Document:

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                                                                  EXHIBIT 10.27

                                U.S. $100,000,000

                                CREDIT AGREEMENT

                                   Dated as of

                                November 1, 1996

                                  By and Among

                   PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY,

                               PM HOLDINGS, INC.,

                           THE BANKS SIGNATORY HERETO,

                                       and

                              THE BANK OF NEW YORK,
                                    as Agent

           THIS TRANSACTION WAS ARRANGED BY BNY CAPITAL MARKETS, INC.
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                               TABLE OF CONTENTS

SECTION 1. THE COMMITTED LOAN FACILITY. ...................................... 1
     Section 1.1. The Committed Loans. ....................................... 1
     Section 1.2. Minimum Borrowing Amounts. ................................. 1
     Section 1.3. Manner of Committed Borrowing. ............................. 1

SECTION 2. THE COMPETITIVE BID FACILITY. ..................................... 3
     Section 2.1. The Bid Loans. ............................................. 3
     Section 2.2. Requests for Bid Loans. .................................... 3
     Section 2.3. Notice of Bids; Advice of Rate. ............................ 5
     Section 2.4. Acceptance or Rejection of Bids. ........................... 5
     Section 2.5. Notice of Acceptance or Rejection of Bids. ................. 6
     Section 2.6. Telephonic Notice. ......................................... 7

SECTION 3. INTEREST. ......................................................... 7
     Section 3.1. Domestic Rate Loans. ....................................... 7
     Section 3.2. Adjusted CD Rate Loans. .................................... 8
     Section 3.3. Eurodollar Loans. ......................................... 10
     Section 3.4. Interest on Bid Loans. .................................... 11
     Section 3.5. Default Rate. ............................................. 11
     Section 3.6. Rate Quotations. .......................................... 12
     Section 3.7. Rate Determinations. ...................................... 12
     Section 3.8. Funding Indemnity. ........................................ 12
     Section 3.9. Change of Law. ............................................ 13
     Section 3.10. Unavailability of Deposits or Inability to Ascertain
                   LIBOR or CD Rate. ........................................ 13
     Section 3.11. Increased Cost and Reduced Return. ....................... 14
     Section 3.12. Lending Offices. ......................................... 15
     Section 3.13. Discretion of Bank as to Manner of Funding. .............. 15
     Section 3.14. Exemptions from Withholding. ............................. 15

SECTION 4. PROVISIONS APPLICABLE TO ALL LOANS. .............................. 16
     Section 4.1. Maturity of Loans. ........................................ 16
     Section 4.2. The Notes. ................................................ 17
     Section 4.3. Appointment of Company as Agent for PM. ................... 17
     Section 4.4. Facility Fee. ............................................. 18
     Section 4.5. Agent's Fee. .............................................. 18
     Section 4.6. Voluntary Prepayments. .................................... 18
     Section 4.7. Terminations. ............................................. 19
     Section 4.8. Capital Adequacy. ......................................... 19
     Section 4.9. Place and Application of Payments. ........................ 20
     Section 4.10. Funding by Agent. ........................................ 21
     Section 4.11. Use of Proceeds. ......................................... 21

SECTION 5. REPRESENTATIONS AND WARRANTIES. .................................. 22
     Section 5.1. Corporate Organization and Authority. ..................... 22
     Section 5.2. Financial Statements. ..................................... 22

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     Section 5.3. Full Disclosure. .......................................... 23
     Section 5.4. Restrictions on Borrowers. ................................ 23
     Section 5.5. Pending Litigation. ....................................... 23
     Section 5.6. Licenses and Franchises. .................................. 23
     Section 5.7. Financing is Legal and Authorized. ........................ 24
     Section 5.8. Agreement and Notes Valid and Binding. .................... 24
     Section 5.9. No Defaults. .............................................. 24
     Section 5.10. Governmental Consent. .................................... 24
     Section 5.11. Taxes. ................................................... 25
     Section 5.12. Not an Investment Company. ............................... 25
     Section 5.13. Use of Proceeds. ......................................... 25
     Section 5.14. ERISA. ................................................... 26
     Section 5.15. Compliance with Law and Agreements. ...................... 26
     Section 5.16. Pari Passu. .............................................. 26
     Section 5.17. Ratings. ................................................. 26
     Section 5.18. Environmental Matters. ................................... 26

SECTION 6. CONDITIONS PRECEDENT. ............................................ 27

SECTION 7. BORROWERS COVENANTS. ............................................. 28
     Section 7.1. Corporate Existence, Etc. ................................. 28
     Section 7.2. Insurance. ................................................ 29
     Section 7.3. Taxes, Compliance with Laws. .............................. 29
     Section 7.4. Maintenance of Properties and Authorizations. ............. 29
     Section 7.5. Nature of Business. ....................................... 30
     Section 7.6. Reports and Rights of Inspection. ......................... 30
     Section 7.7. Limitation on Liens. ...................................... 33
     Section 7.8. Adjusted Capital to Assets. ............................... 35
     Section 7.9. Minimum Capital. .......................................... 35
     Section 7.10. 3 to 6 Rated Assets to Net Invested Assets;
                   NAIC Ratings. ............................................ 35
     Section 7.11. 5 to 6 Rated Bonds to Capital. ........................... 36
     Section 7.12. Real Estate Investments to Net Invested Assets. .......... 36
     Section 7.13. Non-Performing Real Estate. .............................. 36
     Section 7.14. Total Debt to Adjusted Capital. .......................... 36
     Section 7.15. ERISA Compliance. ........................................ 37
     Section 7.16. Minimum Ratings. ......................................... 37
     Section 7.17. Mergers, Consolidations and Sales of Assets. ............. 38
     Section 7.18. Risk Based Capital Ratio. ................................ 38

SECTION 8. GUARANTY. ........................................................ 38
     Section 8.1. Guaranty. ................................................. 38
     Section 8.2. Obligations Unconditional. ................................ 39
     Section 8.3. Reinstatement. ............................................ 41
     Section 8.4. Subrogation. .............................................. 41
     Section 8.5. Remedies. ................................................. 42
     Section 8.6. Continuing Guaranty. ...................................... 42
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SECTION 9. EVENTS OF DEFAULT AND REMEDIES. .................................. 42
     Section 9.1. Events of Default. ........................................ 42
     Section 9.2. Non-Bankruptcy Defaults. .................................. 44
     Section 9.3. Bankruptcy Defaults. ...................................... 45

SECTION 10. DEFINITIONS; INTERPRETATION OF AGREEMENT. ....................... 45
     Section 10.1. Definitions. ............................................. 45
     Section 10.2. Accounting Principles. ................................... 55
     Section 10.3. Moody's Ratings and S&P Ratings. ......................... 56
     Section 10.4. Directly or Indirectly. .................................. 56

SECTION 11. THE AGENT FOR THE BANKS. ........................................ 57
     Section 11.1. Appointment and Duties. .................................. 57
     Section 11.2. Sufficiency of the Agreement. ............................ 57
     Section 11.3. Independent Investigation. ............................... 58
     Section 11.4. Agent as Bank. ........................................... 58
     Section 11.5. Indemnification of Agent. ................................ 58
     Section 11.6. Refusal to Act. .......................................... 59
     Section 11.7. Successor Agent. ......................................... 59

SECTION 12. MISCELLANEOUS. .................................................. 59
     Section 12.1. Waiver of Rights. ........................................ 59
     Section 12.2. Non-Business Day. ........................................ 60
     Section 12.3. Documentary Taxes. ....................................... 60
     Section 12.4. Survival of Representations. ............................. 60
     Section 12.5. Survival of Indemnities. ................................. 60
     Section 12.6. Set-off Sharing. ......................................... 61
     Section 12.7. Notices. ................................................. 62
     Section 12.8. Counterparts. ............................................ 62
     Section 12.9. Successors and Assigns. .................................. 62
     Section 12.10. Participants. ........................................... 63
     Section 12.11. Assignment Agreements. .................................. 63
     Section 12.12. Costs and Expenses. ..................................... 64
     Section 12.13. Amendments and Waivers. ................................. 65
     Section 12.14. Governing Law. .......................................... 65
     Section 12.15. Entire Agreement. ....................................... 65
     Section 12.16. Headings and Severability. .............................. 65
     Section 12.17. Consent to Jurisdiction. ................................ 66
     Section 12.18. Service of Process. ..................................... 66
     Section 12.19. No Limitation on Service or Suit. ....................... 66
     Section 12.20. WAIVER OF TRIAL BY JURY ................................. 66

Exhibit  A  -     COMMITTED LOAN NOTE
Exhibit  B  -     BID NOTE
Exhibit  C  -     BID LOAN REQUEST CONFIRMATION
Exhibit  D  -     INVITATION TO BID
Exhibit  E  -     CONFIRMATION OF BID
Exhibit  F  -     NOTICE OF ACCEPTANCE OF BID
Exhibit  G  -     [RESERVED]
Exhibit  H  -     BORROWING CERTIFICATE
Exhibit  I  -     CERTAIN TAX ASSESSMENTS
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         Credit Agreement, dated as of November 1, 1996, by and among Phoenix
Home Life Mutual Insurance Company, a New York mutual insurance company (the
"Company"), PM Holdings, Inc., a Connecticut corporation ("PM", and together
with the Company, the "Borrowers"), the lenders party hereto from time to time
(each a "Bank" and, collectively, the "Banks"), and The Bank of New York
("BNY"), as administrative agent for the Banks.

SECTION 1. THE COMMITTED LOAN FACILITY.

         Section 1.1. The Committed Loans.

         Subject to and on the terms and conditions hereof, each Bank, by its
acceptance hereof, severally agrees to make a loan or loans (individually a
"Committed Loan" and collectively the "Committed Loans") to the Borrowers from
time to time prior to the Termination Date on a revolving basis not at any time
exceeding in the aggregate the amount of its commitment as set forth on the
applicable signature page hereof or on an Assignment Agreement to which it is a
party, all as reduced from time to time pursuant to Section 4.7 hereof (its
"Commitment" and cumulatively for all the Banks the "Commitments"). The
aggregate principal amount of all Loans outstanding at any one time shall not
exceed the Commitments as then in effect. Each Borrowing of Committed Loans
shall be made ratably from the Banks in proportion to the amounts of their
Commitments. The relevant Borrower may elect that any Committed Borrowing be
made available by means of (i) Domestic Rate Loans, (ii) Adjusted CD Rate Loans
or (iii) Eurodollar Loans, which Loans may be repaid and the principal amount
thereof reborrowed through the Termination Date, subject to all reductions in
the Commitments permitted by Section 4.7 hereof and all other terms and
conditions hereof. Each Borrower promises to pay interest on each Committed Loan
made to it at the rates and times provided in Section 3 hereof.

         Section 1.2. Minimum Borrowing Amounts.

         Each Committed Borrowing of Domestic Rate Loans shall be in an amount
not less than $1,000,000 or an integral multiple of $1,000,000 in excess
thereof, and each Committed Borrowing of Fixed Rate Loans shall be in an amount
not less than $3,000,000 or an integral multiple of $1,000,000 in excess
thereof.

         Section 1.3. Manner of Committed Borrowing.

         (a) Notice to the Agent. The Company shall on its own behalf or on
behalf of PM, as appropriate, give telephonic, telex or telecopy notice to the
Agent (which notice shall be irrevocable once given and if by telephone shall be
promptly confirmed in writing) by no later than 10:00 a.m. (New York time) (i)
on the date at least three (3) Business Days prior to the date of each requested
Committed Borrowing of Eurodollar Loans, (ii) on the date at least one (1)
Business Day prior to the date of each requested Committed Borrowing of Adjusted
CD Rate Loans, and (iii) on the date of each requested Committed Borrowing of
Domestic Rate Loans. Each such notice shall specify
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the Borrower, the date of the requested Borrowing (which shall be a Business
Day), the amount of the requested Borrowing, the type of Loans to comprise such
Borrowing and, if such Borrowing is to be comprised of Fixed Rate Loans, the
Interest Period applicable thereto. The Borrowers agree that the Agent may rely
on any such telephonic, telex or telegraphic notice given by any person which it
in good faith believes is an Authorized Representative without the necessity of
independent investigation and in the event any notice by such means conflicts
with the written confirmation, such notice shall govern if the Agent has acted
in reliance thereon.

         (b) Notice to the Banks. The Agent shall give telephonic, telex,
telecopy or facsimile notice to each of the Banks of any Committed Borrowing
request received pursuant to Section 1.3(a) hereof by the close of business on
the date the Agent received the Company's request and, if such notice requests
the Banks to make Committed Loans that are Fixed Rate Loans, the Agent shall
give notice to the Company and each of the Banks by like means of the interest
rate applicable thereto, on the day the Agent has made such determination.

         (c) Failure to Notify. In the event the Company (on its own behalf or
on behalf of PM, as appropriate) fails to give notice pursuant to Section 1.3(a)
hereof of the reborrowing of the principal amount of any maturing Borrowing of
Fixed Rate Loans and has not notified the Agent by 10:00 a.m. (New York time) on
the day such Borrowing matures that it intends to repay such Borrowing, the
Company shall be deemed to have requested a Committed Borrowing of Domestic Rate
Loans on such day in the amount of the maturing Borrowing of Fixed Rate Loans.

         (d) Disbursement. Not later than noon (New York time) on the date of
any Committed Borrowing, each Bank shall make available its Committed Loan in
funds immediately available in New York, New York at the office of the Agent,
except to the extent such Borrowing is a reborrowing, in whole or in part, of
the principal amount of a maturing Committed Borrowing of Fixed Rate Loans (a
"Refunding Borrowing"), in which case each Bank shall record the Loan made by it
as a part of such Refunding Borrowing on its books or records or on a schedule
to the Committed Loan Note held by it, and shall effect the repayment, in whole
or in part, as appropriate, of its maturing Fixed Rate Loan through the proceeds
of such new Committed Loan. Subject to Section 6 hereof, the Agent shall make
the proceeds of each Borrowing other than Refunding Borrowings available to the
applicable Borrower at the Agent's office in New York, New York.

SECTION 2. THE COMPETITIVE BID FACILITY.

         Section 2.1. The Bid Loans.

         At any time before the Termination Date, the Company (on its own behalf
or on behalf of PM, as appropriate) may request the Banks to offer to make
uncommitted loans (each a "Bid Loan" and collectively the "Bid Loans") to it or
to PM in the manner set

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forth in this Section 2 and in amounts such that the aggregate principal amount
of all Committed Loans and Bid Loans at any time outstanding hereunder shall not
exceed the Commitments of the Banks then in effect. The Banks may, but shall
have no obligation to, make such offers and the applicable Borrower may, but
shall have no obligation to, accept any such offers in the manner set forth in
this Section 2. Each Bank may offer to make Bid Loans in any amount (whether
greater than, equal to, or less than its Commitment), subject to the limitation
that the aggregate principal amount of all Loans outstanding at any time may not
at any time exceed the Commitments then in effect and subject to the other
conditions of this Section 2.

         Section 2.2. Requests for Bid Loans.

         (a) Requests and Confirmations. In order to request a Borrowing of Bid
Loans (a "Bid Loan Request"), the Company (on its own behalf or on behalf of PM,
as appropriate) shall give telephonic notice to the Agent no later than 2:00
p.m. (New York time) one (1) Business Day before the proposed Borrowing Date,
followed on the same day by a duly completed confirmation (a "Bid Loan Request
Confirmation"), delivered by telecopier or other means of facsimile
communication, substantially in the form of Exhibit C hereto or otherwise
containing the information required by this Section 2.2, to be received by the
Agent no later than 2:30 p.m. (New York time) on such day. Bid Loan Request
Confirmations that do not conform substantially to the format of Exhibit C
hereto or otherwise contain the information required by this Section 2.2 may be
rejected by the Agent, and the Agent shall give telephonic notice to the Company
of such rejection promptly after it determines (which determination shall be
conclusive) that the Bid Loan Request Confirmation does not substantially
conform to the format of Exhibit C hereto or otherwise contain the information
required by this Section 2.2. Requests for Bid Loans shall in each case refer to
this Agreement and specify (i) the proposed Borrowing Date, (ii) the aggregate
principal amount thereof (which shall not be less than $1,000,000 and shall be
an integral multiple of $1,000,000), (iii) the proposed term of the Bid Loan and
(iv) the proposed Borrower.

         (b) Invitation to Bid. Upon receipt by the Agent of a Bid Loan Request
Confirmation that conforms substantially to the format of Exhibit C hereto or
otherwise contains the information required by this Section 2.2, the Agent
shall, by telephone (no later than 3:30 p.m. (New York time) on the same day the
Agent receives a Bid Loan Request Confirmation), promptly confirmed by a
telecopy or other form of facsimile communication in the form of Exhibit D
hereto, invite each Bank to bid, on the terms and conditions of this Agreement,
to make Bid Loans pursuant to such Bid Loan Request.

         (c) Bids. Each Bank may, in its sole discretion, offer to make a Bid
Loan or Loans (a "Bid") to the relevant Borrower responsive to the related Bid
Loan Request. Each Bid by a Bank must be received by the Agent by telephone not
later than 9:00 a.m. (New York time) on the proposed Borrowing Date promptly
confirmed in writing by a duly completed confirmation (a "Confirmation of Bid")
delivered by telecopier or other

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means of facsimile communication substantially in the form of Exhibit E hereto
or otherwise containing the information required by this subsection (c), to be
received by the Agent on the same day; provided, however, that any Bid made by a
Bank which is the Agent must be made by telephone to the Company by no later
than 8:45 a.m. (New York time) on such day. Each Bid and each Confirmation of
Bid shall refer to this Agreement and specify (x) the interest rate (which shall
be computed on the basis of a 360 day year and actual days elapsed for a period
equal to the proposed term of the Bid Loan) at which the relevant Bank is
prepared to make such Bid Loan, (y) the principal amount of such Bid Loan, which
(1) shall be in a minimum principal amount of $1,000,000, or an integral
multiple of $1,000,000 in excess thereof, and (2) may equal the entire principal
amount requested by the Company, and (z) the maturity with respect to such Bid
Loan and the last day thereof. The Agent shall reject any Bid if such Bid (i)
does not specify all of the information specified in the immediately preceding
sentence, (ii) contains any qualifying, conditional, or similar language other
than as provided for in the immediately preceding sentence, (iii) proposes terms
other than or in addition to those set forth in the Bid Loan Request to which it
responds other than as provided for in the immediately preceding sentence, or
(iv) is received by the Agent later than 9:00 a.m. (New York time). Any Bid
submitted by a Bank pursuant to this Section 2.2 shall be irrevocable and shall
be promptly confirmed by a telecopy or other form of facsimile communication in
the form of Exhibit E hereto; provided that in all events the telephone Bid
received by the Agent shall be binding on the relevant Bank and shall not be
altered, modified, or in any other manner affected by any inconsistent terms
contained in, or terms missing from, such Bank's Confirmation of Bid. Each offer
contained in a Bid to make a Bid Loan in a certain amount, at a certain interest
rate, and for a certain term is referred to herein as an "Offer".

         Section 2.3. Notice of Bids; Advice of Rate.

         The Agent shall give telephonic notice to the Company no later than
9:15 a.m. (New York time) on the proposed Borrowing Date of the number of Bids
made, the interest rate(s) and maturities applicable to each Bid, the maximum
principal amount bid at each interest rate for each maturity, and the identity
of the Bank making, such Bid. The Agent shall send a written summary of all Bids
received by it to the Company on the same day.

         Section 2.4. Acceptance or Rejection of Bids.

         The Company (on its behalf or on behalf of PM, as appropriate) may in
its sole and absolute discretion, subject only to the provisions of this Section
2.4, irrevocably accept or reject, in whole or in part, any Offer. No later than
9:45 a.m. (New York time) on the proposed Borrowing Date, the Company shall give
telephonic notice to the Agent of whether and to what extent it has decided to
accept or reject on its behalf or on behalf of PM (as appropriate) any or all of
the Offers made in response to a Bid Loan Request, which notice shall be
promptly confirmed by a telecopy or other form of facsimile

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communication to be received by the Agent on the proposed Borrowing Date;
provided, however, that in the event any Offers are accepted, (i) the Company
shall accept Offers solely on the basis of ascending interest rates, (ii) if the
Company declines to effect a Borrowing (on its own behalf or on behalf of PM, as
appropriate) of the maximum principal amount of Bid Loans in respect of which
Offers at a particular interest rate for a particular maturity have been made,
or is prevented from doing so by any other condition hereof, then the Company
shall accept a pro rata portion of each such Offer, based as nearly as possible
on the ratio of the maximum aggregate principal amounts of Bid Loans for which
each such Offer was made by each Bank (provided that, if the available principal
amount of Bid Loans to be so allocated is not sufficient to enable Bid Loans to
be so allocated to each relevant Bank in integral multiples of $500,000, then
the Company may round allocations up or down in integral multiples not less than
$100,000 as it shall deem appropriate), (iii) the aggregate principal amount of
all Offers accepted by the Company (on its behalf or on behalf of PM, as
appropriate) shall not exceed the maximum amount contained in the related Bid
Loan Request Confirmation, and (iv) no Offer of a Bid Loan shall be accepted in
a principal amount less than $1,000,000. Any telephonic notice given by the
Company pursuant to this Section 2.4 shall be irrevocable and shall not be
altered, modified, or in any other manner affected by any inconsistent terms
contained in, or terms missing from, any written confirmation of such notice.

         Section 2.5. Notice of Acceptance or Rejection of Bids.

         (a) Notice to Banks Making Bids. The Agent shall give telephonic notice
to each Bank whether any of the Offers contained in its Bid has been accepted
(and if so, in what amount, at what interest rate and for what term) no later
than 10:00 a.m. (New York time) on the proposed Borrowing Date, and each
successful bidder will thereupon become bound, subject to Section 6 and the
other applicable conditions hereof, to make the Bid Loan(s) in respect of which
its Bid has been accepted. As soon as practicable thereafter the Agent shall
send written notice substantially in the form of Exhibit F hereto to each such
successful bidder; provided, however, that failure to give such notice shall not
affect the obligation of such successful bidder to disburse its Bid Loans as
herein required.

         (b) Disbursement of Bid Loans. Not later than noon (New York time) on
the Borrowing Date for each Borrowing of a Bid Loan(s), each Bank bound to make
a Bid Loan(s) in accordance with Section 2.5(a) hereof shall make available to
the Agent the principal amount of each such Bid Loan in immediately available
funds at the Agent's principal office in New York, New York. Subject to Section
6 hereof, the Agent shall promptly thereafter make available to the relevant
Borrower as directed by the Company like funds as received from each Bank, at
such office of the Agent in New York, New York.

         (c) Bid Summaries to the Banks. Before the close of business on each
Borrowing Date for Bid Loans, the Agent shall endeavor to notify each Bank of
the

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aggregate amount of Bid Loans advanced pursuant to a Bid Loan Request on such
Borrowing Date and the lowest and highest interest rates at which Bid Loans were
made for each maturity.

         Section 2.6. Telephonic Notice.

         Each Bank's telephonic notice to the Agent of its Bid pursuant to
Section 2.2(c) hereof, and the Company's telephonic acceptance of any Offer (on
its own behalf or on behalf of PM, as appropriate) contained in a Bid pursuant
to Section 2.4 hereof, shall be irrevocable and binding on such Bank and the
relevant Borrower and shall not be altered, modified, or in any other manner
affected by any inconsistent terms contained in, or missing from, any telecopy
or other confirmation of such telephonic notice. It is understood and agreed by
the parties hereto that the Agent shall be entitled to act, or to fail to act,
hereunder in reliance on its records of any telephonic notices provided for
herein and that the Agent shall not incur any liability to any Person in so
doing if its records conflict with any telecopy or other confirmation of a
telephonic notice or otherwise, provided that the Agent has acted, or failed to
act, in good faith. It is further understood and agreed by the parties hereto
that the times of day as set forth in this Section 2 are for the convenience of
all the parties for providing notices and that no party shall incur any
liability or other responsibility for any failure to provide such notices within
the specified times; provided, however, that the Agent shall have no obligation
to notify the Company of any Bid received by it later than 9:00 a.m. (New York
time) on the proposed Borrowing Date, and no acceptance by the Company (on its
own behalf or on behalf of PM, as appropriate) of any Offer contained in a Bid
shall be effective to bind any Bank to make a Bid Loan, nor shall the Agent be
under any obligation to notify any Person of an acceptance, if notice of such
acceptance is received by the Agent later than 9:45 a.m. (New York time) on the
proposed Borrowing Date.

SECTION 3. INTEREST.

         Section 3.1. Domestic Rate Loans.

         Each Domestic Rate Loan made by a Bank shall bear interest (computed on
the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed except when clause (ii) of the definition of the term "Domestic Rate" is
applicable, in which case the computation shall be made on the basis of a year
of 360 days for the actual number of days elapsed) on the unpaid principal
amount thereof from time to time outstanding from the date such Loan is made
until maturity (whether by acceleration or otherwise) at a rate per annum,
determined daily, equal to the Domestic Rate from time to time in effect, due
and payable on the last day of each March, June, September and December, and at
maturity (whether by acceleration or otherwise).

         "Domestic Rate" means for any day the greater of:

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<PAGE>   11
         (i) the rate of interest per annum publicly announced in New York City
         by BNY from time to time as its prime commercial lending rate (it being
         understood that such rate may not be such Bank's best or lowest rate),
         with any change in the Domestic Rate resulting from a change in said
         prime commercial lending rate to be effective as of the date of the
         relevant change in said prime commercial lending rate; and

         (ii) the sum of (x) the rate for that day set forth opposite the
         caption "Federal Fund (Effective)" in the daily statistical release
         designated as "Composite 3:30 P.M. Quotations for U.S. Government
         Securities", or any successor publication, published by the Federal
         Reserve Bank of New York or, if such publication shall be suspended or
         terminated, the arithmetic average of the rates quoted to the Agent by
         each of the Reference Banks as the prevailing rates per annum (rounded
         upward, if necessary, to the next higher 1/100 of 1%) bid at
         approximately 11:00 a.m. (New York time) (or as soon thereafter as is
         practicable) on such day by two or more New York Federal funds dealers
         of recognized standing selected by such Reference Bank for the purchase
         at face value of overnight Federal funds in an amount comparable to the
         principal amount owed to such Reference Bank for which such rate is
         being determined, plus (y) 1/2 of 1%.

         Section 3.2. Adjusted CD Rate Loans.

         Each Adjusted CD Rate Loan made by a Bank shall bear interest (computed
on the basis of a year of 360 days and actual days elapsed) on the unpaid
principal amount thereof from time to time outstanding from the date of the
Borrowing of such Loan until maturity (whether by acceleration or otherwise) at
a rate per annum equal to the sum of the Applicable Margin plus the Adjusted CD
Rate, payable on the last day of the applicable Interest Period and at maturity
(whether by acceleration or otherwise) and, if the applicable Interest Period is
longer than 90 days, on the date occurring every 90 days after the date of the
Borrowing of such Loan. The interest rate applicable to an Adjusted CD Rate Loan
shall be fixed during each Interest Period applicable to such Loan except as
expressly provided in this Agreement with respect to adjustments for changes in
the Applicable Margin, the CD Reserve Percentage or the Assessment Rate
applicable to such Loan.

         "Adjusted CD Rate" means a rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined in accordance with the
following formula:

Adjusted CD Rate =          CD Rate
                   ------------------------     Assessment
                  100%-CD Reserve Percentage  +    Rate

         "Assessment Rate" means, with respect to any Interest Period for a
Borrowing of Adjusted CD Rate Loans, the highest assessment rate (rounded
upwards, if necessary, to

                                      -7-
<PAGE>   12
the nearest 1/100 of 1%) imposed by the Federal Deposit Insurance Corporation
for insuring member banks' liabilities for time deposits, as in effect from time
to time. The Adjusted CD Rate shall be automatically adjusted as of the date of
any change in the Assessment Rate.

         "CD Rate" means, with respect to an Interest Period for a Borrowing of
Adjusted CD Rate Loans, the arithmetic average (rounded upwards, if necessary,
to the nearest 1/100 of 1%) of the rates quoted to the Reference Banks in the
secondary market at approximately 10:00 a.m. (New York time) on the first day of
such Interest Period by three New York certificate of deposit dealers of
recognized standing selected by each Reference Bank for the purchase at face
value from each Reference Bank of its U.S. Dollar certificates of deposit in an
amount comparable to the amount of the Borrowing scheduled to be outstanding
during such Interest Period and having a maturity approximately equal to such
Interest Period.

         "CD Reserve Percentage" means, for any day during an Interest Period
for a Borrowing of Adjusted CD Rate Loans, the rate of the maximum reserve
requirement (including, without limitation, any supplemental, marginal and
emergency reserves) imposed by the Board of Governors of the Federal Reserve
System (or any successor) from time to time on non-personal time deposits in the
United States of any member bank of the Federal Reserve System having a maturity
equal to the applicable Interest Period and in an amount equal to the principal
amount of the Borrowing for such Interest Period, subject to any amendments of
such reserve requirement by such Board or its successor, taking into account any
transitional adjustments thereto. Without limiting the effect of the foregoing,
the CD Reserve Percentage shall reflect any other reserves required to be
maintained by a member bank of the Federal Reserve System against (1) any
category of liabilities that includes deposits by reference to which the CD Rate
for Adjusted CD Rate Loans is to be determined or (2) any category of extension
of credit or other assets that include Adjusted CD Rate Loans. The Adjusted CD
Rate shall automatically be adjusted as of the date of any change in the CD
Reserve Percentage.

         Section 3.3. Eurodollar Loans.

         Each Eurodollar Loan made by a Bank shall bear interest (computed on
the basis of a year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from time to time outstanding from the date of the Borrowing of
such Loan until maturity (whether by acceleration or otherwise) at a rate per
annum equal to the sum of the Applicable Margin plus the Adjusted LIBOR Rate,
payable on the last day of the applicable Interest Period and at maturity
(whether by acceleration or otherwise), and, if the applicable Interest Period
is longer than three months, on the date occurring three months after the date
of the Borrowing of such Loan. The interest rate applicable to a Eurodollar Loan
shall be fixed during the Interest Period applicable to such Loan except as
expressly provided in this Agreement with respect to adjustments for changes in
the Applicable Margin or the Eurodollar Reserve Percentage applicable to such
Loan.

                                      -8-
<PAGE>   13
         "Adjusted LIBOR Rate" means a rate per annum determined in accordance
with the following formula:

Adjusted LIBOR Rate  =            L  I  B  O  R
                        --------------------------------------
                   100% - Eurodollar Reserve Percentage

         "LIBOR" means, with respect to an Interest Period for a Borrowing of
Eurodollar Loans, the arithmetic average of the respective rates of interest per
annum, determined by the Reference Banks (rounded upwards, if necessary, to the
nearest 1/100 of 1%), at which deposits of United States Dollars in immediately
available and freely transferable funds are offered to each of the Reference
Banks at 10:00 a.m. (New York time) two Business Days prior to the commencement
of such Interest Period by major banks in the offshore interbank market upon
request by each such Reference Bank for a period equal to such Interest Period
and in an amount equal to the principal amount of the Borrowing scheduled to be
outstanding during such Interest Period.

         "Eurodollar Reserve Percentage" means, for any day during an Interest
Period for a Borrowing of Eurodollar Loans, the maximum rate at which reserves
(including, without limitation, any supplemental, marginal and emergency
reserves) are imposed on such day by the Board of Governors of the Federal
Reserve System (or any successor) on "Eurocurrency liabilities", as defined in
such Board's Regulation D (or in respect of any other category of liabilities
that includes deposits by reference to which the interest rate on Eurodollar
Loans is determined on any category of extension of credit or other assets that
include loans by non-United States offices of any Bank to United States
residents) subject to any amendments of such reserve requirement by such Board
or its successor, taking into account any transitional adjustments thereto, but
without regard to the benefit of credits for proration, exceptions or offsets
which may be available from time to time to any of the Banks. The Adjusted LIBOR
Rate shall automatically be adjusted as of the date of any change in the
Eurodollar Reserve Percentage.

         Section 3.4. Interest on Bid Loans.

         Each Borrower shall pay interest on the unpaid principal amount of each
Bid Loan borrowed by such Borrower from the applicable Borrowing Date to the
maturity thereof at the rate of interest applicable to such Bid Loan as
determined pursuant to the above provisions (calculated on the basis of a 360
day year and the actual number of days elapsed) payable on the maturity date
applicable to such Bid Loan (whether by acceleration or otherwise), and, if the
term of a Bid Loan is longer than 90 days, on each day occurring every 90 days
after the date such Loan is made.

         Section 3.5. Default Rate.

         If any payment of principal on any Loan is not made when due (whether
by acceleration or otherwise), such principal shall bear interest (computed on
the same basis

                                      -9-
<PAGE>   14
as in effect thereon at the time of such default) from the date such payment was
due until paid in full, payable on demand, at a rate per annum equal to:

         (a) with respect to any Domestic Rate Loan, the sum of two percent (2%)
         per annum plus the Domestic Rate from time to time in effect; and

         (b) with respect to any Fixed Rate Loan the sum of two percent (2%) per
         annum plus the rate of interest in effect thereon at the time of such
         default until the end of the Interest Period (or scheduled maturity
         date in the case of Bid Loans) applicable thereto and, thereafter, at a
         rate per annum equal to the sum of two percent (2%) per annum, plus the
         Domestic Rate from time to time in effect.

         Section 3.6. Rate Quotations.

         Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section 3. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Reference Banks.

         Section 3.7. Rate Determinations.

         The Agent shall determine each interest rate applicable to the
Committed Loans hereunder in accordance herewith, and its determination thereof
shall be conclusive and binding except in the case of manifest error or willful
misconduct.

         Section 3.8. Funding Indemnity.

         In the event any Bank shall incur any loss, cost or expense (including,
without limitation, any loss, cost or expense incurred by reason of the
liquidation or re-employment of deposits or other funds acquired by such Bank to
fund or maintain any Fixed Rate Loan or the relending or reinvesting of such
deposits or amounts paid or prepaid to such Bank, and any loss of profit) as a
result of:

         (a) any payment or prepayment of a Fixed Rate Loan on a date other than
         the last day of its Interest Period or its due date for any reason and
         whether or not such payment is required to be made under this
         Agreement;

         (b) any failure (because of a failure to meet the conditions of Section
         6 hereof or otherwise) by a Borrower to borrow a Fixed Rate Loan on the
         date specified in a notice given pursuant to this Agreement; or

         (c) any failure by a Borrower to make any payment of principal on any
         Fixed Rate Loan when due (whether by acceleration or otherwise),

                                      -10-
<PAGE>   15
then, upon the demand of such Bank, the applicable Borrower shall pay to such
Bank such amount as will reimburse such Bank for such loss, cost or expense. If
any Bank makes such a claim for compensation, it shall provide to the applicable
Borrower a certificate executed by an officer of such Bank setting forth the
amount of such loss, cost or expense in reasonable detail (including an
explanation of the basis for and the computation of such loss, cost or expense)
and such certificate shall be deemed prima facie correct.

         Section 3.9. Change of Law.

         Notwithstanding any other provisions of this Agreement or any Note, if
at any time any change in applicable law or regulation or in the interpretation
thereof makes it unlawful for any Bank to make or continue to maintain
Eurodollar Loans or to give effect to its obligations to make Eurodollar Loans
as contemplated hereby, such Bank shall promptly give notice thereof to the
applicable Borrower and the Agent and such Bank's obligations to make or
maintain Eurodollar Loans under this Agreement shall terminate until it is no
longer unlawful for such Bank to make or maintain Eurodollar Loans. To the
extent required to comply with any such law as changed, the applicable Borrower
shall prepay on demand the outstanding principal amount of any such affected
Eurodollar Loans, together with all interest accrued thereon and all other
amounts then due and payable to such Bank under this Agreement including,
without limitation, Section 3.8 hereof; provided, however, subject to all of the
terms and conditions of this Agreement, the applicable Borrower may then elect
to borrow the principal amount of the affected Eurodollar Loan from such Bank by
means of a Domestic Rate Loan or Adjusted CD Rate Loan from such Bank that shall
not be made ratably by the Banks but only from such affected Bank. During the
period when it is unlawful for any Bank to make Eurodollar Loans, Committed
Loans shall continue to be made in such a manner so that the percentage of each
Bank's Commitment in the form of Committed Loans is unchanged, but the Banks
affected by such illegality shall make their share of each Committed Borrowing
which has been requested in the form of Eurodollar Loans available in the form
of a Domestic Rate Loan or Adjusted CD Rate Loan, as requested by the Company.

         Section 3.10. Unavailability of Deposits or Inability to Ascertain
LIBOR or CD Rate.

         If on or prior to the first day of any Interest Period for any
Committed Borrowing of Fixed Rate Loans the Agent is advised by the Reference
Banks that deposits in United States Dollars (in the applicable amounts) are not
being offered to the Reference Banks in the relevant market for such Interest
Period or that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Adjusted LIBOR
Rate or Adjusted CD Rate, then the Agent shall forthwith give notice thereof to
the Borrowers and the Banks, whereupon until the Agent notifies the Borrowers
that the circumstances giving rise to such suspension no longer exist, the

                                      -11-
<PAGE>   16
obligations of the Banks to make Adjusted CD Rate Loans or Eurodollar Loans, as
the case may be, shall be suspended.

         Section 3.11. Increased Cost and Reduced Return.

         If the adoption of or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency:

         (a) shall subject any Bank (or its Lending Office) to any tax, duty or
         other charge with respect to its Fixed Rate Loans, its Notes or its
         obligation to make Fixed Rate Loans, or shall change the basis of
         taxation of payment to any Bank (or its Lending Office) of the
         principal of or interest on its Fixed Rate Loans or any other amounts
         due under this Agreement in respect of its Fixed Rate Loans or its
         obligation to make Fixed Rate Loans (except for changes involving the
         imposition or increase of a tax on the overall net income or gross
         receipts of such Bank or its Lending Office and imposed by the
         jurisdiction or any political subdivision or taxing authority thereof,
         in which such Bank's principal executive office or its Lending Office
         is located); or

         (b) shall impose, modify or deem applicable any reserve, special
         deposit or similar requirements (including, without limitation, any
         such requirement imposed by the Board of Governors of the Federal
         Reserve System, but excluding (A) with respect to any Adjusted CD Rate
         Loan any such requirement included in the applicable CD Reserve
         Percentage and (B) with respect to any Eurodollar Loan any such
         requirement included in the applicable Eurodollar Reserve Percentage)
         against assets of, deposits with or for the account of, or credit
         extended by, any Bank (or its Lending Office) or shall impose on any
         Bank (or its Lending Office) or on the United States market for
         certificates of deposit or the offshore interbank market any other
         condition affecting its Fixed Rate Loans, its Notes or its obligation
         to make Fixed Rate Loans;

and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Note with respect thereto, then,
within fifteen (15) days after demand by such Bank (with a copy to the Agent),
the applicable Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such increased cost or reduction. A certificate
of any Bank claiming compensation under this Section 3.11 and setting forth the
additional amount or amounts to be paid to it hereunder shall be prima facie
correct. In determining such amount, such Bank may use any reasonable averaging
and attribution methods.

                                      -12-
<PAGE>   17
         Section 3.12. Lending Offices.

         Each Bank may, at its option, elect to make its Loans hereunder at the
branch, office or affiliate specified on the appropriate signature pace hereof
(each a "Lending Office") for each type of Loan available hereunder or at such
other of its branches, offices or affiliates as it may from time to time elect
and designate in a notice to the Borrowers and the Agent (but such funds shall
in any event be made available to the applicable Borrower at the office of the
Agent as herein provided for).

         Section 3.13. Discretion of Bank as to Manner of Funding.

         Notwithstanding any other provision of this Agreement, each Bank shall
be entitled to fund and maintain its funding of all or any part of its Loans in
any manner it sees fit, it being understood, however, that for the purposes of
this Agreement all determinations under this Agreement shall be made as if each
Bank had actually funded and maintained each Fixed Rate Loan which is a
Committed Borrowing through the purchase of deposits in the relevant market
having a maturity corresponding to such Loan's Interest Period and bearing an
interest rate equal to the CD Rate or LIBOR, as applicable, for such Interest
Period.

         Section 3.14. Exemptions from Withholding.

         (a) U.S. Withholding Tax Exemptions. Each Bank that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrowers and the Agent duly completed and signed copies of either
Form 1001 (relating to such Bank and entitling it to a complete exemption from
withholding on all amounts to be received by such Bank, including fees, pursuant
to this Agreement and its Loans) or Form 4224 (in duplicate) (relating to all
amounts to be received by such Bank, including fees, pursuant to this Agreement
and its Loans) of the United States Internal Revenue Service. Thereafter and
from time to time, each such Bank shall submit such additional duly completed
and signed copies of one or the other of such forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) and duly updated forms as the Borrowers or Agent may notify such
Bank are required under then-current United States law to avoid United States
withholding taxes on payments in respect of all amounts to be received by such
Bank, including fees, pursuant to this Agreement or the Loans.

         (b) Inability of Bank to Submit Forms. If any Bank determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit any form or
certificate that such Bank is obligated to submit pursuant to subsection (a) of
this Section 3.14 or that such Bank is required to withdraw or cancel any such
form or certificate previously submitted or any such form or certificate
otherwise becomes ineffective or inaccurate, such Bank shall promptly notify the
Borrowers and the Agent of such fact and such Bank shall to that extent not be
obligated to provide any such form or certificate and will be entitled to

                                      -13-
<PAGE>   18
withdraw or cancel any affected form or certificate, as applicable. In the event
any Bank so notifies the Borrowers and the Agent, such Bank agrees that it will
at any time thereafter at the request of the Borrowers assign its Notes and
rights and obligations hereunder to another lender designated by the Borrowers
and approved by the Agent (which approval will not be unreasonably withheld)
under and pursuant to Section 12.11 hereof (except that the $5,000,000
assignment minimum shall not apply) upon payment to it of the amount of
principal and accrued and unpaid interest and fees owing it as of the date such
assignment becomes effective and any amount which would be due it hereunder had
its Fixed Rate Loans been prepaid rather than assigned.

SECTION 4. PROVISIONS APPLICABLE TO ALL LOANS.

         Section 4.1. Maturity of Loans.

         Each Fixed Rate Loan which is a Committed Loan shall mature and become
due and payable on the last day of the Interest Period applicable thereto,
provided that, subject to the terms and conditions of this Agreement, such Fixed
Rate Loan may be refunded through a Refunding Borrowing. Each Domestic Rate Loan
shall mature and become due and payable on the Termination Date and each Bid
Loan shall mature and become due and payable on its maturity date as established
pursuant to Section 2 hereof.

         Section 4.2. The Notes.

         (a) All Committed Loans made to a Borrower by a Bank shall be evidenced
by a promissory note of such Borrower in the form of Exhibit A hereto
(individually a "Committed Loan Note" and collectively the "Committed Loan
Notes"), each such Committed Loan Note to be dated the date hereof, payable to
the order of the applicable Bank in the principal amount of its Commitment and
otherwise in the form of Exhibit A hereto.

         (b) All Bid Loans made to a Borrower by a Bank shall be evidenced by a
promissory note of such Borrower in the form of Exhibit B hereto (individually a
"Bid Note" and collectively the "Bid Notes"), each such Bid Note to be dated the
date hereof, payable to the order of the applicable Bank and otherwise in the
form of Exhibit B hereto.

         (c) Each Bank shall record on its books and records or on a schedule to
the appropriate Note the amount of each Loan made by it to a Borrower, the
Interest Period and/or maturity date thereof, all payments of principal and
interest and the principal balance from time to time outstanding thereon, in
respect of any Committed Loan, the type of such Loan and, in respect of any
Fixed Rate Loan, the interest rate applicable thereto; provided that prior to
the transfer of any Note such information relating to any outstanding Loans made
by such Bank shall be recorded on the back of such Note or on a schedule to such
Note. The record thereof, whether shown on such books and records of a Bank or
on a schedule to any Note, shall be prima facie evidence as to all such matters;
provided, however, that the failure of any Bank to record any of the foregoing
or any

                                      -14-
<PAGE>   19
error in any such record shall not limit or otherwise affect the obligation of
each Borrower hereunder or under any Note.

         Section 4.3. Appointment of Company as Agent for PM.

         PM irrevocably appoints the Company as its agent hereunder and
attorney-in-fact to issue requests for Borrowings on its behalf under this
Agreement, to select interest rates, Interest Periods, maturities and interest
options therefor, to accept offers for Bid Loans on its behalf, to receive and
deliver notices on its behalf, to direct the Agent as to the disbursement and
repayment of such Borrowings, to terminate the Commitments and to take all other
actions prescribed by the terms of this Agreement. Whenever this Agreement makes
reference to the Company taking action concerning Borrowings by PM hereunder,
the same shall be deemed a reference to the Company acting as agent for PM and
not for its own account.

