregate could not (even if enforced)  reasonably be expected to cause a
Material Adverse Effect.

     (g) easements,  rights-of-way,  restrictions and other similar encumbrances
incurred in the ordinary  course of business  which,  in the aggregate,  are not
substantial in amount,  and which do not in any case materially detract from the
value of the property  subject thereto or interfere with the ordinary conduct of
the businesses of the Borrower and its Subsidiaries;

     (h) Liens arising solely by virtue of any statutory or common Law provision
relating to banker's liens,  rights of set-off or similar rights and remedies as
to  deposit  accounts  or other  funds  maintained  with a  creditor  depository
institution;  provided,  that (i) such deposit  account is not a dedicated  cash
collateral  account and is not  subject to  restrictions  against  access by the
Borrower in excess of those set forth by regulations promulgated by the FRB, and
(ii) such deposit  account is not intended by the Borrower or any  Subsidiary to
provide collateral to the depository institution;

     (i) Liens consisting of deposits made by any Insurance  Subsidiary with the
insurance  regulatory  authority  in  its  jurisdiction  of  domicile  or  other
statutory  Liens or Liens or claims imposed or required by applicable  insurance
Law or regulation against the assets of any Insurance  Subsidiary,  in each case
in favor of all  policyholders of such Insurance  Subsidiary and in the ordinary
course of such Insurance Subsidiary's business;

     (j)  Liens  securing  obligations  of  SAFECO  Properties,  Inc.  and their
Subsidiaries incurred in the ordinary course of business and attaching solely to
the property of such Persons;

     (k)  Liens  securing  obligations  owed  to the  Borrower  or  owed  by any
Subsidiary of the Borrower to any of its other Subsidiaries; and
<PAGE>

     (l) Liens securing other  Obligations of the Borrower and its  Subsidiaries
not to exceed $100,000,000 in the aggregate at any one time outstanding.

7.02  Indebtedness.  The Borrower  shall not, nor shall it permit any Subsidiary
to,  directly  or  indirectly,  create,  incur,  assume  or  suffer to exist any
Indebtedness, if an Event of Default exists or would result therefrom.

7.03 Fundamental Changes. The Borrower shall not, directly or indirectly, merge,
dissolve,  liquidate,  consolidate  with or into another  Person,  or Dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets  (whether now owned or  hereafter  acquired) to or in favor of
any Person,  except that, the Borrower may merge with an entity  organized under
the Laws of the United  States so long as (a) no Default  exists or would result
therefrom,  (b) the Borrower is the surviving  entity in such merger and (c) all
applicable  regulatory  requirements have been satisfied.  No Material Insurance
Subsidiary  shall  change its  country of  domicile  without  the prior  written
consent  of the  Required  Lenders,  which  consent  shall  not be  unreasonably
withheld.

7.04  Dispositions.  The Borrower  shall not, nor shall it permit any Subsidiary
to, directly or indirectly,  make any Disposition or enter into any agreement to
make any Disposition, except:

     (a)  Dispositions  of used,  worn-out or surplus  equipment in the ordinary
course of business and other  Dispositions  of  immaterial  property  (including
charitable donations) made in the ordinary course of business;

     (b)  Dispositions  of  equipment  to the  extent  that  such  equipment  is
exchanged  for  credit  against  the  purchase  price  of  similar   replacement
equipment,  or the proceeds of such sale are reasonably  promptly applied to the
purchase price of such replacement equipment;

     (c) Dispositions of investments by any Insurance Subsidiary;

     (d)   Dispositions  of  property  by  SAFECO   Properties,   Inc.  and  its
Subsidiaries  in the  ordinary  course of business so long as such  proceeds are
promptly used by such Persons to purchase other  property or repay  Indebtedness
of such Persons;

     (e)  Dispositions  of property to the Borrower or any of its  Subsidiaries;
and

     (f) Dispositions not otherwise  permitted hereunder which are made for fair
market  value;  provided,  that (i) at the time of any  disposition,  no Default
shall exist or shall result from such  Disposition  and (ii) the aggregate value
of all assets  Disposed of pursuant to this  subsection  7.04(f) by the Borrower
and its  Subsidiaries,  together,  shall not exceed 25% of Shareholders'  Equity
(determined as of the last day of the preceding fiscal year) in any fiscal year.
<PAGE>

7.05 Change in Nature of Business.  The Borrower shall not, and shall not permit
any  Subsidiary  to,  engage  in any  material  line of  business  substantially
different  from  those  lines of  business  conducted  by the  Borrower  and its
Subsidiaries  on the  date  hereof  or any  business  substantially  related  or
incidental thereto.

7.06 Transactions with Affiliates.  The Borrower shall not, and shall not permit
any Subsidiary to, enter into any  transaction of any kind with any Affiliate of
the Borrower,  whether or not in the ordinary course of business,  other than on
fair and  reasonable  terms  substantially  as favorable to the Borrower or such
Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time
in a comparable arm's length transaction with a Person other than an Affiliate.

7.07  Burdensome  Agreements.  The  Borrower  shall not, nor shall it permit any
Subsidiary to, enter into any Contractual  Obligation (other than this Agreement
or any other Loan  Document)  that (a) limits the  ability  (i) of any  Material
Subsidiary to make Dividends to the Borrower or to otherwise  transfer  property
to the Borrower,  or (ii) of the Borrower or any  Subsidiary  to create,  incur,
assume or suffer to exist Liens on property of such Person;  provided,  however,
that this  clause  (ii) shall not  prohibit  any  negative  pledge  incurred  or
provided in favor of any holder of  Indebtedness  permitted  under  Section 7.02
solely to the extent any such negative  pledge relates to the property  financed
by or the subject of such  Indebtedness;  or (b) requires the grant of a Lien to
secure an  obligation  of such  Person if a Lien is  granted  to secure  another
obligation of such Person.

7.08 Use of Proceeds. The Borrower shall not, nor shall it permit any Subsidiary
to, use the proceeds of any Credit  Extension,  whether  directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase or carry margin
stock  (within the meaning of  Regulation  U of the FRB) or to extend  credit to
others for the  purpose of  purchasing  or  carrying  margin  stock or to refund
indebtedness originally incurred for such purpose.

7.09 Shareholders' Equity. The Borrower shall not permit Shareholders' Equity at
any time to be less than the sum of (a)  $2,700,000,000,  (b) an amount equal to
50% of the  Consolidated  Net Income earned in each full fiscal  quarter  ending
after July 1, 2002 (with no deduction for a net loss in any such fiscal quarter)
and (c) an amount equal to 25% of the Net Cash Proceeds received by the Borrower
and its Subsidiaries after the date hereof from the issuance and sale of Capital
Stock of the Borrower or any Subsidiary (other than issuances to the Borrower or
a wholly-owned Subsidiary),  including upon any conversion of debt securities of
the Borrower into such Capital Stock.

7.10 Debt to  Capitalization  Ratio.  The Borrower  shall not permit the Debt to
Capitalization Ratio to be greater than 0.375 to 1.00 at any time.

7.11 ERISA.  The  Borrower  shall not, and shall not suffer or permit any of its
ERISA Affiliates to: (a) engage in a prohibited  transaction or violation of the
fiduciary  responsibility  rules with  respect to any Plan which has resulted or
could  reasonably  be  expected  to result in  liability  of the  Borrower in an
aggregate  amount in excess of $50,000,000  or (b) engage in a transaction  that
could be subject to Section 4069 or 4212(c) of ERISA.
<PAGE>

7.12 Accounting Changes.  The Borrower shall not, and shall not suffer or permit
any Material Subsidiary to, make any significant change in accounting  treatment
or reporting  practices,  except as required by SAP or GAAP or any  Governmental
Authority,  as  applicable,  or change the fiscal year of the Borrower or of any
Material Subsidiary.

                                 ARTICLE VIII.
                         EVENTS OF DEFAULT AND REMEDIES

8.01  Events of  Default.  Any of the  following  shall  constitute  an Event of
Default:

     (a)  Non-Payment.  The Borrower fails to pay (i) when and as required to be
paid herein, any amount of principal of any Loan or any L/C Obligation,  or (ii)
within five days after the same  becomes due, any interest on any Loan or on any
L/C Obligation, or any Facility Fee, Utilization Fee or other fee due hereunder,
or (iii) within five days after the same  becomes due, any other amount  payable
hereunder or under any other Loan Document; or

     (b) Specific Covenants.  The Borrower fails to perform or observe any term,
covenant or agreement  contained in any of Section 6.03,  6.05, 6.10, or 6.11 or
Article VII; or

     (c) Other  Defaults.  The  Borrower  fails to perform or observe  any other
covenant or agreement (not  specified in subsection (a) or (b) above)  contained
in any Loan  Document on its part to be  performed  or observed and such failure
continues for 30 days after the earlier of (i) the date upon which a Responsible
Officer  knew or  reasonably  should have known of such failure or (ii) the date
upon which written notice thereof is given to the Borrower by the Administrative
Agent or any Lender; or

     (d)   Representations  and  Warranties.   Any   representation,   warranty,
certification  or  statement  of fact made or deemed made by or on behalf of the
Borrower  herein,  in any other Loan Document,  or in any document  delivered in
connection  herewith  or  therewith  shall be  incorrect  or  misleading  in any
material respect when made or deemed made; or

     (e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any
payment  when  due  (whether  by  scheduled   maturity,   required   prepayment,
acceleration,  demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate  principal amount (including undrawn committed or available amounts
and including  amounts  owing to all creditors  under any combined or syndicated
credit  arrangement) of more than  $50,000,000 and such failure  continues after
the  applicable  grace or  notice  period,  if any,  specified  in the  relevant
document  on the date of such  failure,  or (B) fails to observe or perform  any
other agreement or condition  relating to any such  Indebtedness or Guarantee or
contained  in any  instrument  or  agreement  evidencing,  securing  or relating
thereto,  or any other event occurs,  the effect of which default or other event
is to cause,  or to permit the holder or  holders  of such  Indebtedness  or the
beneficiary or  beneficiaries of such Guarantee (or a trustee or agent on behalf
<PAGE>

of such holder or holders or beneficiary or  beneficiaries)  to cause,  with the
giving of notice if required,  such Indebtedness to be demanded or to become due
or  to  be  repurchased,   prepaid,   defeased  or  redeemed  (automatically  or
otherwise),  or  an  offer  to  repurchase,   prepay,  defease  or  redeem  such
Indebtedness  to be made,  prior to its stated  maturity,  or such  Guarantee to
become  payable or cash  collateral in respect  thereof to be demanded;  or (ii)
there occurs under any Swap  Contract an Early  Termination  Date (as defined in
such Swap  Contract)  resulting  from (A) any event of  default  under such Swap
Contract as to which the Borrower or any Subsidiary is the Defaulting  Party (as
defined in such Swap  Contract)  or (B) any  Termination  Event (as so  defined)
under  such Swap  Contract  as to which the  Borrower  or any  Subsidiary  is an
Affected Party (as so defined) and, in either event, the Swap Termination  Value
owed by the  Borrower or such  Subsidiary  as a result  thereof is greater  than
$50,000,000; or

     (f) Insolvency  Proceedings,  Etc. The Borrower or any Material  Subsidiary
institutes or consents to the  institution  of any  proceeding  under any Debtor
Relief Law, or makes an assignment for the benefit of creditors;  or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator,  rehabilitator  or similar officer for it or for all or any material
part  of  its  property;  or  any  receiver,  trustee,  custodian,  conservator,
liquidator,   rehabilitator   or  similar  officer  is  appointed   without  the
application or consent of such Person and the appointment continues undischarged
or unstayed for 60 calendar days; or any proceeding  under any Debtor Relief Law
relating to any such Person or to all or any  material  part of its  property is
instituted  without  the  consent of such Person and  continues  undismissed  or
unstayed  for 60  calendar  days,  or an order for relief is entered in any such
proceeding;  or any Material  Insurance  Subsidiary  shall become subject to any
conservation,  rehabilitation or liquidation order,  directive or mandate issued
by an Governmental Authority; or