         Section 4.4. Facility Fee.

         For the period from the date hereof to and including the Termination
Date, the Company shall pay to the Agent for the ratable account of the Banks a
facility fee at the Applicable Margin (computed on the basis of a year of 360
days, for the actual number of days elapsed) on the average daily amount of the
Commitments in effect under this Agreement from time to time (whether or not in
use), such fee to be payable in arrears on the last Business Day of each March,
June, September and December from and after the date hereof to and including,
and on, the Termination Date, provided that if the Commitments terminate in
whole or in part prior to the Termination Date, any accrued and unpaid facility
fee on the amount of the Commitments so terminated shall be paid on the date of
such termination.

         Section 4.5. Agent's Fee.

         The Company shall pay to the Agent for its own use and benefit such
agency and other fees as the Borrowers and the Agent may mutually agree.

         Section 4.6. Voluntary Prepayments.

         Each Borrower shall have the privilege of prepaying the Committed Loan
Notes issued by it in whole or in part (but if in part then in an aggregate
minimum amount for all Banks of $1,000,000 or an integral multiple of $1,000,000
in excess thereof) at any time upon one Business Day's prior notice to the Agent
(such notices, if received subsequent to 10:00 a.m. New York time on a given
day, to be treated as though received at the opening of business on the next
Business Day), which shall promptly so notify the Banks, by paying to the Agent
for the account of the Banks the principal amount to be prepaid and (i) if such
prepayment prepays the Notes in full or is a prepayment of a Fixed Rate Loan,
accrued interest thereon to the date fixed for prepayment and (ii) any amount
due the Banks under Section 3.8 hereof. Bid Loans may not be voluntarily
prepaid.

                                      -15-
<PAGE>   20
         Section 4.7. Terminations.

         The Company shall have the privilege at any time and from time to time
upon three (3) Business Days' prior notice to the Agent (which shall promptly
notify the Banks) to ratably terminate the Commitments in whole or in part (but
if in part then in a minimum amount of $3,000,000 or an integral multiple of
$1,000,000 in excess thereof) and on the date of termination and as a condition
thereto the Company shall or shall cause PM to (as appropriate) pay to the Agent
for the account of the Banks (i) any amount due under Section 4.4 hereof in
respect of such termination and (ii) the amount necessary to reduce the unpaid
principal balance of the Notes to the amount of the Commitments as so reduced,
together with interest thereon if such amount prepays the Notes in full or
prepays a Fixed Rate Loan and with any amount due the Banks under Section 3.8
hereof. No termination of the Commitments may be reinstated. The foregoing to
the contrary notwithstanding, the Commitments may not be reduced below the
amount of Bid Loans at the time outstanding.

         Section 4.8. Capital Adequacy.

         If any Bank shall determine that any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof or compliance by such Bank (or its Lending Office) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital as a consequence of
its Commitment or other obligations hereunder or credit extended by it hereunder
to a level below that which such Bank could have achieved but for such adoption,
change or compliance (taking into consideration such Bank's policies with
respect to capital adequacy), then from time to time as specified by such Bank
the Company shall pay to such Bank, such additional amount or amounts as will
compensate such Bank for such reduction. A certificate of any Bank claiming
compensation under this Section 4.8 and setting forth the additional amount or
amounts to be paid to it hereunder shall be prima facie evidence thereof. In
determining such amount, such Bank may use any reasonable averaging and
attribution methods.

         Section 4.9. Place and Application of Payments.

         All payments of principal of and interest on the Loans and all payments
of facility fees and all other amounts payable under this Agreement shall be
made to the Agent by no later than 11:00 a.m. (New York time) at the principal
office of the Agent in New York, (or such other location in the State of New
York as the Agent may designate to the Borrowers) for the benefit of the Banks.
All such payments shall be made in lawful money of the United States of America,
in immediately available funds at the place of payment, without setoff or
counterclaim and without reduction for, and free from, any and all present or
future taxes, levies, imposts, duties, fees, charges, deductions,

                                      -16-
<PAGE>   21
withholdings, restrictions or conditions of any nature imposed by any government
or any political subdivision or taxing authority thereof (other than taxes on
the overall income or gross receipts of any Bank or its Lending Office and
imposed by the jurisdiction or any political subdivision or taxing authority
thereof, in which such Bank's principal executive office or its Lending Office
is located). The Agent will on the day such funds are received, subject to
unavoidable delays, cause to be distributed like funds relating to the payment
of principal or interest (ratably in accord with the respective amount of
principal and interest then due and owing each Bank) or fees (ratably in accord
with the amount owing each) to the Banks, and like funds relating to the payment
of any other amount payable to any Bank to such Bank, in each case to be applied
in accordance with the terms of this Agreement. Unless the applicable Borrower
otherwise directs, principal prepayments of Committed Loans shall be applied
first to the Domestic Rate Loans and then to the Fixed Rate Loans in the order
of their maturity. Unless the Agent shall have been notified by the applicable
Borrower prior to the date a payment of principal or interest is due hereunder
that the applicable Borrower does not intend to make such payment (the right of
the applicable Borrower to give such a notice to be to only avoid the
application of this sentence and to not in any manner imply that the applicable
Borrower has a right not to make a payment of principal or interest as and when
the same becomes due) the Agent may assume that the applicable Borrower has made
such payment available to the Agent on such date and the Agent may in reliance
upon such assumption distribute an amount equal to the amount of such payment to
the Banks. If such payment is not in fact made available to the Agent by the
applicable Borrower and the Agent has made the amount of such payment available
to the Banks, each Bank shall promptly upon demand of the Agent return the
amount of the payment so remitted to it to the Agent together with interest
thereon in respect of each day during the period commencing on the date such
amount was paid to such Bank and ending on but excluding the date the Agent
recovers such amount from such Bank at a rate per annum equal to the Federal
Funds rate for each day as determined by the Agent using the principle set forth
in clause (ii)(x) of the definition of the term "Domestic Rate" (or in the case
of a day which is not a Business Day, then for the preceding Business Day).

         Section 4.10. Funding by Agent.

         Unless the Agent shall have been notified by a Bank prior to noon (New
York time) on the date a Borrowing is to be made that such Bank does not intend
to make its Loan available to the Agent (which notice a Bank shall not be
entitled to give unless a condition precedent to lending has not been satisfied
or waived), the Agent may assume that such Bank has made such Loan available to
the Agent on such date and the Agent may in reliance upon such assumption make
available to the applicable Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Bank and
the Agent has made such amount available to the applicable Borrower, the Agent
shall be entitled to receive such amount from such Bank forthwith upon its
demand, together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to the applicable Borrower
and

                                      -17-
<PAGE>   22
ending on but excluding the date the Agent recovers such amount at a rate per
annum equal to the Federal Funds rate for each day as determined by the Agent
using the principles set forth in clause (ii)(x) of the definition of the term
"Domestic Rate" (or in the case of a day which is not a Business Day, then for
the preceding Business Day). If such Bank has not made such funds available
within one Business Day of the Agent's demand therefor, the applicable Borrower
shall, promptly upon demand of the Agent, return such funds to it together with
interest thereon at the same daily rate per annum specified in the immediately
preceding sentence.

         Section 4.11. Use of Proceeds

         The Borrowers covenant and agree that the proceeds of the Loans shall
be used in connection with their general corporate purposes in a manner not
inconsistent with the provisions of this Agreement. Notwithstanding anything to
the contrary contained in this Agreement, the Borrowers further covenant and
agree that no part of the proceeds of any Loan will be used, directly or
indirectly, for a purpose which violates any law, rule or regulation of any
governmental authority, including the provisions of Regulations G, U or X of the
Board of Governors of the Federal Reserve System, as amended.

SECTION 5. REPRESENTATIONS AND WARRANTIES.

         The Borrowers represent and warrant to the Agent and each of the Banks
as follows:

         Section 5.1. Corporate Organization and Authority.

         The Company and each Primary Subsidiary,

         (a) is a corporation duly organized, validly existing and in good
         standing under the laws of the state of its organization identified
         herein;

         (b) has all requisite power and authority and all licenses and permits
         necessary in any respect material to it taken as a whole to own and
         operate its material properties and to carry on its business as now
         conducted; and

         (c) is duly licensed or qualified and is in good standing as a foreign
         corporation in each jurisdiction in which the nature of the business
         transacted by it or the nature of the property owned or leased by it
         makes such licensing or qualification necessary if the failure to be so
         licensed or qualified would materially and adversely affect its
         business, properties or operations.

         Section 5.2. Financial Statements.

         (a) The consolidated balance sheet of (i) the Company and the Insurance
Subsidiaries and (ii) PM, each as at December 31, 1995, and the related
statements of

                                      -18-
<PAGE>   23
income and cash flow for the fiscal year ending on such date reported on by
Price Waterhouse (copies of which have been furnished to the Banks), have been
prepared in accordance with AAP consistently applied and present fairly in
accordance with AAP the financial condition of (x) the Company and the Insurance
Subsidiaries and (y) PM, respectively, as of such dates and the results of
operations and changes in the financial position for such fiscal periods.

         (b) Since December 31, 1995, there has been no material adverse change
in the financial condition or business of the Company and the Primary
Subsidiaries taken as a whole, from the most recent above-described balance
sheet as of such date.

         Section 5.3. Full Disclosure.

         The financial statements referred to in Section 5.2 hereof do not, nor
do the written statements, if any, furnished by the Company to the Agent and/or
any Bank in connection with the negotiation of or its participation in this
Agreement, taken as a whole, contain any untrue statement of a material fact or
omit a material fact necessary to make the material statements contained therein
not misleading except as corrected in subsequent written statements furnished
the Agent and/or the Banks, as appropriate.

         Section 5.4. Restrictions on Borrowers.

         The Borrowers are not a party to or bound by any note, contract,
indenture, agreement, instrument, order of any court or governmental agency, law
or rule or regulation which (i) restricts or limits in any material respect the
right or ability of the Borrowers or either of them to incur the indebtedness
and obligations contemplated herein or (ii) which would render any of the
Borrowers' obligations hereunder or under the Notes void or unenforceable.

         Section 5.5. Pending Litigation.

         There are no proceedings pending or, to the knowledge of the Borrowers
or either of them, threatened against the Company or any of its Subsidiaries, or
maintained by the Company or any of its Subsidiaries, or which may affect the
Property of the Company or any of its Subsidiaries, in any court or before any
governmental authority or arbitration board or tribunal in which, either
individually or in the aggregate, there is a reasonable possibility of an
adverse decision which could result in any material adverse change in the
properties, business, profits or financial condition of the Company and its
Primary Subsidiaries or could result in the Borrowers' obligations under this
Agreement or the Notes being declared invalid or unenforceable. The Company and
its Primary Subsidiaries are not in default with respect to any order of any
court or governmental authority or arbitration board or tribunal.

         Section 5.6. Licenses and Franchises.

                                      -19-
<PAGE>   24
         The Company and its Primary Subsidiaries own or possess all patents,
trademarks, trade names, service marks, copyrights, licenses, franchises and
rights necessary and material to them for the conduct of their business, without
any known conflict by, or with the rights of, others.

         Section 5.7. Financing is Legal and Authorized.

         The execution and delivery of this Agreement, the Borrowings hereunder,
the issuance of the Notes in evidence thereof and compliance by the Borrowers
with all of the provisions hereof and of the Notes:

         (a) are within the corporate powers of the Borrowers and have been duly
         authorized by proper corporate action on the part of the Borrowers; and

         (b) will not (i) violate any provisions of any law or any order of any
         court or governmental authority or agency and will not conflict with,
         or result in any breach of any of the terms, conditions or provisions
         of, or constitute a default under, the Articles of Incorporation or
         By-laws of either of the Borrowers or any indenture or other agreement
         or instrument to which the Company or any Subsidiary thereof is a party
         or by which it may be bound if the violation, conflict or default in
         question (A) could reasonably be expected to have or does have a
         material adverse effect on the financial condition or business of the
         Company or the Primary Subsidiaries or on the ability of the Borrowers
         to perform their obligations hereunder and under the Notes or (B) would
         render any of the Borrowers' obligations hereunder or under the Notes
         void or unenforceable or (ii) result in the imposition of any Liens on
         any property of the Company or any Primary Subsidiary not permitted
         hereby.

         Section 5.8. Agreement and Notes Valid and Binding.

         This Agreement and the Notes each constitute the legal, valid and
binding contract and agreement of each Borrower that is a signatory thereto,
enforceable in accordance with their respective terms except as such terms may
be limited by bankruptcy, insolvency or similar laws and legal and equitable
principles affecting or limiting the enforcement of creditor's rights generally.

         Section 5.9. No Defaults.

         No Default or Event of Default has occurred and is continuing.

         Section 5.10. Governmental Consent.

         No approval, authorization, consent or withholding of objection on the
part of any regulatory body, state, federal or local, is necessary in connection
with the execution and delivery by the Borrowers of this Agreement, the issuance
of the Notes, any Borrowing

                                      -20-
<PAGE>   25
hereunder, compliance by the Borrowers with any of the provisions of this
Agreement or the Notes or for the validity or enforceability of this Agreement
or the Notes except for any of such which have been obtained and are in full
force and effect.

         Section 5.11. Taxes.

         All tax returns required to be filed by the Company and the
Subsidiaries thereof in any jurisdiction have, in fact, been filed, except where
the failure to file such returns would not have a material adverse effect on the
Company and the Primary Subsidiaries as a whole or on either Borrower's ability
to perform its obligations hereunder and under the Notes, and all taxes,
assessments, fees and other governmental charges upon the Company and the
Primary Subsidiaries or upon any of their properties, income or franchises which
are shown to be due and payable in such filed returns have been paid. For all
taxable years ending on or before December 31, 1987 , the Federal income tax
liability of the Company and the Primary Subsidiaries have been satisfied and
either the period of limitations on assessment of additional Federal income tax
has expired or the Company or affected Primary Subsidiary has entered into an
agreement with the Internal Revenue Service closing conclusively the total tax
liability for the taxable year. Except as disclosed on Exhibit I hereto, the
Company does not know of any proposed additional tax assessment against it or a
Primary Subsidiary for which adequate provision has not been made in its
accounts in accordance with AAP, and no material controversy in respect of
additional Federal or state taxes is pending or to the knowledge of the Company
threatened. The provisions for taxes on the books of the Company and the Primary
Subsidiaries are adequate in all material respects for all open years, and for
its current fiscal year.

         Section 5.12. Not an Investment Company.

         Neither Borrower is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

         Section 5.13. Use of Proceeds.

         None of the proceeds of the Loans will be used, directly or indirectly
for the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any "margin stock," within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System. Neither Borrower nor any Subsidiary of
either Borrower is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
any margin stock within the meaning of such Regulation U.

         Section 5.14. ERISA.

         No "employee pension benefit plans," as defined in ERISA ("Plans" and
individually a "Plan"), maintained by the Company or any Primary Subsidiary or
any

                                      -21-
<PAGE>   26
Person which is under common control with the Company or any Primary Subsidiary
within the meaning of Section 4001(b) of ERISA, nor any trusts created
thereunder, have incurred any "accumulated funding deficiency" as defined in
Section 302 of ERISA nor does the present value of all benefits vested under all
Plans exceed the value of the assets of the Plans allocable to such vested
benefits, in either case in any respect material to the Company and the Primary
Subsidiaries.

         Section 5.15. Compliance with Law and Agreements.

         The Company and the Subsidiaries thereof are not (i) in default under
any order, writ, injunction or decree of any court of competent jurisdiction,
(ii) in default under any law, ordinance, order, regulation, license or demand
of any federal, state, municipal or other governmental agency, or (iii) in
default under any agreement to which any of them is a party or by which it or
any of its Property is bound, which default may, in each case, reasonably be
expected to have consequences which would materially and adversely affect the
business or properties of the Company and the Primary Subsidiaries taken as a
whole.

         Section 5.16. Pari Passu.

         All the payment obligations of the Borrowers arising under or pursuant
to this Agreement and the Notes will at all times rank pari passu with or senior
to all other unsecured and unsubordinated obligations of the Borrowers and will
be accounted for as an unsubordinated liability.

         Section 5.17. Ratings.

         As of the date, hereof the Company has a Moody's Rating of not less
than Baa2 and an S&P Rating of not less than BBB.

         Section 5.18. Environmental Matters

         Neither the Borrowers nor any of their Subsidiaries (a) has received
written notice or otherwise learned of any claim, demand, action, event,
condition, report or investigation indicating or concerning any potential or
actual liability which individually or in the aggregate could reasonably be
expected to have a material adverse effect upon the business, properties,
profits or financial condition of the Company or any of the Primary
Subsidiaries, arising in connection with (i) any non-compliance with or
violation of the requirements of any applicable federal, state or local
environmental health or safety statute or regulation, or (ii) the release or
threatened release of any toxic or hazardous waste, substance or constituent, or
other substance into the environment, (b) to the best knowledge of the Company,
has any threatened or actual liability in connection with the release or
threatened release of any toxic or hazardous waste, substance or constituent, or
other substance into the environment which individually or in the aggregate
could reasonably be expected to have a material adverse effect upon the
business, properties,

                                      -22-
<PAGE>   27
profits or financial condition of the Company or any of the Primary
Subsidiaries, (c) has received notice of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release or
threatened release of any toxic or hazardous waste, substance or constituent or
other substance into the environment for which the Company or any of its
Subsidiaries is or would be liable, which liability would reasonably be expected
to have a material adverse effect upon the business, properties, profits or
financial condition of the Company or any of the Primary Subsidiaries, or (d)
has received notice that the Company or any of its Subsidiaries is or may be
liable to any Person under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601 et seq., or
any analogous state law, which liability would reasonably be expected to have a
material adverse effect upon the business, properties, profits or financial
condition of the Company or any of the Primary Subsidiaries. The Company and
each of its Subsidiaries is in compliance with the financial responsibility
requirements of federal and state environmental laws to the extent applicable,
including those contained in 40 C.F.R., part 264, subpart H, and part 265,
subpart H, and any analogous state law, except in those cases in which the
failure so to comply would not reasonably be expected to have a material adverse
effect upon the business, properties, profits or financial condition of the
Company or any of the Primary Subsidiaries.

SECTION 6. CONDITIONS PRECEDENT.

         The obligation of the Banks to make any Loan hereunder shall be subject
to the following conditions precedent:

         (a) the Agent shall have received the notice required hereunder;

         (b) each of the representations and warranties set forth in Section 5
         hereof shall be and remain true and correct as of said time except to
         the extent such a representation or warranty relates solely to an
         earlier date and except that the representations and warranties made in
         the first sentence of Section 5.2(a) shall be deemed to refer to the
         most recent quarterly or annual report, respectively, furnished to the
         Banks pursuant to Section 7.6 hereof; and

         (c) no Default or Event of Default shall have occurred and be
         continuing or will occur as a result of making such Loan.

         Each notice requesting that a Loan be made shall be and constitute a
warranty as to the matters specified in subsections (b) and (c) above, but prior
to funding, the Company shall confirm the foregoing by delivering a certificate
to the Agent in the form annexed hereto as Exhibit H signed by an Authorized
Representative, it being agreed that such certificate may be delivered by
facsimile communication, with the original delivered by the close of business on
the Business Day following the date of funding.

SECTION 7. BORROWERS COVENANTS.

                                      -23-
<PAGE>   28
         The Company agrees that, so long as any Note is outstanding hereunder
or any credit is available to or in use by the Borrowers hereunder, except to
the extent compliance in any case or cases is waived in writing by the Required
Banks:

         Section 7.1. Corporate Existence, Etc.

         The Company will, and (subject to Section 7.17 hereof) will cause each
Primary Subsidiary to preserve and keep in force and effect its corporate
existence and all material franchises, licenses and permits necessary to the
proper conduct of its business, provided, however, that the Company and the
Primary Subsidiaries shall not be required to preserve any such franchise,
license or permit if the Company or such Primary Subsidiary shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company and the Primary Subsidiaries taken as a whole.

         Section 7.2. Insurance.

         The Company will, and will cause the Primary Subsidiaries to, maintain
insurance coverage by financially sound and reputable insurers in such forms and
amounts, with such deductibles and against such risks, as are customary for
business entities of established reputation engaged in the same or a similar
business and owning and operating similar properties.

         Section 7.3. Taxes, Compliance with Laws.

         (a) The Company will, and will cause the Primary Subsidiaries to,
promptly pay and discharge all lawful taxes, assessments and governmental
charges or levies imposed upon it or upon or in respect of all or any part of
its property or business; provided the Company and the Primary Subsidiaries
shall not be required to pay any such tax, assessment, charge, levy or claim if
(i) the validity, applicability or amount thereof is being contested in good
faith by appropriate actions or proceedings and either (A) such proceedings will
prevent the forfeiture or sale of any property of the Company and the Primary
Subsidiaries or any material interference with the use thereof by the Company
and the Primary Subsidiaries or any material interference with the conduct of
the business of the Company and the Primary Subsidiaries or (B) no such
forfeiture, sale or interference has occurred or is reasonably likely to occur
and (ii) the Company or the applicable Primary Subsidiary shall have set aside
on its books reserves deemed by the Company in its reasonable business judgment
to be adequate with respect thereto or such greater amount as may be required by
AAP.

         (b) The Company will, and will cause the Primary Subsidiaries to,
comply, in all material respects, with all laws, ordinances and governmental
rules and regulations to which it is subject, the violation of which would
materially and adversely affect the properties, business, profits or financial
condition of the Company and the Primary Subsidiaries taken as a whole.

                                      -24-
<PAGE>   29
         Section 7.4. Maintenance of Properties and Authorizations.

         (a) The Company will maintain, preserve and keep, and cause each
Primary Subsidiary to maintain, preserve and keep, its properties which are
necessary to it for the conduct of its business in good repair and working order
(ordinary wear and tear excepted) and from time to time will make all necessary
repairs, replacements, renewals and additions so that at all times the
efficiency thereof shall be maintained.

         (b) The Company will maintain and cause each of the Primary
Subsidiaries to maintain, in full force and effect, all copyrights, patents,
trademarks, trade names, service marks, franchises, licenses, permits,
applications, reports, and other authorizations and rights, as are necessary for
the conduct from time to time of their businesses, except to the extent the
failure so to maintain such items, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect upon the properties,
business, profits or financial condition of the Company and the Primary
Subsidiaries taken as a whole.

         Section 7.5. Nature of Business.

         The Company will not, and will not permit any Primary Subsidiary to,
engage in any business or activity if, as a result, the general nature of the
business which would then be engaged in by the Company and the Primary
Subsidiaries would be substantially changed from the general nature of the
business engaged in by the Company and the Primary Subsidiaries on the date of
this Agreement.

         Section 7.6. Reports and Rights of Inspection.

         The Company and PM will keep proper books of record and account in
which full and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of the Company and PM in accordance
with AAP and will furnish to the Banks:

         (a) Quarterly Statements. As soon as available and in any event within
         90 days after the end of each quarterly fiscal period of each fiscal
         year, copies of:

                  (1) a statutory balance sheet of the Company and a
                  consolidated balance sheet of PM, each as of the close of such
                  quarterly period, and

                  (2) statutory statements of income and cash flows of the
                  Company and a consolidated income statement of PM, each for
                  such quarterly period and for the portion of the fiscal year
                  then ended,

         in each case setting forth in comparative form the figures for or as of
         the end of (as appropriate) the corresponding period in the preceding
         fiscal year, all in reasonable detail and certified by an Authorized
         Representative as presenting

                                      -25-
<PAGE>   30
         fairly in accordance with AAP the financial condition of the Company
         and PM as of the end of such period and the results of operations for
         such period;

         (b) Annual Statements of the Company. As soon as available and in any
         event within 120 days after the close of each fiscal year of the
         Company, copies of:

                  (1) a consolidated balance sheet of the Company as of the
                  close of such fiscal year, and

                  (2) a consolidated statement of income and cash flows of the
                  Company for such fiscal year,

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

         (c) Annual Statements of PM. As soon as available and in any event
         within 120 days after the end of each fiscal year of PM, consolidated
         and consolidating statements of operations, stockholder's equity and
         cash flow of PM and its Subsidiaries for such fiscal year and the
         related consolidated and consolidating balance sheets of PM and its
         Subsidiaries as at the end of such fiscal year, setting forth in each
         case in comparative form the corresponding consolidated and
         consolidating figures for or as of the end of (as appropriate) the
         preceding fiscal year, and accompanied (i) in the case of said
         consolidated statements and balance sheet of PM, by an opinion thereon
         of Price Waterhouse or another firm of independent certified public
         accountants of recognized national standing selected by the Company and
         reasonably acceptable to the Agent, which opinion shall state that said
         consolidated financial statements fairly present the consolidated
         financial condition and results of operations of PM and its
         Subsidiaries as at the end of, and for, such fiscal year in accordance
         with AAP, and (ii) in the case of said consolidating statements and
         balance sheets, by a certificate of a senior financial officer of PM
         which certificate shall state that said consolidating financial
         statements fairly present the respective individual unconsolidated

                                      -26-
<PAGE>   31
         financial condition and results of operations of PM and of each of its
         Subsidiaries, in each case in accordance with generally accepted
         accounting principles, consistently applied, as at the end of, and for,
         such fiscal year;

         (d) Notice of Downgrade. Promptly upon becoming aware of same, notice
         of any downgrade by any rating agency in its claims paying ability
         rating for the Company;

         (e) Annual Reports. Promptly upon it becoming available, a copy of each
         annual statement filed by the Company with the insurance department of
         the State of New York;

         (f) Requested Information. With reasonable promptness, such other data
         and information as any Bank may reasonably request;

         (g) Officers' Certificates. Within the periods provided in paragraphs
         (a) and (b) above, a certificate of an Authorized Representative
         stating that he has reviewed the provisions of this Agreement and
         setting forth: (i) the information and computations (in sufficient
         detail) required in order to establish whether the Company was in
         compliance with the requirements of Sections 7.8 to 7.14, both
         inclusive, and Section 7.18, hereof at the end of the period covered by
         the financial statements then being furnished, and (ii) to the best of
         his knowledge, whether there exists on the date of the certificate or
         existed at any time during the period covered by such financial
         statement any Default or Event of Default and, if any such condition or
         event exists on the date of the certificate or existed during such
         period, specifying the nature and period of existence thereof and the
         action the Company is taking, has taken or proposes to take with
         respect thereto; and

         (h) Certain Notices. Promptly after knowledge thereof shall have come
         to the attention of any Authorized Representative:

                  (i) notice of any Default or Event of Default specifying the
                  nature and period of existence thereof and the action the
                  Company is taking, has taken or proposes to take with respect
                  thereto;

                  (ii) notice of any pending or overtly threatened litigation or
                  governmental proceeding against the Company or any Subsidiary
                  thereof which in the good faith judgment of the Company
                  involves a reasonable possibility of materially and adversely
                  affecting the financial condition of the Company and its
                  Primary Subsidiaries taken as a whole or the ability of the
                  Borrowers to perform their obligations hereunder and under the
                  Notes or the validity or enforceability of any of the
                  Borrowers' obligations hereunder or under the Notes; and

                                      -27-
<PAGE>   32
                      (iii) notice of the occurrence of any other event or
                  condition which in the reasonable judgment of the Company
                  materially and adversely affects the financial condition or
                  business prospects of the Company and the Primary Subsidiaries
                  taken as a whole.

Without limiting the foregoing, the Borrowers will permit each Bank (or such
persons as any Bank may designate), to visit and inspect, under the applicable
Borrower's reasonable guidance, any of the properties of the applicable
Borrower, to examine all its books of account, records, reports and other
papers, to make copies and extracts therefrom (except with respect to
confidential proprietary nonfinancial information), and to discuss their
respective affairs, finances and accounts with their respective officers and
employees and auditors, all at such reasonable times and as often as may be
reasonably requested.

         Section 7.7. Limitation on Liens.

         The Company will not, and will not permit any Primary Subsidiary to,
create or incur, or suffer to be incurred or to exist, any Lien of any kind on
its Property, whether now owned or hereafter acquired, or upon any income or
profits therefrom, or transfer any Property for the purpose of subjecting the
same to the payment of obligations in priority to the payment of its or their
general creditors, or acquire or agree to acquire, any Property or assets upon
conditional sales agreements or other title retention devices, except:

         (a) Liens incurred in the ordinary course of business (x) for taxes,
         assessments or other governmental charges or levies not at the time
         delinquent or thereafter payable without penalty or being contested in
         good faith in compliance with Section 7.3 hereof, (y) to carriers,
         warehousemen, mechanics, materialmen and landlords for sums not overdue
         for a period of 45 days or more or being contested in good faith, or
         (z) for workmen's compensation, unemployment insurance or other forms
         of governmental insurance or benefits;

         (b) any Lien (including judgment liens) arising pursuant to any order
         of attachment, distraint or similar legal process arising in connection
         with court proceedings so long as the execution or other enforcement
         thereof is effectively stayed and the claims secured thereby are being
         contested in good faith by appropriate proceedings and are either
         covered in full (subject to a deductible in an amount which, if paid,
         would not have a material adverse effect on the financial condition of
         the Company and the Primary Subsidiaries) by insurance as to which the
         carrier admits liability or the amount secured by such Lien and not so
         covered by insurance is less than $10,000,000 in the aggregate);

         (c) any Lien resulting from deposits which the Company or a Primary
         Subsidiary is required to make under the laws, rules, regulations or
         administrative practices of any state or jurisdiction in which the
         Company or such Primary Subsidiary is qualified to do business;

                                      -28-
<PAGE>   33
         (d) easements (including, without limitation, reciprocal easement
         agreements and utility agreements), rights-of-way, covenants, consents,
         reservations, encroachments, variations and other restrictions, charges
         or encumbrances (whether or not recorded) affecting the use of real
         property, which do not materially detract from the value of such
         property or impair the use thereof;

         (e) Liens on assets acquired by the Company in satisfaction of past due
         obligations owing it which were in existence at the time of
         acquisition, provided that neither the Company nor any Primary
         Subsidiary assumes liability for the indebtedness secured by such
         Liens; and

         (f) Liens not otherwise permitted by this Section 7.7 securing Adjusted
         Debt not in excess of $5,000,000 at any one time outstanding.

         Section 7.8. Adjusted Capital to Assets.

         The Company shall at all times maintain Adjusted Capital in an amount
equal to or greater than 5.75% of consolidated total assets of the Company and
the Insurance Subsidiaries (exclusive of assets maintained in Separate
Accounts).

         Section 7.9. Minimum Capital.

         The Company shall at all times during each of the calendar years set
forth below maintain Capital of not less than the amount specified for such year
below:
<TABLE>
<CAPTION>

         Calendar Year                               Minimum Capital Shall Be
         -------------                               ------------------------
<S>                                                  <C>
               1996                                          $700,000,000
               1997                                          $730,000,000
               1998                                          $735,000,000
               1999                                          $750,000,000
               2000                                          $750,000,000
               2001                                          $750,000,000
</TABLE>

         Section 7.10. 3 to 6 Rated Assets to Net Invested Assets; NAIC Ratings.

         (a) The Company will not at any time permit the portion of the invested
assets of the Company and the Insurance Subsidiaries consisting of notes, bonds
and other obligations of a character classified as "Bonds" on a consolidated
balance sheet of the Company and the Insurance Subsidiaries prepared in
accordance with AAP which bear NAIC Ratings of from 3 to 6 both inclusive to
exceed 5.5% of Net Invested Assets.

         (b) The Company will use its best efforts to at all times have not less
than 90% of its bond portfolio covered by NAIC Ratings. If for any reason beyond
the control of the Company NAIC Ratings are unavailable for such percentage of
the bond portfolio of the Company or the NAIC rating system is discontinued,
then in that event the Company and

                                      -29-
<PAGE>   34
the Required Banks agree to negotiate in good faith for an amendment to this
Agreement replacing Sections 7.10(a) and 7.11 hereof with new covenants
measuring the credit quality of the bond portfolio of the Company and which are
not materially more liberal nor restrictive than Sections 7.10(a) and 7.11
hereof as presently in effect, but in the event that the Company and the
Required Banks are unable to agree to such an amendment within 60 days of the
date the NAIC rating system is discontinued, or the Company is unable to comply
with the preceding sentence, then in that event this Agreement may, at the
option of the Required Banks or the Company, terminate whereupon the Commitments
shall terminate and all outstanding Loans, together with interest thereon and
any amounts due the Banks under this Agreement, including Section 3.8 hereof,
shall be repaid.

         Section 7.11. 5 to 6 Rated Bonds to Capital.

         The Company will not at any time permit the portion of the invested
assets of the Company and the Insurance Subsidiaries consisting of notes, bonds
and other obligations of a character classified as "Bonds" on a consolidated
balance sheet of the Company and the Insurance Subsidiaries prepared in
accordance with AAP which bear NAIC Ratings of from 5 to 6 both inclusive to
exceed 13% of Capital.

         Section 7.12. Real Estate Investments to Net Invested Assets.

         The Company will not at any time permit the sum of the investment of
the Company and the Insurance Subsidiaries in real estate, real estate acquired
in satisfaction of indebtedness (exclusive, however, of any investments in real
estate otherwise included in the foregoing categories which consist of real
estate occupied by the Company or the Insurance Subsidiaries for use in their
business) plus mortgage loans on real estate to exceed 32% of Net Invested
Assets.

         Section 7.13. Non-Performing Real Estate.

         The Company will not at any time permit the book value of the
investment of the Company and the Insurance Subsidiaries in Non-Performing Real
Estate to exceed 80% of Adjusted Capital.

         Section 7.14. Total Debt to Adjusted Capital.

         The Company will not at any time permit the consolidated Debt of the
Company and its Subsidiaries to exceed 100% of Adjusted Capital.

         Section 7.15. ERISA Compliance.

         (a) Relationship of Vested Benefits to Pension Plan Assets. The Company
will, and will cause the Primary Subsidiaries to, at all times maintain the
qualified status of those Plans which are intended to be qualified under Section
401(a) of the Internal

                                      -30-
<PAGE>   35
Revenue Code of 1986, as amended (the "Code"). The Company will not, and will
not permit any Primary Subsidiary to, at any time terminate any Plan subject to
Title IV of ERISA unless on the date of such termination the present value of
all employee benefits vested under such Plan does not exceed the present value
of the assets allocable to such vested benefits.

         (b) Valuations. All assumptions and methods used to determine the
actuarial valuation of vested employee benefits under Plans subject to Title IV
of ERISA at any time maintained by any one or more of the Company or the Primary
Subsidiaries and the present value of assets of such Plans shall be reasonable
in the good faith judgment of the Company and shall comply with all requirements
of law in all material respects.

         (c) Prohibited Actions. Neither the Company nor any Primary Subsidiary
nor any Plan at any time maintained by the Company or any Primary Subsidiary
will:

         (1) engage in any "prohibited transaction" (as such term is defined in
         Section 406 or Section 2003(a) of ERISA) which is not entitled to an
         exemption under ERISA or the Code;

         (2) incur any "accumulated funding deficiency" (as such term is defined
         in Section 302 of ERISA) whether or not waived; or

         (3) terminate any such Plan in a manner which could result in the
         imposition of a Lien on the Property of the Company or any Primary
         Subsidiary pursuant to Section 4068 of ERISA.

         Section 7.16. Minimum Ratings.

         The Company shall at all times maintain a Moody's Rating of not less
than Baa2 and an S&P Rating of not less than BBB.

         Section 7.17. Mergers, Consolidations and Sales of Assets.

         The Company will not, and will not permit any Primary Subsidiary to,
(a) consolidate with or be a party to a merger with any other Person or (b)
sell, lease or otherwise dispose of any substantial part of its Properties,
provided that the foregoing shall not apply to or operate to prevent (i)
reinsurance and similar risk sharing arrangements entered into in the ordinary
course of business, (ii) sales or other dispositions of assets acquired in
satisfaction of obligations owing the Company or a Primary Subsidiary, (iii)
mergers of a Primary Subsidiary with and into the Company and other mergers not
involving the Company, or (iv) the sale of all or any substantial part of the
assets of, or of the equity interests held by the Company in, any Primary
Subsidiary, so long as in the case of each of the matters described in clauses
(i) through (iv) above, no Default or Event of Default shall have occurred and
be continuing or would occur as a result thereof. The foregoing to the contrary
notwithstanding, the Company will not in

                                      -31-
<PAGE>   36
any event sell, transfer or otherwise dispose of capital stock of PM or permit
the merger of PM into any other Person other than the Company if after giving
effect thereto PM would no longer be a Subsidiary of the Company or would not be
the survivor of the merger in question.

         Section 7.18. Risk Based Capital Ratio.

         The Company shall at all times maintain a Risk Based Capital Ratio of
not less than 195%.

SECTION 8. GUARANTY.

         Section 8.1. Guaranty.

         The Company hereby absolutely, irrevocably and unconditionally
guarantees to each Bank and the Agent and their respective successors and
assigns the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) of the principal of and interest on the Loans made by
the Banks to, and the Notes held by each Bank of, PM and all other amounts from
time to time owing to the Banks or the Agent by PM under this Agreement and
under the Notes, in each case strictly in accordance with the terms thereof
(such obligations being herein collectively called the "Guaranteed
Obligations"). The Company hereby further agrees that if PM shall fail to pay in
full when due (whether by stated maturity, by acceleration or otherwise) any of
the Guaranteed Obligations, the Company will promptly pay the same, without any
demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal. This
Section 8.1 constitutes a guaranty of payment, and neither the Agent nor any
Bank shall have any obligation to enforce its rights under this Agreement or any
Note by any action, including making or perfecting any claim against any Person
prior to being entitled to the benefits of this Section 8.1. The Agent and/or
any Bank, as appropriate, may, at its option, proceed against the Company in the
first instance to enforce the Guaranteed Obligations without first proceeding
against PM or any other Person, and without first resorting to any other rights
or remedies, as the Agent or such Bank, as the case may be, may deem advisable.
In furtherance hereof, if the Agent or any Bank is prevented by law from
collecting or otherwise hindered from collecting or otherwise enforcing any
Guaranteed Obligation in accordance with its terms, the Agent or such Bank, as
the case may be, shall be entitled to receive hereunder from the Company after
demand therefor, the sums which would have been otherwise due had such
collection or enforcement not been prevented or hindered.

         Section 8.2. Obligations Unconditional.

         The obligations of the Company under Section 8.1 hereof are absolute,
irrevocable and unconditional, irrespective of the value, genuineness, validity,
preference

                                      -32-
<PAGE>   37
or priority ranking, regularity, compromise or enforceability of the obligations
of PM under this Agreement, the Notes or any other agreement or instrument
referred to herein or therein, or the existence, validity, enforceability,
substitution, release, exchange or loss or impairment of any other guaranty of
or security for any of the Guaranteed Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 8.2 that the
obligations of the Company hereunder shall be absolute and unconditional under
any and all circumstances. Without limiting the generality of the foregoing, it
is agreed that the occurrence of any one or more of the following shall not
alter or impair the liability of the Company hereunder which shall remain
absolute, irrevocable and unconditional as described above:

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

         (ii) any of the acts mentioned in any of the provisions of this
         Agreement or the Notes or any other agreement or instrument referred to
         herein or therein shall be done or omitted;

         (iii) the maturity of any of the Guaranteed Obligations shall be
         accelerated, or any of the terms or conditions of this Agreement or the
         Notes shall be modified, supplemented or amended in any respect, or any
         right under this Agreement or the Notes or any other agreement or
         instrument referred to herein or therein shall be waived or any other
         guaranty of any of the Guaranteed Obligations or any security therefor
         shall be released or exchanged in whole or in part or otherwise dealt
         with;

         (iv) any failure, delay, neglect or omission by the Agent or any Bank
         to realize upon or exercise its rights or remedies with respect to any
         direct or indirect collateral security, indebtedness, liability or
         obligation, this Agreement or any Note, or any agreement, instrument or
         document executed or delivered in connection therewith, or any of the
         Guaranteed Obligations;

         (v) the existence or exercise of any right of set-off by the Agent or
         any Bank;

         (vi) the bankruptcy, insolvency, reorganization or receivership of, or
         any other proceeding for the relief of debtors commenced by or against,
         any Person;

         (vii) the disaffirmance or rejection, or the purported disaffirmance or
         purported rejection, of any of the Guaranteed Obligations, this
         Agreement or any Note, or any agreement, instrument or document
         executed or delivered in connection therewith, in any bankruptcy,
         insolvency, reorganization or receivership, or any other proceeding for
         the relief of debtor, relating to any Person;

                                      -33-
<PAGE>   38
         (viii) any law, regulation or decree now or hereafter in effect which
         might in any manner affect any of the terms or provisions of this
         Agreement or any Note, or any agreement, instrument or document
         executed or delivered in connection therewith or any of the Guaranteed
         Obligations, or which might cause or permit to be invoked any
         alteration in the time, amount, manner or payment or performance of any
         of PM's obligations and liabilities (including the Guaranteed
         Obligations);

         (ix) the merger or consolidation of PM into or with any Person;

         (x) the sale by PM of all or any part of its assets; or

         (xi) the fact that at any time and from time to time none of the
         Guaranteed Obligations may be outstanding or owing to the Agent or any
         Bank.

The Company hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Agent or any
Bank exhaust any right, power or remedy or proceed against PM under this
Agreement or the Notes or any other agreement or instrument referred to herein
or therein, or against any other Person under any other guaranty of, or security
for, any of the Guaranteed Obligations.

         Section 8.3. Reinstatement.

         The obligations of the Company under this Section 8 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of PM in respect of the Guaranteed Obligations is rescinded or must
be otherwise restored by any obligee of any of the Guaranteed Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise and the Company agrees that it will indemnify the Agent and each Bank
on demand for all reasonable costs and expenses (including, without limitation,
fees of counsel) incurred by the Agent or such Bank in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.

         Section 8.4. Subrogation.

         The Company hereby waives all rights of subrogation or contribution,
whether arising by contract or operation of law (including, without limitation,
any such right arising under the Bankruptcy Code) or otherwise by reason of any
payment by it pursuant to the provisions of this Section 8 and further agrees
with PM for the benefit of each of its creditors (including, without limitation,
each Bank and the Agent) that any such payment by it shall constitute a
contribution of capital by the Company to PM.

         Section 8.5. Remedies.

                                      -34-
<PAGE>   39
         The Company agrees that, as between the Company and the Banks, the
obligations of the Company under this Agreement and the Notes may be declared to
be forthwith due and payable as provided in Section 9 hereof (and shall be
deemed to have become automatically due and payable in the circumstances
provided in said Section 9) for purposes of Section 8.1 hereof notwithstanding
any stay, injunction or other prohibition preventing such declaration (or such
obligation from becoming automatically due and payable) as against PM and that,
in the event of such declaration (or such obligations being deemed to have
become automatically due and payable), such obligations (whether or not due and
payable by PM) shall forthwith become due and payable by the Company for
purposes of said Section 8.1.

         Section 8.6. Continuing Guaranty.

         The guaranty in this Section 8 is a continuing guaranty, and shall
apply to all Guaranteed Obligations whenever arising.

SECTION 9. EVENTS OF DEFAULT AND REMEDIES.

         Section 9.1. Events of Default.

         Any one or more of the following shall constitute an Event of Default:

         (a) Default in the payment when due of any principal amount of any Note
         or any Loan evidenced thereby or default for two Business Days in the
         payment when due of any interest thereon or any other amount payable by
         either Borrower hereunder; or

         (b) Default shall be made in the payment of the principal of or
         interest on any Adjusted Debt of the Company or any Subsidiary thereof
         in an amount in excess of $1,000,000 as and when the same shall become
         due and payable by the lapse of time, by declaration, by call for
         redemption or otherwise, and such default shall continue beyond any
         period of grace or notice, if any, allowed with respect thereto or any
         other default shall have occurred under the terms of any instrument or
         agreement evidencing or setting forth terms and conditions applicable
         to Adjusted Debt of the Company or any Subsidiary thereof in an amount
         in excess of $1,000,000, such default shall have been declared by the
         requisite holder or holders of such Adjusted Debt and any period of
         grace applicable thereto shall have expired; or

         (c) Default shall be made in the payment when due of any amount payable
         by the Company or any Primary Subsidiary under any policy of insurance,
         surety bond or similar undertaking, provided that the failure to pay a
         disputed claim shall not be an Event of Default hereunder if and so
         long as the Company or the applicable Primary Subsidiary is contesting
         such claim in good faith by appropriate actions or proceedings and, if
         the amount involved is material, the

                                      -35-
<PAGE>   40
         Company or the applicable Primary Subsidiary shall have set aside on
         its books reserves deemed by the Company in its reasonable judgment to
         be adequate with respect thereto or such greater amount as may be
         required by AAP; or

         (d) Default shall occur in the observance or performance of any
         covenant or agreement contained in Section 4.11, 7.1, 7.7, 7.8, 7.9,
         7.10, 7.11, 7.12, 7.13, 7.14, 7.16, 7.17 or 7.18 hereof; or

         (e) Default shall occur in the observance or performance of any other
         provision of this Agreement which is not remedied within 20 days after
         the date on which notice of such default is first given to the
         Borrowers by the Agent or any Bank; or

         (f) Any representation or warranty made or deemed made by the Borrowers
         or either of them herein, or in any statement or certificate furnished
         in connection with this Agreement or any Loan or furnished pursuant
         hereto, is untrue in any material respect as of the date of the
         issuance or making (or deemed issuance or making) thereof; or

         (g) Final judgment or judgments for the payment of money not fully
         covered by insurance as to which the carrier has admitted, accepted or
         assumed liability aggregating in excess of $5,000,000 is or are
         outstanding against the Company or any Subsidiary thereof or against
         any of their Property (other than judgments which are nonrecourse as to
         the Company and the Subsidiaries thereof and are outstanding only
         against Property acquired by the Company in satisfaction of past due
         obligations owing it) and any one of such judgments has remained
         unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a
         period of 30 days from the date of its entry; or

         (h) A custodian, receiver, liquidator, rehabilitator, conservator or
         trustee of the Company or any Primary Subsidiary, or of any of their
         Property, is appointed or takes possession; or an order is entered for
         the liquidation, dissolution or rehabilitation of the Company or any
         Primary Subsidiary; or the Company or any Primary Subsidiary generally
         fails to pay its debts as they become due or admits in writing its
         inability to pay its debts as they mature; or the Company or any
         Primary Subsidiary is adjudicated bankrupt or insolvent; or any of
         their material Property is sequestered by court order and the order
         remains in effect for more than 45 days; or an application or a
         petition is filed against the Company or any Primary Subsidiary under
         any bankruptcy, reorganization, arrangement, insolvency, readjustment
         of debt, dissolution, liquidation, rehabilitation or conservation law
         of any jurisdiction, whether now or subsequently in effect; or

         (i) The Company or any Primary Subsidiary files a petition or consents
         to a petition or order seeking relief under any provision of any
         bankruptcy, reorganization, arrangement, insolvency, readjustment of
         debt, dissolution, liquidation,

                                      -36-
<PAGE>   41
         rehabilitation or conservation law of any jurisdiction, whether now or
         subsequently in effect; or consents to the filing of any petition
         against it under any such law; or consents to the appointment of or
         taking possession by a custodian, receiver, trustee, liquidator,
         rehabilitator or conservator for the Company or any Primary Subsidiary
         or any of their Property.

         Section 9.2. Non-Bankruptcy Defaults.

         When any Event of Default, other than an Event of Default described in
subsection (h) or (i) of Section 9.1 hereof, has occurred and is continuing, the
Agent may, and if so directed by Banks holding 66-2/3% or more of the
outstanding principal balance of the Loans or, if no Loans are outstanding,
Banks granting 66-2/3% or more of the Commitments shall, take either or both of
the following actions: (i) terminate the Commitments of the Banks hereunder on
the date (which may be the date thereof) stated in the notice from the Agent and
(ii) declare the principal of and the accrued interest on the Notes to be
forthwith due and payable and thereupon said Notes, including both principal and
interest, shall be and become immediately due and payable together with all
other amounts payable under this Agreement accrued through the date of such
termination or declaration without further demand, presentment, protest or
notice of any kind.

         Section 9.3. Bankruptcy Defaults.

         When any Event of Default described in subsection (h) or (i) of Section
9.1 hereof has occurred and is continuing, then the principal of and accrued
interest on all Notes shall immediately become due and payable together with all
other amounts payable under this Agreement and then outstanding without
presentment, demand, protest or notice of any kind, and the obligation of the
Banks to extend further credit pursuant to any of the terms of this Agreement
shall immediately terminate.

SECTION 10. DEFINITIONS; INTERPRETATION OF AGREEMENT.

         Section 10.1. Definitions.

         The following terms when used herein shall have the following meanings,
such terms to be equally applicable to both the singular and the plural of the
terms defined:

         "AAP" shall mean the accounting practices prescribed or permitted by
the Insurance Department of the State of New York (or the relevant state of
domicile of the Company and the Primary Subsidiaries at the relevant time) as
such practices are predominantly promulgated by the National Association of
Insurance Commissioners.

         "Adjusted Capital" shall mean as of the time of determination the sum
at such time of (i) Capital and (ii) surplus notes of the Company that have been
issued and are outstanding.

                                      -37-
<PAGE>   42
         "Adjusted CD Rate" has the meaning specified in Section 3.2 hereof.

         "Adjusted CD Rate Loan" shall mean a Committed Loan bearing interest as
specified in Section 3.2 hereof.

         "Adjusted Debt" of any Person shall mean for such Person the sum of
Debt plus the obligations excluded from Debt by the proviso to the definition of
that term.

         "Adjusted LIBOR Rate" has the meaning specified in Section 3.3 hereof.

         "Agent" shall mean BNY and its successors as administrative agent
hereunder.

         "Agreement" shall mean the Credit Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.

         "Applicable Margin":

         (a) (i) With respect to Adjusted CD Rate Loans, the percentage set
forth below under the heading "CD" adjacent to the applicable Pricing Level,
(ii) with respect to Eurodollar Loans, the percentage set forth below under the
heading "Eurodollar" adjacent to the applicable Pricing Level, and (iii) with
respect to the Facility Fee, the percentage set forth below under the heading
"Facility Fee" adjacent to the applicable Pricing Level:
<TABLE>
<CAPTION>

                                                                                         Facility
                                       CD                        Eurodollar                Fee
                                    -----------------            ----------             ----------
<S>                                 <C>                          <C>                    <C>
whenever
Pricing Level I
is in effect:                            0.275%                      0.150%                 0.080%

whenever
Pricing Level II
is in effect:                            0.285%                      0.160%                 0.090%

whenever
Pricing Level III
is in effect:                            0.295%                      0.175%                 0.100%

whenever
Pricing Level IV
is in effect:                            0.315%                      0.190%                 0.110%

whenever
Pricing Level V
is in effect:                            0.350%                      0.225%                 0.125%
</TABLE>

                                      -38-
<PAGE>   43
<TABLE>
<S>                                 <C>                          <C>                    <C>
whenever
Pricing Level VI
is in effect:                            0.350%                      0.225%                 0.175%
</TABLE>

         (b) Changes in the Applicable Margin shall become effective on the date
that any change in the S&P Rating or the Moody's Rating results in a change in
the Pricing Level.

         "Arranger"  shall mean BNY Capital Markets, Inc.

         "Assessment Rate" has the meaning specified in Section 3.2 hereof.

         "Asset Valuation Reserve" shall mean the consolidated asset valuation
reserves of the Company and the Insurance Subsidiaries as computed in accordance
with the asset valuation procedures of the National Association of Insurance
Commissioners.

         "Assignment Agreement" has the meaning specified in Section 12.11
hereof.

         "Auditors" has the meaning specified in Section 7.6(b) hereof.

         "Authorized Representative" shall mean any one of the following
officers of the Company: the Chief Financial Officer, the Second Vice President,
Treasury, the Chief Investment Officer or such other persons as may from time to
time be designated as such in a writing from the Chief Financial Officer or
Chief Investment Officer of the Company to the Agent.

         "Banks" has the meaning specified in the preamble hereof.

         "Bid" has the meaning specified in Section 2.2(c) hereof.

         "Bid Loan" has the meaning specified in Section 2.1 hereof.

         "Bid Loan Request" has the meaning specified in Section 2.2(a) hereof.

         "Bid Loan Request Confirmation" has the meaning specified in Section
2.2(a) hereof.

         "Bid Note" has the meaning specified in Section 4.2 (b) hereof.

         "BNY" has the meaning specified in the preamble hereof.

         "Borrowers" has the meaning specified in the preamble hereof.

         "Borrowing" shall mean the total of Loans of a single type made by one
or more of the Banks on a single date and, if such Loans are Eurodollar Loans,
for a single Interest Period.

                                      -39-
<PAGE>   44
         "Borrowing Date" shall mean the date a Borrowing is to be funded
pursuant to this Agreement, which must be a Business Day.

         "Business Day" shall mean any day other than a Saturday or Sunday on
which banks are not authorized or required to close in New York, New York and,
when used with reference to Eurodollar Loans, a day on which banks are also open
for business and dealing in United States Dollar deposits in London, England.

         "Capital" shall mean the sum for the Company and the Insurance
Subsidiaries on a consolidated basis of their unrestricted surplus accounts plus
the Asset Valuation Reserve.

         "Capitalized Lease" shall mean any lease the obligation for Rentals
with respect to which is required to be capitalized on a balance sheet of the
lessee in accordance with AAP, but in any event including any lease entered into
as part of a sale/leaseback transaction.

         "Capitalized Rentals" shall mean as of the date of any determination
the amount at which the aggregate Rentals due and to become due under all
Capitalized Leases under which a Person is a lessee would be reflected as a
liability on a consolidated balance sheet of such Person prepared in accordance
with AAP.

         "CD Rate" has the meaning specified in Section 3.2 hereof.

         "CD Reserve Percentage" has the meaning specified in Section 3.2
hereof.

         "Code" has the meaning specified in Section 7.15(a) hereof.

         "Commitment" has the meaning specified in Section 1.1 hereof.

         "Committed Borrowing" shall mean a Borrowing made pursuant to Section
1.1 hereof.

         "Committed Loan" has the meaning specified in Section 1.1 hereof.

         "Committed Loan Note" has the meaning specified in Section 4.2(a)
hereof.

         "Company" has the meaning specified in the preamble hereof.

         "Confirmation of Bid" has the meaning specified in Section 2.2(c)
hereof.

         "Debt" of any Person shall mean and include, without duplication, the
sum for such Person of all (i) obligations of such Person for borrowed money
(but not including in any case unborrowed amounts under ordinary revolving loan
commitments) or which have been incurred in connection with the acquisition of
Property or assets other than current accounts payable, (ii) obligations secured
by any Lien or other charge upon

                                      -40-
<PAGE>   45
Property or assets owned by such Person, even though such Person has not assumed
or become liable for the payment of such obligations, (iii) obligations created
or arising under any conditional sale or other title retention agreement with
respect to Property acquired by such Person, notwithstanding the fact that the
rights and remedies of the seller, lender or lessor under such agreement in the
event of default are limited to repossession or sale of property, (iv)
obligations (other than obligations under any lease which is not a Capitalized
Lease and obligations in an amount equal to the demand component of any contract
providing for usual and customary utility services, including gas, water,
electricity and wastewater treatment services) to purchase any Property or to
obtain the services of another Person if the contract requires that payment for
such Property or services be made regardless of whether such Property is
delivered or such services are performed, except that no obligation shall
constitute Debt solely because the contract provides for liquidated damages or
reimbursement of expenses following cancellation, (v) all Guaranties by such
Person, (vi) Capitalized Rentals and (vii) obligations (absolute or contingent)
in respect of letters of credit but only to the extent that the letter of credit
does not support an obligation of such Person already included in Debt or which
would constitute a current account payable of such Person, provided that the
following shall be excluded from Debt: (A) repurchase obligations under short
term securities lending arrangements with securities dealers and banks so long
as such Person's repurchase obligation is conditional on delivery of the
securities in question and (B) the liability of such Person under interest rate
swaps and other interest rate hedging arrangements. The consolidated Debt of the
Company and its Subsidiaries shall be computed without duplication, so that a
Guaranty of a Subsidiary's Debt will not be added to consolidated Debt.

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

         "Dollar" and "$" shall mean the lawful currency of the United States of
America.

         "Domestic Rate" has the meaning specified in Section 3.1 hereof.

         "Domestic Rate Loan" shall mean a Committed Loan bearing interest as
specified in Section 3.1 hereof.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974
as amended, and the rules and regulations issued thereunder, or any successor
thereto.

         "Eurodollar Loan" shall mean a Loan bearing interest as specified in
Section 3.3 hereof.

         "Eurodollar Reserve Percentage" has the meaning specified in Section
3.3 hereof.

         "Event of Default" shall mean any of the events specified in Section
9.1 hereof.

                                      -41-
<PAGE>   46
         "Fixed Rate Loans" shall mean all Loans other than Domestic Rate Loans.

         "Guaranteed Obligations" has the meaning specified in Section 8.1
hereof.

         "Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation, of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase on default such indebtedness or
obligation or any Property or assets constituting security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of such indebtedness or
obligation, (y) to maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation, or (iii) to lease Property or to purchase securities
or other Property or services primarily for the purpose of assuring, the owner
of such indebtedness or obligation of the ability of the primary obligor to make
payment of such indebtedness or obligation, or (iv) otherwise to assure the
owner of the indebtedness or obligation of the primary obligor against loss in
respect thereof resulting from the primary obligor's failure to pay or perform.
For the purposes of all computations made under this Agreement, a Guaranty in
respect of any Debt for money borrowed shall be deemed to be Debt equal to the
principal amount of such outstanding Debt for money borrowed which has been
guaranteed, and a Guaranty in respect of any other obligation or any dividend
shall be deemed to be indebtedness equal to the maximum aggregate amount of such
obligation or dividend for which the person guaranteeing may be liable.

         "Insurance Subsidiaries" shall mean the direct or indirect Subsidiaries
of the Company that are engaged in the insurance business.

         "Interest Period" shall mean the period commencing on the date a
Borrowing of Loans is made and ending on the date, as the Company may select (on
its own behalf or on behalf of PM, as appropriate) (a) in the case of Adjusted
CD Rate Loans, 30, 60, 90 or 180 days thereafter and (b) in the case of
Eurodollar Loans, 1, 2, 3, or 6 months thereafter provided, however, that:

         1. no Interest Period may extend beyond the Termination Date; and

         2. whenever the last day of any Interest Period would otherwise be a
         day that is not a Business Day, the last day of such Interest Period
         shall be extended to the next succeeding Business Day, provided, that,
         in the case of an Interest Period for a Borrowing of Eurodollar Loans,
         if such extension would cause the last day of such Interest Period to
         occur in the following calendar month, the last day of such Interest
         Period shall be the immediately preceding Business Day.

                                      -42-
<PAGE>   47
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on the numerically corresponding day
in the next calendar month, provided, however, if an Interest Period begins on
the last day of a month or if there is no numerically corresponding day in the
month in which an Interest Period is to end, then such Interest Period shall end
on the last Business Day of such month.

         "Lending Office" has the meaning specified in Section 3.12 hereof.

         "LIBOR" has the meaning specified in Section 3.3 hereof.

         "Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, including, without
limitation, the security interest or lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes and including any Capitalized Lease. For the purpose of
this Agreement, the Company or a Primary Subsidiary shall be deemed to be the
owner of any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to such Property has
been retained by or vested in another Person for security purposes.

         "Loans" shall mean the Domestic Rate Loans, Adjusted CD Rate Loans,
Eurodollar Loans and Bid Loans or any of them.

         "Moody's Rating" shall mean at any time the rating assigned by Moody's
Investors Service, Inc. to the claims paying ability of the Company.

         "NAIC Ratings" shall mean the quality ratings assigned by the
Securities Valuation Office of the National Association of Insurance
Commissioners to investments of the Company. References in this Agreement to
particular NAIC ratings are references to such ratings as currently defined and
classified by the Securities Valuation Office of the National Association of
Insurance Commissioners and if such rating system is changed then each reference
to a particular rating in this Agreement shall be deemed to be a reference to
the rating under such changed rating system which most closely approximates the
credit quality of the particular rating as currently defined.

         "Net Invested Assets" shall mean the Company's and the Insurance
Subsidiaries' portfolios of stocks, bonds, mortgage loans, real estate, policy
loans and other assets classified as invested assets under AAP less separate
account assets.

         "Non-Performing Real Estate" shall mean the book value of the sum of
(i) real estate acquired by the Company and the Insurance Subsidiaries in
satisfaction of indebtedness, whether by foreclosure, deed in lieu of
foreclosure or otherwise, which during the period of 180 days prior to the date
of determination had a net operating income (gross income less taxes,
maintenance and other operating expenses and also less

                                      -43-
<PAGE>   48
principal and interest on indebtedness not owing to the Company or the
applicable Insurance Subsidiary) of less than 6% of book value, (ii) mortgage
loans the terms of which have been modified because of the borrower's inability
to comply with the terms as originally agreed or which are in the process of
foreclosure and under which the amount received by the Company or the applicable
Insurance Subsidiary (exclusive of amounts received for taxes or insurance or in
payment of expenses) during the 90 days preceding the date of determination is
an amount which on an annual basis would return to the Company or the applicable
Insurance Subsidiary less than 6% of the book value of the mortgage loan in
question and (iii) mortgage loans on which any payment of principal or interest
is more than 90 days past due.

         "Notes" shall mean the Bid Notes and the Committed Loan Notes.

         "Offer" has the meaning specified in Section 2.2(c) hereof.

         "Person" shall mean an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, or any other entity and a
government or agency or political subdivision thereof.

         "Plan" has the meaning specified in Section 5.14 hereof.

         "PM" has the meaning specified in the preamble hereof.

         "Pricing Level": Pricing Level I, Pricing Level II, Pricing Level III,
Pricing Level IV, Pricing Level V, or Pricing Level VI, as applicable.

         "Pricing Level I": at any time, when the S&P Rating is greater than or
equal to AA and the Moody's Rating is greater than or equal to Aa2.

         "Pricing Level II": at any time, when the S&P Rating is greater than or
equal to AA- or the Moody's Rating is greater than or equal to Aa3 and Pricing
Level I is not applicable.

         "Pricing Level III": at any time, when the S&P Rating is greater than
or equal to A+ or the Moody's Rating is greater than or equal to A1 and Pricing
Levels I and II are not applicable.

         "Pricing Level IV": at any time, when the S&P Rating is greater than or
equal to A or the Moody's Rating is greater than or equal to A2 and Pricing
Levels I, II and III are not applicable.

         "Pricing Level V": at any time, when the S&P Rating is greater than or
equal to A- or the Moody's Rating is greater than or equal to A3 and Pricing
Levels I, II, III and IV are not applicable.

                                      -44-
<PAGE>   49
         "Pricing Level VI": at any time, when the S&P Rating is less than or
equal to BBB+ and the Moody's Rating is less than or equal to Baa1.

         "Primary Subsidiaries" shall mean Phoenix American Life Insurance Co.,
PM, Phoenix Duff & Phelps Corporation, and any other Subsidiary of the Company
which at the time of determination has capital or a net worth in excess of
$25,000,000.

         "Property" shall mean any interest of any kind in property or assets,
whether real, personal or mixed, and whether tangible or intangible.

         "Reference Banks" shall mean BNY, Fleet National Bank, and NationsBank,
N.A. (South) or such other Banks as the Company, the Required Banks and the
Agent shall agree in writing.

         "Refunding Borrowing" has the meaning specified in Section 1.3(d)
hereof.

         "Rentals" shall mean and include all fixed rents (including as such all
payments which the lessee is obligated to make to the lessor on termination of
the lease or surrender of the Property) payable by a Person, as lessee or
sublessee under a lease of real or personal Property, but shall be exclusive of
any amounts required to be paid by such Person (whether or not designated as
rents or additional rents) on account of maintenance, repairs, insurance, taxes
and similar charges. Fixed rents under any so-called "percentage leases" shall
be computed solely on the basis of the minimum rents, if any, required to be
paid by the lessee regardless of sales volume or gross revenues.

         "Required Banks" shall mean Banks granting 66-2/3% or more of the
Commitments or if the Commitments are not outstanding, Banks holding 66-2/3% or
more of the outstanding principal amount of the Loans.

         "Risk Based Capital Ratio": shall mean, as of any time the same is to
be determined, the ratio of "Total Adjusted Capital" of the Company to the
Company Action Level of the Company. The "Total Adjusted Capital" of the Company
shall be computed in the manner from time to time prescribed by the Insurance
Department of the State of New York for inclusion in the annual statement of the
Company to such Department (Total Adjusted Capital appearing on page 23 of the
annual statement for the period ending December 31, 1995 in column 1, line 27,
and currently consisting of capital and surplus, the asset valuation reserve of
the Company and 50% of the Company's dividend liability). The "Company Action
Level" of the Company shall equal 200% of the "Authorized Control Level Risk
Based Capital" of the Company. The "Authorized Control Level Risk Based Capital"
of the Company shall be computed in the manner from time to time prescribed by
the Insurance Department of the State of New York for inclusion in the annual
statement of the Company to such Department (such Authorized Control Level Risk
Based Capital appearing on page 23 of the statement for the period ending
December 31, 1995 in column 1, line 28).

                                      -45-
<PAGE>   50
         "S&P Rating" shall mean at any time the rating assigned by Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. to the
claims paying ability of the Company.

         "Separate Accounts" shall mean accounts maintained by the Company
pursuant to the New York Insurance Law of a character such that the assets
allocated thereto are to provide for annuities or life insurance benefits under
specific annuity and/or insurance contracts and are not chargeable with other
liabilities of the Company or the Insurance Subsidiaries.

         "Subsidiary" shall mean, as to any particular parent corporation, any
corporation of which more than 50% (by number of votes) of the Voting Stock
shall be owned by such parent corporation and/or one or more corporations which
are themselves Subsidiaries of such parent corporation.

         "Termination Date" shall mean November 1, 2001.

         "Voting Stock" shall mean securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of corporate directors (or Persons performing similar
functions).

         Section 10.2. Accounting Principles.

         Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with AAP, to the extent
applicable, applied consistently (except for changes in application with respect
to which the Auditors concur) with the principles used in preparation of the
December 31, 1995 financial statements of the Company heretofore delivered to
the Banks, except where such principles are inconsistent with the specific
provisions of this Agreement.

         Section 10.3. Moody's Ratings and S&P Ratings.

         All references in this Agreement to particular Moody's Ratings and S&P
Ratings are references to such ratings as currently defined by Moody's Investors
Service, Inc. and/or Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. and in the event either of such corporations changes
its rating system, each reference to a particular rating set forth in this
Agreement shall be deemed to be a reference to the rating under such changed
rating system which, in the reasonable judgment of the Agent, after consultation
with the rating service involved, most closely approximates the level of claims
paying ability associated with the particular rating as currently defined.
Whenever a determination of compliance with any provision of this Agreement or
any interest rate or fee is dependent upon the availability of both a Moody's
Rating and an S&P Rating and one or the other (but not both) of such rating
services ceases to rate the claims paying

                                      -46-
<PAGE>   51
ability of the Company, compliance with the applicable provisions of this
Agreement and determinations of interest rates and fees shall be made on the
basis of the rating which is available. If for any reason neither a Moody's
Rating nor an S&P Rating is available for the Company then in that event
compliance with the provisions of this Agreement where a determination of such a
rating is necessary and determinations of interest rates and fees shall be made
by the Required Banks, after consultation with the Company, based on the
Required Banks' good faith estimate of what such ratings would have been had
they been available, the determination of the Required Banks in such regards to
be final and conclusive provided that they have been made in good faith.

         Section 10.4. Directly or Indirectly.

         Where any provision in this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether the action in question is taken directly or indirectly by
such Person.

SECTION 11. THE AGENT FOR THE BANKS.

         Section 11.1. Appointment and Duties.

         For the convenience of the parties hereto, BNY is appointed Agent
hereunder by and for the Banks with such powers as are specifically delegated to
the Agent by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto, and by its execution hereof accepts such agency,
solely for the purposes herein set forth and as such agency is described herein.
The Agent shall have no authority to enforce, nor any duty or responsibility for
the enforcement of, any of the terms hereof except as a Bank hereunder. Neither
the Agent nor any of its directors, officers or employees shall be liable for
any action taken or omitted to be taken by it or them hereunder, except for its
or their own gross negligence or wilful misconduct. The Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Agent shall have received written notice thereof from a Bank
or the Company. The Agent shall be protected in acting upon any notice, request,
certificate, letter, statement (oral or written) or other documents believed by
it in good faith to be genuine and correct and to have been signed or sent by
the proper person or persons and, in the case of legal matters, upon the advice
of counsel selected by the Agent. The Agent may treat the Banks that are named
herein as the holders of the Notes and the indebtedness contemplated herein
unless and until the Agent receives notice of the assignment of a Note and
indebtedness held by a Bank hereunder. As to any matters not expressly provided
for by this Agreement, the Agent shall in all cases be fully protected in
acting, or refraining from acting, hereunder in accordance with the instructions
of the Required Banks, and such instructions of the Required Banks and any
action taken or not taken pursuant thereto shall be binding on all Banks. The
Agent shall be acting as an independent contractor hereunder and nothing herein
shall be deemed to impose on the Agent any fiduciary obligations to the Banks or
the Borrowers.

                                      -47-
<PAGE>   52
         Section 11.2. Sufficiency of the Agreement.

         The Agent and Arranger take no responsibility for the truth of any
warranties or representations given or made herein, except expressed
representations made by the Agent herein, and the Agent and Arranger shall not
be responsible to the Banks for the validity, effectiveness, enforceability or
sufficiency of this Agreement, the Notes or any other related documents.

         Section 11.3. Independent Investigation.

         Each Bank warrants that it has made its own independent investigations
of the financial condition and affairs of the Borrowers in connection with the
making and continuance of the Loans hereunder and has not relied upon
information provided to such Bank by the Agent or the Arranger (provided that it
is acknowledged that the Banks have relied on information provided to them by
the Borrowers through the Agent and Arranger and the Borrowers' liability
therefor shall be the same as though they had directly provided such information
to the Banks) and each Bank represents that it shall continue throughout the
duration of this Agreement to make its own independent appraisal of the
Borrowers.

         Section 11.4. Agent as Bank.

         The Agent shall be under the same obligations and be entitled to the
same rights and powers in its capacity as a Bank as if it were not the Agent and
the Agent shall not be obliged by reason of its position as Agent to account to
any other Bank for any sum received by it hereunder in its capacity as a Bank or
for the profit element thereof and the Agent, the Arranger or any Bank may,
without liability to account to the other Banks, accept deposits from, lend
money to, and generally engage in any kind of banking, or trust business with,
the Borrowers and their affiliates as if it were not the Agent, the Arranger or
a Bank, as the case may be.

         Section 11.5. Indemnification of Agent.

         The Borrowers and (to the extent not reimbursed by the Borrowers) each
Bank (pro-rata in accordance with their respective Commitments) agree to
indemnify the Agent and the Arranger from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent or Arranger (in their capacities
as such) in any way relating to or arising out of this Agreement, provided that
neither the Borrowers nor any Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements arising from the Agent's or Arranger's gross
negligence or willful misconduct and PM shall not be responsible for any of such
caused by acts or omissions of the Company.

                                      -48-
<PAGE>   53
         Section 11.6. Refusal to Act.

         Except for action expressly required of the Agent hereunder, the Agent
shall in all cases be fully justified in failing or refusing to act hereunder
unless it shall be indemnified to its reasonable satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action (other than liability for its
own gross negligence or willful misconduct). In all cases in which this
Agreement does not require the Agent to take certain actions, the Agent shall be
fully justified in using its discretion in failing to take or in taking any
action hereunder.

         Section 11.7. Successor Agent.

         Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by giving written notice
thereof to the Banks and the Borrowers. Upon any such resignation, the Required
Banks shall have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Required Banks and shall have accepted such
appointment within thirty (30) days after the retiring Agent's giving notice of
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a bank or trust company with capital and surplus
in excess of $500,000,000. Upon the acceptance of any appointment as successor
Agent hereunder, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder as Agent, the
provision of this Section 11 shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as the
Agent.

SECTION 12. MISCELLANEOUS.

         Section 12.1. Waiver of Rights.

         No delay or failure on the part of the Agent or any Bank or the holder
or holders of any Note in the exercise of any power or right shall operate as a
waiver thereof, nor as an acquiescence in any default, nor shall any single or
partial exercise thereof, or the exercise of any other power or right, preclude
any other right or the further exercise of any other rights, and the rights and
remedies hereunder of the Agent, the Banks and the holder or holders of any Note
are cumulative to, and not exclusive of, any rights or remedies which any of
them would otherwise have.

         Section 12.2. Non-Business Day.

         (a) If any payment of principal or interest on any Domestic Rate Loan,
Adjusted CD Rate Loan or Bid Loan shall fall due on a day which is not a
Business Day, interest at the rate such Loan bears for the period prior to
maturity shall continue to

                                      -49-
<PAGE>   54
accrue on such principal from the stated due date thereof to and including the
next succeeding Business Day on which the same is payable.

         (b) If any payment of principal or interest on any Eurodollar Loan
shall fall due on a day which is not a Business Day, the payment date therefor
shall be extended to the next date which is a Business Day and the Interest
Period for such Loan and the period for which interest is to be paid shall be
accordingly extended, unless as a result thereof any payment date would fall in
the next calendar month, in which case such payment date shall be the
immediately preceding Business Day and the relevant Interest Period shall be
correspondingly abbreviated. In either case the next Interest Period shall be
measured from the payment date so adjusted.

         Section 12.3. Documentary Taxes.

         The Company agrees to pay any documentary, stamp or similar taxes
payable in respect of this Agreement or any Note, including interest and
penalties, in the event any such taxes are assessed irrespective of when such
assessment is made and whether or not any credit is then in use or available
hereunder.

         Section 12.4. Survival of Representations.

         All representations and warranties made herein or in certificates given
pursuant hereto shall survive the execution and delivery of this Agreement and
of the Notes, and shall continue in full force and effect with respect to the
date as of which they were made as long as any credit is in use or available
hereunder.

         Section 12.5. Survival of Indemnities.

         All indemnities and all other provisions relative to reimbursement to
the Banks of amounts sufficient to protect the yield of the Banks with respect
to the Fixed Rate Loans, including, but not limited to, Sections 3.8, 3.9, 3.11,
4.8, 12.3 and 12.12 hereof, and the other protective provisions hereof including
Section 8.3, shall survive the termination of this Agreement and the payment of
the Notes.

         Section 12.6. Set-off Sharing.

         (a) In addition to any rights and remedies of each Bank provided by
law, upon the occurrence of an Event of Default and acceleration of the Notes,
or at any time upon the occurrence and during the continuance of an Event of
Default under Section 9.1(a), each Bank shall have the right, without prior
notice to either Borrower, any such notice being expressly waived by both
Borrowers to the extent permitted by applicable law, to set-off and apply
against any indebtedness or other liability, whether matured or unmatured, of
either of the Borrowers to such Bank arising under this Agreement and the Notes,
any amount owing from such Bank to such Borrower. To the extent permitted by
applicable law, the aforesaid right of set-off may be exercised by such Bank
against

                                      -50-
<PAGE>   55
either Borrower or against any trustee in bankruptcy, custodian, debtor in
possession, assignee for the benefit of creditors, receiver, or execution,
judgment or attachment creditor of such Borrower, or against anyone else
claiming through or against such Borrower or such trustee in bankruptcy,
custodian, debtor in possession, assignee for the benefit of creditors,
receivers, or execution, judgment or attachment creditors, notwithstanding the
fact that such right of set-off shall not have been exercised by such Bank prior
to the making, filing or issuance of, service upon such Bank of, or notice to
such Bank of, any petition, assignment for the benefit of creditors, appointment
or application for the appointment of a receiver, or issuance of execution,
subpoena, order or warrant. Each Bank agrees promptly to notify the Borrowers
and the Agent after each such set-off and application made by the such Bank,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.

         (b) Each Bank agrees with each other Bank a party hereto that in the
event such Bank shall receive and retain any payment, whether by setoff or
application of deposit balances or otherwise (other than pursuant to Section
12.11 hereof) on or in respect of its Notes or facility fees in excess of its
ratable share of payments on all Notes and facility fee payments then
outstanding to the Banks then such Bank shall purchase for cash at face value,
but without recourse, ratably from each of the other Banks such amount of the
Notes or rights to payment of facility fees held by each such other Bank (or
interest therein) as shall be necessary to cause such Bank to share such excess
payment ratably with all the other Banks; provided, however, that if any such
purchase is made by any Bank, and if such excess payment or part thereof is
thereafter recovered from such purchasing Bank, the related purchases from the
other Banks shall be rescinded ratably and the purchase price restored as to the
portion of such excess payment so recovered, but without interest. Each Borrower
acknowledges and agrees that each of the Banks shall have the right to set off
amounts due it against any claims of such Borrower purchased by them from other
Banks pursuant to this Section 12.6, such right to be in addition to and not in
lieu of any rights of setoff to which they would otherwise be entitled to
exercise.

         Section 12.7. Notices.

         All communications provided for herein shall be in writing or by telex,
telegraph or facsimile transmission, except as otherwise specifically provided
for hereinabove, addressed, if to the Borrowers or either of them at One
American Row, Hartford, CT 06115, Attention: Raymond Cummings or if to the Agent
or Banks at their respective addresses set forth opposite their respective
signatures hereto, or at such other address as shall be designated by any party
hereto in a written notice to each other party pursuant to this Section 12.7.
Any notice in writing shall be deemed to have been given or made when served
personally or when received if sent by United States mail, and any notice given
by telex or telegraphic means shall be deemed given when transmitted (answerback
confirmed); provided that any notice to the Agent or any Bank under Sections 1,
2 and 3 hereof shall only be effective upon receipt.

                                      -51-
<PAGE>   56
         Section 12.8. Counterparts.

         This Agreement may be executed in any number of counterparts, and by
the different parties on different counterparts, each of which when executed
shall be deemed an original, but all such counterparts taken together shall
constitute one and the same instrument.

         Section 12.9. Successors and Assigns.

         This Agreement shall be binding upon the Borrowers and their respective
successors and assigns, and shall be binding upon and inure to the benefit of
the Banks and their respective successors and permitted assigns, including any
subsequent holder of any Note. Neither Borrower may assign its rights or
obligations hereunder without the prior written consent of all Banks.

         Section 12.10. Participants.

         Each Bank shall have the right at its own cost to grant participations
(to be evidenced by one or more agreements or certificates of participation) in
the Loans made by such Bank and in such Bank's Commitment at any time and from
time to time to one or more other financial institutions, provided that no such
participant shall have any rights under this Agreement or any Note (the
participant's rights against the Bank granting its participation to be those set
forth in the participation agreement between the participant and such Bank), no
such Bank shall be relieved of its obligations to the Borrowers under its
Commitment and no such Bank shall agree with any such participant to refrain
from agreeing to waivers, amendments or modifications hereunder or under the
Notes without the consent of such participant except for waivers, amendments and
modifications which pursuant to the terms of Section 12.13 hereof require the
consent of all Banks. Each such Bank shall be entitled to the benefits of
Sections 3.8, 3.11 and 4.8 hereof to the extent such Bank would have been so
entitled had no such participation been sold.

         Section 12.11. Assignment Agreements.

         Each Bank may, from time to time, with the written consent of the
Borrowers and Agent (which will not in either instance be unreasonably withheld
or delayed), assign to other financial institutions all or part of the
indebtedness evidenced by the Notes then owned by it together with an equivalent
proportion of its obligation to make Loans hereunder pursuant to written
agreements executed by the assignor, the assignee and the Borrowers, which
agreements shall specify in each instance the portion of the indebtedness
evidenced by the Notes which is to be assigned to each such assignee and the
portion of the Commitment of the assignor to be assumed by it (the "Assignment
Agreements"), provided that either Borrower may in its sole discretion withhold
its consent to any assignment by a Bank of less than all of its Commitment if as
a result thereof the assignee will have a Commitment hereunder of less than
$5,000,000. Upon

                                      -52-
<PAGE>   57
the execution of each Assignment Agreement by the assignor, the assignee and the
Borrowers (i) such assignee shall thereupon become a "Bank" for all purposes of
this Agreement with a Commitment in the amount set forth in such Assignment
Agreement and with all the rights, powers and obligations afforded a Bank
hereunder, (ii) the assignor shall have no further liability for funding the
portion of its Commitment assumed by such other Bank and (iii) the address for
notices to such Bank shall be as specified in the Assignment Agreement executed
by it. Concurrently with the execution and delivery of such Assignment
Agreement, and upon return to the applicable Borrower of the outstanding Note or
Notes of the assignor (except that the Bid Note of the assignor will not be
returned or replaced in the case of a partial assignment), such Borrower shall
execute and deliver Notes to the assignee Bank in the amount of its Commitment
(in the case of its new Committed Loan Note) and a new Note or Notes (as
appropriate) to the assignor Bank in the amount of its Commitment after giving
effect to the reduction occasioned by such assignment (in the case of the
Committed Loan Notes), all such Notes to constitute "Notes" for all purposes of
this Agreement, and there shall be paid to the Agent, as a condition to such
assignment, an administrative fee of $2,500 plus any reasonable out-of-pocket
costs and expenses incurred by it in effecting such assignment, such fee to be
paid by the assignor or the assignee as they may mutually agree, but under no
circumstances shall any portion of such fee be payable by or charged to the
Borrowers. No provision of this Section 12.11 or of Section 12.10 hereof shall
be deemed to affect or impair the right of any Bank to pledge and assign its
Notes to a Federal Reserve Bank as collateral for obligations owing such Federal
Reserve Bank without notice to or consent of the Agent or the Borrowers.

         Section 12.12. Costs and Expenses.

         The Borrowers agree to pay on demand all reasonable out-of-pocket costs
and expenses of the Agent and Arranger in connection with the negotiation,
preparation, execution and delivery of this Agreement, the Notes, and the other
instruments and documents to be delivered hereunder or thereunder or in
connection with the transactions contemplated hereby or thereby or in connection
with any consents hereunder or thereunder or waivers or amendments hereto or
thereto, including the reasonable fees and out-of-pocket expenses of counsel for
the Agent with respect to all of the foregoing, and all reasonable costs and
expenses (including reasonable attorneys' fees), incurred by the Agent, the
Banks, the Arranger or any other holders of a Note in connection with a default
or the enforcement of this Agreement or the Notes and the other instruments and
documents to be delivered hereunder or thereunder except that PM shall not be
liable or responsible for expenses incurred by the Agent or the Banks in
pursuing remedies against the Company. The Borrowers agree to indemnify and save
harmless the Banks, the Arranger and the Agent from any and all liabilities,
losses, costs and expenses incurred by the Banks, the Arranger or the Agent in
connection with any action, suit or proceeding brought against the Agent, the
Arranger or any Bank by any Person which arises out of the transactions
contemplated or financed hereby or by the Notes or out of any action or inaction
by the Agent or any Bank hereunder, except for such thereof as is caused by the

                                      -53-
<PAGE>   58
gross negligence or willful misconduct of the party to be indemnified and except
that PM shall not be liable for any of such caused by the acts and omissions of
the Company. The provisions of this Section 12.12 and the protective provisions
of Sections 3 and 4.8 hereof shall survive payment of the Notes.

         Section 12.13. Amendments and Waivers.

         No provision of this Agreement may be amended or waived except in
writing signed by the Borrowers and the Required Banks and, if the rights or
duties of the Agent are affected thereby, by the Agent; provided that no such
amendment or waiver shall, unless signed by all Banks, (i) increase or extend
any Commitment or subject any Bank to any additional obligation, (ii) reduce the
principal of or rate of interest on any Loan or any fees due a Bank hereunder,
(iii) change the stated time or manner of any payment of principal of or
interest on any Loan or any fees due a Bank hereunder, (iv) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Notes, or the number of Banks, required for the Banks or any of them to take any
action under this Section 12.13 or any other provisions of this Agreement or (v)
amend or modify Section 1.1, 3.8, 3.9, 3.10, 3.11, 4.8, 7.16, 8, 12.5, 12.6,
12.10, 12.11, 12.12 or 12.13 hereof.

         Section 12.14. Governing Law.

         This Agreement and the Notes, and the rights and duties of the parties
hereto, shall be construed and determined in accordance with the laws of the
State of New York, without regard to principles of conflict of laws.

         Section 12.15. Entire Agreement.

         This Agreement constitutes the entire understanding of the parties with
respect to the subject matter hereof and any prior agreements, whether written
or oral, with respect thereto are superseded hereby.

         Section 12.16. Headings and Severability.

         Section headings used in this Agreement are for reference only and
shall not affect the construction of this Agreement. Any provision of this
Agreement which is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

         Section 12.17.  Consent to Jurisdiction.

         Each Borrower irrevocably submits to the jurisdiction of any New York
State or Federal Court sitting in the City of New York over any suit, action or
proceeding arising out of or relating to the Agreement or the Notes. Each
Borrower irrevocably waives, to

                                      -54-
<PAGE>   59
the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding brought
in such a court and any claim that any such suit, action or proceeding brought
in such a court has been brought in an inconvenient forum. Each Borrower agrees
that a final judgment in any such suit, action or proceeding brought in such a
court, after all appropriate appeals, shall be conclusive and binding upon it.

         Section 12.18.  Service of Process

         Each Borrower agrees that process may be served against it in any suit,
action or proceeding referred to in Section 12.17 by sending the same by first
class mail, return-receipt requested or by receipted overnight courier service,
to the address of such Borrower set forth in Section 12.7. Each Borrower agrees
that any such service (i) shall be deemed in every respect effective service of
process upon it in any such suit, action, or proceeding, and (ii) shall to the
fullest extent enforceable by law, be taken and held to be valid personal
service upon and personal delivery to it.

         Section 12.19.  No Limitation on Service or Suit

         Nothing in this Agreement or any Note or any modification, waiver, or
amendment thereto shall affect the right of the Agent or any Bank to serve
process in any manner permitted by law or limit the right of the Agent or any
Bank to bring proceedings against any Borrower in the courts of any jurisdiction
or jurisdictions.

         Section 12.20. WAIVER OF TRIAL BY JURY

         EACH OF THE AGENT, THE BANKS AND EACH BORROWER KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE
NOTES OR THE TRANSACTIONS CONTEMPLATED THEREBY. FURTHER, EACH BORROWER HEREBY
CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE AGENT OR THE BANKS, OR COUNSEL
TO THE AGENT OR THE BANKS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
AGENT OR THE BANKS WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE
THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. EACH BORROWER ACKNOWLEDGES THAT
THE AGENT AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER
ALIA, THE PROVISIONS OF THIS SECTION 12.20.

                                      -55-
<PAGE>   60
         Executed and delivered at New York, New York as of this first day of
November, 1996.

                                             PHOENIX HOME LIFE MUTUAL
                                             INSURANCE COMPANY
(CORPORATE SEAL)
                                             By: /s/ David W. Searfoss
                                                -------------------------------
                                               David W. Searfoss
                                               Its Executive Vice President

Attest:

/s/ Keith D. Robbins
------------------------
Keith D. Robbins
Assistant Secretary
                                             PM HOLDINGS, INC.
(CORPORATE SEAL)
                                             By: /s/ Raymond E. Cummings, Jr.
                                                -------------------------------
                                               Raymond E. Cummings, Jr.
                                               Its Authorized Person

Attest:

/s/ Keith D. Robbins
------------------------
Keith D. Robbins
Assistant Secretary
<PAGE>   61
         Accepted and agreed to as of the day and year last above written.