     (g)  Inability to Pay Debts;  Attachment.  (i) The Borrower or any Material
Subsidiary  becomes unable or admits in writing its inability or fails generally
to pay its debts as they become due,  subject to applicable  grace  periods,  if
any,  whether at stated  maturity or  otherwise,  or (ii) any writ or warrant of
attachment  or execution or similar  process is issued or levied  against all or
any  material  part of the  property  of any such  Person  and is not  released,
vacated or fully bonded within 60 days after its issue or levy; or
<PAGE>

     (h) Judgments.  There is entered against the Borrower or any Subsidiary (i)
a final  judgment  or order  for the  payment  of money in an  aggregate  amount
exceeding  $50,000,000  (to the extent not  covered by  independent  third-party
insurance as to which the insurer does not dispute coverage), or (ii) any one or
more non-monetary  final judgments that have, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect and, in either
case,  (A)  enforcement  proceedings  are  commenced by any  creditor  upon such
judgment or order, or (B) there is a period of 10 consecutive  days during which
a stay of  enforcement  of such  judgment,  by  reason  of a  pending  appeal or
otherwise, is not in effect; or

     (i) ERISA.  (i) An ERISA  Event  occurs with  respect to a Pension  Plan or
Multiemployer  Plan which has resulted or could reasonably be expected to result
in  liability  of the  Borrower  under  Title IV of ERISA to the  Pension  Plan,
Multiemployer  Plan or the PBGC in an aggregate amount in excess of $50,000,000,
(ii) the aggregate amount of Unfunded Pension  Liability among all Pension Plans
at any time exceeds  $50,000,  000; or (iii) the Borrower or any ERISA Affiliate
fails to pay when due, after the expiration of any applicable grace period,  any
installment payment with respect to its withdrawal  liability under Section 4201
of  ERISA  under a  Multiemployer  Plan in an  aggregate  amount  in  excess  of
$50,000,000; or

     (j) Invalidity of Loan Documents.  Any Loan Document, at any time after its
execution  and delivery  and for any reason  other than as  expressly  permitted
hereunder or satisfaction in full of all the  Obligations,  ceases to be in full
force and effect; or the Borrower or any other Person contests in any manner the
validity or enforceability of any Loan Document;  or the Borrower denies that it
has any or further liability or obligation under any Loan Document,  or purports
to revoke, terminate or rescind any Loan Document; or

     (k) Change of Control.  There  occurs any Change of Control with respect to
the Borrower; or

     (l) Loss of Licenses. Any Governmental Authority revokes, fails to renew or
suspends any License of the Borrower or any Material Insurance Subsidiary, which
revocation,  failure or  suspension  has had or could  reasonably be expected to
have a Material  Adverse  Effect,  or the  Borrower  or any  Material  Insurance
Subsidiary  for any  reason  loses  any  License  which  loss  had had or  could
reasonably be expected to have a Material Adverse Effect, or the Borrower or any
Material  Insurance  Subsidiary suffers the imposition of any restraining order,
escrow,  suspension  or  impound  of funds  in  connection  with any  proceeding
(judicial or administrative) with respect to any License which imposition has or
could reasonably be expected to have a Material Adverse Effect; or

     (m) Adverse Order. Any Material  Insurance  Subsidiary shall be the subject
of a final  non-appealable  order  imposing  a fine in an  amount  in  excess of
$10,000,000 in any single instance or other such orders imposing fines in excess
of  $25,000,000  in the aggregate  after the date of this Agreement by or at the
request of any state insurance regulatory agency as a result of the violation by
such Material Insurance  Subsidiary of such state's applicable insurance Laws or
the regulations promulgated in connection therewith.
<PAGE>

8.02  Remedies  Upon Event of  Default.  If any Event of  Default  occurs and is
continuing,  the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

     (a) declare the  commitment of each Lender to make Loans and any obligation
of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such
commitments and obligation shall be terminated;

     (b) declare  the unpaid  principal  amount of all  outstanding  Loans,  all
interest  accrued and unpaid  thereon,  and all other  amounts  owing or payable
hereunder or under any other Loan  Document to be  immediately  due and payable,
without presentment,  demand,  protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower;

     (c) require that the Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof); and

     (d)  exercise on behalf of itself and the  Lenders all rights and  remedies
available to it and the Lenders under the Loan Documents or applicable Law;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further act
of the Administrative Agent or any Lender.

8.03  Application  of Funds.  After the  exercise  of remedies  provided  for in
Section 8.02 (or after the Loans have  automatically  become immediately due and
payable and the L/C  Obligations  have  automatically  been  required to be Cash
Collateralized  as set  forth in the  proviso  to  Section  8.02),  any  amounts
received on account of the  Obligations  shall be applied by the  Administrative
Agent in the following order:

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including Attorney Costs and amounts
payable under Article III) payable to the Administrative Agent in its capacity
as such;

Second, to payment of that portion of the Obligations constituting
fees, indemnities and other amounts (other than principal and interest) payable
to the Lenders (including Attorney Costs and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause Second
payable to them;

 Third, to payment of that portion of the Obligations
constituting accrued and unpaid interest on the Loans and L/C Borrowings,
ratably among the Lenders in proportion to the respective amounts described in
this clause Third payable to them;
<PAGE>

Fourth, to payment of that portion of the
Obligations constituting unpaid principal of the Loans and L/C Borrowings,
ratably among the Lenders in proportion to the respective amounts described in
this clause Fourth held by them;

Fifth, to the Administrative Agent for the
account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations
comprised of the aggregate undrawn amount of Letters of Credit; and

Last, the balance,  if any, after all of the Obligations have been  indefeasibly
paid in full,  to the  Borrower  or as  otherwise  required  by Law.  Subject to
Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount
of Letters of Credit  pursuant to clause Fifth above shall be applied to satisfy
drawings  under such Letters of Credit as they occur.  If any amount  remains on
deposit as Cash  Collateral  after all  Letters of Credit have either been fully
drawn  or  expired,  such  remaining  amount  shall  be  applied  to  the  other
Obligations, if any, in the order set forth above.

                                  ARTICLE IX.
                              ADMINISTRATIVE AGENT

9.01     Appointment and Authorization of Administrative Agent.

     (a) Each Lender hereby irrevocably appoints,  designates and authorizes the
Administrative  Agent to take such action on its behalf under the  provisions of
this  Agreement  and each other Loan  Document  and to exercise  such powers and
perform  such  duties  as are  expressly  delegated  to it by the  terms of this
Agreement  or  any  other  Loan  Document,  together  with  such  powers  as are
reasonably  incidental  thereto.  Notwithstanding  any provision to the contrary
contained  elsewhere  herein or in any other Loan Document,  the  Administrative
Agent shall not have any duties or responsibilities,  except those expressly set
forth herein, nor shall the  Administrative  Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, and no implied covenants,
functions,  responsibilities,  duties,  obligations or liabilities shall be read
into this  Agreement or any other Loan  Document or otherwise  exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the  use of the  term  "agent"  herein  and in the  other  Loan  Documents  with
reference to the  Administrative  Agent is not intended to connote any fiduciary
or other implied (or express)  obligations  arising under agency doctrine of any
applicable Law. Instead,  such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.

     (b) The L/C Issuer  shall act on behalf of the Lenders  with respect to any
Letters of Credit issued by it and the documents associated  therewith,  and the
L/C Issuer  shall have all of the benefits  and  immunities  (i) provided to the
Administrative  Agent in this  Article  IX with  respect  to any  acts  taken or
omissions suffered by the L/C Issuer in connection with Letters of Credit issued
by it or proposed to be issued by it and the  applications  and  agreements  for
letters of credit  pertaining  to such Letters of Credit as fully as if the term
"Administrative  Agent"  as used in this  Article  IX and in the  definition  of
"Agent-Related  Person"  included  the L/C Issuer  with  respect to such acts or
omissions,  and (ii) as  additionally  provided  herein with  respect to the L/C
Issuer.
<PAGE>

9.02  Delegation  of Duties.  The  Administrative  Agent may  execute any of its
duties  under this  Agreement or any other Loan  Document by or through  agents,
employees  or  attorneys-in-fact  and shall be entitled to advice of counsel and
other consultants or experts  concerning all matters  pertaining to such duties.
The  Administrative  Agent  shall  not be  responsible  for  the  negligence  or
misconduct  of any agent or  attorney-in-fact  that it selects in the absence of
gross negligence or willful misconduct.

9.03 Liability of  Administrative  Agent. No  Agent-Related  Person shall (a) be
liable  for any  action  taken or omitted to be taken by any of them under or in
connection  with this  Agreement or any other Loan Document or the  transactions
contemplated  hereby (except for its own gross negligence or willful  misconduct
in connection with its duties expressly set forth herein), or (b) be responsible
in any  manner  to  any  Lender  or  participant  for  any  recital,  statement,
representation  or  warranty  made  by  the  Borrower  or any  officer  thereof,
contained herein or in any other Loan Document,  or in any certificate,  report,
statement or other  document  referred to or provided for in, or received by the
Administrative  Agent under or in connection  with,  this Agreement or any other
Loan Document, or the validity,  effectiveness,  genuineness,  enforceability or
sufficiency of this Agreement or any other Loan Document,  or for any failure of
the Borrower or any other party to any Loan Document to perform its  obligations
hereunder or thereunder.  No Agent-Related  Person shall be under any obligation
to any Lender or  participant to ascertain or to inquire as to the observance or
performance  of any of the  agreements  contained  in, or  conditions  of,  this
Agreement or any other Loan  Document,  or to inspect the  properties,  books or
records of the Borrower or any Affiliate thereof.

9.04     Reliance by Administrative Agent.

     (a) The Administrative  Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing,  communication,  signature,  resolution,
representation,  notice,  consent,  certificate,  affidavit,  letter,  telegram,
facsimile,  telex or telephone  message,  electronic mail message,  statement or
other document or  conversation  believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons,  and upon advice
and statements of legal counsel (including counsel to the Borrower), independent
accountants  and  other  experts  selected  by  the  Administrative  Agent.  The
Administrative Agent shall be fully justified in failing or refusing to take any
action  under any Loan  Document  unless it shall first  receive  such advice or
concurrence  of the  Required  Lenders  as it deems  appropriate  and,  if it so
requests,  it shall  first be  indemnified  to its  satisfaction  by the Lenders
against any and all  liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative  Agent shall
in all cases be fully protected in acting,  or in refraining from acting,  under
this  Agreement  or any other  Loan  Document  in  accordance  with a request or
consent of the  Required  Lenders (or such  greater  number of Lenders as may be
expressly required hereby in any instance) and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders.
<PAGE>

     (b) For purposes of determining compliance with the conditions specified in
Section 4.01, each Lender that has signed this Agreement shall be deemed to have
consented  to,  approved or accepted or to be satisfied  with,  each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to a Lender unless the Administrative  Agent shall have received
notice  from such Lender  prior to the  proposed  Closing  Date  specifying  its
objection thereto.

9.05 Notice of  Default.  The  Administrative  Agent shall not be deemed to have
knowledge or notice of the  occurrence  of any  Default,  except with respect to
defaults in the payment of  principal,  interest and fees required to be paid to
the   Administrative   Agent  for  the  account  of  the  Lenders,   unless  the
Administrative  Agent shall have  received  written  notice from a Lender or the
Borrower  referring to this Agreement,  describing such Default and stating that
such notice is a "notice of default." The  Administrative  Agent will notify the
Lenders of its receipt of any such notice. The  Administrative  Agent shall take
such action  with  respect to such  Default as may be  directed by the  Required
Lenders in accordance  with Article  VIII;  provided,  however,  that unless and
until  the   Administrative   Agent  has  received  any  such   direction,   the
Administrative  Agent may (but shall not be obligated  to) take such action,  or
refrain from taking such  action,  with respect to such Default as it shall deem
advisable or in the best interest of the Lenders.