Address and Amount and Percentage of
  Commitment:

One Wall Street                              THE BANK OF NEW YORK
New York, New York  10286
Attn: Melanie Shorofsky
Telephone: 212-635-6482
Facsimile: 212-809-9520                      By: /s/ Melanie L. Shorofsky
                                               -------------------------------
                                               Melanie L. Shorofsky
                                               Its: Vice President
                                                   ---------------------------

Commitment:                                  Lending Office:
$30,000,000                                  The Bank of New York
                                             One Wall Street, 18th Floor
Commitment Percentage: 30%                   New York, New York  10286
                                             Attn: Ramona McCottrie

777 Main Street                              FLEET NATIONAL BANK
Hartford, Connecticut  06115
Attn: Juliana B. Dalton
Telephone: 860-986-3127
Facsimile: 860-986-1264                      By: /s/ Anson T. Harris
                                               -------------------------------
                                               Anson T. Harris
                                               Its: Assistant Vice President
                                                   ---------------------------

Commitment:                                  Lending Office:
$25,000,000                                  Fleet National Bank
                                             777 Main Street
Commitment Percentage: 25%                   Hartford, Connecticut  06115
                                             Attn: Emily Jones

600 Peachtree Street NE                      NATIONSBANK, N.A. (SOUTH)
21st Floor S.
Atlanta, Georgia  30308
Attn:  Greg Seib
Telephone: 404-607-4092
Facsimile: 404-607-6318                      By: /s/ Gregory A. Seib
                                               -------------------------------
                                               Gregory A. Seib
                                               Its: Officer
                                                   ---------------------------

Commitment:                                  Lending Office:
$15,000,000                                  600 Peachtree Street NE
<PAGE>   62
                                             21st Floor S.
                                             Atlanta, Georgia  30308
Commitment Percentage: 15%                   Attn: Cathy Matthews

 127 Public Square                           KEY BANK NATIONAL ASSOCIATION
OH-01-27-0606
Cleveland, Ohio  44114
Attn:  Sharon F. Weinstein
Telephone: 216-689-3443
Facsimile: 216-689-4981                      By: /s/ Sharon F. Weinstein
                                               -------------------------------
                                               Sharon F. Weinstein
                                               Its:
                                                    Vice President
                                                   ---------------------------

Commitment:                                  Lending Office:
$15,000,000                                  127 Public Square
                                             OH-01-27-0606
                                             Cleveland, Ohio  44114
Commitment Percentage: 15%                   Attn:  Susan Nealon

108 Myrtle Street                            STATE STREET BANK AND TRUST COMPANY
North Quincy, MA  02171
AH-2 (Mail Stop)
Attn:  Edward M. Anderson
Telephone: 617-985-5301
Facsimile: 617-985-5302                      By: /s/ Edward M. Anderson
                                               -------------------------------
                                               Edward M. Anderson
                                               Its:
                                                   Vice President
                                                   ---------------------------

Commitment:                                  Lending Office:
$13,000,000                                  108 Myrtle Street
                                             North Quincy, MA  02171
                                             AH-2 (Mail Stop)
Commitment Percentage: 13%                   Attn: Toni Pace

                                      -2-
<PAGE>   63

100 Constitution Plaza                       WEBSTER BANK
17th Floor
Hartford, Connecticut 06103
Attn:  William P. Kelleher
Telephone: 860-692-1603
Facsimile: 860-692-1602                      By: /s/ William P. Kelleher
                                               -------------------------------
                                               William P. Kelleher
                                             Its:
                                                 Vice President
                                               -------------------------------
<PAGE>   64
                                               Its:
                                                   ---------------------------

Commitment:                                  Lending Office:
$2,000,000                                   100 Constitution Plaza, 17th Floor
                                             Hartford, Connecticut 06103
Commitment Percentage: 2%                    Attn:  Rose Santana

                                      -3-
<PAGE>   65
                                    EXHIBIT A

                               COMMITTED LOAN NOTE

$_______________                                              ___________, 1996
                                                              New York, New York

         FOR VALUE RECEIVED, the undersigned, [INSERT NAME OF BORROWER] (the
"Borrower") promises to pay to the order of _____________________ (the "Bank")
at the office of The Bank of New York in New York, New York, the principal sum
of __________ Dollars ($__________) or, if less, the aggregate unpaid principal
amount of all Committed Loans made by the Bank to the Borrower under its
Commitment provided for under the Credit Agreement hereinafter mentioned and
with each Fixed Rate Loan which is a Committed Loan to mature and become payable
on the last day of the Interest Period applicable thereto, but in no event later
than _______ __, 2001, and with each Domestic Rate Loan to mature and become
payable on _______ __, 2001, together with interest on the principal amount of
each Committed Loan from time to time outstanding hereunder at the rates, and
payable in the manner and on the dates, specified in said Credit Agreement.

         The Bank shall record on its books or records or on a schedule to this
Committed Loan Note which is a part hereof the principal amount of each
Committed Loan, all payments of principal and interest and the principal
balances from time to time outstanding, whether such Committed Loan is an
Adjusted CD Rate Loan, Eurodollar Loan or Domestic Rate Loan and, in the case of
any Fixed Rate Loan, the interest rate and Interest Period applicable thereto;
provided that prior to the transfer of this Committed Loan Note all such amounts
shall be recorded on a schedule attached to this Committed Loan Note. The record
thereof, whether shown on such books or records or on a schedule to this
Committed Loan Note, shall be prima facie evidence as to all such information;
provided, however, that the failure of the Bank to record any of the foregoing
or any error therein shall not limit or otherwise affect the obligations of the
Borrower hereunder or under the Credit Agreement.

         This Committed Loan Note is one of the Committed Loan Notes referred to
in and issued under that certain Credit Agreement, dated as of _____ __, 1996,
by and among the Borrower, [INSERT NAME OF OTHER BORROWER], The Bank of New
York, as Agent, and the Banks named therein, as amended from time to time (the
"Credit Agreement"), and this Committed Loan Note and the holder hereof are
entitled to all of the benefits provided for thereby or referred to therein, to
which Credit Agreement reference is hereby made for a statement thereof. All
defined terms used in this Committed Loan Note, except terms otherwise defined
herein, shall have the same meaning as such terms have in the Credit Agreement.
<PAGE>   66
         Prepayments may be made on the Committed Loans evidenced hereby and
this Committed Loan Note (and the Committed Loans evidenced hereby) may be
declared or may become due prior to the expressed maturity thereof, all in the
events, on the terms and in the manner as provided for in the Credit Agreement.

         Except as specifically otherwise provided in the Credit Agreement, the
Borrower hereby waives presentment, demand, notice of dishonor, protest, notice
of protest and all other demands, protests and notices in connection with the
execution, delivery, performance, collection and enforcement of this Committed
Loan Note.

         This Committed Loan Note shall be construed in accordance with and
governed by the laws of the State of New York, without regard to principles of
conflict of laws.

                                               [NAME OF BORROWER]

                                               By____________________________
                                                 Its________________________

                                      -2-
<PAGE>   67
                                   SCHEDULE TO
                               COMMITTED LOAN NOTE

<TABLE>
<CAPTION>
         Type of
         Committed
         Loan                                                Interest
         Principal     (Domestic       Interest              Amount of
         Amount of     Eurodollar      Rate (if              Period  (if    Principal      Amount of
         Committed     or Adjusted     Fixed Rate            Fixed Rate     Payment or     Interest              Notation
Date     Loan          CD)             Advance)              Advance)       Prepayment     Payment               Made By
----     ---------     ---------       ---------             ---------      ---------      ---------             -------
<S>      <C>           <C>             <C>                   <C>            <C>            <C>                   <C>

</TABLE>
<PAGE>   68
                                    EXHIBIT B

                                    BID NOTE

                                                            ___________ __, 1996
                                                            New York, New York

         FOR VALUE RECEIVED, the undersigned, [INSERT NAME OF BORROWER] (the
"Borrower"') promises to pay to the order of _________________________________
(the "Bank") at the office of The Bank of New York in New York, New York, the
aggregate unpaid principal amount of all Bid Loans made by the Bank to the
Borrower under the Credit Agreement hereinafter mentioned and with each Bid Loan
to mature and become payable on its maturity date as established pursuant to
such Credit Agreement, but in no event later than __________ ___, 2001, together
with interest on the principal amount of each Bid Loan from time to time
outstanding at the rates, and payable in the manner and on the dates, specified
in said Credit Agreement.

         The Bank shall record on its books or records or on a schedule to this
Bid Note which is a part hereof the principal amount, interest rate and maturity
date of each Bid Loan and all payments of principal and interest thereon;
provided that prior to the transfer of this Bid Note all such amounts shall be
recorded on a schedule attached to this Bid Note. The record thereof, whether
shown on such books or records or on a schedule to this Bid Note, shall be prima
facie evidence as to all such information; provided, however, that the failure
of the Bank to record any of the foregoing or any error therein shall not limit
or otherwise affect the obligations of the Borrower hereunder or under the
Credit Agreement.

         This Bid Note is one of the Bid Notes referred to in and issued under
that certain Credit Agreement, dated as of __________, 1996, by and among the
Borrower, [INSERT NAME OF OTHER BORROWER], The Bank of New York, as Agent, and
the Banks named therein, as amended from time to time (the "Credit Agreement"),
and this Bid Note and the holder hereof are entitled to all of the benefits
provided for thereby or referred to therein, to which Credit Agreement reference
is hereby made for a statement thereof. All defined terms used in this Bid Note,
except terms otherwise defined herein, shall have the same meaning as such terms
have in the Credit Agreement.

         This Bid Note (and the Bid Loans evidenced hereby) may be declared or
may become due prior to the expressed maturity thereof, all in the events, on
the terms and in the manner as provided for in the Credit Agreement.

         Except as specifically otherwise provided in the Credit Agreement, the
Borrower hereby waives presentment, demand, notice of dishonor, protest, notice
of protest and all other demands, protests and notices in connection with the
execution, delivery, performance, collection and enforcement of this Bid Note.
<PAGE>   69
         This Bid Note shall be construed in accordance with and governed by the
laws of the State of New York.

                                               [NAME OF BORROWER]

                                               By____________________________
                                                 Its________________________

                                      -2-
<PAGE>   70
                                   SCHEDULE TO
                                  BID LOAN NOTE

<TABLE>
<CAPTION>
         Principal     Interest      Maturity     Amount of      Amount of
         Amount of     Rate of       Date of      Principal      Interest              Notation
Date     Bid Loan      Bid Loan      Bid Loan     Payment        Payment               Made By
----     ---------     ---------     --------     ----------     ---------             ---------
<S>      <C>           <C>           <C>          <C>            <C>                   <C>

</TABLE>
<PAGE>   71
                                    EXHIBIT C

                          BID LOAN REQUEST CONFIRMATION

                                               [Date]

The Bank of New York,
as Agent for the Banks
party to the Credit Agreement
referred to below

Attention:

         The undersigned refers to the Credit Agreement, dated as of _______,
1996, as amended from time to time (the "Credit Agreement"), by and among
Phoenix Home Life Mutual Insurance Company, PM Holdings, Inc., the Banks named
therein and The Bank of New York, as Agent for the Banks. Capitalized terms used
and not defined herein have the meanings assigned to them in the Credit
Agreement. The Company hereby confirms that it has, on the date hereof, given
you notice pursuant to Section 2.2 of the Credit Agreement that it (on [BEHALF
OF PM]/[ITS OWN BEHALF]) requests a Borrowing of Bid Loans under the Credit
Agreement, and in that connection sets forth below the terms on which such
Borrowing is requested to be made:

         (A)      Date of Borrowing of

         Bid Loan (1)                                         ____________

         (B)      Aggregate Principal Amount

         of Borrowing of Bid Loan (2)                         ____________

         (C)      Maturity Date                               ____________

         (D)      Borrower for proposed

         Borrowing                                            ____________

(1)      The Bid Loan Request Confirmation must be received on a Business Day by
the Agent not later than 2:30 p.m. (New York time) one (1) Business Day before
the proposed Borrowing Date.

(2)      Not less than $1,000,000 and in integral multiples of $1,000,000.
<PAGE>   72
         Upon acceptance of any or all of the Bids offered by Banks in response
to this request, the Borrower shall be deemed to affirm as of such date of
acceptance that each of the conditions to Borrowing set forth in subsections (b)
and (c) of Section 6 of the Credit Agreement is satisfied.

                                               Very truly yours,

                                               PHOENIX HOME LIFE MUTUAL
                                                INSURANCE COMPANY (3)

                                               By____________________________
                                                 Its________________________

(3)      Insert "on behalf of PM Holdings, Inc." if it is to be the Borrower.

                                      -2-
<PAGE>   73
                                    EXHIBIT D

                                INVITATION TO BID

[Name of Bank]                          [Date]
[Address]
Attention:

         Reference is made to the Credit Agreement, dated as of ________ __,
1996, as amended from time to time (the "Credit Agreement") by and among Phoenix
Home Life Mutual Insurance Company, PM Holdings, Inc., the Banks named therein
and The Bank of New York, as Agent for the Banks. Capitalized terms used and not
defined herein have the meanings assigned to them in the Credit Agreement. A Bid
Loan Request was made on _____________, ____ pursuant to Section 2.2 of the
Credit Agreement, and in that connection you are invited to submit a Bid by
[Date] . Your Bid must comply with Section 2.2 of the Credit Agreement and the
terms set forth below on which such Bid Loan Request was made.

         (A)      Date of Proposed Borrowing

                  of Bid Loan                          _____________

         (B)      Maturity Date                        _____________

         (C)      Borrower                             _____________

         (D)      Amount of Proposed Borrowing

                  of Bid Loan                          _____________

         (E)      The Bid must be received by The Bank of New York not later
than 9:00 a.m. (New York time) on the proposed Borrowing Date.

                                               Very truly yours,

                                               THE BANK OF NEW YORK
                                                as Agent for the Banks

                                               By____________________________
                                                 Its________________________
<PAGE>   74
                                    EXHIBIT E

                               CONFIRMATION OF BID

                                         [Date]

The Bank of New York,
  as Agent for the Banks party to the
  Credit Agreement referred to below

Attention:

         The undersigned refers to the Credit Agreement, dated as of
____________, 1996, as amended from time to time (the "Credit Agreement") by and
among Phoenix Home Life Mutual Insurance Company, PM Holdings, Inc., the Banks
named therein and The Bank of New York, as Agent for the Banks. Capitalized
terms used and not defined herein have the meanings assigned to them in the
Credit Agreement. The undersigned hereby confirms that on the date hereof it has
made a Bid pursuant to Section 2.2 of the Credit Agreement, in response to the
Bid Loan Request made on ___________, ____, and in that connection sets forth
below the terms on which such Bid is made:

                  Date of proposed Borrowing of Bid Loan: _______________.

                  Borrower: _____________________________________________.

                  Principal
                  Amount          $____________.

                  Interest Rate: ___% per annum.

                  Maturity Date: ______________.

                                               Very truly yours,

                                               [NAME OF BANK)

                                               By____________________________
                                                 Its________________________
<PAGE>   75
                                    EXHIBIT F

                           NOTICE OF ACCEPTANCE OF BID

[Name of Bank]                          [Date]
[Address]

Attention:

         Reference is made to the Credit Agreement, dated as of __________,
1996, as amended from time to time (the "Credit Agreement") by and among Phoenix
Home Life Mutual Insurance Company, PM Holdings, Inc., the Banks named therein
and The Bank of New York, as Agent for the Banks. Capitalized terms used and not
defined herein have the meanings assigned to them in the Credit Agreement. A Bid
Loan Request was made on ______________, 19____ pursuant to Section 2.2 of the
Credit Agreement, and in that connection you have submitted a Bid. Your Bid has
been accepted as set forth below.

         (A)      Date of Borrowing of Bid Loan        ______________

         (B)      Principal Amount of Bid Loan         $_____________

         (C)      Borrower                             ________________________

         (D)      Maturity                             ______________

         (E)      Interest Rate                        ____% per annum

                                               Very truly yours,

                                               THE BANK OF NEW YORK
                                                as Agent for the Banks

                                               By____________________________
                                                 Its________________________
<PAGE>   76
                                   EXHIBIT G

                                   [RESERVED]
<PAGE>   77
                                    EXHIBIT H

                              BORROWING CERTIFICATE

The Bank of New York for itself and as Agent
for the Banks from time to time party to the
Credit Agreement, dated as of ________ __, 1996
by and among Phoenix Home Life Mutual Insurance
Company, PM Holdings, Inc., the Banks signatory
thereto and The Bank of New York, as Agent

Attention: _______________

Ladies and Gentlemen:

         We refer to the Credit Agreement, dated as of _______ ___, 1996, as
currently in effect, as amended from time to time (the "Credit Agreement").
Capitalized terms used without definition below have the meanings ascribed to
them in the Credit Agreement. We hereby confirm our request for Loans to be made
to ________________ in the aggregate principal amount of $_____________ to be
funded by the Banks under the Credit Agreement on ______________ as a
________________(1), and in that regard represent to you that each of the
conditions to Borrowing set forth in subsections (b) and (c) of Section 6 of the
Credit Agreement is satisfied.

         Dated as of this ___ day of _____________, ____.

                                               PHOENIX HOME LIFE MUTUAL
                                               INSURANCE COMPANY (2)

                                               By____________________________
                                                 Its________________________

cc:      Melanie Shorofsky

--------
(1)      Domestic Rate Loan, Adjusted CD Rate Loan or Eurodollar Loan, as
         appropriate.

(2)      Insert "on behalf of PM Holdings, Inc.", if it is to be the Borrower.
<PAGE>   78
                                    EXHIBIT I

                             CERTAIN TAX ASSESSMENTS

                                      NONE<PAGE>   1
                                                                   EXHIBIT 10.28

                                CREDIT AGREEMENT

                           Dated as of August 14, 1997

                                      among

                       PHOENIX DUFF & PHELPS CORPORATION,
                   PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY

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

                              THE BANK OF NEW YORK,
                             as Administrative Agent

                                       and

                  THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

                                   Arranged by

                          BANCAMERICA SECURITIES, INC.

                                       and

                            BNY CAPITAL MARKETS, INC.
<PAGE>   2
                               TABLE OF CONTENTS

<TABLE>
<S>             <C>                                                                                              <C>
ARTICLE I            DEFINITIONS ..........................................................................        1

    1.1         Certain Defined Terms......................................................................        1

    1.2         Other Interpretive Provisions..............................................................       20

    1.3         Accounting Principles......................................................................       21

ARTICLE II           THE CREDITS ..........................................................................       21

    2.1         Amounts and Terms of Commitments...........................................................       21

    2.2         Loan Accounts..............................................................................       22

    2.3         Procedure for Borrowing....................................................................       22

    2.4         Facility B Conversion......................................................................       23

    2.5         Facility A Conversion......................................................................       23

    2.6         Conversion and Continuation Elections......................................................       24

    2.7         Voluntary Termination or Reduction of Commitments..........................................       25

    2.8         Optional Prepayments.......................................................................       26

    2.9         Mandatory Prepayments of Loans; Mandatory Commitment Reductions............................       26

    2.10        Repayment..................................................................................       26

    2.11        Interest...................................................................................       26

    2.12        Fees.......................................................................................       27

    2.13        Computation of Fees and Interest...........................................................       28

    2.14        Payments by the Company....................................................................       28

    2.15        Payments by the Banks to the Administrative Agent..........................................       29

    2.16        Sharing of Payments, Etc...................................................................       29

ARTICLE III          TAXES, YIELD PROTECTION AND ILLEGALITY ...............................................       30

    3.1         Taxes. (a) Payments to be Free and Clear...................................................       30

    3.2         Illegality.................................................................................       31

    3.3         Increased Costs and Reduction of Return....................................................       32

    3.4         Funding Losses.............................................................................       32

    3.5         Inability to Determine Rates...............................................................       33

    3.6         Certificates of Banks......................................................................       34

    3.7         Survival...................................................................................       34

ARTICLE IV           CONDITIONS PRECEDENT .................................................................       34
</TABLE>

                                      -i-
<PAGE>   3
                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
<S>                                                                                                               <C>
    4.1         Conditions of Initial Loans................................................................       34

    4.2         Conditions to All Borrowings and Facility B Conversion.....................................       35

    4.3         Conditions to Facility B Conversion........................................................       36

ARTICLE V            REPRESENTATIONS AND WARRANTIES .......................................................       37

    5.1         Corporate Existence and Power..............................................................       37

    5.2         Corporate Authorization; No Contravention..................................................       37

    5.3         Governmental Authorization.................................................................       37

    5.4         Binding Effect.............................................................................       38

    5.5         Litigation.................................................................................       38

    5.6         Contractual Obligation.....................................................................       38

    5.7         ERISA Compliance...........................................................................       38

    5.8         Use of Proceeds; Margin Regulations........................................................       39

    5.9         Title to Properties........................................................................       39

    5.10        Taxes......................................................................................       39

    5.11        Financial Condition........................................................................       39

    5.12        Environmental Matters......................................................................       40

ARTICLE VI           AFFIRMATIVE COVENANTS.................................................................       42

    6.1         Financial Statements.......................................................................       42

    6.2         Certificates; Other Information............................................................       43

    6.3         Notices....................................................................................       44

    6.4         Preservation of Corporate Existence, Etc...................................................       45

    6.5         Maintenance of Property....................................................................       45

    6.6         Insurance..................................................................................       45

    6.7         Payment of Obligations.....................................................................       45

    6.8         Compliance with Laws.......................................................................       46

    6.9         Compliance with ERISA......................................................................       46

    6.10        Inspection of Property and Books and Records...............................................       46

    6.11        Environmental Laws.........................................................................       46

    6.12        Use of Proceeds............................................................................       46

    6.13        Holding Agreement..........................................................................       47
</TABLE>

                                      -ii-
<PAGE>   4
                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
<S>             <C>                                                                                               <C>
ARTICLE VII          NEGATIVE COVENANTS....................................................................       47

    7.1         Limitation on Liens........................................................................       47

    7.2         Mergers, Consolidations and Sales of Assets................................................       48

    7.3         Loans and Investments......................................................................       48

    7.4         Limitation on Indebtedness.................................................................       49

    7.5         Transactions with Affiliates...............................................................       49

    7.6         Use of Proceeds............................................................................       49

    7.7         Contingent Obligations.....................................................................       50

    7.8         Joint Ventures.............................................................................       50

    7.9         Lease Obligations..........................................................................       50

    7.10        Restricted Payments........................................................................       50

    7.11        ERISA......................................................................................       51

    7.12        Change in Business.........................................................................       51

    7.13        Accounting Changes.........................................................................       51

    7.14        Pari Passu.................................................................................       51

    7.15        Phoenix....................................................................................       51

    7.16        Subordinated Debt and Preferred Stock......................................................       51

    7.17        Capital Expenditures.......................................................................       51

ARTICLE VIII         GUARANTOR'S FINANCIAL COVENANTS.......................................................       51

    8.1         Guarantor's Minimum Total SAP Adjusted Capital.............................................       52

    8.2         Invested Assets............................................................................       52

    8.3         NAIC Ratings...............................................................................       52

    8.4         Real Estate................................................................................       52

    8.5         Risk Based Capital.........................................................................       52

    8.6         Non-Performing Real Estate.................................................................       52

    8.7         Indebtedness to Capital....................................................................       52

ARTICLE IX           COMPANY'S FINANCIAL COVENANTS.........................................................       52

    9.1         Shareholders' Equity.......................................................................       52

    9.2         EBITDA to Interest Ratio...................................................................       53

    9.3         Total Debt to Capital Ratio................................................................       53
</TABLE>

                                     -iii-
<PAGE>   5
                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
<S>             <C>                                                                                               <C>
    9.4         Senior Debt to EBITDA Ratio................................................................       53

ARTICLE X            GUARANTY..............................................................................       53

    10.1        Guaranty...................................................................................       53

    10.2        Guaranty Unconditional.....................................................................       54

    10.3        Discharge only upon Payment in Full; Reinstatement in Certain Circumstances................       54

    10.4        Waiver by the Guarantor....................................................................       55

    10.5        Subrogation................................................................................       55

    10.6        Stay of Acceleration.......................................................................       55

ARTICLE XI           EVENTS OF DEFAULT.....................................................................       55

    11.1        Event of Default...........................................................................       55

    11.2        Remedies...................................................................................       57

    11.3        Rights Not Exclusive.......................................................................       57

ARTICLE XII          GUARANTOR EVENTS OF DEFAULT...........................................................       58

    12.1        Event of Default...........................................................................       58

    12.2        Remedies...................................................................................       58

ARTICLE XIII         COMPANY EVENTS OF DEFAULT.............................................................       58

    13.1        Event of Default...........................................................................       58

    13.2        Remedies...................................................................................       58

ARTICLE XIV          THE ADMINISTRATIVE AGENT..............................................................       59

    14.1        Appointment................................................................................       59

    14.2        Delegation of Duties.......................................................................       59

    14.3        Exculpatory Provisions.....................................................................       59

    14.4        Reliance by Administrative Agent...........................................................       60

    14.5        Notice of Default..........................................................................       60

    14.6        Non-Reliance on Administrative Agent and Other Banks.......................................       61

    14.7        Indemnification............................................................................       61

    14.8        Administrative Agent in Its Individual Capacity............................................       62

    14.9        Successor Agent............................................................................       62

    14.10       Syndication and Documentation Agent........................................................       63
</TABLE>

                                      -iv-
<PAGE>   6
                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
<S>             <C>                                                                                               <C>
ARTICLE XV           MISCELLANEOUS.........................................................................       63

    15.1        Amendments and Waivers.....................................................................       63

    15.2        Notices....................................................................................       64

    15.3        No Waiver; Cumulative Remedies.............................................................       64

    15.4        Costs and Expenses.........................................................................       64

    15.5        Indemnity..................................................................................       65

    15.6        Payments Set Aside.........................................................................       65

    15.7        Successors and Assigns.....................................................................       66

    15.8        Assignments, Participations, etc...........................................................       66

    15.9        Confidentiality............................................................................       67

    15.10       Set-off....................................................................................       68

    15.11       Automatic Debits of Fees...................................................................       68

    15.12       Notification of Addresses, Lending Offices, Etc............................................       69

    15.13       Counterparts...............................................................................       69

    15.14       Severability...............................................................................       69

    15.15       No Third Parties Benefited.................................................................       69

    15.16       Governing Law and Jurisdiction.............................................................       69

    15.17       Waiver of Jury Trial.......................................................................       70

    15.18       Entire Agreement...........................................................................       70
</TABLE>

Schedule 2.1      Commitments
Schedule 5.5      Litigation
Schedule 5.7      ERISA
Schedule 5.11     Permitted Liabilities
Schedule 5.12     Environmental Matters
Schedule 5.16     Subsidiaries and Minority Interests
Schedule 5.17     Insurance Matters
Schedule 7.1      Permitted Liens
Schedule 7.4      Permitted Indebtedness
Schedule 7.7      Contingent Obligations
Schedule 15.2     Lending Offices; Addresses for Notices

EXHIBITS

Exhibit  A        Form of Notice of Borrowing
Exhibit  B        Form of Notice of Conversion/Continuation
Exhibit  C        Form of Compliance Certificate
Exhibit  D-1      Form of Legal Opinion of Company's Counsel
Exhibit  D-2      Form of Legal Opinion of Guarantor's Counsel
Exhibit  E        Form of Assignment and Acceptance
Exhibit  F        Form of Promissory Note
Exhibit  G        Form of Notice of Facility A Conversion
Exhibit  H        Form of Notice of Facility B Conversion

                                      -v-
<PAGE>   7
                                CREDIT AGREEMENT

         This CREDIT AGREEMENT is entered into as of August 14, 1997, among
Phoenix Duff & Phelps Corporation a Delaware corporation (the "Company"),
Phoenix Home Life Mutual Insurance Company, a New York domiciled mutual
insurance company (the "Guarantor"), the several financial institutions from
time to time party to this Agreement (collectively, the "Banks"; individually, a
"Bank"), Bank of America National Trust and Savings Association, as Syndication
and Documentation Agent for the Banks and The Bank of New York, as
Administrative Agent for the Banks.

         WHEREAS, the Banks have agreed to make available to the Company a
revolving credit facility guaranteed by the Guarantor and an unguaranteed
revolving credit facility upon the terms and conditions set forth in this
Agreement;

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

                                   ARTICLE I

                                   DEFINITIONS

         1.1      Certain Defined Terms. The following terms have the following
                  meanings:

                  "Acquisition" means any transaction or series of related
         transactions for the purpose of or resulting, directly or indirectly,
         in (a) the acquisition of all or substantially all of the assets of a
         Person, or of any business or division of a Person, (b) the acquisition
         of in excess of 50% of the capital stock, partnership interests or
         equity of any Person, or otherwise causing any Person to become a
         Subsidiary, or (c) a merger or consolidation or any other combination
         with another Person (other than a Person that is a Subsidiary) provided
         that the Company or the Subsidiary is the surviving entity.

                  "Administrative Agent" means BNY in its capacity as
         administrative agent for the Banks hereunder, and any successor agent
         arising under Section 14.9.

                  "Administrative Agent's Payment Office" means the address for
         payments set forth on the signature page hereto in relation to the
         Administrative Agent, or such other address as the Administrative Agent
         may from time to time specify.

                  "Affiliate" means, as to any Person, any other Person which,
         directly or indirectly, is in control of, is controlled by, or is under
         common control with, such Person. A Person shall be deemed to control
         another Person if the controlling Person possesses, directly or
         indirectly, the power to direct or cause the direction of the
         management and policies of the other Person, whether through the
         ownership of voting securities, by contract, or otherwise.

                  "Agent-Related Persons" means BofA, BNY and any successor
         Administrative Agent arising under Section 14.9, together with their
         respective Affiliates (including, in
<PAGE>   8
         the case of BofA and BNY, the Arrangers), and the officers, directors,
         employees, agents and attorneys-in-fact of such Persons and Affiliates.

                  "Agents" mean the Administrative Agent and BofA, as
         Syndication and Documentation Agent.

                  "Agreement" means this Credit Agreement.

                  "Alternate Base Rate" means, for any day, a rate per annum
         equal to the higher of: (a) 0.50% per annum above the Federal Funds
         Rate in effect on such date; and (b) the BNY Rate in effect on such
         day.

                  Any change in the BNY Rate shall take effect at the opening of
         business on the day specified in the public announcement of such
         change.

                  "Annual Statement" means the annual financial statement of any
         insurance company as required to be filed with the Department, together
         with all exhibits or schedules filed therewith, prepared in conformity
         with SAP. References to amounts on particular exhibits, schedules,
         lines, pages and columns on such Annual Statements are based on the
         formats promulgated by the NAIC for 1996 Annual Statements for the
         applicable type of insurance company. If such format is changed in
         future years so that different information is contained in such items
         or they no longer exist, it is understood that the reference is to
         information consistent with that recorded in the referenced item in the
         1996 Annual Statement of the insurance company.

                  "Applicable Fee Rate" means initially 0.10%. On and after the
         date specified below, the Applicable Fee Rate shall be adjusted to the
         rate per annum set forth in the table below beneath the consolidated
         Senior Debt to EBITDA Ratio (such Ratio being referred to as "X" below)
         for the Company and its Subsidiaries set forth below:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                   Level 1         Level 2              Level 3                 Level 4                Level 5
----------------------------------------------------------------------------------------------------------------------
<S>                <C>             <C>                  <C>                     <C>                    <C>
Senior Debt        X < OR = 1.4    1.4 < X < OR = 2.0   2.0 < X < OR = 2.55     2.55 < X < OR = 3.00   3.00 < X
EBITDA Ratio
----------------------------------------------------------------------------------------------------------------------
Applicable Fee     8.0 bps         9.0 bps              10.0 bps                12.5 bps               17.5 bps
Ratio
----------------------------------------------------------------------------------------------------------------------
</TABLE>

         The Applicable Fee Rates shall be adjusted, to the extent applicable,
60 days (or, in the case of the last fiscal quarter of any fiscal year, 120
days) after the end of each fiscal quarter, based on the Senior Debt to EBITDA
Ratio as of the last day of such fiscal quarter; it being understood that if the
Company failed to deliver the financial statements required by subsection 6.1(a)
or (b), as applicable, and the related certificate required by subsection 6.2(a)
by the 60th day (or, if applicable, the 120th day) after any fiscal quarter, the
applicable Fee Rate shall be based on Level 5 above until such financial
statements and certificate are delivered.

                                      -2-
<PAGE>   9
         "Applicable Margin" means initially as to Facility A Eurodollar Rate
Loans, 0.195% and as to Facility A CD Rate Loans, 0.320%. Concurrently with any
change in the Rating, the rate set forth below for Facility A Eurodollar Rate
Loans and Facility A CD Rate Loans:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Facility A             Level 1         Level 2        Level 3          Level 4        Level 5        Level 6
---------------------------------------------------------------------------------------------------------------
<S>                    <C>             <C>            <C>              <C>            <C>            <C>
Rating of the          AA/Aa2          Aa-/Aa3        A+/A1            A/A2           A-/A3          Level 5
Guarantor
---------------------------------------------------------------------------------------------------------------
Applicable Margin      0.1875%         0.195%         0.225%           0.250%         0.350%         0.50%
For Eurodollar
Rate Loans
---------------------------------------------------------------------------------------------------------------
Applicable             0.3125%         0.320%         0.350%           0.375%         0.475%         0.625%
Margin For CD
Rate Loans
---------------------------------------------------------------------------------------------------------------
</TABLE>

In the event of a split between the Moody's Rating and the S&P Rating, the
higher interest rate shall be applicable.

         "Applicable Margin" means initially as to Facility B Eurodollar Rate
Loans, 0.385%, and as to Facility B CD Rate Loans, 0.51%. On and after the date
specified below, the Applicable Margin shall be adjusted to the rate per annum
set forth in the table below beneath the consolidated Senior Debt to EBITDA
Ratio (such Ratio being referred to as "X") below) for the Company set forth
below:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Facility B                 Level 1        Level 2              Level 3               Level 4                Level 5
--------------------------------------------------------------------------------------------------------------------
<S>                        <C>            <C>                  <C>                   <C>                    <C>
Senior Debt to EBITDA      X < or = 1.4   1.4 < X < or = 2.0   2.0 < X < or = 2.55   2.55 < X  < or = 3.00  3.00 < X
--------------------------------------------------------------------------------------------------------------------
Applicable Margin for      0.300%         0.360%               0.385%                 0.450%                 0.550%
Eurodollar Rate Loans
--------------------------------------------------------------------------------------------------------------------
Applicable Margin for      0.425%         0.485%               0.510%                 0.575%                 0.675%
CD Rate Loans
--------------------------------------------------------------------------------------------------------------------
</TABLE>

The Applicable Margin for Facility B Loans shall be adjusted, to the extent
applicable, 60 days (or, in the case of the last fiscal quarter of any fiscal
year, 120 days) after the end of each fiscal quarter, based on the Senior Debt
to EBITDA Ratio as of the last day of such fiscal quarter; it being understood
that if the Company fails to deliver the financial statements required by
subsection 6.1(a) or (b), as applicable, and the related certificate required by
subsection 6.2(a) by the 60th day (or, if applicable, the 120th day) after any
fiscal quarter, the Applicable Margin shall be based on Level 5 above until such
financial statements and certificate are delivered.

                                      -3-
<PAGE>   10
                  "Arrangers" means BancAmerica Securities, Inc., a Delaware
         corporation and BNY Capital Markets, Inc., a New York corporation.

                  "Assignee" has the meaning specified in subsection 12.8(a).

                  "Attorney Costs" means and includes all fees and disbursements
         of any law firm or other external counsel, the non-duplicative
         allocated cost of internal legal services and all disbursements of
         internal counsel.

                  "Bank" has the meaning specified in the introductory clause
         hereto.

                  "Bankruptcy Code" means the Federal Bankruptcy Reform Act of
         1978 (11 U.S.C. Section 101, et seq.).

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

                  "BNY" means The Bank of New York, a New York banking
         corporation.

                  "BNY Rate" means a rate of interest per annum equal to the
         rate of interest publicly announced in New York City by BNY from time
         to time as its prime commercial lending rate, such rate to be adjusted
         automatically (without notice) on the effective date of any change in
         such publicly announced rate. The BNY Rate is not the lowest rate
         available at BNY at any time.

                  "BofA" means Bank of America National Trust and Savings
         Association, a national banking association.

                  "Borrowing" means a borrowing hereunder consisting of Loans of
         the same Type and of the same Facility made to the Company on the same
         day by the Banks under Article II, and, other than in the case of Base
         Rate Loans, having the same Interest Period.

                  "Borrowing Date" means any date on which a Borrowing occurs
         under Section 2.3.

                  "Business Day" means any day other than a Saturday, Sunday or
         other day on which commercial banks in New York City are authorized or
         required by law to close and, if the applicable Business Day relates to
         any Eurodollar Rate Loan, means such a day on which dealings are
         carried on in the applicable Eurodollar dollar interbank market.

                  "Capital Adequacy Regulation" means any guideline, request or
         directive of any central bank or other Governmental Authority, or any
         other law, rule or regulation, whether or not having the force of law,
         in each case, regarding capital adequacy of any bank or of any
         corporation controlling a bank.

                  "CD Rate" means, for any Interest Period with respect to CD
         Rate Loans comprising part of the same Borrowing, the rate of interest
         (rounded upward to the next 1/100th of 1%) determined as follows:

                                      -4-
<PAGE>   11
                  CD Rate =     Certificate of Deposit Rate + Assessment
                                1.00 - Reserve Percentage Rate

                  Where:

                           "Assessment Rate" means, for any day of such Interest
                  Period, the rate determined by the Administrative Agent as
                  equal to the annual assessment rate in effect on such day
                  payable to the FDIC by a member of the Bank Insurance Fund
                  that is classified as adequately capitalized and within
                  supervisory subgroup "A" (or a comparable successor assessment
                  risk classification within the meaning of 12 C.F.R.
                  Section 327.3) for insuring time deposits at offices of such
                  member in the United States; or, in the event that the FDIC
                  shall at any time hereafter cease to assess time deposits
                  based upon such classifications or successor classifications,
                  equal to the maximum annual assessment rate in effect on such
                  day that is payable to the FDIC by commercial banks (whether
                  or not applicable to any particular Bank) for insuring time
                  deposits at offices of such banks in the United States.

                           "Certificate of Deposit Rate" means the rate of
                  interest per annum determined by the Administrative Agent to
                  be the arithmetic mean (rounded upward to the next 1/100th of
                  1%) of the rates notified to the Administrative Agent as the
                  rates of interest bid by two or more certificate of deposit
                  dealers of recognized standing selected by the Administrative
                  Agent for the purchase at face value of dollar certificates of
                  deposit issued by major United States banks, for a maturity
                  comparable to such Interest Period and in the approximate
                  amount of the CD Rate Loans to be made, at the time selected
                  by the Administrative Agent on the first day of such Interest
                  Period.

                           "Reserve Percentage" means, for any day of such
                  Interest Period, the maximum reserve percentage (expressed as
                  a decimal, rounded upward to the next 1/100th of 1%), as
                  determined by the Administrative Agent, in effect on such day
                  (including any ordinary, marginal, emergency, supplemental,
                  special and other reserve percentages), prescribed by the FRB
                  for determining the maximum reserves to be maintained by
                  member banks of the Federal Reserve System with deposits
                  exceeding $1,000,000,000 for new non-personal time deposits
                  for a period comparable to such Interest Period and in an
                  amount of $100,000 or more.

                  The CD Rate shall be adjusted, as to all CD Rate Loans then
         outstanding, automatically as of the effective date of any change in
         the Assessment Rate or the Reserve Percentage.

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

         "Change of Control" means

                  (a) the acquisition by any Person, or two or more Persons
         acting in concert, of beneficial ownership (within the meaning of Rule
         13d-3 of the Securities and Exchange Commission under the Securities
         Exchange Act of 1934) of 20% or more of the voting power of the
         Guarantor; or

                                      -5-
<PAGE>   12
                  (b) the failure of the Guarantor to own either directly or
         indirectly, free and clear of all Liens or other encumbrances, 51% of
         the outstanding shares of voting stock and of the capital stock of the
         Company on a fully diluted basis.

         "Closing Date" means the date on which all conditions precedent set
forth in Section 4.1 are satisfied or waived by all Banks (or, in the case of
subsection 4.1(a)(v), waived by the Person entitled to receive such payment).

         "Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.

         "Commitment", as to each Bank, means its Facility A Commitment and its
Facility B Commitment without duplication.

         "Company Action Level" means 200% of the Authorized Control Level
Risk-Based Capital of the Guarantor. The Authorized Control Level Risk-Based
Capital of the Guarantor shall be computed in the manner from time to time
prescribed by the Insurance Department of the State of New York for inclusion in
the Annual Statement of the Guarantor of such Department. Such Authorized
Control Level Risk-Based Capital currently appears on page 23 of such statement
in column 1, line 28.

         "Company Default" means any event or circumstances which, with the
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute a Company Event of Default.

         "Company Event of Default" means any of the events or circumstances
specified in Section 13.1.

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

         "Contingent Obligation" means, as to any Person, any direct or indirect
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof (each, a "Guaranty Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered, or (d)

                                      -6-
<PAGE>   13
in respect of any Swap Contract. The amount of any Contingent Obligation shall,
in the case of Guaranty Obligations, be deemed equal to the stated or
determinable amount of the primary obligation in respect of which such Guaranty
Obligation is made or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof, and in the case of other
Contingent Obligations, shall be equal to the maximum reasonably anticipated
liability in respect thereof.

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

                  "Conversion/Continuation Date" means any date on which, under
         Section 2.6, the Company (a) converts Loans of one Type to another
         Type, or (b) continues as Loans of the same Type, but with a new
         Interest Period, Loans having Interest Periods expiring on such date.

                  "Default" means any event or circumstance which, with the
         giving of notice, the lapse of time, or both, would (if not cured or
         otherwise remedied during such time) constitute an Event of Default.

                  "Department" means the applicable Governmental Authority of
         the state of domicile of an insurance company responsible for the
         regulation of said insurance company.

                  "Dollars", "dollars" and "$" each mean lawful money of the
         United States.

                  "EBITDA" means, with respect to the Company and its
         Subsidiaries, as the end of any fiscal quarter for the four fiscal
         quarters then ending earnings before interest, taxes, depreciation and
         amortization, calculated in accordance with GAAP; provided, that, for
         any four fiscal quarter period in which either the PCC Acquisition or
         the Seneca Acquisition shall have occurred, EBITDA shall be calculated
         on a pro forma basis as if such acquisition had occurred on the first
         day of such period.

                  "Eligible Assignee" means (i) a commercial bank organized
         under the laws of the United States, or any state thereof, and having a
         combined capital and surplus of at least $100,000,000 (or its
         equivalent in foreign currency); (ii) a commercial bank organized under
         the laws of any other country which is a member of the Organization for
         Economic Cooperation and Development, or a political subdivision of any
         such country, and having a combined capital and surplus of at least
         $100,000,000 (or its equivalent in foreign currency), provided that
         such bank is acting through a branch or agency located in the United
         States; and (iii) a Person that is primarily engaged in the business of
         commercial banking and that is (A) a Subsidiary of a Bank, (B) a
         Subsidiary of a Person of which a Bank is a Subsidiary, or (C) a Person
         of which a Bank is a Subsidiary.

                  "Environmental Claims" means all claims, however asserted, by
         any Governmental Authority or other Person alleging potential liability
         or responsibility for violation of any Environmental Law, or for
         release or injury to the environment.

                                      -7-
<PAGE>   14
                  "Environmental Laws" means all federal, state or local laws,
         statutes, common law duties, rules, regulations, ordinances and codes,
         together with all administrative orders, directed duties, requests,
         licenses, authorizations and permits of, and agreements with, any
         Governmental Authorities, in each case relating to environmental,
         health, safety and land use matters.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, and regulations promulgated thereunder.

                  "ERISA Affiliate" means any trade or business (whether or not
         incorporated) under common control with the Company 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 Company 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 which is treated as
         such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
         partial withdrawal by the Company 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 Section 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 might reasonably be expected to constitute 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
         PBGC premiums due but not delinquent under Section 4007 of ERISA, upon
         the Company or any ERISA Affiliate.

                  "Eurodollar Rate" means with respect to the Interest Period
         applicable to any Eurodollar Loan, a rate of interest per annum, as
         determined by the Administrative Agent, obtained by dividing (and then
         rounding to the nearest 1/16 of 1% or, if there is no nearest 1/16 of
         1%, then to the next higher 1/16 of 1%):

                  (a) the rate, as reported by BNY to the Administrative Agent,
         quoted by BNY to leading banks in the interbank eurodollar market as
         the rate at which BNY is offering Dollar deposits in an amount equal
         approximately to the Eurodollar Loan of BNY to which such Interest
         Period shall apply for a period equal to such Interest Period, as
         quoted at approximately 11:00 a.m. two Business Days prior to the first
         day of such Interest Period, by

                  (b) a number equal to 1.00 minus the aggregate of the then
         stated maximum rates during such Interest Period of all reserve
         requirements (including, without limitation, marginal, emergency,
         supplemental and special reserves), expressed as a decimal, established
         by the Board of Governors of the Federal Reserve System and any other
         banking authority to which BNY and other major United States money
         center

                                      -8-
<PAGE>   15
         banks are subject, in respect of eurocurrency funding (currently
         referred to as "Eurocurrency liabilities" in Regulation D of the Board
         of Governors of the Federal Reserve System) or in respect of any other
         category of liabilities including deposits by reference to which the
         interest rate on Eurodollar Loans is determined or any category of
         extensions of credit or other assets which includes loans by
         non-domestic offices of any Bank to United States residents. Such
         reserve requirements shall include, without limitation, those imposed
         under such Regulation D. Eurodollar Loans shall be deemed to constitute
         Eurocurrency liabilities and as such shall be deemed to be subject to
         such reserve requirements without benefit of credits for proration,
         exceptions or offsets which may be available from time to time to any
         Bank under such Regulation D. The Eurodollar Rate shall be adjusted
         automatically on and as of the effective date of any change in any such
         reserve requirement.

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

                  "Event of Default" means any of the events or circumstances
         specified in Section 11.1.

                  "Exchange Act" means the Securities and Exchange Act of 1934,
         and regulations promulgated thereunder.

                  "Facility" means either Facility A or Facility B.

                  "Facility A" means the credit facility pursuant to which
         Facility A Loans shall be made.

                  "Facility A Base Rate Loan" means a Facility A Loan which
         constitutes a Base Rate Loan.

                  "Facility A Borrowing" means a Borrowing of Facility A Loans.

                  "Facility A CD Rate Loan" means a Facility A Loan which
         constitutes a CD Rate Loan.

                  "Facility A Commitment", as to each Bank, has the meaning
         specified in Section 2.1(a).

                  "Facility A Conversion" means a conversion of a Facility B
         Loan into a Facility A Loan as set forth in Section 2.5.

                  "Facility A Eurodollar Rate Loan" means a Facility A Loan
         which constitutes an Eurodollar Rate Loan.

                  "Facility A Loan" has the meaning specified in Section 2.1(a).

                  "Facility B" means the credit facility pursuant to which
         Facility B Loans shall be made.

                                      -9-
<PAGE>   16
                  "Facility B Base Rate Loan" means a Facility B Loan which
         constitutes a Base Rate Loan.

                  "Facility B CD Rate Loan" means a Facility B Loan which
         constitutes a CD Rate Loan.

                  "Facility B Commitment" as to each Bank, has the meaning
         specified in Section 2.1(b).

                  "Facility B Conversion" means a conversion of a Facility A
         Loan into a Facility B Loan as set forth in Section 2.1(b).

                  "Facility B Eurodollar Rate Loan" means a Facility B Loan
         which constitutes a Eurodollar Rate Loan.

                  "Facility B Loan" has the meaning specified in Section 2.1(b).

                  "Facility Conversion Date" means any date on which under
         Section 2.1(b) or Section 2.5, the Company converts a Facility A Loan
         to a Facility B Loan or a Facility B Loan to a Facility A Loan.

                  "FDIC" means the Federal Deposit Insurance Corporation, and
         any Governmental Authority succeeding to any of its principal
         functions.

                  "Federal Funds Rate" means, for any day, a rate per annum
         (expressed as a decimal, rounded upwards, if necessary, to the next
         higher 1/100 of 1%) equal to the weighted average of the rates on
         overnight federal funds transactions with members of the Federal
         Reserve System arranged by federal funds brokers on such day, as
         published by the Federal Reserve Bank of New York on the Business Day
         next succeeding such day, provided that (i) if the day for which such
         rate is to be determined is not a Business Day, the Federal Funds Rate
         for such day shall be such rate on such transactions on the next
         preceding Business Day as so published on the next succeeding Business
         Day, and (ii) if such rate is not so published for any day, the Federal
         Funds Rate for such day shall be the average of the quotations for such
         day on such transactions received by BNY as determined by BNY and
         reported to the Administrative Agent.

                  "FRB" means the Board of Governors of the Federal Reserve
         System, and any Governmental Authority succeeding to any of its
         principal functions.

                  "GAAP" means generally accepted accounting principles set
         forth from time to time 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 agencies with similar functions of
         comparable stature and authority within the U.S. accounting
         profession), which are applicable to the circumstances as of the date
         hereof.

                  "Governmental Authority" means any nation or government, any
         state or other political subdivision thereof, any central bank (or
         similar monetary or regulatory

                                      -10-
<PAGE>   17
         authority) thereof, any entity exercising executive, legislative,
         judicial, regulatory or administrative functions of or pertaining to
         government, and any corporation or other entity owned or controlled,
         through stock or capital ownership or otherwise, by any of the
         foregoing.

                  "Guarantor Default" means any event or circumstance which,
         with the giving of notice, the lapse of time, or both, would (if not
         cured or otherwise remedied during such time) constitute a Guarantor
         Event of Default.

                  "Guarantor Event of Default" means any of the events or
         circumstances specified in Section 12.1.

                  "Guaranty Obligation" has the meaning specified in the
         definition of "Contingent Obligation."

                  "Highest Lawful Rate" means as to any Bank, the maximum rate
         of interest, if any, that at any time or from time to time may be
         contracted for, taken, charged or received by such Bank on the
         obligations owed to it under the laws applicable to such Bank and this
         transaction.

                  "Indebtedness" of any Person means, without duplication, (a)
         all indebtedness for borrowed money; (b) all obligations issued,
         undertaken or assumed as the deferred purchase price of property or
         services (other than trade payables entered into in the ordinary course
         of business on ordinary terms); (c) all non-contingent reimbursement or
         payment obligations with respect to Surety Instruments; (d) all
         obligations evidenced by notes, bonds, debentures or similar
         instruments, including obligations so evidenced incurred in connection
         with the acquisition of property, assets or businesses(but not
         including in the case of the Guarantor, Surplus Notes); (e) all
         indebtedness created or arising under any conditional sale or other
         title retention agreement, or incurred as financing, in either case
         with respect to property acquired by the Person (even though the rights
         and remedies of the seller or bank under such agreement in the event of
         default are limited to repossession or sale of such property); (f) all
         obligations with respect to capital leases (other than the $2,600,000
         capital lease related to the National Securities and Research
         Corporation transaction); (g) all net obligations with respect to Swap
         Contracts; (h) all indebtedness referred to in clauses (a) through (g)
         above secured by (or for which the holder of such Indebtedness has an
         existing right, contingent or otherwise, to be secured by) any Lien
         upon or in property (including accounts and contracts rights) owned by
         such Person, even though such Person has not assumed or become liable
         for the payment of such Indebtedness; and (i) all Guaranty Obligations
         in respect of indebtedness or obligations of others of the kinds
         referred to in clauses (a) through (g) above.

                  "Indemnified Liabilities" has the meaning specified in Section
         15.5.

                  "Indemnified Person" has the meaning specified in Section
         15.5.

                  "Independent Auditor" has the meaning specified in subsection
         6.1(a).

                                      -11-
<PAGE>   18
                  "Insolvency Proceeding" means (a) any case, action or
         proceeding before any court or other Governmental Authority relating to
         bankruptcy, reorganization, insolvency, liquidation, receivership,
         dissolution, winding-up or relief of debtors, or (b) any assignment for
         the benefit of creditors, composition, marshaling of assets for
         creditors, or other, similar arrangement in respect of its creditors
         generally or any substantial portion of its creditors; undertaken under
         U.S. Federal, state or foreign law, including the Bankruptcy Code.

                  "Insurance Code" means with respect to any insurance company,
         the insurance code at the state of domicile and any successor statute
         of similar import together with the regulations thereunder as amended
         or otherwise modified and in effect from time to time. References to
         sections of the Insurance Code shall be construed to also refer to
         successor sections.

                  "Interest Expense" means consolidated interest expense,
         calculated in accordance with GAAP including, without limitation,
         interest expense with respect to Subordinated Debt; provided, however,
         that for the one year period commencing on the date of exchange or, if
         earlier, December 31, 1997, 50% of the interest expense related to
         Subordinated Debt exchanged for preferred stock outstanding on the
         Closing Date shall be excluded from Interest Expense.

                  "Interest Payment Date" means, as to any Loan other than a
         Base Rate Loan, the last day of each Interest Period applicable to such
         Loan and, as to any Base Rate Loan, the last Business Day of each
         calendar quarter and each date such Loan is converted into another Type
         of Loan, provided, however, that if any Interest Period for a CD Rate
         Loan or Eurodollar Rate Loan exceeds 90 days or three months,
         respectively, the date that falls 90 days or three months (as the case
         may be) after the beginning of such Interest Period and after each
         Interest Payment Date thereafter is also an Interest Payment Date.

                  "Interest Period" means, (a) as to any Eurodollar Rate Loan,
         the period commencing on the Borrowing Date of such Loan or on the
         Conversion/Continuation Date on which the Loan is converted into or
         continued as an Eurodollar Rate Loan, and ending on the date one, two,
         three or six months thereafter as selected by the Company in its Notice
         of Borrowing or Notice of Conversion/Continuation; and (b) as to any CD
         Rate Loan, the period commencing on the Borrowing Date of such Loan or
         on the Conversion/Continuation Date on which the Loan is converted into
         or continued as a CD Rate Loan, and ending 30, 60, 90 or 180 days
         thereafter, as selected by the Company in its Notice of Borrowing or
         Notice of Conversion/Continuation;

provided that:

                           (i) if any Interest Period would otherwise end on a
                  day that is not a Business Day, that Interest Period shall be
                  extended to the following Business Day unless, in the case of
                  an Eurodollar Rate Loan, the result of such extension would be
                  to carry such Interest Period into another calendar month, in
                  which event such Interest Period shall end on the preceding
                  Business Day;

                                      -12-
<PAGE>   19
                           (ii) any Interest Period pertaining to an Eurodollar
                  Rate Loan 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
                  Termination Date.

                  "Invested Assets" means cash, cash equivalents, short term
         investments, investments held for sale and any other assets which are
         treated as investments under SAP.

                  "IRS" means the Internal Revenue Service, and any Governmental
         Authority succeeding to any of its principal functions under the Code.

                  "Joint Venture" means a single-purpose corporation,
         partnership, joint venture or other similar legal arrangement (whether
         created by contract or conducted through a separate legal entity) now
         or hereafter formed by the Company or any of its Subsidiaries with
         another Person in order to conduct a common venture or enterprise with
         such Person.

                  "Lending Office" means, as to any Bank, the office or offices
         of such Bank specified as its "Lending Office" or "Domestic Lending
         Office" or "Eurodollar Lending Office", as the case may be, on Schedule
         15.2, or such other office or offices as such Bank may from time to
         time notify the Company and the Agent.

                  "Lien" means any security interest, mortgage, deed of trust,
         pledge, hypothecation, assignment, charge or deposit arrangement,
         encumbrance, lien (statutory or other) or preferential arrangement of
         any kind or nature whatsoever in respect of any property (including
         those created by, arising under or evidenced by any conditional sale or
         other title retention agreement, the interest of a lessor under a
         capital lease, any financing lease having substantially the same
         economic effect as any of the foregoing, or the filing of any financing
         statement naming the owner of the asset to which such lien relates as
         debtor, under the Uniform Commercial Code or any comparable law) and
         any contingent or other agreement to provide any of the foregoing, but
         not including the interest of a lessor under an operating lease.

                  "Loan" means an extension of credit by a Bank to the Company
         under Article II, and may be a Base Rate Loan, CD Rate Loan or an
         Eurodollar Rate Loan (each, a "Type" of Loan) and includes any Facility
         A Loan or Facility B Loan.

                  "Loan Documents" means this Agreement, any Notes and all other
         documents delivered to either Agent or any Bank in connection herewith.

                  "Majority Banks" means at any time Banks then holding at least
         66-2/3% of the then aggregate unpaid principal amount of the Loans, or,
         if no such principal amount is then outstanding, Banks then having at
         least 66-2/3% of the Facility A Commitments.

                                      -13-
<PAGE>   20
                  "Margin Stock" means "margin stock" as such term is defined in
         Regulation G, T, U or X of the FRB.

                  "Material Adverse Effect" means (a) a material adverse change
         in, or a material adverse effect upon, the operations, business,
         properties, condition (financial or otherwise) or prospects of the
         Guarantor, the Company or the Company and its Subsidiaries taken as a
         whole or the Guarantor and its Subsidiaries taken as a whole; (b) a
         material impairment of the ability of the Company or the Guarantor to
         perform under any Loan Document and to avoid any Event of Default,
         Guarantor Event of Default or Company Event of Default; or (c) an
         adverse effect upon the legality, validity, binding effect or
         enforceability against the Company or the Guarantor of any Loan
         Document.

                  "Maximum Facility B Commitments" means $100,000,000 as such
         amount may be reduced pursuant to Section 2.7 and Section 2.9 hereof.

                  "Moody's" means Moody's Investors Services, Inc.

                  "Moody's Rating" shall mean at any time the Insurance
         Financial Strength Ratings of the Guarantor assigned by Moody's
         Investors Service, Inc.

                  "Multiemployer Plan" means a "Multi employer plan", within the
         meaning of Section 4001(a)(3) of ERISA, to which the Company or any
         ERISA Affiliate makes, is making, or is obligated to make contributions
         or, during the preceding three calendar years, has made, or been
         obligated to make, contributions.

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

                  "NAIC Ratings" shall mean the quality ratings assigned by the
         Securities Valuation Office of the NAIC to investments of the Guarantor
         and the Primary Insurance Subsidiaries. References in this Agreement to
         particular NAIC ratings are references to such ratings as currently
         defined and classified by the Securities Valuation Office of the
         National Association of Insurance Commissioners and if such rating
         system is changed then each reference to a particular rating in this
         Agreement shall be deemed to be a reference to the rating under such
         changed rating system which most closely approximates the credit
         quality of the particular rating as currently defined. The Guarantor
         will use its best efforts to at all times have not less than 90% of its
         bond portfolio and that of the Primary Insurance Subsidiaries covered
         by NAIC Ratings. If for any reason beyond the control of the Guarantor
         NAIC Ratings are unavailable for such percentage of the bond portfolios
         of the Guarantor and the Primary Insurance Subsidiaries or the NAIC
         rating system is discontinued then in that event the Guarantor and the
         Banks agree to negotiate in good faith for an amendment to this
         Agreement replacing Sections 8.2 and 8.3 hereof with new covenants
         measuring the credit quality of the bond portfolio of the Guarantor and
         the Primary Insurance Subsidiaries and which are not materially more
         liberal nor restrictive than Sections 8.2 and 8.3 hereof as presently
         in effect, but in the event that the Guarantor and the Majority Banks
         are unable to agree to such an amendment within 60 days of the date the
         NAIC rating system is discontinued or

                                      -14-
<PAGE>   21
         the Guarantor is unable to comply with the preceding sentence then in
         that event this Agreement may, at the option of the Majority Banks or
         the Guarantor, terminate whereupon the Commitments shall terminate and
         all outstanding Loans, together with interest thereon and any amounts
         due the Banks under this Agreement, including under Section 3.4 hereof,
         shall be repaid.

                  "Net Cash Proceeds" means with respect to the sale, transfer,
         or other disposition by the Guarantor or any Subsidiary of any asset
         (including any stock of any Subsidiary), the aggregate cash proceeds
         (including cash proceeds received by way of deferred payment of
         principal pursuant to a note, installment receivable or otherwise, but
         only as and when received) received by the Guarantor or any Subsidiary
         pursuant to such sale, transfer or other disposition, net of (i) the
         direct costs relating to such sale, transfer or other disposition
         (including, without limitation, sales commissions and legal, accounting
         and investment banking fees), (ii) taxes paid or payable as a result
         thereof (after taking into account any available tax credits or
         deductions and any tax sharing arrangements), (iii) amounts required to
         be applied to the repayment of any Indebtedness secured by a Lien on
         the asset subject to such sale, transfer or other disposition (other
         than the Loans) and (iv) any reserve for adjustment in respect of the
         sale price of such asset (until such amount is available to the
         Guarantor or the applicable Subsidiary).

                  "Net Invested Assets" shall mean the Guarantor's and the
         Primary Insurance Subsidiaries' portfolios of stocks, bonds, mortgage
         loans, real estate, policy loans and other assets classified as
         invested assets under SAP less Separate Account assets.

                  "Non-Performing Real Estate" shall mean the book value of the
         sum of (i) real estate acquired by the Guarantor and the Primary
         Insurance Subsidiaries in satisfaction of indebtedness, whether by
         foreclosure, deed in lieu of foreclosure or otherwise, which during the
         period of 180 days prior to the date of determination had a net
         operating income (gross income less taxes, maintenance and other
         operating expenses and also less principal and interest on indebtedness
         not owing to the Guarantor or the applicable Primary Insurance
         Subsidiary) of less than 6% of book value, (ii) mortgage loans the
         terms of which have been modified because of the borrower's inability
         to comply with the terms as originally agreed or which are in the
         process of foreclosure and under which the amount received by the
         Guarantor or the applicable Primary Insurance Subsidiary (exclusive of
         amounts received for taxes or insurance or in payment of expenses)
         during the 90 days preceding the date of determination is an amount
         which on an annual basis would return to the Guarantor or the
         applicable Primary Insurance Subsidiary less than 6% of the book value
         of the mortgage loan in question and (iii) mortgage loans on which any
         payment of principal or interest is more than 90 days past due.

                  "Note" means a promissory note executed by the Company in
         favor of a Bank pursuant to subsection 2.2(b), in substantially the
         form of Exhibit F.

                  "Notice of Borrowing" means a notice in substantially the form
         of Exhibit A.

                  "Notice of Conversion/Continuation" means a notice in
         substantially the form of Exhibit B.

                                      -15-
<PAGE>   22
                  "Notice of Facility A Conversion" means a notice in
         substantially in the form of Exhibit G.

                  "Notice of Facility B Conversion" means a notice in
         substantially in the form of Exhibit H.

                  "Obligations" means all advances, debts, liabilities,
         obligations, covenants and duties arising under any Loan Document owing
         by the Company or the Guarantor to any Bank, any Agent, or any other
         Indemnified Person, whether direct or indirect (including those
         acquired by assignment), absolute or contingent, due or to become due,
         now existing or hereafter arising.

                  "Organization Documents" means, for any corporation, the
         certificate or articles of incorporation, the bylaws, any certificate
         of determination or instrument relating to the rights of preferred
         shareholders of such corporation, any shareholder rights agreement, and
         all applicable resolutions of the board of directors (or any committee
         thereof) of such corporation.

                  "Participant" has the meaning specified in subsection 15.8(d).

                  "PBGC" means the Pension Benefit Guaranty Corporation, or any
         Governmental Authority succeeding to any of its principal functions
         under ERISA.

                  "PCC" means Pasadena Capital Corporation.

                  "PCC Acquisition" means the acquisition by the Company of the
         stock of PCC pursuant to the PCC Acquisition Agreement.

                  "PCC Acquisition Agreement" means the Agreement and Plan of
         Merger by and among the Company, Phoenix Apollo Corp. and PCC dated as
         of June 9, 1997.

                  "Pension Plan" means a pension plan (as defined in Section
         3(2) of ERISA) subject to Title IV of ERISA which the Company sponsors,
         maintains, or to which it makes, is making, or is obligated to make
         contributions, or in the case of a multiple employer plan (as described
         in Section 4064(a) of ERISA) has made contributions at any time during
         the immediately preceding five (5) plan years.

                  "Permitted Liens" has the meaning specified in Section 7.1.

                  "Person" means an individual, partnership, corporation,
         business trust, joint stock company, trust, unincorporated association,
         joint venture or Governmental Authority.

                  "Plan" means an employee benefit plan (as defined in Section
         3(3) of ERISA) which the Company sponsors or maintains or to which the
         Company makes, is making, or is obligated to make contributions and
         includes any Pension Plan.

                  "Primary Insurance Subsidiaries" shall mean those Primary
         Subsidiaries principally engaged in the business of insurance.

                                      -16-
<PAGE>   23
                  "Primary Subsidiaries" shall mean Phoenix American Life
         Insurance Co., the Company, and any other Subsidiary of the Guarantor
         which at the time of determination has capital or a net worth in excess
         of $25,000,000.

                  "Pro Rata Share" means, as to any Bank at any time, the
         percentage equivalent (expressed as a decimal, rounded to the ninth
         decimal place) at such time of such Bank's Facility A Commitment
         divided by the combined Facility A Commitments of all Banks.

                  "Rating" means the Moody's Rating or the S&P Rating. All
         references in this Agreement to particular Moody's Ratings and S&P
         Ratings are references to such ratings as currently defined by Moody's
         and S&P, and in the event either of such corporations changes its
         rating system, each reference to a particular rating set forth in this
         Agreement shall be deemed to be a reference to the rating under such
         changed rating system which, in the reasonable judgment of the
         Administrative Agent, after consultation with the rating service
         involved, most closely approximates the level of claims paying ability
         associated with the particular rating as currently defined. Whenever a
         determination of compliance with any provision of this Agreement or any
         interest rate or fee is dependent upon the availability of both a
         Moody's Rating and an S&P Rating and one or the other (but not both) of
         such rating services ceases to rate the claims paying ability of the
         Guarantor, compliance with the applicable provisions of this Agreement
         and determinations of interest rates and fees shall be made on the
         basis of the rating which is available. If for any reason neither a
         Moody's Rating nor an S&P Rating is available for the Guarantor then in
         that event compliance with the provisions of this Agreement where a
         determination of such a rating is necessary, determinations of interest
         rates and fees shall be made by the Majority Banks, after consultation
         with the Guarantor, based on the Majority Banks' good faith estimates
         of what such ratings would have been had they been available, the
         determination of the Majority Banks in such regards to be final and
         conclusive provided that they have been made in good faith.

                  "Reportable Event" means, any of the events set forth in
         Section 4043(b) of ERISA or the regulations thereunder, other than any
         such event for which the 30-day notice requirement under ERISA has been
         waived in regulations issued by the PBGC.

                  "Requirement of Law" means, as to any Person, any law
         (statutory or common), treaty, rule or regulation or determination of
         an arbitrator or of a Governmental Authority, in each case applicable
         to or binding upon the Person or any of its property or to which the
         Person or any of its property is subject.

                  "Responsible Officer" means, with respect to any Person, the
         chief executive officer, or the president of such Person, or any other
         officer having substantially the same authority and responsibility; or,
         with respect to compliance with financial covenants, the chief
         financial officer or the treasurer of such Person, or any other officer
         having substantially the same authority and responsibility.

                  "Risk Based Capital Ratio" shall mean, as of any time the same
         is to be determined, the ratio of adjusted capital of the Guarantor to
         the Company Action Level of the Guarantor. Adjusted capital, for the
         purpose of this definition, shall be computed in

                                      -17-
<PAGE>   24
         the manner from time to time prescribed by the Insurance Department of
         the State of New York as total adjusted capital for inclusion in the
         Annual Statement of the Guarantor to such department (currently
         appearing on page 23 of such annual statement in column 1, line 27 and
         currently consisting of capital and surplus, the asset valuation
         reserve of the Guarantor and 50% of the Guarantor's dividend
         liability).

                  "S&P" means Standard & Poor's Ratings Group.

                  "S&P Rating" shall mean at any time the Insurer Claims Paying
         Ability Rating of the Guarantor assigned by Standard & Poor's Ratings
         Services, a Division of the McGraw Hill Companies, Inc.

                  "SAP" means, as to the Guarantor, the statutory accounting
         principles prescribed or permitted by the Department, or in the event
         that the Department fails to prescribe or address such practices, the
         NAIC guidelines.

                  "SAP Capital" means unrestricted surplus accounts plus asset
         valuation reserve plus surplus notes, all calculated in accordance
         with SAP.

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

                  "Seneca" means GMG/Seneca Capital Management, LLC.

                  "Seneca Acquisition" means the acquisition by the Company of
         the majority of the equity interests of Seneca pursuant to the Seneca
         Acquisition Agreement.

                  "Seneca Acquisition Agreement" means the Purchase Agreement by
         and among the Company and certain other Persons dated as of June 18,
         1997 with respect to Seneca.

                  "Senior Debt" means Indebtedness less Subordinated Debt.

                  "Senior Debt to EBITDA Ratio" means the ratio for the Company,
         on a consolidated basis in accordance with GAAP, as at the end of any
         fiscal quarter of Senior Debt as of such quarter end to EBITDA as of
         such quarter end for the four fiscal quarters then ending.

                  "Separate Accounts" shall mean accounts maintained by the
         Guarantor and the Primary Insurance Subsidiaries pursuant to the New
         York Insurance Law of a character such that the assets allocated
         thereto are to provide for annuities or life insurance benefits under
         specific annuity and/or insurance contracts and are not chargeable with
         other liabilities of the Guarantor or the Primary Insurance
         Subsidiaries.

                  "Shareholders' Equity" means shareholders' equity determined
         in accordance with GAAP.

                  "Subordinated Debt" means Indebtedness subordinated to the
         Obligations in form and substance satisfactory to the Majority Banks.

                                      -18-
<PAGE>   25
                  "Subsidiary" of a Person means any corporation, association,
         partnership, joint venture or other business entity of which more than
         50% of the voting stock or other equity interests (in the case of
         Persons other than corporations), is owned or controlled directly or
         indirectly by the Person, or one or more of the Subsidiaries of the
         Person, or a combination thereof. Unless the context otherwise clearly
         requires, references herein to a "Subsidiary" refer to a Subsidiary of
         the Guarantor.

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

                  "Surplus Notes" means surplus notes issued in accordance with
         Section 1307 of the New York Insurance Law and which are payable only
         out of free and divisible surplus with the prior approval of the
         Department.

                  "Swap Contract" means any agreement (including any master
         agreement and any agreement, whether or not in writing, relating to any
         single transaction) that is an interest rate swap agreement, basis
         swap, forward rate agreement, commodity swap, commodity option, equity
         or equity index swap or option, bond option, interest rate option,
         forward foreign exchange agreement, rate cap, collar or floor
         agreement, currency swap agreement, cross-currency rate swap agreement,
         swaption, currency option or any other, similar agreement (including
         any option to enter into any of the foregoing).

                  "Termination Date" means the earlier to occur of:

                        (a) August 14, 2002; and

                        (b) the date on which the Commitments terminate in
         accordance with the provisions of this Agreement.

                  "Total Debt to Capital Ratio" means the ratio for the Company,
         on a consolidated basis in accordance with GAAP, of its Indebtedness to
         the sum of its Indebtedness plus its Shareholders' Equity. For the
         purpose of the calculations of Indebtedness for this ratio,
         Indebtedness shall be reduced by an amount equal to the lesser of (i)
         50% of any outstanding Subordinated Debt which has been exchanged for
         Subordinated Debt from preferred stock outstanding on the Closing Date
         and (ii) $40,000,000.

                  "Total SAP Adjusted Capital" means SAP Capital plus reserves
         for losses on real estate.

                  "12b-1 Asset" means, with respect to any Person, such Person's
         right to receive payments arising in connection with the sale of shares
         in a registered open-end management investment company, which payment
         shall be permitted pursuant to Rule 12b-1(b) (such payment, a so-called
         "12b-1 fee") or Rule 6c-10 (such payment, a so-called "contingent
         deferred sales load") of the Investment Company Act of 1940.

                  "Type" has the meaning specified in the definition of "Loan."

                                      -19-
<PAGE>   26
                  "Unfunded Pension Liability" means the excess of a Plan's
         benefit liabilities under Section 4001(a)(16) of ERISA, over the
         current value of that 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." each means the United States of
         America.

                  "Wholly-Owned Subsidiary" means any corporation in which
         (other than directors' qualifying shares required by law) 100% of the
         capital stock of each class having ordinary voting power, and 100% of
         the capital stock of every other class, in each case, at the time as of
         which any determination is being made, is owned, beneficially and of
         record, by the Guarantor or by one or more of the other Wholly-Owned
         Subsidiaries, or both.

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

                  (b) The words "hereof", "herein", "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.

                  (c) (i) The term "documents" includes any and all instruments,
         documents, agreements, certificates, indentures, notices and other
         writings, however evidenced.

                        (ii) The term "including" is not limiting and means
         "including without limitation."

                        (iii) 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) Except as otherwise stated, the terms "determine" or
"determination" mean to reasonably determine or reasonable determination,
respectively.

                  (e) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.

                  (f) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.

                  (g) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations,

                                      -20-
<PAGE>   27
tests and measurements are cumulative and shall each be performed in accordance
with their terms.

                  (h) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agents, the
Company and the other parties, and are the products of all parties. Accordingly,
they shall not be construed against the Banks or the Agents merely because of
the Agents' or Banks' involvement in their preparation.

         1.3 Accounting Principles. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.

                  (a) References herein to "fiscal year" and "fiscal quarter"
         refer to such fiscal periods of the Company.

                                   ARTICLE II

                                   THE CREDITS

         2.1 Amounts and Terms of Commitments. (a) The Facility A Credit. Each
Bank severally agrees, on the terms and conditions set forth herein, to make
loans to the Company (each such loan, a "Facility A Loan") from time to time on
any Business Day during the period from the Closing Date to the Termination
Date, in an aggregate amount not to exceed at any time outstanding, together
with the principal amount of Loans outstanding (including both Facility A Loans
and Facility B Loans) in favor of such Bank at such time, the amount set forth
next to such Bank's name on Schedule 2.1 (such amount as the same may be reduced
under Section 2.7 or 2.9 or as a result of one or more assignments under Section
15.8, the Bank's "Facility A Commitment"); provided, however, that, after giving
effect to any Borrowing, the aggregate principal amount of all outstanding Loans
(including both Facility A Loans and Facility B Loans) shall not at any time
exceed the combined Facility A Commitments. Within the limits of each Bank's
Commitment, and subject to the other terms and conditions hereof, the Company
may borrow under this Section 2.1(a), prepay under Section 2.8 and reborrow
under this Section 2.1(a).

                  (b) The Facility B Credit. Each Bank severally agrees, on the
terms and conditions set forth herein, to convert Facility A Loans into loans to
the Company (each such loan, a "Facility B Loan") from time to time on any
Business Day during the period from the Closing Date to the Termination Date, in
an aggregate amount not to exceed at any time outstanding, the amount set forth
in Schedule 2.1 (such amount, as the same may be reduced under Section 2.7 or
2.9 or as a the result of one or more assignments under Section 15.8, the Bank's
"Facility B Commitment"); provided, however, that, after giving effect to any
Facility B Conversion, the aggregate principal amount of all outstanding
Facility B Loans shall not at any time exceed the combined Maximum Facility B
Commitments. Within the limits of each Bank's Facility B Commitment, and subject
to the other terms and conditions hereof, the Company may convert under this
Section 2.1(b), prepay under Section 2.8 and convert again under this Section
2.1(b). At no time shall any Bank's Facility B Commitment exceed its Pro Rata
Share of the

                                      -21-
<PAGE>   28
Maximum Facility B Commitments. Each Facility B Loan shall be of the same Type,
be in the same amount and have an Interest Period equal to the remainder of the
same Interest Period of the Facility A Loans being converted (with its interest
rate calculated for the remainder of the Interest Period, based on the same
Eurodollar Rate, if a Eurodollar Rate Loan and the same CD Rate, if a CD Rate
Loan).

         2.2 Loan Accounts. (a) The Loans made by each Bank shall be evidenced
by one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the
Administrative Agent shall be conclusive absent manifest error of the amount of
the Loans made by the Banks to the Company and the interest and payments
thereon. Any failure so to record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Company hereunder to pay any
amount owing with respect to the Loans.

                  (b) Upon the request of any Bank made through the
Administrative Agent, the Loans made by such Bank may be evidenced by one or
more Notes, instead of loan accounts. Each such Bank shall endorse on the
schedules annexed to its Note(s) the date, amount and maturity of each Loan made
by it and the amount of each payment of principal made by the Company with
respect thereto. Each such Bank is irrevocably authorized by the Company to
endorse its Note(s); provided, however, that the failure of a Bank to make, or
an error in making, a notation thereon with respect to any Loan shall not limit
or otherwise affect the obligations of the Company hereunder or under any such
Note to such Bank.

         2.3 Procedure for Borrowing. (a) Each Facility A Borrowing shall be
made upon the Company's irrevocable written notice delivered to the
Administrative Agent in the form of a Notice of Borrowing (which notice must be
received by the Administrative Agent prior to 11:00 a.m. (New York City time)
(i) three Business Days prior to the requested Borrowing Date, in the case of
Eurodollar Rate Loans; (ii) two Business Days prior to the requested Borrowing
Date, in the case of CD Rate Loans, and (iii) one Business Day prior to the
requested Borrowing Date, in the case of Base Rate Loans, specifying:

                           (A) the amount of the Borrowing, which shall be in an
                  aggregate minimum amount of $5,000,000 or any multiple of
                  $1,000,000 in excess thereof;

                           (B) the requested Borrowing Date, which shall be a
                  Business Day;

                           (C) the Type of Loans comprising the Borrowing; and

                           (D) the duration of the Interest Period applicable to
                  such Loans included in such notice. If the Notice of Borrowing
                  fails to specify the duration of the Interest Period for any
                  Borrowing comprised of CD Rate Loans or Eurodollar Rate Loans,
                  such Interest Period shall be 90 days or three months,
                  respectively.

                  (b) after giving effect to any Borrowing, there may be no more
than 10 different Interest Periods in effect.

         2.4 Facility B Conversion. (a) Each Facility B Conversion shall be made
upon the Company's irrevocable written notice delivered to the Administrative
Agent in the form of a

                                      -22-
<PAGE>   29
Notice of Facility B Conversion (which notice must be received by the
Administrative Agent prior to 11:00 a.m. (New York City time) one Business Day
prior to the requested Facility Conversion Date, specifying:

                           (i) the amount of the Facility B Conversion which
                  shall be in an aggregate minimum amount of $5,000,000 or any
                  multiple of $1,000,000 in excess thereof;

                           (ii) the requested Facility Conversion Date, which
                  shall be a Business Day; and

                           (iii) the particular Loans to be converted
                  (identified by Type of Loan and Interest Period, if
                  applicable) comprising the Facility B Conversion.

                  (b) The Administrative Agent will promptly notify each Bank of
its receipt of any Notice of Facility B Conversion and of the amount of such
Bank's Pro Rata Share of that Facility B Conversion.

                  (c) After giving effect to any Facility B Conversion, there
may not be more than 10 different Interest Periods in effect.

         It is understood and agreed that, subject to the terms and conditions
set forth herein, the Company may concurrently request a Facility A Loan and a
Facility B Conversion, in which case the applicable Borrowing Date shall also be
the applicable Facility Conversion Date.

         2.5 Facility A Conversion. (a) The Company may, upon irrevocable
written notice to the Agent in accordance with subsection 2.5(b), elect, as of
any Business Day, to convert any Facility B Loans into Facility A Loans.

                  (b) The Company shall deliver a Notice of Facility A
         Conversion co-signed by the Guarantor to be received by the
         Administrative Agent not later than 11:00 a.m. (New York City time) at
         least one Business Day in advance of the Facility Conversion Date
         specifying:

                           (i) the aggregate amount of Facility B Loans to be
                  converted which shall be in a minimum amount of $5,000,000 or
                  any multiple of $1,000,000 in excess thereof;

                           (ii) the requested Facility Conversion Date, which
                  shall be a Business Day; and

                           (iii) the particular Loans to be converted
                  (identified by Type of Loan and Interest Period, if
                  applicable) resulting from the proposed conversion or
                  continuation.

                  (c) The Administrative Agent will promptly notify each Bank of
         its receipt of any Notice of Facility A Conversion and of the amount of
         such Bank's Pro Rata Share of that Facility A Conversion.

                                      -23-
<PAGE>   30
                  (d) After giving effect to any Facility A Conversion, there
         may not be more than 10 different Interest Periods in effect.

                  (e) Upon (i) the occurrence of an Event of Default with
         respect to the Company described in Section 11.1(f) or 11.1(g) or (ii)
         upon the acceleration of any Subordinated Debt issued in exchange for
         preferred stock outstanding on the Closing Date, all Facility B Loans
         shall be automatically converted into Facility A Loans, without any
         further action by any Person, including the Company and the Guarantor,
         and notwithstanding any failure to meet any conditions set forth in
         Article IV hereof.

                  (f) Each Facility A Loan arising from a Facility A Conversion
         shall be of the same Type, be in the same amount and have an Interest
         Period equal to the remainder of the same Interest Period of the
         Facility B Loans being converted (with the interest rate calculated for
         the remainder of the Interest Period, based on the same Eurodollar
         Rate, if a Eurodollar Rate Loan and the same CD Rate, if a CD Rate
         Loan.)

         2.6 Conversion and Continuation Elections. (a) The Company may, upon
irrevocable written notice to the Agent in accordance with subsection 2.6(b):

                        (i) elect, as of any Business Day, in the case of Base
         Rate Loans, or as of the last day of the applicable Interest Period, in
         the case of any other Type of Loans, to convert any such Loans (or any
         part thereof in an amount not less than $5,000,000, or that is in an
         integral multiple of $1,000,000 in excess thereof) into Loans of any
         other Type; or

                        (ii) elect, as of the last day of the applicable
         Interest Period, to continue any Loans having Interest Periods expiring
         on such day (or any part thereof in an amount not less than $5,000,000,
         or that is in an integral multiple of $1,000,000 in excess thereof);

                  provided, that if at any time the aggregate amount of CD Rate
         Loans or Eurodollar Rate Loans in respect of any Borrowing is reduced,
         by payment, prepayment, or conversion of part thereof to be less than
         $5,000,000, such CD Rate Loans or Eurodollar Rate Loans shall
         automatically convert into Base Rate Loans.

                  (b) The Company shall deliver a Notice of Conversion/
Continuation to be received by the Administrative Agent not later than 11:00
a.m. (New York City time) at least (i) three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Eurodollar Rate Loans; (ii) two Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as CD Rate Loans; and (iii) one Business Day in advance of the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:

                           (A) the proposed Conversion/Continuation Date;

                           (B) the aggregate amount of Loans to be converted or
                  continued;

                                      -24-
<PAGE>   31
                           (C) the Type of Loans result from the proposed
                  conversion or continuation; and

                           (D) other than in the case of conversions into Base
                  Rate Loans, the duration of the requested Interest Period.

                  (c) If upon the expiration of any Interest Period applicable
to CD Rate Loans or Eurodollar Rate Loans, the Company has failed to select
timely a new Interest Period to be applicable to such CD Rate Loans or
Eurodollar Rate Loans, as the case may be, or if any Default, Event of Default,
Guarantor Default or Guarantor Event of Default then exists, or, with respect to
the Facility B Loans, any Company Default or Company Event of Default then
exists, the Company shall be deemed to have elected to convert such CD Rate
Loans or Eurodollar Rate Loans into Base Rate Loans effective as of the
expiration date of such Interest Period.

                  (d) The Administrative Agent will promptly notify each Bank of
its receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Company, the Administrative Agent will promptly notify each Bank
of the details of any automatic conversion. All conversions and continuations
shall be made ratably according to the respective outstanding principal amounts
of the Loans with respect to which the notice was given held by each Bank.

                  (e) Unless the Majority Banks otherwise agree, with respect to
all Loans during the existence of a Default, Event of Default, Guarantor Default
or Guarantor Event of Default or, with respect to Facility B Loans, during the
existence of a Company Default or Company Event of Default, the Company may not
elect to have a Loan converted into or continued as an Eurodollar Rate Loan or a
CD Rate Loan.

                  (f) After giving effect to any conversion or continuation of
Loans, there may not be more than 10 different Interest Periods in effect.

         2.7 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than three Business Days' prior notice to the Administrative
Agent, terminate the Facility A Commitments, or permanently reduce the Facility
A Commitments by an aggregate minimum amount of $5,000,000 or any multiple of
$1,000,000 in excess thereof; provided, however, that any reduction of the
Facility A Commitment shall be accompanied by a reduction of Maximum Facility B
Commitments in an amount equal to one-half of the reduced Facility A
Commitments; and, provided, further, that after giving effect thereto and to any
prepayments of Loans made on the effective date thereof, the then-outstanding
principal amount of the Loans (including both Facility A Loans and Facility B
Loans) may not exceed the amount of the combined Commitments then in effect and
the then-outstanding amount of the Facility B Loans may not exceed the amount of
the combined Maximum Facility B Commitments then in effect. Once reduced in
accordance with this Section, the Facility A Commitments and the Maximum
Facility B Commitments may not be increased. Any reduction of the Facility A
Commitments and the Maximum Facility B Commitments shall be applied to each Bank
according to its Pro Rata Share. All accrued commitment fees to, but not
including the effective date of any reduction or termination of Commitments,
shall be paid on the effective date of such reduction or termination.

                                      -25-
<PAGE>   32
         2.8 Optional Prepayments. Subject to Section 3.4, the Company may, at
any time or from time to time, upon not less than three Business Days'
irrevocable notice to the Agent, ratably prepay Loans in whole or in part, in
minimum amounts of $5,000,000 or any multiple of $1,000,000 in excess thereof;
provided, that all prepayments shall be applied to the Facility B Loans until
the Facility B Loans shall be repaid in full, and then to the Facility A Loans.
Such notice of prepayment shall specify the date and amount of such prepayment
and the Type(s) of Loans to be prepaid. The Agent will promptly notify each Bank
of its receipt of any such notice, and of such Bank's Pro Rata Share of such
prepayment. If such notice is given by the Company, the Company shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to each
such date on the amount prepaid and any amounts required pursuant to Section
3.4.

         2.9 Mandatory Prepayments of Loans; Mandatory Commitment Reductions.
The Company shall make a prepayment of the Loans within 30 days after receipt of
proceeds from any sale, transfer or other disposition by the Company or any
Subsidiary of the Company of any asset outside the ordinary course of its
business (other than any sale of 12b-1 Assets pursuant to the Purchase and Sale
Agreement among Phoenix Equity Planning Corporation, the Company and FEP Capital
L.P. dated as of June 1, 1997, additional sales of 12b-1 Assets for up to an
aggregate amount of $4,000,000 or any capital stock of Beutel Goodman and
Company Ltd., so long as in either case the proceeds of such sale shall be
reinvested within 365 days in businesses or assets substantially similar to the
business or assets of the Company in an amount equal to 100% of the Net Cash
Proceeds of such sale, to the extent the aggregate proceeds thereof shall exceed
$2,000,000 in any fiscal year. All prepayments of Loans pursuant to this Section
2.9 shall be applied to the Facility B Loans until the Facility B Loans are
repaid in full, and then to the Facility A Loans. On the date of any prepayment
pursuant to this Section 2.9, accrued interest on the amount of such prepayment,
together with any amounts owing under Section 3.4, shall be due and payable. The
Facility A Commitments shall be reduced by the amount of such prepayments and
the Maximum Facility B Commitments shall be reduced by an amount equal to
one-half of the amount of such prepayment.

         2.10 Repayment. The Company shall repay to the Banks on the Termination
Date the aggregate principal amount of Loans outstanding on such date.

         2.11 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the CD Rate, the Eurodollar Rate or the Base Rate, as the case may be
(and subject to the Company's right to convert to other Types of Loans under
Section 2.6), plus the Applicable Margin, in the case of Eurodollar Rate Loans
and CD Rate Loans.

                  (b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any prepayment
of Loans under Section 2.8 or 2.9 for the portion of the Loans so prepaid and
upon payment (including prepayment) in full thereof and, with respect to any
Loan during the existence of any Event of Default or Guarantor Event of Default,
or, with respect to any Facility B Loan during any Company Event of Default,
interest shall be paid on demand of the Administrative Agent at the request or
with the consent of the Majority Banks.

                                      -26-
<PAGE>   33
                  (c) Notwithstanding subsection (a) of this Section with
respect to any Loan, while any Event of Default or Guarantor Event of Default
exists or after acceleration, or with respect to any Facility B Loan, while any
Company Event of Default exists, the Company shall pay interest (after as well
as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Loans, at a rate per annum which is
determined by adding 2% per annum to the Applicable Margin then in effect for
such Loans and, in the case of Base Rate Loans, at a rate per annum equal to the
Base Rate plus 2%; provided, however, that, on and after the expiration of any
Interest Period applicable to any Eurodollar Rate Loan or CD Rate Loan
outstanding on the date of occurrence of such Event of Default or acceleration,
the principal amount of such Loan shall, during the continuation of such Event
of Default or after acceleration, bear interest at a rate per annum equal to the
Base Rate plus 2%.

                  (d) Highest Lawful Rate. At no time shall the interest rate
payable on the Loans of any Bank, together with the fees and all other amounts
payable under the Loan Documents to such Bank, to the extent the same are
construed to constitute interest, exceed the Highest Lawful Rate applicable to
such Bank. If with respect to any Bank for any period during the term of this
Agreement, any amount paid to such Bank under the Loan Documents, to the extent
the same shall (but for the provisions of this Section) constitute or be deemed
to constitute interest, would exceed the maximum amount of interest permitted by
the Highest Lawful Rate applicable to such Bank during such period (such amount
being hereinafter referred to as an "Unqualified Amount"), then (i) such
Unqualified Amount shall be applied or shall be deemed to have been applied as a
prepayment of the Loans of such Bank, and (ii) if in any subsequent period
during the term of this Agreement, all amounts payable under the Loan Documents
to such Bank in respect of such period which constitute or shall be deemed to
constitute interest shall be less than the maximum amount of interest permitted
by the Highest Lawful Rate applicable to such Lender during such period, then
the Company shall pay to such Bank in respect of such period an amount (each a
"Compensatory Interest Payment") equal to the lesser of (x) a sum which, when
added to all such amounts, would equal the maximum amount of interest permitted
by the Highest Lawful Rate applicable to such Bank during such period, and (y)
an amount equal to the Unqualified Amount less all other Compensatory Interest
Payments made in respect thereof.