9.06 Credit Decision;  Disclosure of Information by  Administrative  Agent. Each
Lender acknowledges that no Agent-Related  Person has made any representation or
warranty to it, and that no act by the  Administrative  Agent  hereafter  taken,
including  any  consent to and  acceptance  of any  assignment  or review of the
affairs of the Borrower or any Affiliate thereof,  shall be deemed to constitute
any  representation or warranty by any Agent-Related  Person to any Lender as to
any matter,  including  whether  Agent-Related  Persons have disclosed  material
information in their possession.  Each Lender  represents to the  Administrative
Agent that it has,  independently  and without  reliance upon any  Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made  its own  appraisal  of and  investigation  into the  business,  prospects,
operations,  property, financial and other condition and creditworthiness of the
Borrower and its Subsidiaries,  and all applicable bank or other regulatory Laws
relating to the transactions  contemplated  hereby, and made its own decision to
enter into this Agreement and to extend credit to the Borrower  hereunder.  Each
Lender also represents that it will, independently and without reliance upon any
Agent-Related  Person and based on such  documents and  information  as it shall
deem  appropriate  at the  time,  continue  to  make  its own  credit  analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents,  and to make such investigations as it deems necessary
to inform itself as to the business, prospects,  operations, property, financial
and other condition and  creditworthiness  of the Borrower and its Subsidiaries.
Except  for  notices,  reports  and other  documents  expressly  required  to be
furnished to the Lenders by the Administrative  Agent herein, the Administrative
Agent shall not have any duty or  responsibility  to provide any Lender with any
credit or other  information  concerning  the business,  prospects,  operations,
property,  financial and other condition or  creditworthiness of the Borrower or
any of its Affiliates  which may come into the  possession of any  Agent-Related
Person.
<PAGE>

9.07  Indemnification of Administrative  Agent.  Whether or not the transactions
contemplated  hereby are  consummated,  the Lenders shall  indemnify upon demand
each  Agent-Related  Person (to the extent not reimbursed by or on behalf of the
Borrower  and without  limiting  the  obligation  of the Borrower to do so), pro
rata, and hold harmless each  Agent-Related  Person from and against any and all
Indemnified  Liabilities  incurred  by it  (WHETHER  OR NOT  ARISING  OUT OF THE
NEGLIGENCE OF SUCH  AGENT-RELATED  PERSON);  provided,  however,  that no Lender
shall be liable for the  payment to any  Agent-Related  Person of any portion of
such Indemnified Liabilities to the extent determined in a final, non-appealable
judgment  by a court  of  competent  jurisdiction  to have  resulted  from  such
Agent-Related  Person's own gross  negligence or willful  misconduct;  provided,
however,  that no action taken in accordance with the directions of the Required
Lenders shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section. Without limitation of the foregoing, each Lender shall
reimburse  the  Administrative  Agent upon demand for its  ratable  share of any
costs or  out-of-pocket  expenses  (including  Attorney  Costs)  incurred by the
Administrative  Agent in connection with the preparation,  execution,  delivery,
administration,   modification,   amendment  or  enforcement   (whether  through
negotiations,  legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities  under, this Agreement,  any other Loan Document,  or
any  document  contemplated  by or  referred  to herein,  to the extent that the
Administrative  Agent is not reimbursed for such expenses by or on behalf of the
Borrower.  The  undertaking  in this Section  shall survive  termination  of the
Aggregate Commitments,  the payment of all other Obligations and the resignation
of  the  Administrative  Agent.  THE  FOREGOING  INDEMNITY  SHALL  APPLY  TO THE
NEGLIGENCE OF THE AGENT-RELATED  PERSON (BUT NOT THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE AGENT-RELATED PERSON).
<PAGE>

9.08 Administrative  Agent in its Individual  Capacity.  Bank of America and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from,  acquire equity  interests in and generally engage in any kind of
banking,  trust,  financial  advisory,  underwriting  or other business with the
Borrower   and  its   Affiliates   as  though  Bank  of  America  were  not  the
Administrative  Agent or the L/C  Issuer  hereunder  and  without  notice  to or
consent  of  the  Lenders.  The  Lenders  acknowledge  that,  pursuant  to  such
activities,  Bank of America or its Affiliates may receive information regarding
the Borrower or its  Affiliates  (including  information  that may be subject to
confidentiality  obligations  in favor of the  Borrower or such  Affiliate)  and
acknowledge  that the  Administrative  Agent  shall be  under no  obligation  to
provide such  information  to them.  With respect to its Loans,  Bank of America
shall have the same rights and powers  under this  Agreement as any other Lender
and may exercise such rights and powers as though it were not the Administrative
Agent or the L/C Issuer,  and the terms  "Lender" and "Lenders"  include Bank of
America in its individual capacity.

9.09 Successor  Administrative  Agent.  The  Administrative  Agent may resign as
Administrative Agent upon 30 days' notice to the Lenders; provided that any such
resignation  by Bank of America shall also  constitute  its  resignation  as L/C
Issuer and Swing Line Lender.  If the  Administrative  Agent  resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
administrative agent for the Lenders, which successor administrative agent shall
be consented to by the Borrower at all times other than during the  existence of
an Event of Default  (which  consent of the Borrower  shall not be  unreasonably
withheld or delayed). If no successor administrative agent is appointed prior to
the  effective  date  of  the  resignation  of  the  Administrative  Agent,  the
Administrative  Agent may  appoint,  after  consulting  with the Lenders and the
Borrower,  a successor  administrative  agent from among the  Lenders.  Upon the
acceptance of its appointment as successor  administrative agent hereunder,  the
Person acting as such  successor  administrative  agent shall succeed to all the
rights,  powers and duties of the retiring  Administrative Agent, L/C Issuer and
Swing Line Lender and the respective terms "Administrative  Agent," "L/C Issuer"
and "Swing Line Lender" shall mean such successor  administrative  agent, Letter
of Credit issuer and swing line lender, and the retiring  Administrative Agent's
appointment,  powers and duties as Administrative  Agent shall be terminated and
the retiring L/C Issuer's and Swing Line Lender's  rights,  powers and duties as
such shall be  terminated,  without any other or further act or deed on the part
of such retiring L/C Issuer or Swing Line Lender or any other Lender, other than
the  obligation  of the  successor  L/C  Issuer  to issue  letters  of credit in
substitution for the Letters of Credit, if any,  outstanding at the time of such
succession or to make other arrangements satisfactory to the retiring L/C Issuer
to effectively assume the obligations of the retiring L/C Issuer with respect to
such Letters of Credit.  After any retiring  Administrative  Agent's resignation
hereunder  as  Administrative  Agent,  the  provisions  of this  Article  IX and
Sections  10.04 and 10.05 shall inure to its benefit as to any actions  taken or
omitted  to be  taken  by it  while  it  was  Administrative  Agent  under  this
Agreement.  If no successor  administrative  agent has accepted  appointment  as
Administrative  Agent  by  the  date  which  is 30  days  following  a  retiring
Administrative  Agent's  notice  of  resignation,  the  retiring  Administrative
Agent's  resignation  shall  nevertheless  thereupon  become  effective  and the
Lenders shall perform all of the duties of the  Administrative  Agent  hereunder
until such time, if any, as the Required  Lenders  appoint a successor  agent as
provided for above.
<PAGE>

9.10  Administrative  Agent May File Proofs of Claim. In case of the pendency of
any   receivership,   insolvency,   liquidation,   bankruptcy,   reorganization,
arrangement,  adjustment,  composition or other judicial  proceeding relative to
the Borrower, the Administrative Agent (irrespective of whether the principal of
any Loan or L/C Obligation  shall then be due and payable as herein expressed or
by declaration or otherwise and irrespective of whether the Administrative Agent
shall have made any demand on the Borrower) shall be entitled and empowered,  by
intervention in such proceeding or otherwise

     (a) to file and  prove a claim for the whole  amount of the  principal  and
interest owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary  or  advisable  in order to have the  claims  of the  Lenders  and the
Administrative  Agent  (including  any  claim for the  reasonable  compensation,
expenses, disbursements and advances of the Lenders and the Administrative Agent
and their  respective  agents and counsel and all other  amounts due the Lenders
and the  Administrative  Agent under  Sections  2.03(i) and (j), 2.09 and 10.04)
allowed in such judicial proceeding; and

     (b) to  collect  and  receive  any  monies  or other  property  payable  or
deliverable  on any such claims and to distribute  the same;  and any custodian,
receiver, assignee, trustee, liquidator,  sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such
payments to the  Administrative  Agent and, in the event that the Administrative
Agent shall consent to the making of such payments  directly to the Lenders,  to
pay to the Administrative Agent any amount due for the reasonable  compensation,
expenses,  disbursements and advances of the Administrative Agent and its agents
and counsel,  and any other amounts due the Administrative  Agent under Sections
2.09 and 10.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative Agent
to vote in respect of the claim of any Lender in any such proceeding.

9.11 Other Agents;  Arrangers and Managers. None of the Lenders or other Persons
identified  on the  facing  page  or  signature  pages  of this  Agreement  as a
"syndication  agent,"  "documentation  agent," "co-agent," "book manager," "lead
manager,"  "arranger,"  "lead arranger" or  "co-arranger"  shall have any right,
power, obligation, liability,  responsibility or duty under this Agreement other
than,  in the case of such  Lenders,  those  applicable  to all Lenders as such.
Without  limiting  the  foregoing,  none of the  Lenders  or  other  Persons  so
identified shall have or be deemed to have any fiduciary  relationship  with any
Lender.  Each Lender  acknowledges that it has not relied, and will not rely, on
any of the Lenders or other Persons so identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.
<PAGE>

                                   ARTICLE X.
                                  MISCELLANEOUS

10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement
or any other Loan  Document,  and no consent to any  departure  by the  Borrower
therefrom,  shall be effective  unless in writing signed by the Required Lenders
and the Borrower and  acknowledged by the  Administrative  Agent,  and each such
waiver or consent shall be effective  only in the specific  instance and for the
specific  purpose for which given;  provided,  however,  that no such amendment,
waiver or consent shall:

     (a) waive any  condition set forth in Section  4.01(a)  without the written
consent of each Lender;

     (b) extend or  increase  the  Commitment  of any Lender (or  reinstate  any
Commitment  terminated  pursuant to Section 8.02) without the written consent of
such Lender;

     (c)  postpone any date fixed by this  Agreement or any other Loan  Document
for any payment or mandatory  prepayment of principal,  interest,  fees or other
amounts due to the Lenders  (or any of them)  hereunder  or under any other Loan
Document without the written consent of each Lender directly affected thereby;

     (d) reduce the principal of, or the rate of interest  specified  herein on,
any Loan or L/C Borrowing,  or (subject to clause (iv)) of the second proviso to
this Section  10.01) any fees or other  amounts  payable  hereunder or under any
other Loan Document without the written consent of each Lender directly affected
thereby; provided,  however, that only the consent of the Required Lenders shall
be  necessary  to amend  the  definition  of  "Default  Rate"  or to  waive  any
obligation of the Borrower to pay interest at the Default Rate;

     (e) change  Section  2.13 or Section  8.03 in a manner that would alter the
pro rata sharing of payments  required  thereby  without the written  consent of
each Lender;  or

     (f) change any  provision  of this Section or the  definition  of "Required
Lenders" or any other  provision  hereof  specifying the number or percentage of
Lenders  required to amend,  waive or otherwise  modify any rights  hereunder or
make any  determination  or grant any  consent  hereunder,  without  the written
consent of each Lender;

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Letter
of Credit Application relating to any Letter of Credit issued or to be issued by
it; (ii) no amendment, waiver or consent shall, unless in writing and signed by
the Swing Line Lender in addition to the Lenders required above, affect the
rights or duties of the Swing Line Lender under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges
thereunder waived, in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that the Commitment of such Lender may not be increased or extended
without the consent of such Lender.

<PAGE>

10.02    Notices and Other Communications; Facsimile Copies.

     (a) General.  Unless otherwise  expressly  provided herein, all notices and
other  communications  provided for hereunder shall be in writing  (including by
facsimile  transmission).  All such written  notices  shall be mailed,  faxed or
delivered to the applicable address,  facsimile number or (subject to subsection
(c) below)  electronic  mail address,  and all notices and other  communications
expressly  permitted  hereunder  to be given by  telephone  shall be made to the
applicable telephone number, as follows:

          (i) if to the Borrower,  the  Administrative  Agent, the L/C Issuer or
     the Swing Line Lender, to the address,  facsimile  number,  electronic mail
     address or telephone  number specified for such Person on Schedule 10.02 or
     to such  other  address,  facsimile  number,  electronic  mail  address  or
     telephone  number as shall be  designated  by such party in a notice to the
     other parties; and

          (ii)  if to any  other  Lender,  to  the  address,  facsimile  number,
     electronic mail address or telephone number specified in its Administrative
     Questionnaire or to such other address,  facsimile number,  electronic mail
     address  or  telephone  number as shall be  designated  by such  party in a
     notice to the Borrower,  the  Administrative  Agent, the L/C Issuer and the
     Swing Line Lender.