         2.12 Fees. (a) Arrangement, Agency Fees. The Company shall pay such
fees to the Arrangers and the Agents for their own accounts as may be agreed to
between the Company and the applicable Arranger and Agent from time to time.

                  (b) Commitment Fees. The Company shall pay to the
Administrative Agent for the account of each Bank a commitment fee on the
average daily unused portion of such Bank's Facility A Commitment (which, with
respect to each Bank on any day, shall equal such Bank's Facility A Commitment
less the sum of all outstanding Facility A Loans and Facility B Loans of such
Bank), computed on a quarterly basis in arrears on the last Business Day of each
calendar quarter based upon the daily utilization for that quarter as calculated
by the Administrative Agent, equal to the Applicable Fee Rate per annum. Such
commitment fee shall accrue from the date hereof to the Termination Date and
shall be due and payable quarterly in arrears on the last Business Day of each
calendar quarter commencing on September 30, 1997 through the Termination Date,
with the final payment to be made on the Termination Date; provided that, in
connection with any reduction or termination of Facility A Commitments under

                                      -27-
<PAGE>   34
Section 2.7 or Section 2.9, the accrued commitment fee calculated for the period
ending on such date shall also be paid on the date of such reduction or
termination, with the following quarterly payment being calculated on the basis
of the period from such reduction or termination date to such quarterly payment
date. The commitment fees provided in this subsection shall accrue at all times
after the above-mentioned commencement date, including at any time during which
one or more conditions in Article IV are not met.

         2.13 Computation of Fees and Interest. (a) All computations of interest
for Base Rate Loans when the Base Rate is determined by BNY's "reference rate"
and all computations of commitment fees shall be made on the basis of a year of
365 or 366 days, as the case may be, and actual days elapsed. All other
computations of interest shall be made on the basis of a 360-day year and actual
days elapsed (which results in more interest being paid than if computed on the
basis of a 365-day year). Interest and fees shall accrue during each Interest
Period or other period during which interest or such fees are computed from the
first day thereof to but excluding the last day thereof. With regard to CD Rate
Loans or Eurodollar Rate Loans, which are converted from Facility A Loans to
Facility B Loans during an Interest Period, or vice versa, interest shall be
calculated based on the old Applicable Margin to but excluding the Facility
Conversion Date and on the new Applicable Margin from and including the Facility
Conversion Date.

                  (b) Each determination of an interest rate by the
Administrative Agent shall be conclusive and binding on the Company and the
Banks in the absence of manifest error.

         2.14 Payments by the Company. (a) All payments to be made by the
Company shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Company shall be made
to the Administrative Agent for the account of the Banks at the Administrative
Agent's Payment Office, and shall be made in dollars and in immediately
available funds, no later than 12:00 p.m. (New York City time) on the date
specified herein. The Administrative Agent will promptly distribute to each Bank
its Pro Rata Share (or other applicable share as expressly provided herein) of
such payment in like funds as received. Any payment received by the
Administrative Agent later than 12:00 p.m. (New York City time) shall be deemed
to have been received on the following Business Day and any applicable interest
or fee shall continue to accrue.

                  (b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.

                  (c) Unless the Administrative Agent receives notice from the
Company prior to the date on which any payment is due to the Banks that the
Company will not make such payment in full as and when required, the
Administrative Agent may assume that the Company has made such payment in full
to the Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Company has not made such
payment in full to the Administrative Agent, each Bank shall repay to the
Administrative Agent on demand such

                                      -28-
<PAGE>   35
amount distributed to such Bank, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Bank
until the date repaid.

         2.15 Payments by the Banks to the Administrative Agent. (a) Unless the
Administrative Agent receives notice from a Bank on or prior to the Closing Date
or, with respect to any Borrowing after the Closing Date, at least one Business
Day prior to the date of such Borrowing, that such Bank will not make available
as and when required hereunder to the Administrative Agent for the account of
the Company the amount of that Bank's Pro Rata Share of the Borrowing, the
Administrative Agent may assume that each Bank has made such amount available to
the Administrative Agent in immediately available funds on the Borrowing Date
and the Administrative Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Administrative Agent in immediately available funds and the
Administrative Agent in such circumstances has made available to the Company
such amount, that Bank shall on the Business Day following such Borrowing Date
make such amount available to the Administrative Agent, together with interest
at the Federal Funds Rate for each day during such period. A notice of the
Administrative Agent submitted to any Bank with respect to amounts owing under
this subsection (a) shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Administrative Agent shall constitute
such Bank's Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Administrative Agent on the Business
Day following the Borrowing Date, the Administrative Agent will notify the
Company of such failure to fund and, upon demand by the Administrative Agent,
the Company shall pay such amount to the Administrative Agent for the
Administrative Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such Borrowing.

                  (b) The failure of any Bank to make any Loan on any Borrowing
Date shall not relieve any other Bank of any obligation hereunder to make a Loan
on such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.

         2.16 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Administrative Agent of such fact, and (b) purchase
from the other Banks such participations in the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment pro rata
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such purchase shall to
that extent be rescinded and each other Bank shall repay to the purchasing Bank
the purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Company agrees
that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 15.10) with respect to such
participation as

                                      -29-
<PAGE>   36
fully as if such Bank were the direct creditor of the Company 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 Banks following
any such purchases or repayments.

                                  ARTICLE III

                     TAXES, YIELD PROTECTION AND ILLEGALITY

         3.1 Taxes. (a) Payments to be Free and Clear. All payments by the
Company or the Guarantor under the Loan Documents to or for the account of the
Administrative Agent, or any Bank (each, an "Indemnified Tax Person") shall be
made free and clear of, and without any deduction or withholding for or on
account of, any and all current or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto (including
interest, additions to tax, and penalties thereon) imposed, levied, collected,
withheld or assessed by the United States or any political subdivision or taxing
authority thereof (collectively, "Taxes"), excluding as to any Indemnified Tax
Person, (i) a Tax on the Income imposed on such Indemnified Tax Person and (ii)
any interest, fees, additions to tax or penalties for late payment thereof (each
such nonexcluded Tax, an "Indemnified Tax"). For purposes hereof, "Tax on the
Income" shall mean, as to any Person, a Tax imposed by one of the following
jurisdictions or by any political subdivision or taxing authority thereof: (i)
the United States, (ii) the jurisdiction in which such Person is organized,
(iii) the jurisdiction in which such Person's principal office is located, or
(iv) in the case of each Bank, any jurisdiction in which such Bank's applicable
Lending Office is located; which Tax is an income tax or franchise tax imposed
on all or part of the net income or net profits of such Person or which Tax
represents interest, fees, or penalties for late payment of such an income tax
or franchise tax.

                  (b) Grossing Up of Payments. If the Company, the Guarantor or
any other Person is required by law, rule, regulation, order, directive, treaty
or guideline to make any deduction or withholding (which deduction or
withholding would constitute an Indemnified Tax) from any amount required to be
paid by the Company or the Guarantor to or on behalf of an Indemnified Tax
Person under any Loan Document (i) the Company or the Guarantor shall pay such
Indemnified Tax before the date on which penalties attach thereto, such payment
to be made for its own account (if the liability to pay is imposed on the
Company or the Guarantor) or on behalf of and in the name of such Indemnified
Tax Person (if the liability is imposed on such Indemnified Tax Person), and
(ii) the sum payable to such Indemnified Tax Person shall be increased as may be
necessary so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums payable
under this Section) such Indemnified Tax Person receives an amount equal to the
sum it would have received had no such deductions or withholdings been made.

                  (c) Other Taxes. The Company and the Guarantor agree to pay
any current or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies that rise from any payment made hereunder or
from the execution, delivery or registration of, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents or otherwise with respect to, the Loan Documents (collectively, the
"Other Taxes").

                                      -30-
<PAGE>   37
                  (d) Evidence of Payment. Within 30 days after the reasonable
request therefor by the Agent in connection with any payment of Indemnified
Taxes or Other Taxes, the Company or the Guarantor, as applicable, will furnish
to the Administrative Agent the original or a certified copy of an official
receipt from the jurisdiction to which payment is made evidencing payment
thereof or, if unavailable, a certificate from a Responsible Officer that states
that such payment has been made and that sets forth the date and amount of such
payment.

                  (e) U.S. Tax Certificates. Each Indemnified Tax Person that is
organized under the laws of any jurisdiction other than the United States or any
political subdivision thereof that is exempt from United States federal
withholding tax, or that is subject to such tax at a reduced rate under an
applicable treaty, with respect to payments under the Loan Documents shall
deliver to the Administrative Agent for transmission to the Company, on or prior
to the Closing Date (in the case of each Indemnified Tax Person listed on the
signature pages hereof) or on the effective date of the Assignment and
Acceptance Agreement or other document pursuant to which it becomes an
Indemnified Tax Person (in the case of each other Indemnified Tax Person), and
at such other times as the Company or the Administrative Agent may reasonably
request, Internal Revenue Form 4224 or Form 1001 or other certificate or
document required under United States law to establish entitlement to such
exemption or reduced rate. Neither the Company nor the Guarantor shall be
required to pay any additional amount to any such Indemnified Tax Person under
subsection (b) above if such Indemnified Tax Person shall have failed to satisfy
the requirements of the immediately preceding sentence; provided that if such
Indemnified Tax Person shall have satisfied such requirements on the Closing
Date (in the case of each Indemnified Tax Person listed on the signature pages
hereof) or on the effective date of the Assignment and Acceptance Agreement or
other document pursuant to which it became an Indemnified Tax Person (in the
case of each other Indemnified Tax Person), nothing in this subsection shall
relieve the Company or the Guarantor of its obligation to pay any additional
amounts pursuant to subsection (b) in the event that, as a result of any change
in applicable law or treaty, such Indemnified Tax Person is no longer properly
entitled to deliver certificates, documents or other evidence at a subsequent
date establishing the fact that such Indemnified Tax Person is no longer
entitled to such exemption or reduced rate.

         3.2 Illegality. (a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Eurodollar Rate Loans, then, on notice thereof by the Bank to the Company
through the Administrative Agent, any obligation of that Bank to make Eurodollar
Rate Loans shall be suspended until the Bank notifies the Administrative Agent
and the Company that the circumstances giving rise to such determination no
longer exist.

                  (b) If a Bank determines that it is unlawful to maintain any
Eurodollar Rate Loan, the Company shall, upon its receipt of notice of such fact
and demand from such Bank (with a copy to the Administrative Agent), prepay in
full such Eurodollar Rate Loans of that Bank then outstanding, together with
interest accrued thereon and amounts required under Section 3.4, either on the
last day of the Interest Period thereof, if the Bank may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Eurodollar Rate Loan. If the Company is
required to so

                                      -31-
<PAGE>   38
prepay any Eurodollar Rate Loan, then concurrently with such prepayment, the
Company shall borrow from the affected Bank, in the amount of such repayment, a
Base Rate Loan.

         3.3 Increased Costs and Reduction of Return. (a) If any Bank determines
that, due to either (i) the introduction of or any change (other than any change
by way of imposition of or increase in reserve requirements included in the
calculation of the CD Rate or the Eurodollar Rate or in respect of the
assessment rate payable by any Bank to the FDIC for insuring U.S. deposits) in
or in the interpretation of any law or regulation or (ii) the compliance by that
Bank with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Bank of agreeing to make or making, funding or maintaining
any Eurodollar Rate Loans or CD Rate Loans, then the Company shall be liable
for, and shall from time to time, upon demand (with a copy of such demand to be
sent to the Administrative Agent), pay to the Administrative Agent for the
account of such Bank, additional amounts as are sufficient to compensate such
Bank for such increased costs.

                  (b) If any Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Bank (or its Lending Office) or any corporation controlling
the Bank with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and (taking into consideration such Bank's or
such corporation's policies with respect to capital adequacy and such Bank's
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitment[s], loans, credits or obligations
under this Agreement, then, upon demand of such Bank to the Company through the
Administrative Agent, the Company shall pay to the Bank, from time to time as
specified by the Bank, additional amounts sufficient to compensate the Bank for
such increase.

         3.4 Funding Losses. The Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:

                  (a) the failure of the Company to make on a timely basis any
         payment of principal of any Eurodollar Rate Loan or CD Rate Loan;

                  (b) the failure of the Company to borrow, continue or convert
         a Loan after the Company has given (or is deemed to have given) a
         Notice of Borrowing or a Notice of Conversion/Continuation;

                  (c) the failure of the Company to make any prepayment in
         accordance with any notice delivered under Section 2.8;

                  (d) the prepayment (including pursuant to Section 2.9) or
         other payment (including after acceleration thereof) of an Eurodollar
         Rate Loan or a CD Rate Loan on a day that is not the last day of the
         relevant Interest Period; or

                                      -32-
<PAGE>   39
                  (e) the automatic conversion under Section 2.6 of any
         Eurodollar Rate Loan or CD Rate Loan to a Base Rate Loan on a day that
         is not the last day of the relevant Interest Period;

including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Eurodollar Rate Loans or CD Rate Loans
or from fees payable to terminate the deposits from which such funds were
obtained. For purposes of calculating amounts payable by the Company to the
Banks under this Section and under subsection 3.3(a), (i) each Eurodollar Rate
Loan made by a Bank (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the Dollar
deposits used in determining the Eurodollar Rate for such Eurodollar Rate Loan
by a matching deposit or other borrowing in the interbank eurodollar market for
a comparable amount and for a comparable period, whether or not such Eurodollar
Rate Loan is in fact so funded, and (ii) each CD Rate Loan made by a Bank (and
each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the Certificate of Deposit Rate used
in determining the CD Rate for such CD Rate Loan by the issuance of its
certificate of deposit in a comparable amount and for a comparable period,
whether or not such CD Rate Loan is in fact so funded.

         3.5 Inability to Determine Rates. If the Majority Banks determine that
for any reason adequate and reasonable means do not exist for determining the
Eurodollar Rate or the CD Rate for any requested Interest Period with respect to
a proposed Eurodollar Rate Loan or CD Rate Loan, or that the Eurodollar Rate or
the CD Rate applicable pursuant to subsection 2.11(a) for any requested Interest
Period with respect to a proposed Eurodollar Rate Loan or CD Rate Loan does not
adequately and fairly reflect the cost to the Banks of funding such Loan, the
Administrative Agent will promptly so notify the Company and each Bank.
Thereafter, the obligation of the Banks to make or maintain CD Rate Loans or
Eurodollar Rate Loans, as the case may be, hereunder shall be suspended until
the Administrative Agent upon the instruction of the Majority Banks revokes such
notice in writing. Upon receipt of such notice, the Company may revoke any
Notice of Borrowing or Notice of Conversion/Continuation then submitted by it.
If the Company does not revoke such Notice, the Banks shall make, convert or
continue the Loans, as proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Loans shall be made,
converted or continued as Base Rate Loans instead of CD Rate Loans or Eurodollar
Rate Loans, as the case may be.

         3.6 Certificates of Banks. Any Bank or Agent claiming reimbursement or
compensation under this Article III shall deliver to the Company (with a copy to
the Administrative Agent) a certificate setting forth in reasonable detail the
amount payable to the Bank or Agent hereunder and such certificate shall be
conclusive and binding on the Company in the absence of manifest error.

         3.7 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.

                                      -33-
<PAGE>   40
                                   ARTICLE IV

                              CONDITIONS PRECEDENT

         4.1 Conditions of Initial Loans. The obligation of each Bank to make
its initial Loan hereunder is subject to the following conditions:

         (a) The Administrative Agent shall have received on or before the
initial borrowing date all of the following, in form and substance satisfactory
to the Administrative Agent and each Bank, and in sufficient copies for each
Bank:

                  (i) Credit Agreement. This Agreement executed by each party
thereto;

                  (ii) Resolutions; Incumbency.

                           (A) Copies of the resolutions of the board of
                  directors of the Company and the Guarantor authorizing the
                  transactions contemplated hereby, certified as of the Closing
                  Date by the Secretary or an Assistant Secretary of such
                  Person; and

                           (B) A certificate of the Secretary or Assistant
                  Secretary of the Company and the Guarantor certifying the
                  names and true signatures of the officers of the Company or
                  the Guarantor authorized to execute, deliver and perform, as
                  applicable, this Agreement, and all other Loan Documents to be
                  delivered by it hereunder;

                  (iii) Organization Documents; Good Standing. Each of the
following documents:

                           (A) the articles or certificate of incorporation and
                  the bylaws of the Company and the Guarantor as in effect on
                  the Closing Date, certified by the Secretary or Assistant
                  Secretary of the Company or the Guarantor as of the Closing
                  Date; and

                           (B) a good standing certificate for the Company and
                  the Guarantor from the Secretary of State (or similar,
                  applicable Governmental Authority) of its state of
                  incorporation;

                  (iv) Legal Opinions.

                           (A) An opinion of Thomas Steenburg, counsel to the
                  Company and addressed to the Agents and the Banks,
                  substantially in the form of Exhibit D-1; and

                           (B) An opinion of John T. Mulrain, counsel to the
                  Guarantor and addressed to the Agents and the Banks,
                  substantially in the form of Exhibit D-2;

                  (v) Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date,

                                      -34-
<PAGE>   41
together with Attorney Costs of BofA to the extent invoiced prior to or on the
Closing Date, plus such additional amounts of Attorney Costs as shall constitute
BofA's reasonable estimate of Attorney Costs incurred or to be incurred by it
through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the Company and BofA);
including any such costs, fees and expenses arising under or referenced in
Sections 2.12 and 15.4;

                  (vi) Certificate. A certificate signed by a Responsible
Officer of each of the Company and the Guarantor, dated as of the Closing Date,
stating that:

                           (A) the representations and warranties contained in
                  Article V are true and correct on and as of such date, as
                  though made on and as of such date;

                           (B) no Default, Event of Default, Guarantor Default
                  or Guarantor Event of Default exists or would result from the
                  initial Borrowing; and

                           (C) there has occurred since December 31, 1996, no
                  event or circumstance that has resulted or could reasonably be
                  expected to result in a Material Adverse Effect; and

                  (vii) Other Documents. Such other approvals, opinions,
documents or materials as the Agent or any Bank may request.

                  (b) Existing Debt. All obligations under the Amended and
         Restated Credit Agreement dated as of October 31, 1995 among the
         Company, various financial institutions and Bank of America Illinois,
         as Agent shall have been paid in full and such agreement shall have
         been terminated.

         4.2 Conditions to All Borrowings and Facility B Conversion. The
obligation of each Bank to make any Loan to be made by it (including its initial
Loan) or to make a Facility B Conversion is subject to the satisfaction of the
following conditions precedent on the relevant Borrowing Date or, in the case of
a Facility B Conversion, the relevant Facility Conversion Date:

                  (a) Notice of Borrowing/Notice of Facility B Conversion. The
Agent shall have received (with, in the case of the initial Loan only, a copy
for each Bank) a Notice of Borrowing or Notice of Facility B Conversion, as
applicable;

                  (b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date or Facility Conversion Date with the same effect as if
made on and as of such Borrowing Date or Facility Conversion Date(except to the
extent such representations and warranties expressly refer to an earlier date,
in which case they shall be true and correct as of such earlier date and in the
case of Section 5.16, as otherwise permitted hereunder); and

                  (c) No Existing Default. No Event of Default or Default, and
with respect to any Facility A Loan, Guarantor Default or Guarantor Event of
Default, or with respect to a Facility B Conversion, Company Default or Company
Event of Default, shall exist or shall result from such Borrowing or Facility B
Conversion.

                                      -35-
<PAGE>   42
                  (d) Acquisitions. As to any Loan, which would cause the
outstanding principal amount of the Loans to exceed $80,000,000, the PCC
Acquisition shall have occurred.

Each Notice of Borrowing submitted by the Company hereunder shall constitute a
representation and warranty by the Company hereunder, as of the date of each
such notice and as of each Borrowing Date, that the conditions in Section 4.2
are satisfied.

         4.3      Conditions to Facility B Conversion. The obligation of each
Bank to convert any Facility A Loan to a Facility B Loan is subject to the
satisfaction of the following conditions precedent on the relevant Facility
Conversion Date:

                  (a) Senior Debt to EBITDA Ratio. The Senior Debt to EBITDA
Ratio of the Company and its Subsidiaries as of the last prior quarter shall not
be greater than 3.25 to 1.0.

                  (b) Total Debt to Capital Ratio. The Total Debt to Capital
Ratio, giving effect to the proposed Facility B Loans, shall not be greater than
the following percentages during the following periods:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Percentage                       Periods
--------------------------------------------------------------------------------
<S>                              <C>
58%                              date hereof through August 14, 1998
--------------------------------------------------------------------------------
53%                              August 15, 1998 through August 14, 2000
--------------------------------------------------------------------------------
48%                              August 15, 2000 and thereafter
--------------------------------------------------------------------------------
</TABLE>

                  (c) Certificate. A certificate signed by Responsible Officer
of the Company, dated as of the date of the proposed Facility B Loan, stating
that the conditions set forth in the clauses (a) and (b) have been met.

                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

         The Guarantor and the Company represent and warrant to each Agent and
each Bank that:

         5.1      Corporate Existence and Power. The Guarantor and each of its
Subsidiaries:

                  (a) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation;

                  (b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;

                                      -36-
<PAGE>   43
                  (c) is duly qualified as a foreign corporation and is licensed
and in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification or license; and

                  (d) is in compliance with all Requirements of Law; except, in
each case referred to in clause (c) or clause (d), to the extent that the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

         5.2      Corporate Authorization; No Contravention. The execution,
delivery and performance by the Guarantor and its Subsidiaries of this Agreement
and each other Loan Document to which such Person is party, have been duly
authorized by all necessary corporate action, and do not and will not:

                  (a) contravene the terms of any of that Person's Organization
Documents;

                  (b) conflict with or result in any breach or contravention of,
or the creation of any Lien under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its property is
subject; or

                  (c) violate any Requirement of Law.

         5.3      Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Guarantor or
any of its Subsidiaries of the Agreement or any other Loan Document, except
filings made prior to the date hereof and other filings which will be made as
required by law.

         5.4      Binding Effect. This Agreement and each other Loan Document to
which the Guarantor or the Company is a party constitute the legal, valid and
binding obligations of the Guarantor and the Company, enforceable against such
Person in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles relating
to enforceability.

         5.5      Litigation. Except as specifically disclosed in Schedule 5.5,
there are no actions, suits, proceedings, claims or disputes pending, or to the
best knowledge of the Guarantor, threatened or contemplated, at law, in equity,
in arbitration or before any Governmental Authority, against the Guarantor or
the Company or its Subsidiaries or any of their respective properties which:

                  (a) purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby or thereby;
or

                  (b) as to which there exists a substantial likelihood of an
adverse determination, which determination would reasonably be expected to have
a Material Adverse Effect. No injunction, writ, temporary restraining order or
any order of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the

                                      -37-
<PAGE>   44
execution, delivery or performance of this Agreement or any other Loan Document,
or directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.

         5.6      Contractual Obligation. As of the Closing Date, neither the
Guarantor nor any Subsidiary is in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults, could reasonably be expected to have a Material Adverse Effect.

         5.7      ERISA Compliance. Except as specifically disclosed in Schedule
5.7:

                  (a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state law. The
Guarantor and each ERISA Affiliate has made all required contributions to any
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
Guarantor, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no 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 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; (iii) neither
the Guarantor 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); (iv)
neither the Guarantor 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 Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and
(v) neither the Guarantor nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.

         5.8      Use of Proceeds; Margin Regulations. The proceeds of the Loans
are to be used solely for the purposes set forth in and permitted by Section
6.12 and Section 7.6. Neither the Guarantor nor any Subsidiary is generally
engaged in the business of purchasing or selling Margin Stock or extending
credit for the purpose of purchasing or carrying Margin Stock.

         5.9      Title to Properties. The Guarantor and each Subsidiary have
good record and marketable title in fee simple to, or valid leasehold interests
in, all real property necessary or used in the ordinary conduct of their
respective businesses, except for such defects in title as could not,
individually or in the aggregate, have a Material Adverse Effect. As of the
Closing Date, the property of the Guarantor and its Subsidiaries is subject to
no Liens, other than Permitted Liens.

         5.10     Taxes. The Guarantor and its Subsidiaries have filed all
Federal and other material tax returns and reports required to be filed, and
have paid all Federal and other material

                                      -38-
<PAGE>   45
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 and for
which adequate reserves have been provided in accordance with GAAP. There is no
proposed tax assessment against the Guarantor or any Subsidiary that would, if
made, have a Material Adverse Effect.

         5.11     Financial Condition. (a) The statutory financial statements of
the Guarantor and its Primary Insurance Subsidiaries dated December 31, 1996,
and the statutory statements of the Guarantor and its Primary Insurance
Subsidiaries dated March 31, 1997, and the related statements of income or
operations, shareholders' equity and cash flows for the fiscal periods ended on
those dates:

                           (i) were prepared in accordance with SAP consistently
         applied throughout the period covered thereby, except as otherwise
         expressly noted therein, subject in the case of the March 31, 1997
         statements to ordinary, good faith year end audit adjustments;

                           (ii) fairly present the financial condition of the
         Guarantor and its Primary Insurance Subsidiaries as of the date thereof
         and results of operations for the period covered thereby; and

                           (iii) except as specifically disclosed in Schedule
         5.11, show all material indebtedness and other liabilities, direct or
         contingent, of the Guarantor and its Primary Insurance Subsidiaries as
         of the date thereof, including liabilities for taxes, material
         commitments and Contingent Obligations.

                  (b) The audited consolidated financial statements of the
Company and its Subsidiaries dated December 31, 1996, and the unaudited
consolidated statements of the Company and its Subsidiaries dated March 31, 1997
and the related consolidated statements of income or operations, shareholders'
equity and cash flows for the fiscal periods ended on those dates:

                           (i) were prepared in accordance with GAAP
         consistently applied throughout the period covered thereby, except as
         otherwise expressly noted therein, subject in the case of the March 31,
         1997 statements to ordinary, good faith year end audit adjustments;

                           (ii) fairly present the financial condition of the
         Company and its Subsidiaries as of the date thereof and results of
         operations for the period covered thereby; and

                           (iii) except as specifically disclosed in Schedule
         5.11, show all material indebtedness and other liabilities, direct or
         contingent, of the Company and its consolidated Subsidiaries as of the
         date thereof, including liabilities for taxes, material commitments and
         Contingent Obligations.

                  (c) Since December 31, 1996, there has been no Material
Adverse Effect.

                                      -39-
<PAGE>   46
         5.12     Environmental Matters. The Guarantor conducts in the ordinary
course of business a review of the effect of existing Environmental Laws and
existing Environmental Claims on its business, operations and properties, and as
a result thereof the Guarantor has reasonably concluded to the best of its
knowledge that, except as specifically disclosed in Schedule 5.12, such
Environmental Laws and Environmental Claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

         5.13     Regulated Entities. The Company is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness. No
filings, approvals or consents are required under the Investment Company Act of
1940 for the enforceability of this Agreement or any other Loan Document.

         5.14     No Burdensome Restrictions. Neither the Guarantor nor any
Subsidiary is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.

         5.15     Copyrights, Patents, Trademarks and Licenses, etc. The
Guarantor or its Subsidiaries own or are licensed or otherwise have the right to
use all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person. To the best knowledge of the Guarantor, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by the
Guarantor or any Subsidiary infringes upon any rights held by any other Person.
Except as specifically disclosed in Schedule 5.5, no claim or litigation
regarding any of the foregoing is pending or threatened, and no patent,
invention, device, application, principle or any statute, law, rule, regulation,
standard or code is pending or, to the knowledge of the Guarantor, proposed,
which, in either case, could reasonably be expected to have a Material Adverse
Effect.

         5.16     Subsidiaries. As of the Closing Date, the Guarantor has no
Subsidiaries other than those specifically disclosed in part (a) of Schedule
5.16 hereto and the Company has no equity investments in any other corporation
or entity other than those specifically disclosed in part (b) of Schedule 5.16.

         5.17     Insurance. Except as specifically disclosed in Schedule 5.17,
the properties of the Guarantor and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the
Guarantor, in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Guarantor or such Subsidiary
operates.

         5.18     Full Disclosure. None of the representations or warranties
made by the Guarantor or any Subsidiary in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Guarantor or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the

                                      -40-
<PAGE>   47
Guarantor to the Banks prior to the Closing Date), contains any untrue statement
of a material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered;
provided, that, to the extent the representations and warranties set forth in
this Section 5.18 relate to Seneca or PCC, they shall be made to the best of the
knowledge of the Guarantor and the Company after due inquiry.

         5.19     PCC Acquisition Agreement. The representations and warranties
of the Company and, to the best of the knowledge of the Company after due
inquiry, the seller contained in the PCC Acquisition Agreement (a true and
correct copy of which PCC Acquisition Agreement, together with all schedules and
exhibits thereto, has been delivered to the Banks), are true and correct in all
respects which, upon consummation of the PCC Acquisition, could have a Material
Adverse Effect. As of the date of the PCC Acquisition, (i) the Company shall
have taken all necessary corporate actions to authorize the PCC Acquisition; and
(ii) no representation made by the Company or, to the best of the knowledge of
the Company after due inquiry, the seller under such PCC Acquisition Agreement
in any notices or filings with the shareholders of the Company or such seller,
with the SEC or any applicable state securities commissions or with any
governmental authority including, without limitation, any representations
concerning any agreement with, or financing provided by, the Banks, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of
the time when made or delivered.

         5.20     Seneca Acquisition Agreement. The representations and
warranties of the Company and, to the best of the knowledge of the Company after
due inquiry, the seller contained in the Seneca Acquisition Agreement (a true
and correct copy of which Seneca Acquisition Agreement, together with all
schedules and exhibits thereto, has been delivered to the Seneca), are true and
correct in all respects which, upon consummation of the Seneca Acquisition,
could have a Material Adverse Effect. As of the date of the Seneca Acquisition,
(i) the Company shall have taken all necessary corporate actions to authorize
the Seneca Acquisition; and (ii) no representation made by the Company or, to
the best of the knowledge of the Company after due inquiry, the seller under
said Seneca Acquisition Agreement in any notices or filings with the
shareholders of the Company or such seller, with the SEC or any applicable state
securities commissions or with any governmental authority including, without
limitation, any representations concerning any agreement with, or financing
provided by, the Banks, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they are made, not misleading as of the time when made or delivered.

                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

         So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:

                                      -41-
<PAGE>   48
         6.1      Financial Statements. The Guarantor shall deliver to the
Agent, in form and detail satisfactory to the Administrative Agent and the
Majority Banks, with sufficient copies for each Bank:

                  (a) as soon as available, but not later than 120 days after
the end of each fiscal year, a copy of the audited consolidated balance sheet of
the Company and its Subsidiaries as at the end of such year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of Price Waterhouse
LLP or another nationally-recognized independent public accounting firm
("Independent Auditor") which report shall state that such consolidated
financial statements present fairly the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years. Such opinion shall not be qualified or limited because of a restricted or
limited examination by the Independent Auditor of any material portion of the
Company's or any Subsidiary's records;

                  (b) as soon as available, but not later than 60 days after the
end of each of the first three fiscal quarters of each fiscal year, a copy of
the unaudited consolidated balance sheet of the Company and its Subsidiaries as
of the end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, and certified by a Responsible
Officer of the Company as fairly presenting, in accordance with GAAP (subject to
ordinary, good faith year-end audit adjustments), the financial position and the
results of operations of the Company and the Subsidiaries;

                  (c) as soon as available, but not later than 120 days after
the end of each fiscal year, a copy of the Annual Statement of the Guarantor for
such fiscal year prepared in accordance with SAP and accompanied by the
certification of the chief executive a Responsible Officer of the Guarantor that
such Annual Statement presents fairly in accordance with SAP the financial
position of the Guarantor for the period then ended;

                  (d) as soon as possible, but no later than 60 days after the
end of each of the first three fiscal quarters of each fiscal year, a copy of
the quarterly statement of the Guarantor for each such fiscal quarter, all
prepared in accordance with GAAP and accompanied by the certification of a
Responsible Officer of the Guarantor that all such quarterly statements present
fairly in accordance with GAAP the financial position of the Guarantor for the
period then ended;

                  (e) as soon as available, a copy of the Guarantor's "Statement
of Actuarial Opinion" which is provided to the Department (or equivalent
information should the Department no longer require such a statement) as to the
adequacy of loss reserves of the Guarantor, which opinion shall be in the format
prescribed by the Insurance Code;

                  (f) as soon as available, a copy of the Management Discussion
and Analysis filed with the Department with respect to any of the foregoing
financial statements and such other information; and

                                      -42-
<PAGE>   49
                  (g) within 90 days after each fiscal year, projections of the
Company's financial performance on an annual basis for the next fiscal year,
prepared by the Company's management.

         6.2      Certificates; Other Information. The Company shall furnish to
the Administrative Agent, with sufficient copies for each Bank:

                  (a) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a Compliance Certificate executed by
a Responsible Officer of the Company;

                  (b) promptly, copies of all financial statements and reports
that the Guarantor or the Company sends to its policyholders or shareholders,
and copies of all financial statements and regular, periodical or special
reports that the Guarantor or any Subsidiary may make to, or file with, the SEC;

                  (c) promptly, upon a change in the Guarantor's Claims Paying
Rating, written notice of such change by a Responsible Officer; and

                  (d) promptly, such additional information regarding the
business, financial or corporate affairs of the Guarantor or any Subsidiary as
the Administrative Agent, at the request of any Bank, may from time to time
reasonably request.

         6.3      Notices. The Company and the Guarantor shall promptly notify
the Administrative Agent and each Bank:

                  (a) of any change in a Rating;

                  (b) of the occurrence of any Default, Event of Default,
Guarantor Default, Guarantor Event of Default, Company Default or Company Event
of Default and of the occurrence or existence of any event or circumstance that
foreseeably will become a Default, Event of Default, Guarantor Default,
Guarantor Event of Default; Company Default or Company Event of Default;

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

                  (d) of the occurrence of any of the following events affecting
the Guarantor or any ERISA Affiliate (but in no event more than 10 days after
such event), and deliver to the Administrative Agent and each Bank a copy of any
notice with respect to such event that is filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Guarantor or any
ERISA Affiliate with respect to such event:

                           (i) an ERISA Event;

                                      -43-
<PAGE>   50
                           (ii) a material increase in the Unfunded Pension
         Liability of any Pension Plan;

                           (iii) the adoption of, or the commencement of
         contributions to, any Plan subject to Section 412 of the Code by the
         Company or any ERISA Affiliate; or

                           (iv) the adoption of any amendment to a Plan subject
         to Section 412 of the Code, if such amendment results; in a material
         increase in contributions or Unfunded Pension Liability;

                  (e) of any material change in accounting policies or financial
reporting practices by the Guarantor or any of its Primary Subsidiaries; and

                  (f) of any proposed Acquisition by the Company or any of its
Subsidiaries, the total consideration for which shall exceed $10,000,000,
together with pro forma financial statements giving effect to such Acquisition
but subject to the requirements of any applicable confidentiality agreement.

                  Each notice under this Section shall be accompanied by a
written statement by a Responsible Officer of the Company setting forth details
of the occurrence referred to therein, and stating what action the Company or
any affected Subsidiary proposes to take with respect thereto and at what time.
Each notice under subsection 6.3(b) shall describe with particularity any and
all clauses or provisions of this Agreement or other Loan Document that have
been (or foreseeably will be) breached or violated.

         6.4      Preservation of Corporate Existence, Etc. The Guarantor and
the Company shall, and shall cause each of their respective Subsidiaries to:

                  (a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state or
jurisdiction of incorporation;

                  (b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business;

                  (c) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and

                  (d) 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.

         6.5      Maintenance of Property. The Guarantor and the Company shall
maintain, and shall cause each of their respective Subsidiaries to maintain, and
preserve all its property which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted.

                                      -44-
<PAGE>   51
         6.6      Insurance. The Guarantor and the Company shall maintain, and
shall cause each of their respective Subsidiaries to maintain, with financially
sound and reputable independent insurers, 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.

         6.7      Payment of Obligations. The Guarantor and the Company shall,
and shall cause each of their respective Subsidiaries to, pay and discharge as
the same shall become due and payable, all their respective obligations and
liabilities, including:

                  (a) all 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 and adequate reserves in
accordance with GAAP are being maintained by the Guarantor, the Company or such
Subsidiary;

                  (b) all lawful claims which, if unpaid, would by law become a
Lien upon its property; and

                  (c) all indebtedness, as and when due and payable, but subject
to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.

         6.8      Compliance with Laws. The Guarantor and the Company shall
comply, and shall cause each of their respective Subsidiaries to comply, in all
material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act), except such as may be contested in good faith or as to which a
bona fide dispute may exist.

         6.9      Compliance with ERISA. The Company shall, and shall cause each
of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.

         6.10     Inspection of Property and Books and Records. The Guarantor
and the Company shall maintain, and shall cause each of their respective
Subsidiaries to 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 Guarantor, the Company and such
Subsidiary. The Guarantor and the Company shall permit, and shall cause each of
their respective Subsidiaries to permit, representatives and independent
contractors of the Agent or any Bank to visit and inspect any of their
respective properties, to examine their respective corporate, financial and
operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at the expense of
the Guarantor and the Company and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the

                                      -45-
<PAGE>   52
Company; provided, however, when an Event of Default, Guarantor Event of Default
or Company Event of Default exists the Agent or any Bank may do any of the
foregoing during normal business hours and without advance notice.

         6.11     Environmental Laws. The Guarantor and the Company shall, and
shall cause each of their respective Subsidiaries to, conduct its operations and
keep and maintain its property in compliance with all Environmental Laws.

         6.12     Use of Proceeds. The Company shall use the proceeds of the
Loans for working capital purposes including the acquisition of PCC, Seneca and
certain of its Affiliates and other Acquisitions not in contravention of any
Requirement of Law or of any Loan Document; provided, however, that such
proceeds shall not be used for any Acquisition, if the board of directors of the
entity to be acquired shall not have approved such Acquisition.

         6.13     Holding Agreement. The Guarantor agrees that on or before
March 31, 1998, it will cause the obligations under the Term Credit Agreement
extended to PM Holdings, Inc. and guaranteed by the Guarantor, dated November
15, 1995 to be paid in full and such agreement to be terminated.

                                  ARTICLE VII

                               NEGATIVE COVENANTS

         So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:

         7.1      Limitation on Liens. The Guarantor shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, make, create, incur,
assume or suffer to exist any Lien upon or with respect to any part of its
property, whether now owned or hereafter acquired, other than the following
("Permitted Liens"):

                  (a) any Lien existing on property of the Guarantor or any
Subsidiary on the Closing Date and set forth in Schedule 7.1 securing
Indebtedness 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 6.7, provided that no
notice of lien has been filed or recorded under the Code;

                  (d) Liens on 12b-1 Assets which have been sold;

                  (e) 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;

                                      -46-
<PAGE>   53
                  (f) 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;

                  (g) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
liens in the aggregate at any time outstanding for the Guarantor and its
Subsidiaries do not exceed $10,000,000;

                  (h) 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 Guarantor and its
Subsidiaries;

                  (i) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, securities intermediary's liens,
rights of set-off or similar rights and remedies as to deposit accounts,
securities 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
Guarantor in excess of those set forth by regulations promulgated by the FRB,
and (ii) such deposit account or securities account is not intended by the
Guarantor or any Subsidiary to provide collateral to the depository institution
providing such account;

                  (j) Liens on real property and related assets of the Guarantor
granted to any home loan bank, provided that the aggregate amount of
Indebtedness secured by all such Liens, when taken together with the aggregate
amount of Indebtedness secured by Liens permitted by clause (k) of this Section
7.1 shall not exceed $100,000,000 at any one time outstanding; and

                  (k) additional Liens securing Indebtedness not in excess of
$10,000,000 at any time outstanding.

         7.2      Mergers, Consolidations and Sales of Assets. The Guarantor
will not, and will not permit any Primary Subsidiary to

                  (a) consolidate with or be a party to a merger with any other
         Person or

                  (b) sell, lease or otherwise dispose of any substantial part
         of its Properties, provided that the foregoing shall not apply to or
         operate to prevent (i) reinsurance and similar risk sharing
         arrangements entered into in the ordinary course of business, (ii)
         sales or other dispositions of assets acquired in satisfaction of
         obligations owing the Guarantor or a Primary Subsidiary, (iii) mergers
         of a Primary Subsidiary with and into the Guarantor and other mergers
         not involving the Guarantor, or (iv) the sale of all or any substantial
         part of the assets of, or of the equity interests held by the Guarantor
         in, any Primary Subsidiary so long as in the case of each of the
         matters described in clauses (i) through (iv) above, no Default, Event
         of Default, Company Default, Company Event of Default, Guarantor
         Default or Guarantor Event of Default shall have occurred and be
         continuing or would occur as a result thereof. The foregoing to the
         contrary notwithstanding, the Guarantor will not in any event sell,
         transfer or otherwise dispose of capital stock of the Borrower or
         permit the merger of the Borrower into any other Person

                                      -47-
<PAGE>   54
         other than the Guarantor if after giving effect thereto the Borrower
         would no longer be a Subsidiary of the Guarantor or would not be the
         survivor of the merger in question.

         7.3      Loans and Investments. The Guarantor shall not purchase or
acquire, or suffer or permit any Subsidiary to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person
including any Affiliate of the Company, except for:

                  (a) investments in cash equivalents;

                  (b) investments by the Guarantor in compliance with all
applicable regulatory requirements;

                  (c) investments by the Company in the ordinary course of
business consistent with past practices; and

                  (d) Acquisitions, so long as (i) the acquired entity is in the
similar or related business as the Guarantor and its Subsidiaries and (ii) after
giving effect to the Acquisition, (A) no Default, Event of Default, Company
Default, Company Event of Default, Guarantor Default or Guarantor Event or
Default shall have occurred and be continuing and (B) the Guarantor and the
Company would be in compliance with all financial covenants hereof, calculated
on a pro forma basis at the time of the Acquisition and as if the Acquisition
had taken place at the beginning of the four fiscal quarter period ending as of
the last fiscal quarter end, with the Guarantor providing a certificate with
respect thereto.

         7.4      Limitation on Indebtedness. The Company shall not, and shall
not suffer or permit any Subsidiary to, create, incur, assume, suffer to exist,
or otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:

                  (a) Indebtedness available pursuant to this Agreement;

                  (b) Indebtedness consisting of Contingent Obligations
permitted pursuant to Section 7.7;

                  (c) Indebtedness existing on the Closing Date and set forth in
Schedule 7.4; and

                  (d) Indebtedness of the Company and its Subsidiaries in an
amount at any time outstanding not in excess of (i) $20,000,000 or (ii)
$30,000,000 when added to the Contingent Obligations permitted pursuant to
Section 7.7(c).

         7.5      Transactions with Affiliates. The Guarantor shall not, and
shall not suffer or permit any Subsidiary to, enter into any transaction with
any Affiliate of the Guarantor, except upon fair and reasonable terms no less
favorable to the Guarantor or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Guarantor or such
Subsidiary.

                                      -48-
<PAGE>   55
         7.6      Use of Proceeds. The Company shall not, and shall not suffer
or permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Company or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act.

         7.7      Contingent Obligations. The Company shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:

                  (a) endorsements for collection or deposit in the ordinary
course of business;

                  (b) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 7.7;

                  (c) other Contingent Obligations in aggregate amounts not to
exceed (i) $15,000,000 or (ii) $30,000,000 when added to the Indebtedness
permitted pursuant to Section 7.4(d),at any time outstanding; and

                  (d) Guarantees of Indebtedness of Subsidiaries.

         7.8      Joint Ventures. The Company shall not enter into or permit any
Subsidiary to enter into, any Joint Venture involving an investment by it in
excess of $10,000,000 for all Joint Ventures after the date hereof except Joint
Ventures with its Affiliates.