All such  notices and other  communications  shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier,  when signed for by or on behalf of
the relevant  party hereto;  (B) if delivered by mail,  four Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile,  when sent
and receipt has been confirmed by telephone;  and (D) if delivered by electronic
mail  (which form of delivery is subject to the  provisions  of  subsection  (c)
below), when delivered; provided, however, that notices and other communications
to the  Administrative  Agent, the L/C Issuer and the Swing Line Lender pursuant
to Article II shall not be effective until actually  received by such Person. In
no event shall a voicemail  message be effective as a notice,  communication  or
confirmation hereunder.

     (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may
be  transmitted  and/or  signed  by  facsimile.  The  effectiveness  of any such
documents and signatures  shall,  subject to applicable Law, have the same force
and  effect  as  manually-signed  originals  and  shall be  binding  on all Loan
Parties,  the Administrative Agent and the Lenders. The Administrative Agent may
also  require  that  any  such  documents  and  signatures  be  confirmed  by  a
manually-signed original thereof; provided, however, that the failure to request
or deliver the same shall not limit the effectiveness of any facsimile  document
or signature.
<PAGE>

     (c)  Limited Use of  Electronic  Mail.  Electronic  mail and  Internet  and
intranet websites may be used only to distribute routine communications, such as
financial  statements and other  information as provided in Section 6.02, and to
distribute Loan Documents for execution by the parties  thereto,  and may not be
used for any other purpose.

     (d) Reliance by Administrative  Agent and Lenders. The Administrative Agent
and the Lenders  shall be  entitled to rely and act upon any notices  (including
telephonic Revolving Loan Notices and Swing Line Loan Notices) purportedly given
by or on  behalf of the  Borrower  even if (i) such  notices  were not made in a
manner specified herein, were incomplete or were not preceded or followed by any
other form of notice specified herein, or (ii) the terms thereof,  as understood
by the  recipient,  varied from any  confirmation  thereof.  The Borrower  shall
indemnify  each  Agent-Related  Person and each Lender  from all losses,  costs,
expenses  and  liabilities  resulting  from the  reliance by such Person on each
notice purportedly given by or on behalf of the Borrower. All telephonic notices
to and other communications with the Administrative Agent may be recorded by the
Administrative  Agent,  and each of the parties  hereto hereby  consents to such
recording.

10.03  No  Waiver;  Cumulative  Remedies.  No  failure  by  any  Lender  or  the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any  right,  remedy,  power or  privilege  hereunder  shall  operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege  hereunder  preclude  any other or  further  exercise  thereof  or the
exercise of any other right, remedy, power or privilege.  The rights,  remedies,
powers and  privileges  herein  provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by Law.

10.04  Attorney  Costs,  Expenses and Taxes.  The Borrower  agrees (a) to pay or
reimburse the Administrative  Agent for all reasonable  out-of-pocket  costs and
expenses  incurred by the  Administrative  Agent and the Arranger in  connection
with the development,  preparation,  negotiation and execution of this Agreement
and the  other  Loan  Documents  and any  amendment,  waiver,  consent  or other
modification  of  the  provisions   hereof  and  thereof  (whether  or  not  the
transactions   contemplated   hereby  or  thereby  are  consummated),   and  the
consummation  and  administration  of the transactions  contemplated  hereby and
thereby,  including  all  Attorney  Costs,  and  (b)  to pay  or  reimburse  the
Administrative  Agent and each  Lender  for all  reasonable  costs and  expenses
incurred  in  connection  with  the  enforcement,   attempted  enforcement,   or
preservation  of any rights or remedies  under this  Agreement or the other Loan
Documents  (including all such costs and expenses  incurred during any "workout"
or restructuring in respect of the Obligations and during any legal  proceeding,
including any  proceeding  under any Debtor Relief Law),  including all Attorney
Costs.  The  foregoing  costs and  expenses  shall  include all search,  filing,
recording,  title  insurance  and  appraisal  charges and fees and taxes related
thereto,  and other out-of-pocket  expenses incurred by the Administrative Agent
and the  cost of  independent  public  accountants  and  other  outside  experts
reasonably  retained by the Administrative  Agent or, with respect to clause (b)
above,  any Lender.  All amounts due under this  Section  10.04 shall be payable
within ten Business  Days after demand  therefor,  setting  forth in  reasonable
detail the costs and expenses so incurred.  The agreements in this Section shall
survive the termination of the Aggregate  Commitments and repayment of all other
Obligations.
<PAGE>

10.05  Indemnification  by  the  Borrower.   Whether  or  not  the  transactions
contemplated  hereby are  consummated,  the Borrower  shall  indemnify  and hold
harmless each Agent-Related Person, each Lender and their respective Affiliates,
directors,   officers,   employees,   counsel,   agents  and   attorneys-in-fact
(collectively  the  "Indemnitees")  from and  against  any and all  liabilities,
obligations,  losses, damages,  penalties,  claims, demands, actions, judgments,
suits, costs, expenses and disbursements  (including Attorney Costs) of any kind
or  nature  whatsoever  which  may at any time be  imposed  on,  incurred  by or
asserted against any such Indemnitee in any way relating to or arising out of or
in connection  with (a) the  execution,  delivery,  enforcement,  performance or
administration of any Loan Document or any other agreement, letter or instrument
delivered  in  connection  with the  transactions  contemplated  thereby  or the
consummation of the transactions contemplated thereby, (b) any Commitment,  Loan
or  Letter  of  Credit  or the use or  proposed  use of the  proceeds  therefrom
(including  any refusal by the L/C Issuer to honor a demand for payment  under a
Letter of Credit if the documents  presented in  connection  with such demand do
not strictly comply with the terms of such Letter of Credit),  or (c) any actual
or prospective claim, litigation, investigation or proceeding relating to any of
the foregoing,  whether based on contract,  tort or any other theory  (including
any investigation  of,  preparation for, or defense of any pending or threatened
claim,  investigation,  litigation or proceeding)  and regardless of whether any
Indemnitee is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"), in all cases, whether or not caused by or arising, in whole or in
part,  out of the  negligence of the  Indemnitee;  provided that such  indemnity
<PAGE>

shall  not,  as to  any  Indemnitee,  be  available  to  the  extent  that  such
liabilities,  obligations, losses, damages, penalties, claims, demands, actions,
judgments,  suits, costs, expenses or disbursements are determined by a court of
competent  jurisdiction  by final and  non-appealable  judgment to have resulted
from  the  gross  negligence  or  willful  misconduct  of  such  Indemnitee.  No
Indemnitee shall be liable for any damages arising from the use by others of any
information  or other  materials  obtained  through  IntraLinks or other similar
information  transmission  systems in connection with this Agreement,  nor shall
any  Indemnitee  have any  liability for any indirect or  consequential  damages
relating  to this  Agreement  or any other Loan  Document  or arising out of its
activities  in  connection  herewith or therewith  (whether  before or after the
Closing  Date).  the foregoing  indemnity  shall apply to the  negligence of the
indemnitee  (but  not  the  gross  negligence  or  willful   misconduct  of  the
indemnitee).  All amounts due under this Section  10.05 shall be payable  within
ten Business Days after demand  therefor.  The  agreements in this Section shall
survive the  resignation of the  Administrative  Agent,  the  replacement of any
Lender,  the  termination  of  the  Aggregate  Commitments  and  the  repayment,
satisfaction or discharge of all the other Obligations.

10.06 Payments Set Aside.  To the extent that any payment by or on behalf of the
Borrower  is  made  to  the   Administrative   Agent  or  any  Lender,   or  the
Administrative  Agent or any Lender  exercises  its right of  set-off,  and such
payment or the  proceeds  of such  set-off or any part  thereof is  subsequently
invalidated,  declared to be fraudulent or  preferential,  set aside or required
(including  pursuant to any settlement entered into by the Administrative  Agent
or such  Lender in its  discretion)  to be repaid to a trustee,  receiver or any
other party,  in connection  with any proceeding  under any Debtor Relief Law or
otherwise,  then (a) to the  extent of such  recovery,  the  obligation  or part
thereof  originally  intended to be satisfied  shall be revived and continued in
full force and effect as if such  payment had not been made or such  set-off had
not occurred,  and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered from or repaid
by the Administrative  Agent, plus interest thereon from the date of such demand
to the date such payment is made at a rate per annum equal to the Federal  Funds
Rate from time to time in effect.
<PAGE>

10.07    Successors and Assigns.

     (a) The provisions of this Agreement shall be binding upon and inure to the
benefit  of the  parties  hereto and their  respective  successors  and  assigns
permitted hereby,  except that the Borrower may not assign or otherwise transfer
any of its rights or obligations  hereunder without the prior written consent of
each Lender and no Lender may assign or otherwise  transfer any of its rights or
obligations  hereunder except (i) to an Eligible Assignee in accordance with the
provisions of subsection (b) of this Section,  (ii) by way of  participation  in
accordance  with the provisions of subsection  (d) of this Section,  or (iii) by
way of pledge or assignment of a security  interest  subject to the restrictions
of subsection (f) or (h) of this Section (and any other attempted  assignment or
transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied,  shall be construed to confer upon any Person  (other than
the parties hereto,  their respective  successors and assigns  permitted hereby,
Participants  to the extent  provided in subsection  (d) of this Section and, to
the  extent  expressly  contemplated  hereby,  the  Indemnitees)  any  legal  or
equitable right, remedy or claim under or by reason of this Agreement.

     (b) Any Lender may at any time assign to one or more Eligible Assignees all
or a portion of its rights and obligations  under this Agreement  (including all
or a portion of its  Commitment  and the Loans  (including  for purposes of this
subsection  (b),  participations  in L/C Obligations and in Swing Line Loans) at
the time owing to it);  provided that (i) except in the case of an assignment of
the entire remaining amount of the assigning  Lender's  Commitment and the Loans
at the  time  owing  to it or in the case of an  assignment  to a  Lender  or an
Affiliate of a Lender or an Approved Fund (as defined in subsection  (g) of this
Section) with respect to a Lender, the aggregate amount of the Commitment (which
for this purpose  includes Loans  outstanding  thereunder)  subject to each such
assignment, determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Administrative  Agent or, if "Trade Date"
is specified in the Assignment and Assumption,  as of the Trade Date,  shall not
be less than $10,000,000 unless each of the Administrative Agent and, so long as
no Event of Default has  occurred  and is  continuing,  the  Borrower  otherwise
consents (each such consent not to be  unreasonably  withheld or delayed);  (ii)
each partial  assignment shall be made as an assignment of a proportionate  part
of all the assigning  Lender's rights and obligations  under this Agreement with
respect to the Loans or the  Commitment  assigned,  except that this clause (ii)
shall not apply to rights in respect of Swing Line Loans;  (iii) any  assignment
of a Commitment must be approved by the Administrative Agent, the L/C Issuer and
the Swing Line Lender  (each such  approval not to be  unreasonably  withheld or
delayed)  unless the Person  that is the  proposed  assignee  is itself a Lender
(whether or not the proposed  assignee  would  otherwise  qualify as an Eligible
<PAGE>

Assignee);  (iv) the parties to each assignment shall execute and deliver to the
Administrative  Agent an Assignment and Assumption;  and (v) the assignor Lender
or Eligible Assignee shall have paid the  Administrative  Agent a processing and
recordation  fee of $3,500.  Subject to acceptance and recording  thereof by the
Administrative Agent pursuant to subsection (c) of this Section,  from and after
the effective date specified in each  Assignment  and  Assumption,  the Eligible
Assignee thereunder shall be a party to this Agreement and, to the extent of the
interest  assigned  by such  Assignment  and  Assumption,  have the  rights  and
obligations  of  a  Lender  under  this  Agreement,  and  the  assigning  Lender
thereunder  shall, to the extent of the interest assigned by such Assignment and
Assumption,  be released from its obligations  under this Agreement (and, in the
case of an Assignment  and  Assumption  covering all of the  assigning  Lender's
rights and  obligations  under this  Agreement,  such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 3.01,
3.04,  3.05, 10.04 and 10.05 with respect to facts and  circumstances  occurring
prior to the effective date of such assignment).  Upon request, the Borrower (at
its  expense)  shall  execute and  deliver a Note to the  assignee  Lender.  Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this subsection  shall be treated for purposes of this
Agreement  as a sale by such  Lender  of a  participation  in  such  rights  and
obligations in accordance with subsection (d) of this Section.

     (c) The Administrative Agent, acting solely for this purpose as an agent of
the Borrower, shall maintain at the Administrative Agent's Office a copy of each
Assignment and Assumption  delivered to it and a register for the recordation of
the names and addresses of the Lenders,  and the  Commitments  of, and principal
amounts of the Loans and L/C  Obligations  owing to, each Lender pursuant to the
terms  hereof from time to time (the  "Register").  The entries in the  Register
shall be conclusive,  and the Borrower, the Administrative Agent and the Lenders
may treat each Person  whose name is recorded  in the  Register  pursuant to the
terms  hereof  as a  Lender  hereunder  for  all  purposes  of  this  Agreement,
notwithstanding  notice to the  contrary.  The Register  shall be available  for
inspection by the Borrower and any Lender,  at any reasonable time and from time
to time upon reasonable prior notice.

     (d) Any Lender may at any time,  without  the consent of, or notice to, the
Borrower or the Administrative  Agent, sell  participations to any Person (other
than a natural  person or the Borrower or any of the  Borrower's  Affiliates  or
Subsidiaries)  (each,  a  "Participant")  in all or a portion  of such  Lender's
rights and/or  obligations  under this Agreement  (including all or a portion of
its Commitment  and/or the Loans (including such Lender's  participations in L/C
Obligations  and/or  Swing  Line  Loans)  owing to it);  provided  that (i) such
Lender's  obligations  under this Agreement  shall remain  unchanged,  (ii) such
Lender shall  remain  solely  responsible  to the other  parties  hereto for the
performance of such obligations and (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.  Any agreement or instrument  pursuant to which a Lender sells such a
<PAGE>

participation  shall  provide  that such Lender  shall  retain the sole right to
enforce this Agreement and to approve any amendment,  modification  or waiver of
any provision of this Agreement;  provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that directly affects such Participant.  Subject to subsection (e)
of this Section,  the Borrower agrees that each Participant shall be entitled to
the benefits of Sections 3.01,  3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section.  To the extent  permitted by Law, each  Participant  also shall be
entitled to the benefits of Section  10.09 as though it were a Lender,  provided
such  Participant  agrees  to be  subject  to  Section  2.13 as though it were a
Lender.

     (e) A  Participant  shall not be entitled  to receive  any greater  payment
under Section 3.01 or 3.04 than the  applicable  Lender would have been entitled
to receive with respect to the participation  sold to such  Participant,  unless
the sale of the  participation  to such  Participant is made with the Borrower's
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower
is notified of the  participation  sold to such Participant and such Participant
agrees, for the benefit of the Borrower,  to comply with Section 10.15 as though
it were a Lender.

     (f) Any Lender may at any time pledge or assign a security  interest in all
or any portion of its rights under this Agreement  (including under its Note, if
any) to secure obligations of such Lender, including any pledge or assignment to
secure  obligations to a Federal  Reserve Bank;  provided that no such pledge or
assignment  shall release such Lender from any of its  obligations  hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

     (g) As used  herein,  the  following  terms  have the  following  meanings:
"Eligible  Assignee"  means (a) a Lender;  (b) an Affiliate of a Lender;  (c) an
Approved Fund; and (d) any other Person (other than a natural  person)  approved
by (i) the  Administrative  Agent, the L/C Issuer and the Swing Line Lender, and
(ii) unless an Event of Default has  occurred  and is  continuing,  the Borrower
(each such approval not to be unreasonably  withheld or delayed);  provided that
notwithstanding  the  foregoing,  "Eligible  Assignee"  shall  not  include  the
Borrower or any of the Borrower's  Affiliates or Subsidiaries.

"Fund"  means any  Person  (other  than a natural  person)  that is (or will be)
engaged in making,  purchasing,  holding or otherwise  investing  in  commercial
loans and similar extensions of credit in the ordinary course of its business.
<PAGE>

"Approved Fund" means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

     (h)  Notwithstanding  anything to the contrary contained herein, any Lender
that is a Fund may create a security interest in all or any portion of the Loans
owing to it and the Note,  if any,  held by it to the  trustee  for  holders  of
obligations  owed,  or  securities  issued,  by such Fund as  security  for such
obligations or securities,  provided that unless and until such trustee actually
becomes a Lender in compliance with the other  provisions of this Section 10.07,
(i) no such pledge shall release the pledging Lender from any of its obligations
under the Loan Documents and (ii) such trustee shall not be entitled to exercise
any of the rights of a Lender under the Loan  Documents even though such trustee
may have acquired  ownership rights with respect to the pledged interest through
foreclosure or otherwise.

     (i)  Notwithstanding  anything to the contrary  contained herein, if at any
time  Bank of  America  assigns  all of its  Commitment  and Loans  pursuant  to
subsection  (b) above,  Bank of  America  may,  (i) upon 30 days'  notice to the
Borrower and the Lenders,  resign as L/C Issuer and/or (ii) upon 30 days' notice
to the  Borrower,  resign  as  Swing  Line  Lender.  In the  event  of any  such
resignation  as L/C Issuer or Swing Line Lender,  the Borrower shall be entitled
to appoint  from among the Lenders a  successor  L/C Issuer or Swing Line Lender
hereunder;  provided,  however,  that no failure by the  Borrower to appoint any
such successor  shall affect the resignation of Bank of America as L/C Issuer or
Swing Line Lender, as the case may be. If Bank of America resigns as L/C Issuer,
it shall retain all the rights and obligations of the L/C Issuer  hereunder with
respect to all Letters of Credit  outstanding  as of the  effective  date of its
resignation  as  L/C  Issuer  and  all  L/C  Obligations  with  respect  thereto
(including the right to require the Lenders to make Base Rate Revolving Loans or
fund risk  participations in Unreimbursed  Amounts pursuant to Section 2.03(c)).
If Bank of America resigns as Swing Line Lender,  it shall retain all the rights
of the Swing Line Lender provided for hereunder with respect to Swing Line Loans
made  by it and  outstanding  as of the  effective  date  of  such  resignation,
including the right to require the Lenders to make Base Rate Revolving  Loans or
fund risk  participations  in  outstanding  Swing Line Loans pursuant to Section
2.04(c).

10.08  Confidentiality.  Each of the Administrative Agent and the Lenders agrees
to maintain the  confidentiality  of the Information (as defined below),  except
that  Information  may be disclosed  (a) to its and its  Affiliates'  directors,
officers,  employees and agents, including accountants,  legal counsel and other
advisors (it being  understood  that the Persons to whom such disclosure is made
will be informed of the  confidential  nature of such Information and instructed
to keep such  Information  confidential);  (b) to the  extent  requested  by any
<PAGE>

regulatory  authority;  (c)  to  the  extent  required  by  applicable  Laws  or
regulations or by any subpoena or similar legal process;  (d) to any other party
to this Agreement; (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding  relating to this Agreement or the enforcement
of  rights  hereunder;   (f)  subject  to  an  agreement  containing  provisions
substantially the same as those of this Section, to (i) any Eligible Assignee of
or Participant  in, or any prospective  Eligible  Assignee of or Participant in,
any of its  rights or  obligations  under this  Agreement  or (ii) any direct or
indirect   contractual   counterparty  or  prospective   counterparty  (or  such
contractual counterparty's or prospective  counterparty's  professional advisor)
to any credit  derivative  transaction  relating to obligations of the Borrower;
(g) with the consent of the  Borrower;  (h) to the extent such  Information  (i)
becomes publicly available other than as a result of a breach of this Section or
(ii)  becomes  available  to  the  Administrative  Agent  or  any  Lender  on  a
nonconfidential  basis  from a source  other  than the  Borrower;  or (i) to the
National   Association   of  Insurance   Commissioners   or  any  other  similar
organization. In addition, the Administrative Agent and the Lenders may disclose
the existence of this Agreement and  information  about this Agreement to market
data collectors,  similar service providers to the lending industry, and service
providers to the  Administrative  Agent and the Lenders in  connection  with the
administration and management of this Agreement,  the other Loan Documents,  the
Commitments,  and the  Credit  Extensions.  For the  purposes  of this  Section,
"Information"  means all information  received from the Borrower relating to the
Borrower or any Subsidiary or its business, other than any such information that
is  available  to the  Administrative  Agent or any Lender on a  nonconfidential
basis  prior  to  disclosure  by the  Borrower;  provided  that,  in the case of
information  received from the Borrower after the date hereof,  such information
is clearly  identified in writing at the time of delivery as  confidential.  Any
Person  required to maintain the  confidentiality  of Information as provided in
this Section shall be  considered to have complied with its  obligation to do so
if  such  Person  has  exercised  the  same  degree  of  care  to  maintain  the
confidentiality  of such  Information  as such  Person  would  accord to its own
confidential information.

10.09 Set-off. In addition to any rights and remedies of the Lenders provided by
Law, upon the  occurrence  and during the  continuance  of any Event of Default,
each  Lender  is  authorized  at any time and from time to time,  without  prior
notice to the  Borrower,  any such notice  being  waived by the  Borrower to the
fullest  extent  permitted  by Law,  to set off and apply  any and all  deposits
(general or special, time or demand,  provisional or final) at any time held by,
and other indebtedness at any time owing by, such Lender to or for the credit or
the account of the Borrower against any and all Obligations owing to such Lender
hereunder  or  under  any  other  Loan  Document,  now  or  hereafter  existing,
irrespective  of whether or not the  Administrative  Agent or such Lender  shall
have made demand under this  Agreement  or any other Loan  Document and although
such  Obligations  may be contingent or unmatured or  denominated  in a currency
different  from that of the  applicable  deposit or  indebtedness.  Each  Lender
agrees  promptly to notify the Borrower and the  Administrative  Agent after any
such set-off and application made by such Lender;  provided,  however,  that the
failure to give such notice  shall not affect the  validity of such  set-off and
application.

10.10  Interest  Rate  Limitation.  Notwithstanding  anything  to  the  contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents  shall not exceed the Highest Lawful Rate. If the  Administrative
Agent or any Lender shall receive interest in an amount that exceeds the Highest
Lawful Rate, the excess  interest shall be applied to the principal of the Loans
or,  if  it  exceeds  such  unpaid  principal,  refunded  to  the  Borrower.  In
determining  whether the interest  contracted for,  charged,  or received by the
Administrative  Agent or a Lender exceeds the Highest  Lawful Rate,  such Person
may, to the extent  permitted by applicable  Law, (a)  characterize  any payment
that is not principal as an expense,  fee, or premium rather than interest,  (b)
exclude  voluntary  prepayments  and the  effects  thereof,  and  (c)  amortize,
prorate,  allocate,  and  spread in equal or unequal  parts the total  amount of
interest throughout the contemplated term of the Obligations hereunder.

10.11 Counterparts.  This Agreement may be executed in one or more counterparts,
each of which  shall be  deemed an  original,  but all of which  together  shall
constitute one and the same instrument.

10.12  Integration.  This  Agreement,  together  with the other Loan  Documents,
comprises  the complete and  integrated  agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements,  written or oral,
on such subject matter.  In the event of any conflict  between the provisions of
this  Agreement  and those of any other Loan  Document,  the  provisions of this
Agreement shall control;  provided that the inclusion of supplemental  rights or
remedies in favor of the  Administrative  Agent or the Lenders in any other Loan
Document shall not be deemed a conflict with this Agreement.  Each Loan Document
was drafted with the joint  participation of the respective  parties thereto and
shall be  construed  neither  against  nor in favor of any party,  but rather in
accordance with the fair meaning thereof.