         7.9      Lease Obligations. The Guarantor shall not, and shall not
suffer or permit any Subsidiary to, create or suffer to exist not in excess of
any obligations for the payment of rent for any property under lease or
agreement to lease, except for:

                  (a) operating leases entered into by the Guarantor or any
Subsidiary in the ordinary course of business; and

                  (b) capital leases entered into by the Guarantor or any
Subsidiary to finance the acquisition of equipment;

         7.10     Restricted Payments. The Guarantor shall not, and shall not
suffer or permit any Subsidiary to, declare or make any dividend payment or
other distribution of assets, properties, cash, rights, obligations or
securities to its policy holders or shareholders, except that:

                  (a) the Guarantor and its Insurance Subsidiaries may pay
policy holder dividends;

                  (b) the Company may make dividends and distributions, payable
solely in common stock;

                  (c) the Company may in any fiscal quarter pay cash dividends
and repurchase stock not in excess of its income (not including any gain from
the sale of capital stock of Beutel Goodman and Company Ltd.) in such fiscal
quarter, so long as after giving effect thereto, no

                                      -49-
<PAGE>   56
Default, Event of Default, Company Default, Company Event of Default, Guarantor
Default or Guarantor Event of Default shall have occurred and be continuing; and

                  (d) Any Subsidiary of the Guarantor (other than the Company)
may pay in any fiscal quarter cash dividends, so long as after giving effect
thereto, no Default, Event of Default, Company Default, Company Event of
Default, Guarantor Default or Guarantor Event of Default shall have occurred and
be continuing.

         7.11     ERISA. The Guarantor 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
Company in an aggregate amount in excess of $5,000,000 or (b) engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.

         7.12     Change in Business. The Guarantor shall not, and shall not
suffer or permit any Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by the Guarantor
and its Subsidiaries on the date hereof.

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

         7.14     Pari Passu. The Guarantor shall cause the Obligations to rank
at least pari passu with all other senior unsecured Indebtedness of the
Guarantor. The Company shall cause the Obligations to rank at least pari passu
with all other senior unsecured Indebtedness of the Company.

         7.15     Phoenix. The Company shall retain the word "Phoenix" in its
name.

         7.16     Subordinated Debt and Preferred Stock. The Company shall not
make any payments, or set aside funds to make payments, on preferred stock or
any Subordinated Debt into which preferred stock is converted; except that the
Company may make regularly scheduled interest and dividend payments thereon so
long as after giving effect thereto, no Default, Event of Default, Company
Default, Company Event of Default, Guarantor Default or Guarantor Event of
Default shall have occurred and be continuing.

         7.17     Capital Expenditures. The Company and its Subsidiaries shall
not make any capital expenditures in excess of $15,000,000 in any fiscal year.

                                  ARTICLE VIII

                         GUARANTOR'S FINANCIAL COVENANTS

         So long as any Bank shall have any Commitments hereunder, or any Loan
or other Obligations shall remain unpaid or unsatisfied, unless the Majority
Banks waive compliance in writing:

                                      -50-
<PAGE>   57
         8.1      Guarantor's Minimum Total SAP Adjusted Capital. The Guarantor
shall maintain a Total SAP Adjusted Capital of not less than $825,000,000 plus
50% of net income (if greater than zero) for each fiscal quarter ending on or
after September 30, 1997.

         8.2      Invested Assets. The Guarantor shall not permit Invested
Assets of the Guarantor and its Primary Insurance Subsidiaries consisting of
notes, bonds and other obligations classified as bonds which bear NAIC Ratings
from three to six, both inclusive, to exceed 5.5% of Net Invested Assets.

         8.3      NAIC Ratings. The Guarantor shall not permit the portion of
the Invested Assets of the Guarantor and its Primary Insurance Subsidiaries
consisting of notes, bonds and other obligations classified as bonds which bear
NAIC Ratings from five to six to exceed 13% of Total SAP Adjusted Capital.

         8.4      Real Estate. The Guarantor shall not permit the portion of the
Invested Assets of the Guarantor and its Primary Insurance Subsidiaries in real
estate, real estate acquired in satisfaction of indebtedness (exclusive of such
investments of either category occupied by the Guarantor or its Primary
Insurance Subsidiaries for use in their business) plus mortgage loans on real
estate to exceed 32% of Net Invested Assets.

         8.5      Risk Based Capital. The Guarantor shall maintain a minimum
Risk-Based Capital Ratio of not less than 1.75 to 1.0.

         8.6      Non-Performing Real Estate. The Guarantor shall not permit the
book value of the investment of the Guarantor and its Primary Insurance
Subsidiaries in non-performing real estate under SAP, prior to any reserves or
write-offs with respect thereto, to exceed 30% of Total SAP Adjusted Capital.

         8.7      Indebtedness to Capital. The Guarantor shall not permit the
consolidated Indebtedness of the Guarantor and its Subsidiaries to exceed 75% of
Total SAP Adjusted Capital.

                                   ARTICLE IX

                          COMPANY'S FINANCIAL COVENANTS

         So long as any Bank shall have any Commitments hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, unless the Majority
Banks waive compliance in writing:

         9.1      Shareholders' Equity. The Company shall maintain a minimum
Shareholders' Equity (excluding any preferred shares) of $165,000,000 plus 50%
of net income (if greater than zero) for each quarter ending on or after
September 30, 1997.

         9.2      EBITDA to Interest Ratio. The Company shall maintain a ratio
of EBITDA to Interest Expense as at the end of any fiscal quarter for the four
fiscal quarters then ending of not less than 4.0 to 1.0.

                                      -51-
<PAGE>   58
         9.3      Total Debt to Capital Ratio. The Company shall maintain a
Total Debt to Capital Ratio of not in excess of the following percentages at any
time during the following periods:

<TABLE>
<CAPTION>
Percentage                    Periods
----------                    -------
<S>                           <C>
60%                           Date hereof through August 14, 1998
55%                           August 14, 1998 through August 15, 2000
50%                           August 15, 2000 and thereafter
</TABLE>

         9.4      Senior Debt to EBITDA Ratio. The Company shall maintain a
ratio of Senior Debt to EBITDA Ratio of not in excess of the following amounts
during the following periods:

<TABLE>
<CAPTION>
Amount                        Period
------                        -------
<S>                           <C>
3.5 to 1                      Date hereof through August 14,1999
3.0 to 1                      August 15, 1999 through August 14, 2000
2.5 to 1                      August 15, 2000 through August 14, 2001
2.0 to 1                      August 15, 2001 and thereafter
</TABLE>

                                    ARTICLE X

                                    GUARANTY

         10.1     Guaranty. The Guarantor hereby unconditionally and irrevocably
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Facility A
Note issued by the Company pursuant to this Agreement, and the full and punctual
payment of all other Obligations of the Company under this Agreement except with
respect to principal and interest on the Facility B Loans. Upon failure by the
Company to pay punctually any such amount, the Guarantor shall forthwith on
demand pay the amount not so paid at the place and in the manner specified in
this Agreement. In addition (and without limiting the foregoing), upon any
Facility A Loan being declared or otherwise becoming immediately due and payable
pursuant to Sections 11.2 or 12.2, the Guarantor shall forthwith on demand pay
all amounts payable under such Facility A Loan at the place and in the manner
specified in this Agreement.

         10.2     Guaranty Unconditional. The obligations of the Guarantor under
this Article X shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:

                  (a) any extension, renewal, settlement, compromise, waiver or
         release in respect of any obligation of the Company under this
         Agreement or any Note, by operation of law or otherwise;

                  (b) any modification or amendment of or supplement to this
         Agreement or any Note;

                                      -52-
<PAGE>   59
                  (c) any release, impairment, non-perfection or invalidity of
         any direct or indirect security for any obligation of the Company under
         this Agreement or any Note;

                  (d) any change in the corporate existence, structure or
         ownership of the Company or any insolvency, bankruptcy, reorganization
         or other similar proceeding affecting the Company or its assets or any
         resulting release or discharge of any obligation of the Company
         contained in this Agreement or any Note;

                  (e) the existence of any claim, set-off or other right which
         the Guarantor may have at any time against the Company, the
         Administrative Agent, any Bank or any other Person, whether in
         connection herewith or any unrelated transaction, provided that nothing
         herein shall prevent the assertion of any such claim by separate suit
         or compulsory counterclaim;

                  (f) any invalidity or unenforceability relating to or against
         the Company for any reason of this Agreement or any Note, or any
         provision of applicable law or regulation purporting to prohibit the
         payment by the Company of the principal of or interest on any Note or
         any other amount payable by the Company under this Agreement; or

                  (g) any other act or omission to act or delay of any kind by
         the Company, the Administrative Agent, any Lender or any other Person
         or any other circumstance whatsoever which might, but for the
         provisions of this paragraph, constitute a legal or equitable discharge
         of the Company or the Guarantor obligations as guarantor hereunder.

         10.3     Discharge only upon Payment in Full; Reinstatement in Certain
Circumstances. The Guarantor's obligations as guarantor hereunder shall remain
in full force and effect until the Commitments shall have terminated and all
Obligations (except as to principal and interest with respect to the Facility B
Loans) shall have been paid in full in money. If at any time any payment of
principal, interest or any other amount payable by the Company under this
Agreement or any Note is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy or reorganization of the Company or otherwise,
the Guarantor's obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.

         10.4     Waiver by the Guarantor. The Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Company or any other Person.

         10.5     Subrogation. Notwithstanding any payment made by or for the
account of the Guarantor pursuant to this Article X, the Guarantor shall not be
subrogated to any right of the Administrative Agent or any Bank until such time
as the Administrative Agent and the Banks shall have received final payment in
cash of the full amount of all Obligations.

         10.6     Stay of Acceleration. If acceleration of the time for payment
of any amount payable by the Company under this Agreement or any Note is stayed
upon the insolvency, bankruptcy or reorganization of the Company, all such
amounts otherwise subject to acceleration

                                      -53-
<PAGE>   60
under the terms of this Agreement shall nonetheless be payable by the Guarantor
hereunder forthwith on demand by the Administrative Agent made at the request of
the Majority Banks.

                                   ARTICLE XI

                                EVENTS OF DEFAULT

         11.1     Event of Default. Any of the following shall constitute an
"Event of Default":

                  (a) Non-Payment. The Company fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan, or (ii) within
five days after the same becomes due, any interest, fee or any other amount
payable hereunder or under any other Loan Document; or

                  (b) Representation or Warranty. Any representation or warranty
by the Guarantor or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Guarantor, any Subsidiary, or any Responsible Officer of
the Guarantor or any Subsidiary, furnished at any time under this Agreement, or
in or under any other Loan Document, is incorrect in any material respect on or
as of the date made or deemed made; or

                  (c) Specific Defaults. The Guarantor or the Company, as
applicable, fails to perform or observe any term, covenant or agreement
contained in any of Section 6.1, 6.2, 6.3 or 6.9 or in Article VII hereof; or

                  (d) Other Defaults. The Guarantor or the Company fails to
perform or observe any other term or covenant contained in this Agreement or any
other Loan Document (other than under Articles VIII and IX hereof), and such
default shall continue unremedied for a period of 20 days after the date upon
which written notice thereof is given to the Guarantor by the Administrative
Agent or any Bank; or

                  (e) Cross-Default. The Guarantor or any Subsidiary (i) fails
to make any payment in respect of any Indebtedness or Contingent Obligation
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 $10,000,000 with respect to the
Guarantor, or $5,000,000 with respect to the Company or any other Subsidiary of
the Guarantor, when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise); or (ii) fails to perform or observe any
other condition or covenant, or any other event shall occur or condition exist,
under any agreement or instrument relating to any such Indebtedness or
Contingent Obligation, if the effect of such failure, event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded; or

                  (f) Insolvency; Voluntary Proceedings. The Guarantor or any
Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its

                                      -54-
<PAGE>   61
debts as they become due, subject to applicable grace periods, if any, whether
at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business
in the ordinary course; (iii) commences any Insolvency Proceeding with respect
to itself or its property; or (iv) takes any action to effectuate or authorize
any of the foregoing; or

                  (g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Guarantor or any Subsidiary or its
property, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Guarantor's or
any Subsidiary's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Guarantor or any Subsidiary admits the
material allegations of a petition against it in any Insolvency Proceeding, or
an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Guarantor or any Subsidiary acquiesces in
the appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its property or business; or

                  (h) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multi employer Plan which has resulted or could reasonably be
expected to result in liability of the Guarantor under Title IV of ERISA to the
Pension Plan, Multi employer Plan or the PBGC; (ii) there exists an Unfunded
Pension Liability; or (iii) the Company or any ERISA Affiliate shall fail 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 Multi employer Plan; or

                  (i) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against the Guarantor or any Subsidiary involving in the aggregate a liability
(to the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related series of
transactions, incidents or conditions, of $10,000,000 or more, and the same
shall remain unsatisfied, unvacated and unstayed pending appeal for a period of
10 days after the entry thereof; or

                  (j) Non-Monetary Judgments. Any non-monetary judgment, order
or decree is entered against the Guarantor or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or

                  (k) Change of Control. There occurs any Change of Control; or

                  (l) Loss of Licenses. Any other Governmental Authority revokes
or fails to renew any material license, permit or franchise of the Guarantor or
any Subsidiary, or the Guarantor or any Subsidiary for any reason loses any
material license, permit or franchise, or the Guarantor or any Subsidiary
suffers the imposition of any restraining order, escrow, suspension

                                      -55-
<PAGE>   62
or impound of funds in connection with any proceeding (judicial or
administrative) with respect to any material license, permit or franchise.

         11.2     Remedies. If any Event of Default occurs, the Administrative
Agent shall, at the request of, or may, with the consent of, the Majority Banks,

                  (a) declare the commitment of each Bank to make Loans to be
terminated, whereupon such commitments 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 Company; and

                  (c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;

provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 11.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Administrative
Agent or any Bank.

         11.3     Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.

                                  ARTICLE XII

                           GUARANTOR EVENTS OF DEFAULT

         12.1     Event of Default. If the Guarantor fails to perform or observe
any term, covenant or agreement contained in any of Sections 8.1 through 8.7 it
shall constitute a "Guarantor Event of Default".

         12.2     Remedies. If any Guarantor Event of Default occurs, the
Administrative Agent shall, at the request of, or may, with the consent of, the
Majority Banks,

                  (a) declare the commitment of each Bank to make Facility A
Loans and Facility B Conversions to be terminated, whereupon such commitments
shall be terminated;

                  (b) declare the unpaid principal amount of all outstanding
Facility A 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 Company; and

                                      -56-
<PAGE>   63
                  (c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law.

                                  ARTICLE XIII

                            COMPANY EVENTS OF DEFAULT

         13.1     Event of Default. If the Company fails to perform or observe
any term, covenant or agreement contained in any of Sections 9.1 through 9.4 and
the Company shall fail to deliver a Notice of Facility A Conversion co-signed by
the Guarantor pursuant to Section 2.6 or shall fail to deliver a guarantee of
the Guarantor of the obligations with respect to Facility B hereunder, together
with such certified resolutions, incumbency certificates and opinions of counsel
as the Administrative Agent may require, within 10 days after the date upon
which written notice thereof is given to the Company by the Administrative Agent
or any Bank, it shall constitute a "Company Event of Default".

         13.2     Remedies. If any Company Event of Default occurs, the
Administrative Agent shall, at the request of, or may, with the consent of, the
Majority Banks,

                  (a) declare the commitment of each Bank to make Facility B
Conversions to be terminated, whereupon such commitments shall be terminated;

                  (b) declare the unpaid principal amount of all outstanding
Facility B Loans, all interest accrued and unpaid thereon, and all other amounts
owing or payable hereunder or under any other Loan Document (other than amounts
owing or payable solely with respect to outstanding Facility A Loans) 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 Company; and

                  (c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law.

                                  ARTICLE XIV

                            THE ADMINISTRATIVE AGENT

         14.1     Appointment. Each Bank hereby irrevocably designates and
appoints BNY as the Administrative Agent of such Bank under the Loan Documents
and each Bank hereby irrevocably authorizes the Administrative Agent to take
such action on its behalf under the provisions of the Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of the Loan Documents, together with such
powers as are reasonably incidental thereto. The duties of the Administrative
Agent shall be mechanical and administrative in nature, and, notwithstanding any
provision to the contrary elsewhere in any Loan Document, the Administrative
Agent shall not have any duties or responsibilities other than those expressly
set forth therein, or any fiduciary relationship with, or fiduciary duty to, any
Bank, and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into the Loan Documents or otherwise exist against
the Administrative Agent.

                                      -57-
<PAGE>   64
         14.2     Delegation of Duties. The Administrative Agent may execute any
of its duties under the Loan Documents by or through agents or attorneys-in-fact
and shall be entitled to rely upon, and shall be fully protected in, and shall
not be under any liability for, relying upon, the advice of counsel concerning
all matters pertaining to such duties.

         14.3     Exculpatory Provisions. Neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with the Loan Documents
(except the Administrative Agent for its own gross negligence or willful
misconduct), or (ii) responsible in any manner to any of the Banks for any
recitals, statements, representations or warranties made by the Company or the
Guarantor or any officer thereof contained in the Loan Documents 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, the Loan
Documents or for the value, validity, effectiveness, genuineness, perfection,
enforceability or sufficiency of any of the Loan Documents or for any failure of
the Company or the Guarantor or any other Person to perform its obligations
thereunder. The Administrative Agent shall not be under any obligation to any
Bank to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, the Loan Documents, or to inspect
the property, books or records of the Company or the Guarantor. The Banks
acknowledge that the Administrative Agent shall not be under any duty to take
any discretionary action permitted under the Loan Documents unless the
Administrative Agent shall be instructed in writing to do so by the Majority
Banks and such instructions shall be binding on the Banks and all holders of the
Notes; provided, however, that the Administrative Agent shall not be required to
take any action which exposes the Administrative Agent to personal liability or
its contrary to law or any provision of the Loan Documents. The Administrative
Agent shall not be under any liability or responsibility whatsoever, as
Administrative Agent, to the Company or the Guarantor or any other Person as a
consequence of any failure or delay in performance, or any breach, by any Bank
of any of its obligations under any of the Loan Documents.

         14.4     Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, opinion, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by a proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Company or the Guarantor), independent accountants and other experts selected by
the Administrative Agent. The Administrative Agent may treat each Bank, or the
Person designated in the last notice filed with it under this Section, as the
holder of all of the interests of such Bank, in its Loans and Notes, until
written notice of transfer, signed by such Bank (or the Person designated in the
last notice filed with the Administrative Agent) and by the Person designated in
such written notice of transfer, in form and substance satisfactory to the
Administrative Agent, shall have been filed with the Administrative Agent. The
Administrative Agent shall not be under any duty to examine or pass upon the
validity, effectiveness, enforceability or genuineness of the Loan Documents or
any instrument, document or communication furnished pursuant thereto or in
connection therewith, and the Administrative Agent shall be entitled to assume
that the same are valid, effective and genuine, have been signed or sent by the
proper parties and are what they purport to be. The Administrative Agent shall
be fully justified in failing or refusing to take any

                                      -58-
<PAGE>   65
action under the Loan Documents unless it shall first receive such advice or
concurrence of the Majority Banks as it deems appropriate. The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under the Loan Documents in accordance with a request or direction of
the Majority Banks, and such request or direction and any action taken or
failure to act pursuant thereto shall be binding upon all the Banks and all
future holders of the Notes.

         14.5     Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default, Event of
Default, Company Default, Company Event of Default, Guarantor Default or
Guarantor Event of Default unless the Administrative Agent has received written
notice thereof from a Bank, the Company or the Guarantor. In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall
promptly give notice thereof to the Banks, the Company or the Guarantor. The
Administrative Agent shall take such action with respect to such Default, Event
of Default, Company Default, Guarantor Default or Guarantor Event of Default as
shall be directed by the Majority Banks, provided, however, that unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default, Event of Default,
Company Default, Company Event of Default, Guarantor Default or Guarantor Event
of Default as it shall deem to be in the best interests of the Banks.

         14.6     Non-Reliance on Administrative Agent and Other Banks. Each
Bank expressly acknowledges that neither the Administrative Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
the Administrative Agent hereinafter, including any review of the affairs of the
Company or the Guarantor, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Bank. Each Bank represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any Bank, and based on such documents and information as
it has deemed appropriate made its own evaluation of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Company the Guarantor and made its own decision to enter
into this Agreement. Each Bank also represents that it will, independently and
without reliance upon the Administrative Agent or any Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, evaluations and decisions in taking or not taking
action under any Loan Document, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Company or the Guarantor. Except
for notices, reports and other documents expressly required to be furnished to
the Banks by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide the Bank with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Company or the Guarantor which at any time
may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.

         14.7     Indemnification. Each Bank agrees to indemnify and hold
harmless the Administrative Agent in its capacity as such (to the extent not
promptly reimbursed by the Company or the Guarantor and without limiting the
obligation of the Company or the Guarantor

                                      -59-
<PAGE>   66
to do so), pro rata according to the aggregate of the outstanding principal
balance of the Loans (or at any time when no Loans are outstanding, according to
its Pro Rata Share), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever including, without limitation, any amounts
paid to the Banks (through the Administrative Agent) by the Company or the
Guarantor pursuant to the terms of the Loan Documents, that are subsequently
rescinded or avoided, or must otherwise be restored or returned) which may at
any time (including, without limitation, at any time following the payment of
the Loans or the Notes) be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of the Loan Documents
or any other documents contemplated by or referred to therein or the
transactions contemplated thereby or any action taken or omitted to be taken by
the Administrative Agent under or in connection with any of the foregoing;
provided, however, that no Bank shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements to the extent resulting
solely from the finally adjudicated gross negligence or willful misconduct of
the Administrative Agent. Without limitation of the foregoing, each Bank agrees
to reimburse the Administrative Agent promptly upon demand for its pro rata
share of any unpaid fees owing to the Administrative Agent, and any costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel) payable by the Company or the Guarantor under Section 15.4, to the
extent that the Administrative Agent has not been paid such fees or has not been
reimbursed for such costs and expenses, by the Company or the Guarantor. The
failure of any Bank to reimburse the Administrative Agent promptly upon demand
for its pro rata share of any amount required to be paid by the Banks to the
Administrative Agent as provided in this Section shall not relieve any other
Bank of its obligation hereunder to reimburse the Administrative Agent for its
pro rata share of such amount, but no Bank shall be responsible for the failure
of other Bank to reimburse the Administrative Agent for such other Bank's pro
rata share of such amount. If after having been indemnified or reimbursed by the
Banks as provided by this Section, the Administrative Agent shall have received
payment from the obligor in respect of the obligation or liability for which it
received such indemnification or reimbursement from the Banks, the
Administrative Agent shall disburse to the Banks an amount equal to the amount
of the payment so received on a pro rata basis. The agreements in this Section
shall survive the termination of the Commitments of all of the Banks, and the
payment of all amounts payable under the Loan Documents.

         14.8     Administrative Agent in Its Individual Capacity. BNY and its
affiliates may make secured or unsecured loans to, accept deposits from, issue
letters of credit for the account of, act as trustee under indentures of, and
generally engage in any kind of business with, the Company or the Guarantor as
though BNY were not an Agent hereunder and BNY Capital Markets did not arrange
the transactions contemplated hereby. With respect to the Commitments made or
renewed by BNY and the Note issued to BNY, BNY shall have the same rights and
powers under the Loan Documents as any Bank and may exercise the same as though
it were not the Administrative Agent, and the terms "Bank" and "Banks" shall in
each case include BNY.

         14.9     Successor Agent. If at any time the Administrative Agent deems
it advisable, in its sole discretion, it may submit to the Banks a written
notice of its resignation as Agent under the Loan Documents, such resignation to
be effective upon the earlier of (i) the written acceptance of the duties of the
Administrative Agent under the Loan Documents by a successor Agent and (ii) on
the 30th day after the date of such notice. Upon any such resignation, the

                                      -60-
<PAGE>   67
Majority Banks shall have the right to appoint from among the Banks a successor
Agent. If no successor Agent shall have been so appointed by the Majority Banks
and accepted such appointment in writing within 30 days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Bank, appoint a successor
Administrative Agent, which successor Administrative Agent shall be a commercial
bank organized under the laws of the United States or any State thereof and
having a combined capital, surplus, and undivided profits of at least
$100,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent's rights, powers, privileges and duties as Administrative
Agent under the Loan Documents shall be terminated. The Company, the Guarantor
and the Banks shall execute such documents as shall be necessary to effect such
appointment. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of the Loan Documents shall inure to its
benefit as to any actions taken or omitted to be taken by it, and any amounts
owing to it, while it was Administrative Agent under the Loan Documents. If at
any time there shall not be a duly appointed and acting Administrative Agent,
the Company and the Guarantor agree to make each payment due under the Loan
Documents directly to the Banks entitled thereto during such time.

         14.10    Syndication and Documentation Agent. None of the Banks
identified on the facing page or signature pages of this Agreement as a
"syndication and documentation agent" shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Banks as such. Without limiting the foregoing, none of the
Banks so identified as a "co-agent" or "lead manager" shall have or be deemed to
have any fiduciary relationship with any Bank. Each Bank acknowledges that it
has not relied, and will not rely, on any of the Banks so identified in deciding
to enter into this Agreement or in taking or not taking action hereunder.

                                   ARTICLE XV

                                  MISCELLANEOUS

         15.1     Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Guarantor or any applicable Subsidiary
therefrom, shall be effective unless the same shall be in writing and signed by
the Majority Banks (or by the Administrative Agent at the written request of the
Majority Banks) and the Company and acknowledged by the Administrative Agent,
and then any 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 waiver, amendment, or consent shall, unless in writing and signed by all
the Banks, the Company and the Guarantor and acknowledged by the Administrative
Agent, do any of the following:

                  (a) increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to Sections 11.2,12.2 or 13.2);

                                      -61-
<PAGE>   68
                  (b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document;

                  (c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;

                  (d) change the percentage of the Facility A Commitments or of
the aggregate unpaid principal amount of the Loans which is required for the
Banks or any of them to take any action hereunder; or

                  (e) amend this Section, or Section 2.16, or any provision
herein providing for consent or other action by all Banks;

                  (f) amend or terminate any guaranty including the guaranty
pursuant to Article X;

and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Majority Banks
or all the Banks, as the case may be, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document.

         15.2     Notices. (a) All notices, requests and other communications
shall be in writing (including, unless the context expressly otherwise provides,
by facsimile transmission, provided that any matter transmitted by the Company
or the Guarantor by facsimile (i) shall be immediately confirmed by a telephone
call to the recipient at the number specified on Schedule 15.2, and (ii) shall
be followed promptly by delivery of a hard copy original thereof) and mailed,
faxed or delivered, to the address or facsimile number specified for notices on
Schedule 15.2; or, as directed to the Guarantor, the Company or the
Administrative Agent, to such other address as shall be designated by such party
in a written notice to the other parties, and as directed to any other party, at
such other address as shall be designated by such party in a written notice to
the Guarantor, the Company and the Administrative Agent.

                  (b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or XIV shall not be effective until actually
received by the Administrative Agent.

                  (c) Any agreement of the Administrative Agent and the Banks
herein to receive certain notices by telephone or facsimile is solely for the
convenience and at the request of the Company. The Administrative Agent and the
Banks shall be entitled to rely on the authority of any Person purporting to be
a Person authorized by the Company to give such notice and the Administrative
Agent and the Banks shall not have any liability to the Company or other Person
on account of any action taken or not taken by the Administrative Agent or the
Banks in reliance upon such telephonic or facsimile notice. The obligation of
the Company to repay the

                                      -62-
<PAGE>   69
Loans shall not be affected in any way or to any extent by any failure by the
Administrative Agent and the Banks to receive written confirmation of any
telephonic or facsimile notice or the receipt by the Administrative Agent and
the Banks of a confirmation which is at variance with the terms understood by
the Administrative Agent and the Banks to be contained in the telephonic or
facsimile notice.

         15.3     No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Bank, 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.

         15.4     Costs and Expenses. The Guarantor and the Company, jointly and
severally shall:

                  (a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA within five Business Days after demand
(subject to subsection 4.1(a)(v)) for all costs and expenses incurred by BofA in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
reasonable Attorney Costs incurred by BofA with respect thereto; and

                  (b) pay or reimburse each Agent, each Arranger and each Bank
within five Business Days after demand (subject to subsection 4.1(a)(v)) for all
costs and expenses (including reasonable Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan Document during the
existence of an Event of Default, Guarantor Event of Default (or in the case of
the Company, a Company Event of Default) or after acceleration of the Loans
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding).

         15.5     Indemnity. Whether or not the transactions contemplated hereby
are consummated, the Guarantor and the Company, jointly and severally, shall
indemnify and hold the Agent-Related Persons, and each Bank and each of its
respective officers, directors, employees, counsel, agents and attorneys-in-fact
(each, an "Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including Attorney Costs) of any
kind or nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Bank) be imposed on, incurred by or asserted against
any such Person in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in connection
with any of the foregoing, including with respect to any investigation,
litigation or proceeding (including any Insolvency Proceeding or appellate
proceeding) related to or arising out of this Agreement or the Loans or the use
of the proceeds thereof, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided,

                                      -63-
<PAGE>   70
that the Guarantor and the Company shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities resulting solely from
the gross negligence or willful misconduct of such Indemnified Person; and
provided, further, that the Indemnified Persons shall, at the Company's request,
only use one counsel among them unless any such Indemnified Person determines in
its sole discretion that its interests may differ from any other Indemnified
Person. The agreements in this Section shall survive payment of all other
Obligations.

         15.6     Payments Set Aside. To the extent that the Company or the
Guarantor makes a payment to the Administrative Agent or the Banks, or the
Administrative Agent or the Banks exercise their right of set-off, and such
payment or the proceeds of such set-off or any part thereof are 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 Bank in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any Insolvency Proceeding 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
Bank severally agrees to pay to the Administrative Agent upon demand its pro
rata share of any amount so recovered from or repaid by the Administrative
Agent.

         15.7     Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Guarantor and the Company may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Administrative Agent and each Bank.

         15.8     Assignments, Participations, etc. (a) Any Bank may, with the
written consent of the Company at all times other than during the existence of
an Event of Default, Guarantor Event of Default or Company Event of Default and
the Administrative Agent, which consents shall not be unreasonably withheld, at
any time assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Company or the Administrative Agent shall be required in
connection with any assignment and delegation by a Bank to an Eligible Assignee
that is an Affiliate of such Bank) (each an "Assignee") all, or any ratable part
of all, of the Loans, the Commitments and the other rights and obligations of
such Bank hereunder, in a minimum amount such that the Assignee after giving
effect to such assignment shall hold at least $10,000,000 of the Commitments (or
if less the aggregate amount of the Commitments of the Bank so assigning);
provided, however, that the Company and the Administrative Agent may continue to
deal solely and directly with such Bank in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company and the Administrative Agent by
such Bank and the Assignee; (ii) such Bank and its Assignee shall have delivered
to the Company and the Administrative Agent an Assignment and Acceptance in the
form of Exhibit E ("Assignment and Acceptance") together with any Note or Notes
subject to such assignment, (iii) the assignor Bank or Assignee has paid to the
Agent a processing fee in the amount of $3,000 and (iv) any assignment shall be
pro rata between Facility A and Facility B.

                                      -64-
<PAGE>   71
                  (b) From and after the date that the Administrative Agent
notifies the assignor Bank that it has received (and provided its consent with
respect to) an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents.

                  (c) Within five Business Days after its receipt of notice by
the Administrative Agent that it has received an executed Assignment and
Acceptance and payment of the processing fee, (and provided that it consents to
such assignment in accordance with subsection 15.8(a)), the Company shall
execute and deliver to the Administrative Agent, new Notes evidencing such
Assignee's assigned Loans and Commitment and, if the assignor Bank has retained
a portion of its Loans and its Commitment, replacement Notes in the principal
amount of the Loans retained by the assignor Bank (such Notes to be in exchange
for, but not in payment of, the Notes held by such Bank). Immediately upon each
Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Bank
pro tanto.

                  (d) Any Bank may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Company (a "Participant")
participating interests in any Loans, the Commitment of that Bank and the other
interests of that Bank (the "originating Bank") hereunder and under the other
Loan Documents; provided, however, that (i) the originating Bank's obligations
under this Agreement shall remain unchanged, (ii) the originating Bank shall
remain solely responsible for the performance of such obligations, (iii) the
Company and the Agent shall continue to deal solely and directly with the
originating Bank in connection with the originating Bank's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no Bank
shall transfer or grant any participating interest under which the Participant
has rights to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous consent of the Banks as
described in the first proviso to Section 15.1. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections 3.1,
3.3 and 15.5 as though it were also a Bank hereunder, and not have any rights
under this Agreement, or any of the other Loan Documents, and all amounts
payable by the Company hereunder shall be determined as if such Bank had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, Guarantor Event of
Default or Company Event of Default, each Participant shall be deemed to have
the right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement.

                                      -65-
<PAGE>   72
                  (e) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under
applicable law.

         15.9     Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Company and provided to it by the Guarantor or any Subsidiary,
or by the Agents or the Arrangers on such Guarantor's or Subsidiary's behalf,
under this Agreement or any other Loan Document, and neither it nor any of its
Affiliates shall use any such information other than in connection with or in
enforcement of this Agreement and the other Loan Documents or in connection with
other business now or hereafter existing or contemplated with the Guarantor or
any Subsidiary; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Bank, or (ii) was or becomes available on a non-confidential basis from a source
other than the Guarantor or the Company, provided that such source is not bound
by a confidentiality agreement with the Guarantor or the Company known to the
Bank; provided, however, that any Bank may disclose such information (A) at the
request or pursuant to any requirement of any Governmental Authority to which
the Bank is subject or in connection with an examination of such Bank by any
such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with any
litigation or proceeding to which the Administrative Agent, any Bank or their
respective Affiliates may be party; (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document; (F) to such Bank's independent auditors and other professional
advisors; (G) to any Participant or Assignee, actual or potential, provided that
such Person agrees in writing to keep such information confidential to the same
extent required of the Banks hereunder; (H) as to any Bank or its Affiliate, as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which the Guarantor or any Subsidiary is party or is deemed
party with such Bank or such Affiliate; and (I) to its Affiliates.

         15.10    Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or with respect to the Facility A
Loans, a Guarantor Event of Default or with respect to the Facility B Loans, a
Company Event of Default, or the Loans have been accelerated, each Bank is
authorized at any time and from time to time, without prior notice to the
Company or the Guarantor, any such notice being waived by the Company and the
Guarantor 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 Bank to or for
the credit or the account of the Company or the Guarantor against any and all
Obligations owing to such Bank by the Company or the Guarantor, as applicable,
now or hereafter existing, irrespective of whether or not the Administrative
Agent or such Bank shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each Bank
agrees promptly to notify the Company and the Administrative Agent after any
such set-off and application made by such

                                      -66-
<PAGE>   73
Bank; provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application.

         15.11    Automatic Debits of Fees. With respect to any fee, or any
other cost or expense (including Attorney Costs) due and payable to the Agents,
BNY, BofA or any Arranger under the Loan Documents, the Company hereby
irrevocably authorizes BNY and BofA to debit any deposit account of the Company
with BNY or BofA in an amount such that the aggregate amount debited from all
such deposit accounts does not exceed such fee or other cost or expense. If
there are insufficient funds in such deposit accounts to cover the amount of the
fee or other cost or expense then due, such debits will be reversed (in whole or
in part, in BNY's or BofA's sole discretion) and such amount not debited shall
be deemed to be unpaid. No such debit under this Section shall be deemed a
set-off.

         15.12    Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Administrative Agent in writing of any changes in the address
to which notices to the Bank should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.

         15.13    Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.

         15.14    Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.

         15.15    No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Guarantor, the Company,
the Banks, the Agents and the Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents.

         15.16    Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE
NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK; PROVIDED THAT THE AGENTS AND THE BANKS SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.

                  (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 NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE GUARANTOR, THE COMPANY,
THE AGENTS AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE GUARANTOR, THE
COMPANY, THE AGENTS AND THE BANKS IRREVOCABLY WAIVES ANY

                                      -67-
<PAGE>   74
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 THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE GUARANTOR, THE COMPANY, THE AGENTS
AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.

         15.17    Waiver of Jury Trial. THE GUARANTOR, THE COMPANY, THE BANKS
AND THE AGENTS EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE GUARANTOR, THE COMPANY, THE BANKS AND THE AGENT EACH AGREE
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.

         15.18    Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Guarantor,
the Company, the Banks and the Agents, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.

                                      -68-
<PAGE>   75
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.

                                      PHOENIX DUFF & PHELPS CORPORATION

                                      By: /s/ William R. Moyer
                                         ---------------------------------------
                                         William R. Moyer

                                      Title: Senior Vice President and
                                             Chief Financial Officer

                                      S-1
<PAGE>   76
                                      PHOENIX HOME LIFE MUTUAL INSURANCE
                                      COMPANY

                                      By: /s/ David W. Searfoss
                                      --------------------------
                                      Name: David W. Searfoss
                                      Title: Executive Vice President and
                                             Chief Financial Officer

                                      S-2
<PAGE>   77
                                      BANK OF AMERICA NATIONAL TRUST AND SAVINGS
                                      ASSOCIATION, as Syndication Agent and
                                      Documentation Agent

                                      By: /s/ Elizabeth W. F. Bishop
                                      ------------------------------
                                      Name: Elizabeth W. F. Bishop
                                      Title: Vice President

                                      BANK OF AMERICA NATIONAL TRUST AND SAVINGS
                                      ASSOCIATION, as a Bank

                                      By: /s/ Elizabeth W. F. Bishop
                                      -------------------------------
                                      Name: Elizabeth W. F. Bishop
                                      Title: Vice President

                                      S-3
<PAGE>   78
                                      THE BANK OF NEW YORK, as Administrative
                                      Agent

                                      By: /s/ Melanie L. Shorotsky
                                      -----------------------------
                                      Name: Melanie L. Shorotsky
                                      Title: Vice President

                                      THE BANK OF NEW YORK, as a Bank

                                      By: /s/ Melanie L. Shorotsky
                                      -----------------------------
                                      Name: Melanie L. Shorotsky
                                      Title: Vice President

                                      S-4
<PAGE>   79
                                      FLEET NATIONAL BANK, as a Bank

                                      By: /s/ Juliana B. Dalton
                                      ----------------------------
                                      Name: Juliana B. Dalton
                                      Title: Vice President

                                      S-5
<PAGE>   80
                                      BANK OF MONTREAL, as a Bank

                                      By: /s/ Charles W. Reed
                                      -------------------------
                                      Name: Charles W. Reed
                                      Title: Director

                                      S-6
<PAGE>   81
                                      SUNTRUST BANK, ATLANTA, as a Bank

                                      By: /s/ Craig W. Farnsworth
                                          --------------------------------------
                                      Name:  Craig W. Farnsworth
                                      Title: Vice President & Manager
                                          --------------------------------------

                                      By: /s/ Maria C. Mamilovich
                                          --------------------------------------
                                      Name:  Maria C. Mamilovich
                                      Title: Vice President
                                          --------------------------------------

                                      S-7
<PAGE>   82
                                      STATE STREET BANK AND TRUST COMPANY, as
                                      a Bank

                                      By: /s/ Edward M. Anderson
                                          --------------------------------------
                                      Name:  Edward M. Anderson
                                      Title: Vice President
                                           -------------------------------------

                                      S-8
<PAGE>   83
                                      DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN
                                      ISLANDS BRANCHES, as a Bank

                                      By: /s/ Louis Caltavuturo
                                          --------------------------------------
                                      Name:  Louis Caltavuturo
                                      Title: Vice President
                                          --------------------------------------

                                      By: /s/ Gayma Z. Shivnarain
                                          --------------------------------------
                                      Name:  Gayma Z. Shivnarain
                                      Title: Vice President
                                          --------------------------------------
                                      S-9
<PAGE>   84
                                      CREDIT LYONNAIS NEW YORK BRANCH as a Bank

                                      By: /s/ Sebastian Rocco
                                          --------------------------------------
                                      Name:  Sebastian Rocco
                                      Title: First Vice President
                                          --------------------------------------

                                      S-10
<PAGE>   85
                                  SCHEDULE 2.1

                                   COMMITMENTS
                               AND PRO RATA SHARES

<TABLE>
<CAPTION>
                                                                    Facility A         Facility B          Pro Rata
Bank                                                                Commitments        Commitments         Share
<S>                                                                 <C>                <C>                <C>
Bank of America National
Trust and Savings
Association

                                                                    $ 40,000,000       $ 20,000,000         20.0%
The Bank of New York

                                                                    $ 40,000,000       $ 20,000,000         20.0%
Fleet National Bank                                                 $ 35,000,000       $ 17,500,000         17.5%
Bank of Montreal                                                    $ 25,000,000       $ 12,500,000         12.5%
State Street Bank                                                   $ 20,000,000       $ 10,000,000         10.0%
   and Trust Company
SunTrust Bank, Atlanta                                              $ 20,000,000       $ 10,000,000         10.0%
Deutsche Bank AG, New York and/or Cayman Islands Branches           $ 10,000,000       $  5,000,000          5.0%

Credit Lyonnais New York Branch                                     $ 10,000,000       $  5,000,000          5.0%
         TOTAL                                                      $200,000,000       $100,000,000        100.0%
</TABLE>
<PAGE>   86
                                  SCHEDULE 5.5

                                   Litigation

                                      NONE
<PAGE>   87
                                  SCHEDULE 5.7

                                      ERISA

                                      NONE
<PAGE>   88
                                  SCHEDULE 5.11

                              Permitted Liabilities

         None, other than as contained in the footnotes to the financial
statements referred to in Section 5.11(b).
<PAGE>   89
                                  SCHEDULE 5.12

                              Environmental Matters

                                      NONE
<PAGE>   90
                                  SCHEDULE 5.16

                       Subsidiaries and Minority Interests

Subsidiaries of Guarantor

Phoenix Home Life Mutual Insurance Company

     Phoenix Foundation (0%)
     PM Holdings, Inc. (100%)
              Aberdeen Asset Managers PLC (16%)
              American Phoenix Corporation (92%)
                       American Brokerage Corporation of Philadelphia (96.2%)
                       American Phoenix Corporation of Connecticut (71.5%)
                       American Phoenix Corporation of Maryland (100%)
                               Poor, Bowen, Bartlett & Kennedy of PA, Inc. (51%)
                       American Phoenix Corporation of Miami (85%)
                       American Phoenix Corporation of Orlando (80%)
                       American Phoenix Corporation of Western New York (94.5%)
                       American Phoenix Insurance Agency of Georgia, Inc. (100%)
                       American Phoenix Insurance Agency, Inc. (FL) (100%)
                       American Phoenix Insurance Agency, Inc. (NJ) (100%)
                               Giaconia Life Associates, Inc. (100%)
                       Caddell & Byers Insurance Agency, Inc. (80%)
                       Howard Hall Agency, Inc. (100%)
                       Kalvin-Miller Holdings Limited (100%)
                               American Phoenix Corporation of New York (100%)
                                    Kalvin-Miller Life Consultants, Inc. (100%)
                                        Kalvin-Miller Consulting Group,
                                        Inc. (100%)
                                    KAMSAC International, ltd. (100%)
                                    Property Owners & Managers Purchasing Group,
                                    Inc. (100%)
                       Lees Preston Fairy (Holdings) Ltd. (63%)
                       McDowell Insurance, Inc. (87.4%)
                       Nicholas & Cannon Agency, Inc. (100%)
                       Premium Funding Associates Inc. (100%)
              American Phoenix Life and Reassurance Company (100%)
                       APLAR Services, Ltd. (100%)
                       Phoenix Life and Reassurance Company of New York (100%)
              Financial Administrative Services, Inc. (100%)
              HLI Management Corporation (100%)
              HLI Securities Processing Corporation (100%)
              Investors Advantage Corporation (100%)
              Investors Liquidity Financial, Inc. - dissolved 8/13/93 (100%)
              PHL Associates, Inc. (100%)
<PAGE>   91
                       PHL Associates Insurance Agency of AL, Inc. (100%)
                       PHL Associates Insurance Agency of MA, Inc. (100%)
                       PHL Associates Insurance Agency of MS, P.C.. (%)
                       PHL Associates Insurance Agency of NM, Inc. (100%)
                       PHL Associates Insurance Agency of OH, Inc. (%)
                       PHL Associates of Texas, Inc. (%)
                       PHL Global Holding Company (100%)
                       Command International Software (49%)
                       PHL Software Services, Ltd. (100%)
              PHL Variable Insurance Company (100%)
              Phoenix-Aberdeen International Advisors, LLD (50%)
              Phoenix Charter Oak Trust Company (100%)
              Phoenix Duff & Phelps Corporation (60% of voting common stock)
                       CBO Investments Co. (100%)
                       DP Holdings Ltd. (100%)
                       DPCM Holdings, Inc. - Name Change 10/1/96 (100%)
                              Duff & Phelps Securities Co. - Sold 7/1/96 (100%)
                       Duff & Phelps Investment Management Co. (100%)
                       National Securities & Research Corporation (100%)
                       Phoenix Equity Planning Corporation (100%)
                              Phoenix Investment Counsel, Inc. (100%)
                       Windy City Investments Co. (100%)
                       Seneca Capital Management LLC (74.9%)
                       IPWC CBO Corporation (100%)
                       Phoenix Duff & Phelps Investment Advisors (100%)
                       DPIM, Inc. (100%)
              Phoenix Founders Inc. (100%)
                       238 Columbus Blvd., Inc. (100%)
                       Phoenix Realty Equity Investments, Inc. (100%)
                       Phoenix Realty Investors, Inc. (100%)
              Phoenix Group Holdings, Inc. (100%)
                       Phoenix American Life Insurance Company (100%)
                       Phoenix Group Services, Inc. (100%)
                       Benefit Resource Management, Inc. (100%)
                       Phoenix Life and Annuity Company (100%)
                       Phoenix Life Insurance Company (100%)
                       Phoenix Real Estate Securities Inc. (100%)
                       Phoenix Realty Group, Inc. (100%)
                       Phoenix Realty Advisors, Inc. (100%)
                       Phoenix Corporate Services, LLC (55%)
                       Pinnacle Realty Management Company, Inc. (50%)
                       Phoenix Realty Securities, Inc. (100%)
                       Phoenix Strategic Capital Corporation (100%)
                       Phoenix Variable Advisors, Inc. (0%)
                       PML International Insurance Limited (100%)
                       Townsend Financial Advisors, Inc. --
                       Dissolved 6/15/96 (100%)
<PAGE>   92
                      Worldwide Phoenix Limited (100%)
                               American Phoenix Investments Limited (100%)
                               Worldwide Phoenix Offshore, Inc. (100%)
                      W.S. Griffith & Co., Inc. (100%)
                               W.S. Griffith Insurance Agency of AL, Inc. (100%)
                               W.S. Griffith Insurance Agency of MA, Inc. (100%)
                               W.S. Griffith Insurance Agency of MS, P.C. (0%)
                               W.S. Griffith Insurance Agency of NM, Inc. (100%)
                               W.S. Griffith Insurance Agency of OH, Inc. (100%)
                               W.S. Griffith Insurance Agency of TX, Inc. (0%)

Subsidiaries and Equity Interests of Company

Schedule 5.16(b)

Subsidiaries:     Phoenix Equity Planning Corporation

                  Phoenix Investment Counsel, Inc.
                  National Securities and Research Corporation
                  Duff & Phelps Investment Management Co.
                  DPIM, Inc.
                  Phoenix Duff & Phelps Investment Advisors
                  DPCM Holdings, Inc.
                  DP Holdings Ltd.
                  CBO Investments Company
                  Windy City Investment Management Company
                  IPWC CBO Corporation
                  Seneca Capital Management LLC

Equity Investments
                  Beutel Goodman & Co. Ltd.
                  The Greystone Group LLC
                  DP/Inverness LLC; DPI Partners I; DPI Partners II
                  FA Capital LLC; FA Investors I, L.P.
<PAGE>   93
                                  SCHEDULE 5.17

                                Insurance Matters

                                      NONE
<PAGE>   94
                                  SCHEDULE 7.1

                                 Permitted Liens

                                      NONE
<PAGE>   95
                                  SCHEDULE 7.4

                             Permitted Indebtedness

Loan from Phoenix Home Life Mutual Insurance Company in the original principal
amount of $30,103,337.50 due September 4, 1997.