10.13  Survival of  Representations  and  Warranties.  All  representations  and
warranties  made  hereunder  and in any other Loan  Document  or other  document
delivered  pursuant  hereto or thereto or in  connection  herewith or  therewith
shall   survive  the   execution   and  delivery   hereof  and   thereof.   Such
representations  and  warranties  have  been  or  will  be  relied  upon  by the
Administrative  Agent and each Lender,  regardless of any investigation  made by
the  Administrative  Agent or any Lender or on their behalf and  notwithstanding
that the Administrative  Agent or any Lender may have had notice or knowledge of
any  Default at the time of any Credit  Extension,  and shall  continue  in full
force and  effect as long as any Loan or any other  Obligation  hereunder  shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.
<PAGE>

10.14  Severability.  If any  provision  of this  Agreement  or the  other  Loan
Documents is held to be illegal,  invalid or  unenforceable,  (a) the  legality,
validity and  enforceability  of the remaining  provisions of this Agreement and
the other Loan Documents  shall not be affected or impaired  thereby and (b) the
parties  shall  endeavor  in good faith  negotiations  to replace  the  illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which  comes  as  close  as  possible  to  that  of  the  illegal,   invalid  or
unenforceable  provisions.  The  invalidity  of  a  provision  in  a  particular
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.

10.15    Tax Forms.

     (a)

          (i) Each  Lender  that is not a  "United  States  person"  within  the
     meaning of  Section  7701(a)(30)  of the Code (a  "Foreign  Lender")  shall
     deliver  to the  Administrative  Agent,  prior to  receipt  of any  payment
     subject to  withholding  under the Code (or upon accepting an assignment of
     an interest  herein),  two duly signed  completed copies of either IRS Form
     W-8BEN or any  successor  thereto  (relating  to such  Foreign  Lender  and
     entitling it to an exemption from, or reduction of,  withholding tax on all
     payments to be made to such Foreign Lender by the Borrower pursuant to this
     Agreement)  or IRS Form W-8ECI or any  successor  thereto  (relating to all
     payments to be made to such Foreign Lender by the Borrower pursuant to this
     Agreement)  or such other  evidence  satisfactory  to the  Borrower and the
     Administrative  Agent that such Foreign  Lender is entitled to an exemption
     from,  or reduction  of, U.S.  withholding  tax,  including  any  exemption
     pursuant to Section  881(c) of the Code.  Thereafter and from time to time,
     each such Foreign  Lender shall (A) promptly  submit to the  Administrative
     Agent such additional duly completed and signed copies of one of such forms
     (or such  successor  forms as shall  be  adopted  from  time to time by the
     relevant  United States taxing  authorities) as may then be available under
     then current United States Laws and  regulations to avoid, or such evidence
     as is  satisfactory  to the  Borrower and the  Administrative  Agent of any
     available  exemption from or reduction of, United States  withholding taxes
     in  respect  of all  payments  to be  made to such  Foreign  Lender  by the
     Borrower pursuant to this Agreement, (B) promptly notify the Administrative
     Agent of any change in  circumstances  which would modify or render invalid
     any claimed exemption or reduction, and (C) take such steps as shall not be
     materially  disadvantageous  to it,  in the  reasonable  judgment  of  such
     Lender, and as may be reasonably necessary (including the re-designation of
     its Lending  Office) to avoid any  requirement of applicable  Laws that the
     Borrower make any deduction or withholding  for taxes from amounts  payable
     to such Foreign Lender.
<PAGE>

          (ii) Each Foreign  Lender,  to the extent it does not act or ceases to
     act for its own  account  with  respect to any  portion of any sums paid or
     payable to such Lender under any of the Loan Documents (for example, in the
     case of a typical  participation  by such  Lender),  shall  deliver  to the
     Administrative Agent on the date when such Foreign Lender ceases to act for
     its own  account  with  respect  to any  portion  of any such  sums paid or
     payable,  and at such other times as may be necessary in the  determination
     of the Administrative Agent (in the reasonable exercise of its discretion),
     (A) two duly signed completed copies of the forms or statements required to
     be provided by such Lender as set forth above,  to establish the portion of
     any such sums paid or payable  with  respect to which such  Lender acts for
     its own account  that is not subject to U.S.  withholding  tax, and (B) two
     duly signed completed copies of IRS Form W-8IMY (or any successor thereto),
     together  with any  information  such Lender  chooses to transmit with such
     form, and any other  certificate  or statement of exemption  required under
     the Code,  to establish  that such Lender is not acting for its own account
     with respect to a portion of any such sums payable to such Lender.

          (iii) The Borrower shall not be required to pay any additional  amount
     to any Foreign  Lender  under  Section  3.01 (A) with  respect to any Taxes
     required  to be  deducted  or  withheld  on the  basis of the  information,
     certificates  or statements of exemption such Lender  transmits with an IRS
     Form  W-8IMY  pursuant  to this  Section  --------  10.15(a) or (B) if such
     Lender  shall  have  failed to satisfy  the  foregoing  provisions  of this
     Section  10.15(a);  provided  that if such Lender shall have  satisfied the
     requirement  of this  Section  10.15(a)  on the date such  Lender  became a
     Lender or ceased to act for its own  account  with  respect to any  payment
     under any of the Loan  Documents,  nothing in this Section  10.15(a)  shall
     relieve the  Borrower  of its  obligation  to pay any  amounts  pursuant to
     Section 3.01 in the event that, as a result of any change in any applicable
     Law, treaty or governmental rule, regulation or order, or any change in the
     interpretation,  administration or application  thereof,  such Lender is no
     longer properly  entitled to deliver forms,  certificates or other evidence
     at a subsequent date establishing the fact that such Lender or other Person
     for the account of which such Lender receives any sums payable under any of
     the  Loan  Documents  is  not  subject  to  withholding  or is  subject  to
     withholding at a reduced rate.

          (iv) The  Administrative  Agent may, without  reduction,  withhold any
     Taxes  required to be deducted and withheld  from any payment  under any of
     the Loan  Documents  with  respect to which the Borrower is not required to
     pay additional amounts under this Section 10.15(a).
<PAGE>

     (b) Upon the  request of the  Administrative  Agent,  each Lender that is a
"United  States  person"  within the meaning of Section  7701(a)(30) of the Code
shall deliver to the  Administrative  Agent two duly signed  completed copies of
IRS  Form  W-9.  If  such  Lender  fails  to  deliver   such  forms,   then  the
Administrative  Agent may withhold  from any interest  payment to such Lender an
amount equivalent to the applicable back-up withholding tax imposed by the Code,
without reduction.

     (c) If any Governmental Authority asserts that the Administrative Agent did
not properly  withhold or backup withhold,  as the case may be, any tax or other
amount from payments made to or for the account of any Lender, such Lender shall
indemnify  the  Administrative  Agent  therefor,  including  all  penalties  and
interest,  any taxes imposed by any  jurisdiction  on the amounts payable to the
Administrative  Agent  under this  Section,  and costs and  expenses  (including
Attorney Costs) of the Administrative Agent. The obligation of the Lenders under
this  Section  shall  survive  the  termination  of the  Aggregate  Commitments,
repayment  of  all  other  Obligations  hereunder  and  the  resignation  of the
Administrative Agent.

10.16 Replacement of Lenders. Under any circumstances set forth herein providing
that the  Borrower  shall  have the right to replace a Lender as a party to this
Agreement,  the Borrower may, upon notice to such Lender and the  Administrative
Agent, replace such Lender by causing such Lender to assign its Commitment (with
the  assignment  fee to be paid by the  Borrower in such  instance)  pursuant to
Section 10.07(b) to one or more other Lenders or Eligible  Assignees procured by
the Borrower;  provided,  however,  that if the Borrower elects to exercise such
right with  respect  to any Lender  pursuant  to  Section  3.06(b),  it shall be
obligated  to  replace  all  Lenders   that  have  made  similar   requests  for
compensation  pursuant to Section 3.01 or 3.04.  The  Borrower  shall (x) pay in
full all  principal,  interest,  fees and  other  amounts  owing to such  Lender
through  the date of  replacement  (including  any amounts  payable  pursuant to
Section 3.05),  (y) provide  appropriate  assurances and indemnities  (which may
include  letters of credit) to the L/C Issuer and the Swing Line  Lender as each
may  reasonably  require  with  respect  to any  continuing  obligation  to fund
participation  interests  in any L/C  Obligations  or any Swing  Line Loans then
outstanding,  and (z) release  such Lender from its  obligations  under the Loan
Documents. Any Lender being replaced shall execute and deliver an Assignment and
Assumption with respect to such Lender's  Commitment and  outstanding  Loans and
participations in L/C Obligations and Swing Line Loans.

10.17    Governing Law.

     (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH,
the LAW OF THE STATE OF TEXAS  applicable to agreements made and to be performed
entirely  within such State;  PROVIDED  THAT THE  ADMINISTRATIVE  Agent AND EACH
LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
<PAGE>

     (b) ANY LEGAL ACTION OR  PROCEEDING  WITH RESPECT TO THIS  AGREEMENT OR ANY
OTHER LOAN  DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS  SITTING
IN DALLAS  COUNTY,  TEXAS OR OF THE UNITED  STATES FOR THE NORTHERN  DISTRICT OF
SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,  THE BORROWER,  THE
ADMINISTRATIVE Agent AND EACH LENDER CONSENTS,  FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE  JURISDICTION OF THOSE COURTS. THE BORROWER,  THE
ADMINISTRATIVE Agent AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY  OBJECTION  TO THE  LAYING  OF VENUE OR BASED ON THE  GROUNDS  OF FORUM  NON
CONVENIENS,  WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING  IN SUCH  JURISDICTION  IN  RESPECT  OF ANY  LOAN  DOCUMENT  OR OTHER
DOCUMENT RELATED THERETO. THE BORROWER, THE ADMINISTRATIVE Agent AND EACH LENDER
WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

10.18  Waiver of Right to Trial by Jury.  EACH  PARTY TO THIS  AGREEMENT  HEREBY
EXPRESSLY  WAIVES  ANY RIGHT TO TRIAL BY JURY OF ANY  CLAIM,  DEMAND,  ACTION OR
CAUSE OF ACTION  ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES  HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT,  OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER  ARISING,  AND WHETHER  FOUNDED IN CONTRACT OR
TORT OR  OTHERWISE;  AND EACH PARTY  HEREBY  AGREES AND  CONSENTS  THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN  EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
<PAGE>

10.19 Entire  Agreement.  This Agreement and the other Loan Documents  represent
the final agreement AMONG the parties and may not be contradicted by evidence of
prior, contemporaneous,  or subsequent oral agreements of the parties. There are
no unwritten oral agreements AMONG the parties.

--------------------------------------------------------------------------------
                   REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
--------------------------------------------------------------------------------

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
                                                     SAFECO CORPORATION

                                By:
                                   ---------------------------------------------

                                      Name:
                                           -------------------------------------

                                     Title:
                                          --------------------------------------

<PAGE>

                                  BANK OF AMERICA, N.A., as Administrative Agent

                                By:
                                  ----------------------------------------------

                                      Name:
                                           -------------------------------------

                                     Title:
                                          --------------------------------------

<PAGE>

            BANK OF AMERICA, N.A., as a Lender, L/C Issuer and Swing Line Lender

                                  By:
                                     -------------------------------------------

                                Name:
                                     -------------------------------------------

                               Title:
                                     -------------------------------------------

<PAGE>

                                                                      EXHIBIT A

                          FORM OF REVOLVING LOAN NOTICE

                                                     Date:_____________,_____
To:      Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of September 18,
2002 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Agreement;" the terms defined therein being used
herein as therein defined), among SAFECO Corporation, a Washington corporation
(the "Borrower"), the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.
The undersigned hereby requests (select one):
        [] A Borrowing of Revolving Loans       [] A conversion or continuation
                                                   of Revolving Loans
1.        On                                                   (a Business Day).
            --------------------------------------------------
2.        In the amount of $                                  .
                            ----------------------------------
3.        Comprised of                                        .
                      ---------------------------------------
                         [Type of Revolving Loan requested]
4.       For Eurodollar Rate Loans:  with an Interest Period of        months.
                                                                -------
The Revolving Borrowing requested herein complies with the proviso to the first
sentence of Section 2.01 of the Agreement.
                                            SAFECO CORPORATION

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

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

<PAGE>

                                                                       Exhibit B

                         FORM OF SWING LINE LOAN NOTICE

                                                       Date:  ___________, _____
To:      Bank of America, N.A., as Swing Line Lender
         Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of September 18,
2002 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Agreement;" the terms defined therein being used
herein as therein defined), among SAFECO Corporation, a Washington corporation
(the "Borrower"), the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.
The undersigned hereby requests a Swing Line Loan:
1.       On                                                   (a Business Day).
           --------------------------------------------------
2.       In the amount of $                                  .
                           ----------------------------------
The Swing Line Borrowing requested herein complies with the requirements of the
provisos to the first sentence of Section 2.04(a) of the Agreement.