Notes to three former members of GMG/Seneca Capital Management LLC in the amount
of $2,209,828, $4,366,466, and $2,920,648, respectively, due January 2, 2000.
<PAGE>   96
                                  SCHEDULE 7.7

                             Contingent Obligations

                                      NONE
<PAGE>   97
                                  SCHEDULE 15.2

                    EURODOLLAR AND DOMESTIC LENDING OFFICES,
                              ADDRESSES FOR NOTICES

THE BANK OF NEW YORK, as
   Administrative Agent

The Bank of New York
One Wall Street
New York, New York 10286
Attention: Melanie Shorofsky

Telephone:(212) 635-6482
Facsimile:(212) 809-9520

With A Copy To:

William Fahey
The Bank of New York
One Wall Street
New York, New York 10286

Telephone:(212) 635-4690
Facsimile:(212) 635-6365

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

Bank of America National Trust
and Savings Association

231 South LaSalle Street
Chicago, Illinois 60697
Attention: Lizet Flores

Telephone: (312) 828-6642
Facsimile: (312) 987-0889

                                     15.2-1
<PAGE>   98
THE BANK OF NEW YORK,
   as a Bank

Domestic and Eurodollar
 Lending Office:

One Wall Street
New York, New York 10286
Attention: Melanie Shorofsky

Telephone: (212) 635-6482
Facsimile: (212) 809-9520

With A Copy To:

William Fahey
The Bank of New York
One Wall Street
New York, New York 10286

Telephone: (212) 635-4690
Facsimile: (212) 635-6365

Notices (other than Borrowing notices and Notices of Conversion/Continuation):

One Wall Street
New York, New York 10286
Attention: Melanie Shorofsky

Telephone: (212) 635-6482
Facsimile: (212) 809-9520

BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
   as a Bank

Domestic and Eurodollar Lending Office:

231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Denise Stewart

Telephone: (312) 828-6552
Facsimile: (312) 974-9626

                                     15.2-2
<PAGE>   99
Notices (other than Borrowing notices and Notices of
    Conversion/Continuation):

231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Elizabeth Bishop

Telephone: (312) 828-6550

FLEET NATIONAL BANK,
   as a Bank

Domestic and Eurodollar
   Lending Office:

777 Main Street
CT/MO/0250
Hartford, Connecticut 06115
Attention: Icy L. Mounds
                   Insurance Industry Dept.

Telephone: (860) 986-4616
Facsimile: (860) 986-1094

Notices (other than Borrowing notices and Notices of Conversion/Continuation):

777 Main Street
CT/MO/0250
Hartford, Connecticut 06115
Attention:   Julianna Dalton,
             Insurance Industry Dept.

Telephone: (860)986-3127
Facsimile: (860)986-1264

BANK OF MONTREAL,
   as a Bank

Domestic and Eurodollar
   Lending Office:

115 South LaSalle Street
12th Floor West
Chicago, Illinois 60603

                                     15.2-3
<PAGE>   100
Attention: Lora Benton

Telephone: (312) 750-3844
Facsimile: (312) 750-4345

Notices (other than Borrowing notices and Notices of Conversion/Continuation):

115 South LaSalle Street
12th Floor West
Chicago, Illinois 60603
Attention: Charles Reed, Corporate Banking

Telephone: (312) 750-5912
Facsimile: (312) 845-2199

SUNTRUST BANK, ATLANTA,
   as a Bank

Domestic and Eurodollar
   Lending Office
25 Park Place
Atlanta, Georgia 30303
Attention: Kathy Dorsey,
           U.S. Corporate Banking - Operations

Telephone: (404) 588-8375
Facsimile: (404) 658-4905

Notices (other than Borrowing notices and Notices of Conversion/Continuation):

711 5th Avenue
16th Floor
New York, New York 10022
Attention: Jamie McQueen - Banking Officer,
           U.S. Corporate Banking - Northeast Division

Telephone: (212) 583-2611
Facsimile: (212) 371-9386

STATE STREET BANK AND TRUST COMPANY,
   as a Bank

Domestic and Eurodollar
   Lending Office:

108 Myrtle Street

                                     15.2-4
<PAGE>   101
North Quincy, Massachusetts 02171
Attention: Toni Pace, Credit Services

Telephone: (617) 985-4685
Facsimile: (617) 537-2580

Notices (other than Borrowing notices and Notices of Conversion/Continuation):

108 Myrtle Street
North Quincy, Massachusetts 02171

Attention: Edward M. Anderson, Credit Services

Telephone: (617) 985-5301
Facsimile: (617) 537-2580

DEUTSCHE BANK AG,
   as a Bank

Domestic and Eurodollar
   Lending Office:

Deutsche Bank AG
31 West 52nd Street
New York, New York 10019
Attention: Cheryl Mandelbaum

Telephone: (212) 469-4092
Facsimile: (212) 469-4138

Notice (other than Borrowing notices and Notices of Conversion/Continuation):

Deutsche Bank AG
31 West 52nd Street
New York, New York 10019
Attention: Eckhard Osenberg, AVP

Telephone: (212) 469-8242
Facsimile: (212) 469-8366

CREDIT LYONNAIS NEW YORK BRANCH,
   as a Bank

Domestic and Eurodollar
   Lending Office:

Exchange Plaza

                                     15.2-5
<PAGE>   102
Floor 27
53 State Street
Boston, MA 02109
Attention: Lisa Leahy

Telephone: (617) 723-2615
Facsimile: (617) 723-4803

Notice (other than Borrowing notices and Notices of Conversion/Continuation):

Exchange Plaza
Floor 27
53 State Street
Boston, MA 02109
Attention: Lisa Turilli

Telephone: (617) 723-2615
Facsimile: (617) 723-4803

                                     15.2-6
<PAGE>   103
                                    EXHIBIT A

                               NOTICE OF BORROWING

Date:  _________________________, ____________

To:      The Bank of New York, as Administrative Agent for the Banks parties to
         the Credit Agreement dated as of                , 1997 (as extended,
         renewed, amended or restated from time to time, the "Credit Agreement")
         among Phoenix Duff & Phelps Corporation, Phoenix Home Life Mutual
         Insurance Company, certain Banks which are signatories thereto, Bank of
         America National Trust and Savings Association, as Syndication and
         Documentation Agent and The Bank of New York, as Administrative Agent

Ladies and Gentlemen:

         The undersigned, Phoenix Duff & Phelps Corporation (the "Company"),
refers to the Credit Agreement, the terms defined therein being used herein as
therein defined, and hereby gives you notice irrevocably, pursuant to Section
2.3 of the Credit Agreement, of the Borrowing of Facility A Loans specified
below:

                  1.  The Business Day of the proposed Borrowing is
________________________________________  , 19____   .

                  2.  The aggregate amount of the proposed Borrowing is
 $_______________________________________ .

                  3. The Borrowing is to be comprised of $_______ of [Base Rate]
[CD Rate] [Eurodollar Rate] Loans.

                  4. The duration of the Interest Period for the [CD Rate Loans]
[Eurodollar Rate Loans] included in the Borrowing shall be [_____ days] [_____
months].

         The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:

                  (a) the representations and warranties of the Company
         contained in Article V of the Credit Agreement are true and correct as
         though made on and as of such date (except to the extent such
         representations and warranties relate to an earlier date, in which case
         they are true and correct as of such date);
<PAGE>   104
                  (b) no Default, Event of Default, Guarantor Default or
         Guarantor Event of Default has occurred and is continuing, or would
         result from such proposed Borrowing; and

                  (c) The proposed Borrowing will not cause the aggregate
         principal amount of all outstanding Facility A Loans to exceed the
         combined Facility A Commitments of the Banks.

                  (d) The PCC Acquisition has occurred.]

                                                 PHOENIX DUFF & PHELPS
                                                    CORPORATION
                                                 By: __________________________

                                                 Title: _______________________

                                      A-2
<PAGE>   105
                                 EXHIBIT B

                        NOTICE OF CONVERSION/CONTINUATION

                                           Date: _________________________, ____

To:      The Bank of New York, as Administrative Agent for the Banks parties to
         the Credit Agreement dated as of _________, 1997 (as extended, renewed,
         amended or restated from time to time, the "Credit Agreement") among
         Phoenix Duff & Phelps Corporation, Phoenix Home Life Mutual Insurance
         Company, certain Banks which are signatories thereto, Bank of America
         National Trust and Savings Association, as Syndication and
         Documentation Agent and The Bank of New York, as Administrative Agent

Ladies and Gentlemen:

         The undersigned, Phoenix Duff & Phelps Corporation (the "Company"),
refers to the Credit Agreement, the terms defined therein being used herein as
therein defined, and hereby gives you notice irrevocably, pursuant to Section
2.6 of the Credit Agreement, of the [conversion] [continuation] of the Loans
specified herein, that:

         1. The Conversion/Continuation Date is ___________ , 19 ___.

         2. The Loans to be [converted] [continued] are Facility [A][B] Loans.

         3. The aggregate amount of the Loans to be [converted] [continued] is
$____________ .

         4. The Loans are to be [converted into] [continued as] [CD Rate]
[Eurodollar Rate] [Base Rate] Loans.

         5. [If applicable:] The duration of the Interest Period for the Loans
included in the [conversion] [continuation] shall be [_____ days] [____ months].

                                        PHOENIX DUFF & PHELPS
                                        CORPORATION

                                        By: _____________________________

                                        Title:___________________________
<PAGE>   106
                                    EXHIBIT C

                        PHOENIX DUFF & PHELPS CORPORATION
                             COMPLIANCE CERTIFICATE

                             Financial Statement Date: ____________________, 199

         Reference is made to that certain Credit Agreement dated as of

___________, 1997 (as extended, renewed, amended or restated from time to time,
the "Credit Agreement") among Phoenix Duff & Phelps Corporation (the "Company"),
Phoenix Home Life Mutual Insurance Company, the several financial institutions
from time to time parties to this Credit Agreement (the "Banks"), Bank of
America National Trust and Savings Association, as Syndication and Documentation
Agent and The Bank of New York, as Administrative Agent. Unless otherwise
defined herein, capitalized terms used herein have the respective meanings
assigned to them in the Credit Agreement.

         The undersigned Responsible Officer of the Company, hereby certifies as
of the date hereof that he/she is the _____________________ of the Company, and
that, as such, he/she is authorized to execute and deliver this Certificate to
the Banks and the Administrative Agent on the behalf of the Company and its
consolidated Subsidiaries, and that:

         1. Enclosed herewith is a copy of the [annual audit/quarterly] report
of the Company as at _______ (the "Computation Date") which report fairly
presents the financial condition and results of operation of the Company and its
Subsidiaries, as of the Computation Date.

         2. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and has made, or has caused to be made under his/her
supervision, a detailed review of the transactions and conditions (financial or
otherwise) of the Company during the accounting period covered by the attached
financial statements.

         3. To the best of the undersigned's knowledge, the Company, during such
period, has observed, performed or satisfied all of its covenants and other
agreements, and satisfied every condition in the Credit Agreement to be
observed, performed or satisfied by the Company, and the undersigned has no
knowledge of any Default, Event of Default, Company Default, Company Event of
Default, Guarantor Default or Guarantor Event of Default.

         4. The following financial covenant analyses and information set forth
on Schedule 1 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
____________________________________________ , 199____ .
<PAGE>   107
                                      PHOENIX DUFF & PHELPS CORPORATION

                                      By: ___________________________________

                                      Title: ________________________________

                                      C-2
<PAGE>   108
                                   Schedule 1

<TABLE>
<S>                                                                                         <C>
1.       Guarantor's Financial Covenants
      A.       Section 8.1 -- Total SAP Adjusted Capital
      1.       Unrestricted Surplus Accounts                                                $___________
      2.       Asset Valuation Reserve                                                      $___________
      3.       Surplus Notes                                                                $___________
      4.       SAP Capital (Sum of Items 1, 2 and
                3)                                                                          $___________
      5.       Reserves for Losses On Real Estate
                                                                                            $___________
      6.       Total SAP Adjusted Capital
                 (Sum of Items 4 and 6)                                                     $___________
      7.       $825,000,000                                                                 $825,000,000
      8.       Net Income for last quarter                                                  $___________
      9.       50% of Item 8                                                                $___________
      10.      Sum of Item 9 for last
               Compliance Certificate plus
               Item 10 of last Compliance
               Certificate                                                                  $___________

      11.      Required Minimum (Sum of                                                     $___________
               Items 7, 9 and 10)
      B.       Section 8.2 -- Invested Assets -- NAIC Ratings 3 through 6
               1.     Net Invested Assets                                                   $___________
               2.     Maximum amount of notes,
                bonds and other obligations
                classified as bonds which bear
                NAIC Ratings from three to six,
                both inclusive
                (5.5% of Item 1)                                                            $___________
</TABLE>

                                      C-3
<PAGE>   109
<TABLE>
<S>                                                                                         <C>
               3.     Amount of such assets so rated                                        $___________
      C.       Section 8.3 -- Invested Assets -- NAIC Ratings 5 through 6
               1.     Total SAP Adjusted Capital
                (Item A6 above)                                                             $___________
               2.     Maximum amounts of notes, bonds, and other
               obligations classified as bonds which bear NAIC Ratings
               from five to six, both inclusive
               (13% of Item 1)
                                                                                            $___________

               3.     Amount of such assets so rated                                        $___________
      D.       Real Estate
               1.     Real estate and real estate acquired in satisfaction of
                indebtedness (exclusive of either category occupied by the
                Guarantor or its Primary Insurance Subsidiaries for use in
                their business)

                                                                                            $___________
               2.     Mortgage Loans                                                        $___________
               3.     Sum of Items 1 and 2                                                  $___________
               4.     Permitted Real Estate (32% of Item B1 above)
                                                                                            $___________
      E.       Section 8.5 -- Risk-Based Capital Ratio
               1.     Adjusted Capital                                                      $___________
               2.     Authorized Control Level Risk-Based Capital
                                                                                            $___________
               3.     Company Action Level (200% of Item 2)
                                                                                            $___________
               4.     Risk Based Capital Ratio (Item 1 to Item 3)
                                                                                            __ to 1.0
               5.     Required Minimum                                                      1.75 to 1.0
      F.       Section 8.6 -- Non-Performing Real Estate
               1.     Investment in non-performing real estate (prior to
               reserves or write offs)                                                      $___________
</TABLE>

                                      C-4
<PAGE>   110
<TABLE>
<S>                                                                                         <C>
               2.     Permitted investment
                (30% of Item A6)                                                            $___________
      G.       Section 8.7 -- Indebtedness to Capital
               1.     Indebtedness                                                          $___________
               2.     Maximum permitted Indebtedness (75% of Item A6)
                                                                                            $___________
</TABLE>

                                      C-5
<PAGE>   111
<TABLE>

<S>                                                                                         <C>
2.  Company's Financial Covenants
      A.       Section 9.1 -- Shareholders' Equity
               1.     Shareholders' equity                                                  $___________
               2.     Preferred stock                                                       $___________
               3.     Item 1 minus Item 2                                                   $___________
               4.     $165,000,000                                                          $165,000,000
               5.     Net income for last quarter                                           $___________
               6.     50% of Item 5                                                         $___________
               7.     Sum of Item 6 of last Compliance Certificate plus Item
                7 of last Compliance Certificate                                             $___________
               8.     Required Minimum
                (Sum of Items 4, 6 and 7)                                                   $___________
      B.       Section 9.2 -- EBITDA to Interest Ratio
               1.     Earnings                                                              $___________
               2.     Interest                                                              $___________
               3.     Taxes                                                                 $___________
               4.     Depreciation                                                          $___________
               5.     Amortization                                                          $___________
               6.     EBITDA (Sum of Items 1, 2, 3, 4 and 5)
                                                                                            $___________
               7.     Interest Expense                                                      $___________
               8.     Ratio (Item 6 to Item 7)                                              ____ to 1.0
               a.     Required Ratio                                                        4.0 to 1.0
      C.       Section 9.3 -- Total Debt to Capital Ratio
               1.     Indebtedness                                                          $___________
               2.     50% of Subordinated Debt which has been converted from preferred
                stock outstanding on the Closing Date                                       $___________
               3.     Item 1 less the lesser of Item 2 or $40,000,000
                                                                                            $___________
               4.     Item 1 minus Item 3                                                   $___________
               5.     Shareholders' equity                                                  $___________
               6.     Ratio of Item 4 to Item 5                                             _____%
               7.     Maximum permitted ratio                                               _____%
</TABLE>

                                      C-6
<PAGE>   112
<TABLE>
<S>                                                                                         <C>
      D.       Section 9.4 -- Senior Debt to EBITDA Ratio
               1.     Indebtedness                                                          $___________
               2.     Subordinated Debt                                                     $___________
               3.     Senior Debt (Item 1 minus Item 2)                                     $___________
               4.     EBITDA (Item B6)                                                      $___________
               5.     Ratio (Item 3 to Item 4)                                              ____ to 1.0
               6.     Maximum permitted ratio                                               ____ to 1.0
</TABLE>

                                      C-7
<PAGE>   113
                                   EXHIBIT D-1

                      FORM OF OPINION OF BORROWER'S COUNSEL

                               _____________, 1997

To:      Bank of America National Trust and Savings Association, as Syndication
         and Documentation Agent, The Bank of New York, as Administrative Agent
         and the other Banks parties from time to time to the Credit Agreement
         hereinafter referred to

         Re:      Credit Agreement dated as of __________, 1997 among Phoenix
                  Duff & Phelps Corporation (the "Company"), Phoenix Home Life
                  Mutual Insurance (the "Guarantor"), Bank of America National
                  Trust and Savings Association, as Syndication and
                  Documentation Agent, The Bank of New York, as Administrative
                  Agent and certain other financial institutions

Ladies and Gentlemen:

         The undersigned has acted as counsel for the Company in connection with
the negotiation, execution and delivery of the Credit Agreement and the other
Loan Documents. This opinion letter is delivered pursuant to Section 4.1(a)(iv)
of the Credit Agreement. Unless otherwise defined herein or the context
otherwise requires, all capitalized terms used in this opinion letter shall have
the respective meanings assigned to them in the Credit Agreement.

                                  [Assumptions]

         Based upon and subject to the foregoing, I am of the opinion that

         1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, and has
full corporate power and authority to own and hold under lease its property and
to conduct its business substantially as currently conducted by it. The Company
has full corporate power and authority to obtain the Loans and to enter into and
perform its obligations under each Loan Document.

         2. The Company's execution, delivery and performance of the Loan
Documents are within the Company's corporate powers, have been duly authorized
by all necessary corporate action, and do not:

         A. contravene the Company's Certificate of Incorporation or Bylaws;

         B. contravene any Requirement of Law which is applicable to
transactions of the type provided for in the Loan Documents (a "Relevant Law");

         C. to the best of my knowledge, contravene any order, injunction, writ
or decree of any court or any other Governmental Authority (a "Relevant Order");
<PAGE>   114
         D. conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which the Company is a party; or

         E. result in, or require the creation or imposition of, any Lien on the
Company's property under any Relevant Law or Relevant Order.

         3. No authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority is required for the Company's due
execution, delivery or performance of the Loan Documents, to which it is a
party.

         4. The Loan Documents constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms except that the enforceability thereof may be limited by
(a) applicable bankruptcy, insolvency, fraudulent conveyance, liquidation,
rehabilitation, conservation, supervision, reorganization, moratorium or similar
laws affecting the rights and remedies of creditors generally, and (b) equitable
principles of general applicability, regardless of whether enforcement is sought
in a proceeding in equity or at law.

I am admitted to practice law in the State of Connecticut. Except as noted, for
purposes of this opinion, and to the extent necessary I have assumed that the
law of the State of New York is identical to the law of the State of
Connecticut. Nothing contained herein shall be deemed to be an opinion as to any
law other than the laws of the State of Connecticut, the State of Delaware and
any applicable federal laws of the United States of America, except as set forth
in the immediately following sentence. Accordingly, I express no opinion as to
the laws of any state or jurisdiction other than the State of Connecticut, the
State of New York (as qualified herein) and the United States of America.

                                [Qualifications]

This opinion letter is rendered solely for the Agents' and the Banks' benefit in
connection with the above transaction. Without my prior written consent, this
opinion letter may not be: (i) relied upon by any other party or for any other
purpose; (ii) quoted in whole or in part or otherwise referred to in any report
or document; or (iii) furnished (the original or copies thereof) to any party
except in connection with the enforcement of the Loan Documents by the Agents or
the Banks; provided, however, that copies of this opinion letter may be
furnished to regulatory authorities, assignees and participants in the Loans and
pursuant to the requirements of process.

                                                Very truly yours,

                                      D-2
<PAGE>   115
                                   EXHIBIT D-2

                     FORM OF OPINION OF GUARANTOR'S COUNSEL

                               _____________, 1997

To:      Bank of America National Trust and Savings Association, as Syndication
         and Documentation Agent, The Bank of New York, as Administrative Agent
         and the other Banks parties from time to time to the Credit Agreement
         hereinafter referred to

         Re:      Credit Agreement dated as of __________, 1997 among Phoenix
                  Duff & Phelps Corporation (the "Company"), Phoenix Home Life
                  Mutual Insurance (the "Guarantor"), Bank of America National
                  Trust and Savings Association, as Syndication and
                  Documentation Agent, The Bank of New York, as Administrative
                  Agent and certain other financial institutions________________

Ladies and Gentlemen:

         The undersigned has acted as counsel for the Company and the Guarantor
in connection with the negotiation, execution and delivery of the Credit
Agreement and the other Loan Documents. This opinion letter is delivered
pursuant to Section 4.1(a)(iv) of the Credit Agreement. Unless otherwise defined
herein or the context otherwise requires, all capitalized terms used in this
opinion letter shall have the respective meanings assigned to them in the Credit
Agreement.

         I have reviewed the corporate proceedings taken by the Guarantor in
connection with the Credit Agreement and the other Loan Documents. In addition,
I have examined and relied upon copies of such Credit Agreement, the Charter and
the Bylaws of the Guarantor as in effect on the date hereof, copies of
supporting resolutions adopted by the Board of Directors of the Guarantor in
connection with the Credit Agreement and the transactions contemplated thereby
and certificates executed by officers of the Guarantor addressing facts material
to my opinions as I consider necessary or appropriate for the basis of the
opinions expressed.

         In making the examination of such agreements and instruments in
connection with the opinions expressed herein, I have assumed the genuineness of
all signatures (other than those on behalf of the Guarantor) and the
authenticity of all documents submitted to me as originals and the conformity
with the originals of all documents submitted to me as copies and have further
assumed that each of the Banks has the corporate power to enter into and perform
its obligations under the Credit Agreement and have assumed with respect to each
of them due authorization by all requisite corporate action, due execution and
delivery and the valid and binding effect of such documents and agreements and
compliance by the Banks with applicable law. I am admitted to practice law only
in the State of Connecticut and as to matters involving New York law, I have
relied upon the review and analysis of another attorney within the Legal
Division of Phoenix Home Life Mutual Insurance Company who is admitted to
practice law in the State of New York.
<PAGE>   116
         Based upon and subject to the foregoing, I am of the opinion that

                  1. The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and has full corporate power and authority to own and hold under
lease its property and to conduct its business substantially as currently
conducted by it. The Guarantor has full corporate power and authority to enter
into and perform its obligations under each Loan Document to which it is a
party.

                  2. The Guarantor's execution, delivery and performance of the
Loan Documents to which it is a party are within the Guarantor's corporate
powers, have been duly authorized by all necessary corporate action, and do not:

                  A. contravene the Guarantor's Charter or Bylaws;

                  B. to the best of our knowledge, contravene any relevant law;

                  C. contravene any relevant order;

                  D. conflict with or result in any breach or contravention of,
or the creation of any Lien under, any document evidencing any Contractual
Obligation to which the Guarantor is a party; or

                  E. result in, or require the creation or imposition of, any
Lien on the Guarantor's property under any relevant law or relevant order.

                  3. No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority is required for the
Guarantor's due execution, delivery or performance of the Loan Documents to
which it is a party.

                  4. The Loan Documents to which the Guarantor is a party
constitute the legal, valid and binding obligations of the Guarantor,
enforceable against the Guarantor in accordance with their terms.

         With respect to matters of fact on which my opinion is based, I have
relied on appropriate certificates of public officials and officers of the
Guarantor and I have no reason to believe such certificates are inaccurate. My
opinion is limited to the laws of the United States of America and the State of
New York and Connecticut.

This opinion letter is rendered solely for the Agents' and the Banks' benefit in
connection with the above transaction. Without our prior written consent, this
opinion letter may not be: (i) relied upon by any other party or for any other
purpose; (ii) quoted in whole or in part or otherwise referred to in any report
or document; or (iii) furnished (the original or copies thereof) to any party
except in connection with the enforcement of the Loan Documents by the Agents or
the Banks; provided, however, that copies of this opinion letter may be
furnished to regulatory authorities, assignees and participants in the Loans and
pursuant to the requirements of process.

                                        Very truly yours,

                                     D-2-2
<PAGE>   117
                               EXHIBIT E

                  [FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT

                  This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of __________, ___ is made between
______________________________ (the "Assignor") and __________________________
(the "Assignee").

                                    RECITALS

                  WHEREAS, the Assignor is party to that certain Credit
Agreement dated as of _____________, 1997 (as amended, amended and restated,
modified, supplemented or renewed, the "Credit Agreement") among Phoenix Duff &
Phelps Corporation (the "Company"), Phoenix Home Life Mutual Insurance Company,
the several financial institutions from time to time party thereto (including
the Assignor, the "Banks"), Bank of America National Trust and Savings
Association, as Syndication and Documentation Agent, and The Bank of New York,
as Administrative Agent. Any terms defined in the Credit Agreement and not
defined in this Assignment and Acceptance are used herein as defined in the
Credit Agreement;

                  WHEREAS, as provided under the Credit Agreement, the Assignor
has committed to making Loans (the "Loans") to the Company in an aggregate
amount not to exceed $__________ (its "Commitments");

                  WHEREAS, the Assignor wishes to assign to the Assignee [part
of the] [all] rights and obligations of the Assignor under the Credit Agreement
in respect of its Commitments, [together with a corresponding portion of each of
its outstanding Loans,] in an amount equal to $__________ (the "Assigned
Amount") on the terms and subject to the conditions set forth herein and the
Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions;

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

         1.       Assignment and Acceptance.

                  (a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) __% (the "Assignee's Percentage
Share") of (A) the Commitments [and the Loans] of the Assignor and (B) all
related rights, benefits, obligations, liabilities and indemnities of the
Assignor under and in connection with the Credit Agreement and the Loan
Documents.

         [If appropriate, add paragraph specifying payment to Assignor by
Assignee of outstanding principal of, accrued interest on, and fees with respect
to, Loans assigned.]
<PAGE>   118
                  (b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Bank under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with Commitments in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank. It is the intent
of the parties hereto that the Commitments of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee; provided, however, the Assignor shall not relinquish its rights under
Sections 15.4 and 15.5 of the Credit Agreement to the extent such rights relate
to the time prior to the Effective Date.

                  (c) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignee's Commitments will be
$__________.

                  (d) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignor's Commitments will be
$__________.

         2. Payments.

                  (a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $__________,
representing the Assignee's Pro Rata Share of the principal amount of all Loans.

                  (b) The [Assignor] [Assignee] further agrees to pay to the
Administrative Agent a processing fee in the amount specified in Section 15.8 of
the Credit Agreement.

         3. Reallocation of Payments.

         Any interest, fees and other payments accrued to the Effective Date
with respect to the Commitments and Loans shall be for the account of the
Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Amount shall be for the account of
the Assignee. Each of the Assignor and the Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence
and pay to the other party any such amounts which it may receive promptly upon
receipt.

         4. Independent Credit Decision.

         The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements referred to in Section 6.1 of the Credit
Agreement, and such other documents and information as it has deemed appropriate
to make its own credit and legal analysis and decision to enter into this
Assignment and Acceptance; and (b) agrees that it will, independently and
without reliance upon the Assignor, either Agent or any other Bank and based on
such documents and information as it

                                      E-2
<PAGE>   119
shall deem appropriate at the time, continue to make its own credit and legal
decisions in taking or not taking action under the Credit Agreement.

         5. Effective Date; Notices.

                  (a) As between the Assignor and the Assignee, the effective
date for this Assignment and Acceptance shall be __________, 199__ (the
"Effective Date"); provided that the following conditions precedent have been
satisfied on or before the Effective Date:

                         (i) this Assignment and Acceptance shall be executed
and delivered by the Assignor and the Assignee;

                         (ii) the consent of the Company and the Administrative
Agent required for an effective assignment of the Assigned Amount by the
Assignor to the Assignee under Section 15.8 of the Credit Agreement shall have
been duly obtained and shall be in full force and effect as of the Effective
Date;

                         (iii) the Assignee shall pay to the Assignor all
amounts due to the Assignor under this Assignment and Acceptance; and

                         (iv) the processing fee referred to in Section 2(b)
hereof and in Section 15.8 of the Credit Agreement shall have been paid to the
Administrative Agent; and

                         (v) the Assignor shall have assigned and the Assignee
shall have assumed a percentage equal to the Assignee's Percentage Share of the
rights and obligations of the Assignor under the Credit Agreement (if such
agreement exists).

                  (b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Company and the Administrative
Agent for acknowledgment by the Administrative Agent, a Notice of Assignment
substantially in the form attached hereto as Schedule 1.

         6. Administrative Agent. [INCLUDE ONLY IF ASSIGNOR IS ADMINISTRATIVE
AGENT]

                  (a) The Assignee hereby appoints and authorizes the Assignor
to take such action as administrative agent on its behalf and to exercise such
powers under the Credit Agreement as are delegated to the Administrative Agent
by the Banks pursuant to the terms of the Credit Agreement.

                  (b) The Assignee shall assume no duties or obligations held by
the Assignor in its capacity as Administrative Agent under the Credit
Agreement.]

         7. Withholding Tax.

         The Assignee (a) represents and warrants to the Bank, the
Administrative Agent and the Company that under applicable law and treaties no
tax will be required to be withheld by the Bank with respect to any payments to
be made to the Assignee hereunder, (b) agrees to furnish

                                      E-3
<PAGE>   120
(if it is organized under the laws of any jurisdiction other than the United
States or any State thereof) to the Administrative Agent and the Company prior
to the time that the Administrative Agent or Company is required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein the Assignee claims entitlement to the benefits of a
tax treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms 4224
or 1001 upon the expiration of any previously delivered form or comparable
statements in accordance with applicable U.S. law and regulations and amendments
thereto, duly executed and completed by the Assignee, and (c) agrees to comply
with all applicable U.S. laws and regulations with regard to such withholding
tax exemption.

         8. Representations and Warranties.

                  (a) The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any Lien or other adverse claim; (ii) it
is duly organized and existing and it has the full power and authority to take,
and has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.

                  (b) The Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto. The Assignor makes no representation or warranty in connection with,
and assumes no responsibility with respect to, the solvency, financial condition
or statements of the Company or the Guarantor, or the performance or observance
by the Company or the Guarantor, of any of its respective obligations under the
Credit Agreement or any other instrument or document furnished in connection
therewith.

                  (c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings

                                      E-4
<PAGE>   121
or filings required by the Credit Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; and (iv) it is an
Eligible Assignee.

         9. Further Assurances.

         The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Company or the Administrative Agent, which may
be required in connection with the assignment and assumption contemplated
hereby.

         10. Miscellaneous.

                  (a) Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties hereto.
No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other or further breach thereof.

                  (b) All payments made hereunder shall be made without any
set-off or counterclaim.

                  (c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation, execution
and performance of this Assignment and Acceptance.

                  (d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.

                  (e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. The Assignor and
the Assignee each irrevocably submits to the non-exclusive jurisdiction of any
State or Federal court sitting in New York over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.

                  (f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED

                                      E-5
<PAGE>   122
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND
ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).

                           [Other provisions to be added as may be negotiated
                  between the Assignor and the Assignee, provided that such
                  provisions are not inconsistent with the Credit Agreement.]

         IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.

                                   [ASSIGNOR]
                                   By:___________________________________
                                   Title: _______________________________
                                   Address: _____________________________

                                   [ASSIGNEE]
                                   By:___________________________________
                                   Title: _______________________________
                                   Address: _____________________________

                                      E-6
<PAGE>   123
                                   SCHEDULE 1

                       NOTICE OF ASSIGNMENT AND ACCEPTANCE

                                                           _______________, 19__

The Bank of New York, as
         Administrative Agent

Phoenix Duff & Phelps Corporation

Ladies and Gentlemen:

         We refer to the Credit Agreement dated as of _________, 1997 (as
amended, amended and restated, modified, supplemented or renewed from time to
time the "Credit Agreement") among Phoenix Duff & Phelps Corporation, Phoenix
Home Life Mutual Insurance Company, the Banks referred to therein, Bank of
America National Trust and Savings Association, as Syndication and Documentation
Agent, and The Bank of New York, as Administrative Agent. Terms defined in the
Credit Agreement are used herein as therein defined.

         1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "Assignor") to _______________ (the
"Assignee") of _____% of the right, title and interest of the Assignor in and to
the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the Commitments of the Assignor and all
outstanding Loans made by the Assignor pursuant to the Assignment and Acceptance
Agreement attached hereto (the "Assignment and Acceptance").

         2. The Assignee agrees that, upon receiving the consent of the
Administrative Agent and, if applicable, the Company to such assignment, the
Assignee will be bound by the terms of the Credit Agreement as fully and to the
same extent as if the Assignee were the Bank originally holding such interest in
the Credit Agreement.

         3. The following administrative details apply to the Assignee:

           (A)      Notice Address:
                    Assignee name: ___________________________________

                    Address: _________________________________________

                    __________________________________________________

                    __________________________________________________

                    Attention: _______________________________________

                    Telephone: _______________________________________

                    Telecopier: ______________________________________

                                      E-7
<PAGE>   124
           (B)      Payment Instructions:

                    Account No.: _______________________________________

                                 At: ___________________________________

                    ____________________________________________________

                    ____________________________________________________

                    Reference: _________________________________________

                    Attention: _________________________________________

         4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance.

         IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.

                                     Very truly yours,

                                     [NAME OF ASSIGNOR]

                                     By: ________________________________

                                     Title: _____________________________

                                     [NAME OF ASSIGNEE]

                                     By:__________________________________

                                     Title:_______________________________

ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:

PHOENIX DUFF & PHELPS CORPORATION

By:

Title:  __________________________

                                      E-8
<PAGE>   125
THE BANK OF NEW YORK, as
        Administrative Agent

By: _____________________________________

Its: _____________________________________

                                      E-9
<PAGE>   126
                                    EXHIBIT F

                            [FORM OF] PROMISSORY NOTE

$______________________________________                     _____________, 1997

         FOR VALUE RECEIVED, the undersigned, Phoenix Duff & Phelps Corporation,
(the "Company"), hereby promises to pay to the order of    (the "Bank") the
principal sum of    Dollars ($   ) or, if less, the aggregate unpaid principal
amount of all Loans made by the Bank to the Company pursuant to the Credit
Agreement, dated as of ______________, 1997 (such Credit Agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time, being
hereinafter called the "Credit Agreement"), among the Company, Phoenix Home Life
Mutual Insurance Company, the Bank, the other banks parties thereto, Bank of
America National Trust and Savings Association, as Syndication and Documentation
Agent, and The Bank of New York, as Administrative Agent, on the dates and in
the amounts provided in the Credit Agreement. The Company further promises to
pay interest on the unpaid principal amount of the Loans evidenced hereby from
time to time at the rates, on the dates, and otherwise as provided in the Credit
Agreement.

         The Bank is authorized to endorse the amount and the date on which each
Loan is made, the maturity date therefor and each payment of principal with
respect thereto on the schedules annexed hereto and made a part hereof, or on
continuations thereof which shall be attached hereto and made a part hereof;
provided, that any failure to endorse such information on such schedule or
continuation thereof shall not in any manner affect any obligation of the
Company under the Credit Agreement and this Promissory Note (the "Note").

         This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement, which Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.

         Terms defined in the Credit Agreement are used herein with their
defined meanings therein unless otherwise defined herein. This Note shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of New York applicable to contracts made and to be performed entirely
within such State.

                                             PHOENIX DUFF & PHELPS CORPORATION

                                             By: ______________________________

                                             Title:____________________________
<PAGE>   127
||                                                           Schedule A to Note

                BASE RATE LOANS AND REPAYMENT OF BASE RATE LOANS
<TABLE>
<CAPTION>
 (1)           (2)                    (3)                   (4)                        (5)
Date           Facility of Base       Amount of Base Rate   Amount of Base Rate Loan   Notation Made By
               Rate Loan              Loan                  Repaid or Converted
<S>            <C>                    <C>                   <C>                        <C>

</TABLE>

                                      F-2
<PAGE>   128
                                                              Schedule B to Note

          EURODOLLAR RATE LOANS AND REPAYMENT OF EURODOLLAR RATE LOANS
<TABLE>
<CAPTION>
(1)            (2)                    (3)                  (4)                      (5)                     (6)
Date           Facility of            Amount of            Interest Period of       Amount of Eurodollar    Notation Made By
               Eurodollar Rate Loan   Eurodollar Rate      Eurodollar Rate Loan     Rate Loan Repaid or
                                      Loan                                          Converted
<S>            <C>                    <C>                  <C>                      <C>                     <C>

</TABLE>

                                      F-3
<PAGE>   129
                                                              Schedule C to Note

                  CD RATE LOANS AND REPAYMENT OF CD RATE LOANS

<TABLE>
<CAPTION>
 (1)           (2)                    (3)                   (4)                     (5)                     (6)
Date           Facility of CD Rate    Amount of CD Rate     Interest Period of CD   Amount of CD Rate       Notation Made By
               Loan                   Loan                  Rate Loan               Loan Repaid or
                                                                                    Converted
<S>            <C>                    <C>                  <C>                      <C>                     <C>

</TABLE>

                                      F-4
<PAGE>   130
                                    EXHIBIT G

                         NOTICE OF FACILITY A CONVERSION

                                  Date: ________________________________ ,______

To:      The Bank of New York, as Administrative Agent for the Banks parties to
         the Credit Agreement dated as of            , 1997 (as extended,
         renewed, amended or restated from time to time, the "Credit Agreement")
         among Phoenix Duff & Phelps Corporation, Phoenix Home Life Mutual
         Insurance Company, certain Banks which are signatories thereto, Bank of
         America National Trust and Savings Association, as Syndication and
         Documentation Agent, and The Bank of New York, as Administrative Agent

Ladies and Gentlemen:

         The undersigned, Phoenix Duff & Phelps Corporation and Phoenix Home
Life Mutual Insurance Company refer to the Credit Agreement, the terms defined
therein being used herein as therein defined, and hereby give you notice
irrevocably, pursuant to Section 2.5 of the Credit Agreement, of the conversion
of the Facility B Loans specified herein into Facility A Loans, that:

1.       The Facility Conversion Date is            , 19 .

2.       The aggregate amount of the Loans to be converted is $________________.

3.       The Loans to be converted are [CD Rate] [Eurodollar Rate] [Base Rate]
         Loans.

4.       [If applicable:] The Interest Period for the Loans to be converted ends
         on ________________ .

                                      PHOENIX DUFF & PHELPS CORPORATION

                                      By: __________________________________

                                      Title: _______________________________

                                      PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY

                                      By: __________________________________

                                      Title: _______________________________
<PAGE>   131
                                    EXHIBIT H

                         NOTICE OF FACILITY B CONVERSION

                                         Date: __________________________ ,_____

To:      The Bank of New York, as Administrative Agent for the Banks parties to
         the Credit Agreement dated as of           , 1997 (as extended,
         renewed, amended or restated from time to time, the "Credit Agreement")
         among Phoenix Duff & Phelps Corporation, Phoenix Home Life Mutual
         Insurance Company, certain Banks which are signatories thereto, Bank of
         America National Trust and Savings Association, as Syndication and
         Documentation Agent, and The Bank of New York, as Administrative Agent

Ladies and Gentlemen:

         The undersigned, Phoenix Duff & Phelps Corporation (the "Company"),
refers to the Credit Agreement, the terms defined therein being used herein as
therein defined, and hereby gives you notice irrevocably, pursuant to Section
2.4 of the Credit Agreement, of the conversion of the Facility A Loans specified
herein into Facility B Loans, that:

1.       The Facility Conversion Date is                , 19 .

2.       The aggregate amount of the Loans to be converted is $________________.

3.       The Loans to be converted are [CD Rate] [Eurodollar Rate] [Base Rate]
         Loans.

4.       [If applicable:] The Interest Period for the Loans to be converted ends
         on ________________ .

         The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the proposed Facility Conversion Date,
before and after giving effect thereto and to the application of the proceeds
therefrom:

                  (a) the representations and warranties of the Company
contained in Article V of the Credit Agreement are true and correct as though
made on and as of such date (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and correct as
of such date);

                  (b) no Default, Event of Default, Company Default or Company
Event of Default has occurred and is continuing, or would result from such
proposed conversion;

                  (c) the proposed conversion will not cause the aggregate
principal amount of all outstanding Facility B Loans to exceed the combined
Facility B Commitments of the Banks;
<PAGE>   132
                  (d) the Senior Debt to EBITDA Ratio of the Company and its
Subsidiaries as of ____________ was ___________ ; and

                  (e) the Total Debt to Capital Ratio, giving effect to the
proposed Facility B Loans, is _______________ .

                                           PHOENIX DUFF & PHELPS CORPORATION

                                       By: __________________________________

                                       Title: _______________________________

                                      H-2

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