                                                     SAFECO CORPORATION

                                       By:
                                         ---------------------------------------

                                      Name:
                                         ---------------------------------------

                                     Title:
                                         ---------------------------------------

                                       By:
                                           -------------------------------------

                                      Name:
                                           -------------------------------------

                                     Title:
                                           -------------------------------------

<PAGE>

                                                                     Exhibit C

                           FORM OF REVOLVING LOAN NOTE

$---------------                                           ---------------------
FOR VALUE RECEIVED, SAFECO CORPORATION, a Washington corporation (the
"Borrower"), hereby promises to pay to the order of ___________________________
(the "Lender"), on the Maturity Date (as defined in the Credit Agreement
referred to below) the principal amount of __________________Dollars
($____________), or such lesser principal amount of Revolving Loans (as defined
in such Credit Agreement) due and payable by the Borrower to the Lender on the
Maturity Date under that certain Credit Agreement, dated as of September 18,
2002 (as amended, extended, supplemented or otherwise modified in writing from
time to time, the "Agreement;" the terms defined therein being used herein as
therein defined), among the Borrower, the Lenders from time to time party
thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and
Swing Line Lender.
The Borrower promises to pay interest on the unpaid principal amount of each
Revolving Loan from the date of such Revolving Loan until such principal amount
is paid in full, at such interest rates, and at such times as are specified in
the Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent's Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.
This Note is one of the Revolving Loan Notes referred to in the Agreement, is
entitled to the benefits thereof and is subject to optional and mandatory
prepayment in whole or in part as provided therein. Upon the occurrence of one
or more of the Events of Default specified in the Agreement, all amounts then
remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable all as provided in the Agreement. Revolving Loans
made by the Lender shall be evidenced by one or more loan accounts or records
maintained by the Lender in the ordinary course of business. The Lender may also
attach schedules to this Note and endorse thereon the date, amount and maturity
of its Revolving Loans and payments with respect thereto. The Borrower, for
itself, its successors and assigns, hereby waives diligence, presentment,
protest and demand and notice of protest, demand, intent to accelerate,
acceleration, dishonor and non-payment of this Note.

<PAGE>

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.

                                      SAFECO CORPORATION

                                      By:
                                         ---------------------------------------

                                      Name:
                                        ----------------------------------------

                                     Title:
                                         ---------------------------------------

                                      By:
                                         ---------------------------------------

                                      Name:
                                        ----------------------------------------

                                     Title:
                                         ---------------------------------------

<PAGE>

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                REVOLVING LOANS AND PAYMENTS WITH RESPECT THERETO
                                                                              Amount of        Outstanding
                                                                             Principal or       Principal
                      Type of Loan     Amount of Loan   End of Interest     Interest Paid      Balance This
    Date                   Made              Made             Period          This Date            Date         Notation Made By
-------------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------

</TABLE>

<PAGE>

                                                                       EXHIBIT D

                             FORM OF SWING LINE NOTE

$25,000,000 ____________________ FOR VALUE RECEIVED, SAFECO CORPORATION, a
Washington corporation (the "Borrower"), hereby promises to pay to the order of
BANK OF AMERICA, N.A. ("Swing Line Lender"), on the date when due in accordance
with the Credit Agreement referred to below, the aggregate unpaid principal
amount of each Swing Line Loan from time to time made by the Swing Line Lender
to the Borrower under that certain Credit Agreement, dated as of September 18,
2002 (as amended, extended, supplemented or otherwise modified in writing from
time to time, the "Agreement;" the terms defined therein being used herein as
therein defined), among the Borrower, the Lenders from time to time party
thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and
Swing Line Lender. The Borrower promises to pay interest on the unpaid principal
amount of each Swing Line Loan from the date of such Swing Line Loan until such
principal amount is paid in full, at such interest rates and at such times as
provided in the Agreement. All payments of principal and interest shall be made
to the Swing Line Lender in Dollars in immediately available funds at its
Lending Office.
If any amount is not paid in full when due hereunder, such unpaid amount shall
bear interest, to be paid upon demand, from the due date thereof until the date
of actual payment (and before as well as after judgment) computed at the per
annum rate set forth in the Agreement.
This Note is the Swing Line Note referred to in the Agreement, is entitled to
the benefits thereof and is subject to optional and mandatory prepayment in
whole or in part as provided therein. Upon the occurrence of one or more of the
Events of Default specified in the Agreement, all amounts then remaining unpaid
on this Note shall become, or may be declared to be, immediately due and payable
all as provided in the Agreement. Swing Line Loans made by the Swing Line Lender
shall be evidenced by one or more loan accounts or records maintained by Swing
Line Lender in the ordinary course of business. The Swing Line Lender may also
attach schedules to this Note and endorse thereon the date, amount and maturity
of the Swing Line Loans and payments with respect thereto. The Borrower, for
itself, its successors and assigns, hereby waives diligence, presentment,
protest and demand and notice of protest, demand, intent to accelerate,
acceleration, dishonor and non-payment of this Note.

<PAGE>

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.

                                       SAFECO CORPORATION

                                      By:
                                         ---------------------------------------

                                     Name:
                                         ---------------------------------------

                                    Title:
                                         ---------------------------------------

                                       By:
                                          --------------------------------------

                                      Name:
                                          --------------------------------------

                                     Title:
                                          --------------------------------------

<PAGE>

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

               SWING LINE LOANS AND PAYMENTS WITH RESPECT THERETO

                                             Amount of Principal or
                                               Interest Paid This           Outstanding Principal
        Date           Amount of Loan Made          Date                       Balance This Date           Notation Made By
-------------------- ---------------------- --------------------------- ------------------------------ -------------------------

</TABLE>

<PAGE>

                                                                       EXHIBIT E

                         FORM OF COMPLIANCE CERTIFICATE

                                       Financial Statement Date:      ,

To:      Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of September 18,
2002 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Agreement;" the terms defined therein being used
herein as therein defined), among SAFECO Corporation, a Washington corporation
(the "Borrower"), the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.
The undersigned Responsible Officer hereby certifies as of the date hereof that
 he/she is the of the Borrower, and that, as such, he/she is authorized to
 execute and deliver this Certificate to the Administrative Agent on the
behalf of the Borrower, and that:
        [Use following paragraph 1 for fiscal year-end financial statements]
1. Attached hereto as Schedule 1 are the year-end audited financial statements
required by Section 6.01(a) of the Agreement for the fiscal year of the Borrower
ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such section.
        [Use following paragraph 1 for fiscal quarter-end financial statements]
1. Attached hereto as Schedule 1 are the unaudited financial statements required
by Section 6.01(b) of the Agreement for the fiscal quarter of the Borrower ended
as of the above date. Such financial statements fairly present the financial
condition, results of operations and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP as at such date and for such period,
subject only to normal year-end audit adjustments and the absence of footnotes.
2. The undersigned has reviewed and is familiar with the terms of the Agreement
and has made, or has caused to be made under his/her supervision, a detailed
review of the transactions and condition (financial or otherwise) of the
Borrower during the accounting period covered by the attached financial
statements.
3. A review of the activities of the Borrower during such fiscal period has been
made under the supervision of the undersigned with a view to determining whether
during such fiscal period the Borrower performed and observed all its
Obligations under the Loan Documents, and
                                  [select one:]
[to the best knowledge of the undersigned during such fiscal period, the
Borrower performed and observed each covenant and condition of the Loan
Documents applicable to it.]
                                     --or--
[the following covenants or conditions have not been performed or observed and
the following is a list of each such Default and its nature and status:]
4. The representations and warranties of the Borrower contained in Article V of
the Agreement, or which are contained in any document furnished at any time
under or in connection with the Loan Documents, are true and correct on and as
of thedate hereof, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
as of such earlier date, and except that for purposes of this Compliance
Certificate, the representations and warranties contained in subsections (a) and
(b) of Section 5.05 of the Agreement shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of Section
6.01 of the Agreement, including the statements in connection with which this
Compliance Certificate is delivered.
<PAGE>

5. The  financial  covenant  analyses  and  information  set forth on Schedule 2
attached  hereto are true and accurate on and as of ----------  the date of this
Certificate.  IN WITNESS WHEREOF,  the undersigned has executed this Certificate
as of , . ------------------------ ---------------

                                       SAFECO CORPORATION

                                       By:
                                       -----------------------------------------

                                      Name:
                                      ------------------------------------------

                                     Title:
                                       -----------------------------------------

<PAGE>

        For the Quarter/Year ended ___________________("Statement Date")
                                   SCHEDULE 2
                          to the Compliance Certificate
<TABLE>
<S>                               <C>   <C>
                                  ($ in 000's)

I.       Section 7.09 - Shareholders' Equity
         A.       Actual  Shareholders'  Equity at  Statement  Date  (excluding  the effect of any  $__________
                  adjustment under Statement of Financial Accounting Standards No. 115):
         B.       75% of the value of the Existing Trust Securities:                                $__________
         C.       50% of  Consolidated  Net  Income  for each full  fiscal  quarter  ending  after  $__________
                  July 1, 2002 (no deduction for losses):
         D.       25% of Net Cash Proceeds from the issuance and sale of Capital Stock:             $__________
         E.       Minimum required Shareholders' Equity (Lines I.C. + I.D. plus $2,700,000,000)     $__________
         E.       Excess (deficit) for covenant compliance (Line I.E. - (I.A. + I.B.)               $__________

II.      Section 7.10 - Debt to Capitalization Ratio
         A.       Indebtedness at Statement Date:
                  (1)      All obligations for borrowed money and all
                           obligations evidenced by $__________ bonds,
                           debentures, notes, loan agreements or other similar
                           instruments:
                  (2)      All direct or  contingent  obligations  arising under letters of credit  $__________
                           (including  standby  and  commercial),   bankers'   acceptances,   bank
                           guaranties,   surety  bonds  and  similar  instruments  (not  including
                           amounts  owing  under   insurance   policies  or  contracts  or  Surety
                           Instruments issued by Insurance  Subsidiaries in the ordinary course of
                           business):
                  (3)      Net  obligations  under any Swap  Contract and any  Securities  Lending  $__________
                           Arrangement:
                  (4)      All  obligations  to pay the  deferred  purchase  price of  property or  $__________
                           services  (excluding  trade accounts  payable in the ordinary course of
                           business):
                  (5)      Indebtedness  (excluding prepaid interest thereof) secured by a Lien on  $__________
                           property  owned  or being  purchased  (including  indebtedness  arising
                           under conditional sales or other title retention  agreements),  whether
                           or not such  indebtedness  shall  have been  assumed  or is  limited in
                           recourse:
<PAGE>

                  (6)      Obligations under Capital Leases:                                        $__________
                  (7)      Synthetic Lease Obligations:                                             $__________
                  (8)      Obligations in respect of Redeemable Stock:                              $__________
                  (9)      Any Receivables Facility Attributed Indebtedness:                        $__________
                  (10)     All Guaranties in respect of any of the foregoing:                       $__________
                  (11)     25% of the amount of the Existing Trust Securities:                      $__________
                  (12)     100% of the amount of any Additional Trust Securities:                   $__________
                  (13)     Total  (Lines  II.A.(1) + (2) + (3) + (4) + (5) + (6) + (7) + (8) + (9)  $__________
                           + (10) + (11) + (12))
         B.       Capitalization at Statement Date
                  (1)      Line II.A.(13):                                                          $__________
                  (2)      Shareholders'  Equity  (excluding  the effect of any  adjustment  under  $__________
                           Statement of Financial Accounting Standards No. 115):
                  (3)      75% of the value of the Existing Trust Securities:                       $__________
                  (4)      Capitalization (Line II.B.(1) + Line II.B.(2) + Line II.B.(3))           $__________
         C.       Debt to Capitalization Ratio (Line II.A.(13)) / (Line II.B.(4))                   _____ to 1
                  Maximum Allowed                                                                   0.375 to 1

</TABLE>

<PAGE>

                                                                       EXHIBIT F

                            ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this "Assignment and Assumption") is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the "Assignor") and [Insert name of Assignee] (the
"Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (the "Credit
Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee.
The Standard Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor's rights and
obligations as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including, without limitation, Letters of Credit, Guarantees and Swing Line
Loans included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether
known or unknown, arising under or in connection with the Credit Agreement, any
other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the
foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and
(ii) above being referred to herein collectively as, the "Assigned Interest").
Such sale and assignment is without recourse to the Assignor and, except as
expressly provided in this Assignment and Assumption, without representation or
warranty by the Assignor.
1.       Assignor:         ______________________________

2.       Assignee:         ______________________________ [and is an
                  Affiliate/Approved Fund of [identify Lender]1]

3.       Borrower(s):      ______________________________

4.       Administrative Agent: Bank of America, N.A., as the administrative
                               agent under the Credit Agreement
1 Select as applicable
<PAGE>

5.       Credit Agreement: The Credit Agreement, dated as of September 18,
               2002, among SAFECO Corporation,  the Lenders parties thereto, and
               Bank of America,  N.A., as  Administrative  Agent,  and the other
               agents parties thereto
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

6.       Assigned Interest:

         ----------------------------------- ------------------------------ --------------------------------
                     Aggregate                         Amount of                      Percentage
                     Amount of                        Commitment                      Assigned of
                     Commitment                       Assigned*                      Commitment2
                   for all Lenders*                   ---------                      ----------
                   ---------------

                 $----------------                 $----------------                --------------%

                 $----------------                 $----------------                --------------%

                 $----------------                 $----------------                --------------%

[7.      Trade Date:       __________________]3

Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF
RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
* Amount to be adjusted by the couterparties to take into account any payments or prepayments made between the Trade Date and the
Effective Date.
2 Set forth, to at least 9 decimals, as a percentage of the Commitment of all Lenders thereunder.
3 To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade
Date.

<PAGE>

The terms set forth in this Assignment and Assumption are hereby agreed to:
                                                     ASSIGNOR
                                                     --------
                                                     [NAME OF ASSIGNOR]

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

                                                     ASSIGNEE
                                                     --------
                                                     [NAME OF ASSIGNEE]

                                                     By:
                                                         ------------------------------------------------------------------
                                                                                                                   Title:
[Consented to and]4 Accepted:

[NAME OF ADMINISTRATIVE AGENT], as
  Administrative Agent

By: _________________________________
      Title:

[Consented to:]5

By: _________________________________
      Title:

4 To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.
5 To be added only if the consent of the Borrower and/or other parties (e.g. Swing Line Lender, L/C Issuer) is required by the terms
of the Credit Agreement.
</TABLE>

<PAGE>

                      ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

             Credit Agreement, dated as of September 18, 2002, among
               SAFECO Corporation, the Lenders parties thereto, and
                 Bank of America, N.A., as Administrative Agent

                        STANDARD TERMS AND CONDITIONS FOR
                            ASSIGNMENT AND ASSUMPTION

1.       Representations and Warranties.

1.1. Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it meets all
requirements of an Eligible Assignee under the Credit Agreement (subject to
receipt of such consents as may be required under the Credit Agreement), (iii)
from and after the Effective Date, it shall be bound by the provisions of the
Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 6.01(a) thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender, attached hereto is any documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed by
the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Administrative Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.
<PAGE>

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned interest (including payments of
principal, interest, fees and other amounts) to the Assignee whether such
amounts have accrued prior to or on or after the Effective Date. The Assignor
and the Assignee shall make all appropriate adjustments in payments by the
Administrative Agent for periods prior to the Effective Date or with respect to
the making of this assignment directly between themselves.
3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of Texas.<PAGE>
                                                                     EXHIBIT 4.3

                      FAIR, ISAAC AND COMPANY, INCORPORATED

                                       AND

            STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.

                                   AS TRUSTEE

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

                          SECOND SUPPLEMENTAL INDENTURE

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

                  5.25% Convertible Subordinated Notes due 2008

<PAGE>

        SECOND SUPPLEMENTAL INDENTURE, dated as of October 31, 2002 (the "Second
Supplemental Indenture"), between Fair, Isaac and Company, Incorporated, a
Delaware corporation ("Parent"), and State Street Bank and Trust Company of
California, N.A., as Trustee (the "Trustee").

                                    RECITALS

        WHEREAS, pursuant to the Indenture, dated as of August 24, 2001 (as
amended and supplemented, the "Indenture"), between HNC Software Inc., a
Delaware corporation (the "Company") and the Trustee, the Company issued
$150,000,000 aggregate principal amount of 5.25% Convertible Subordinated Notes
due September 1, 2008 (the "Securities");

        WHEREAS, the Company, Parent and the Trustee have entered into a First
Supplemental Indenture, dated as of August 5, 2002 (the "First Supplemental
Indenture"), which provides (i) that the Securities shall be convertible into
shares of Parent Common Stock, (ii) for adjustments of the Conversion Rate which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in Article 4 of the Indenture, and (iii) for a full and unconditional
subordinated guarantee of the obligations of the Company under the Indenture and
the Securities by Parent on the terms and conditions set forth therein;

        WHEREAS, the Board of Directors of Parent has determined to merge the
Company, now a wholly-owned subsidiary of Parent, with and into Parent (the
"Upstream Merger"), with Parent being the surviving corporation in the Upstream
Merger;

        WHEREAS, Section 7.1 of the Indenture requires that, in connection with
the Upstream Merger, Parent execute and deliver a supplemental indenture
pursuant to which Parent shall expressly assume the due and punctual payment of
the principal of and any premium and interest on all the Securities and the
performance or observance of every covenant of the Indenture on the part of the
Company to be performed or observed and the conversion rights shall be provided
for in accordance with Article 4 of the Indenture;

        WHEREAS, the Upstream Merger and Parent's assumption of the Company's
obligations under the Indenture pursuant to this Second Supplemental Indenture
makes certain provisions of the First Supplemental Indenture unnecessary and/or
undesirable, including Parent's guarantee contained therein;

        WHEREAS, all conditions and requirements necessary to make this Second
Supplemental Indenture a valid, binding and legal instrument in accordance with
the terms of the Indenture have been performed and fulfilled and the execution
and delivery hereof have been in all respects duly authorized; and

        WHEREAS, in accordance with the terms of the Indenture, Parent has
requested that the Trustee execute and deliver this Second Supplemental
Indenture;

                                       1
<PAGE>

        NOW, THEREFORE, in consideration of the above premises, each of Parent
and the Trustee agrees, for the benefit of each other and for the equal and
ratable benefit of the Holders of the Securities, as follows:

                                I. EFFECTIVENESS

1.1 Effectiveness of Second Supplemental Indenture. Assuming it has been duly
executed by all parties, this Second Supplemental Indenture will be effective
concurrently with the effectiveness of the Upstream Merger (the "Effective
Time").

                                 II. ASSUMPTION

2.1 Assumption. Parent hereby expressly assumes, upon the Effective Time in
accordance with Section 7.1 of the Indenture, the due and punctual payment of
the principal of and any premium and interest on all the Securities and the
performance or observance of every covenant of the Indenture on the part of the
Company to be performed or observed.

2.2 Substitution of Parent. Pursuant to Section 7.2 of the Indenture, upon the
Effective Time, Parent shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture with the same
effect as if Parent had been named as the Company therein.

                          III. TERMINATION OF GUARANTEE

3.1 Termination of Guarantee. Upon the Effective Time, Article III and Article
IV of the First Supplemental Indenture are deleted in their entirety, and all of
Parent's rights and obligations set forth therein shall terminate and no longer
have any force or effect.

                IV. DELETION OF CERTAIN MISCELLANEOUS AMENDMENTS

4.1 Deletion of Certain Miscellaneous Amendments. Sections 5.3(c), 5.3(g) and
5.3(h) of the First Supplemental Indenture are hereby deleted in their entirety.

                        V. REGISTRATION RIGHTS AGREEMENT

5.1 Parent Covenant. Parent hereby represents and covenants to each Holder of
the Securities and the Trustee that it will assume upon the Effective Time all
of the Company's obligations under the Registration Rights Agreement from and
after the Effective Time, except that all obligations under the Registration
Rights Agreement to register Company common stock shall be obligations of Parent
to register Common Stock.

                                       2
<PAGE>

                           VI. NOTIFICATION TO HOLDERS

6.1 Notice to Holders of Securities. Parent shall notify the Holders of the
execution of this Second Supplemental Indenture. Any failure of Parent to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of this Second Supplemental Indenture.

                          VII. MISCELLANEOUS PROVISIONS

7.1 Incorporation of Indenture. All the provisions of this Second Supplemental
Indenture shall be deemed to be incorporated in, and made a part of, the
Indenture; and the Indenture, as supplemented and amended by this Second
Supplemental Indenture, shall be read, taken and construed as one and the same
instrument.

7.2 Conflict with Trust Indenture Act. If any provision hereof limits, qualifies
or conflicts with another provision hereof which is required to be included in
this Second Supplemental Indenture by any of the provisions of the Trust
Indenture Act, the required provision shall control.

7.3 Terms Defined. For all purposes of this Second Supplemental Indenture,
except as otherwise defined herein, capitalized terms used in this Second
Supplemental Indenture shall have the meanings ascribed to such terms in the
Indenture.

7.4 Indenture. Except as amended hereby, the Indenture and the Securities are in
all respects ratified and confirmed and all their terms shall remain in full
force and effect. From and after the Effective Time, any reference to the
Indenture or the Securities shall mean the Indenture or the Securities, as the
case may be, as so supplemented and/or amended by this Second Supplemental
Indenture.

7.5 Governing Law. The internal laws of the State of New York shall govern this
Second Supplemental Indenture, without regard to the principles of the conflicts
of law thereof.

7.6 Successors. All agreements of Parent in this Second Supplemental Indenture
and the Securities shall bind their respective successors and assigns. This
Second Supplemental Indenture shall be binding upon each Holder of Securities
and their respective successors and assigns.

7.7 Multiple Counterparts. The parties may sign multiple counterparts of this
Second Supplemental Indenture. Each signed counterpart shall be deemed an
original, but all of them together represent the same agreement.

7.8 Effectiveness. In accordance with Section 7.1 of the Indenture, there shall
have been delivered to the Trustee (i) an Officers' Certificate and

                                       3
<PAGE>
(ii) an Opinion of Counsel, in each case stating that the Upstream Merger and
this Second Supplemental Indenture comply with Article 7 of the Indenture and
that all of the conditions precedent provided for in the Indenture relating to
the Upstream Merger have been complied with.

7.9 Trustee Disclaimer. The Trustee accepts the amendment of the Indenture and
the Securities effected by this Second Supplemental Indenture and agrees to
execute the trust created by the Indenture as hereby amended, but only upon the
terms and conditions set forth in the Indenture, including the terms and
provisions defining and limiting the liabilities and responsibilities of the
Trustee, which terms and provisions shall in like manner define and limit its
liabilities and responsibilities in the performance of the trust created by the
Indenture as hereby amended. Without limiting the generality of the foregoing,
the Trustee shall not be responsible in any manner whatsoever for or with
respect to any of the recitals or statements contained herein, all of which
recitals or statements are made solely by Parent, or for or with respect to (i)
the validity, efficacy or sufficiency of this Second Supplemental Indenture or
any of the terms or provisions hereof, (ii) the proper authorization hereof by
Parent by corporate action or otherwise, (iii) the due execution hereof by
Parent or (iv) the consequences (direct or indirect and whether deliberate or
inadvertent) of any amendment herein provided for, and the Trustee makes no
representation with respect to any such matters.

7.10 Separability Clause. In case any clause of this Second Supplemental
Indenture shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

            [The remainder of this page is intentionally left blank.]

                                       4
<PAGE>

        IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, all as of the date first written
above.

FAIR, ISAAC AND COMPANY, INCORPORATED

By:    /s/ ANDREA M. FIKE
       ---------------------------------

Name:  Andrea M. Fike
       ---------------------------------

Title: VP, Secretary and General Counsel
       ---------------------------------

STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
AS TRUSTEE

By:    /s/ PAULA OSWALD
       ------------------------------

Name:  Paula Oswald
       ------------------------------

Title: Vice President
       ------------------------------

                [SIGNATURE PAGE TO SECOND SUPPLEMENTAL INDENTURE]

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