364 Day] CREDIT AGREEMENT Dated as of October 24, 1996

EXECUTION COPY

[364 Day]

$200,000,000

CREDIT AGREEMENT

Dated as of October 24, 1996

among

TORCHMARK CORPORATION,

THE LENDERS

and

THE FIRST NATIONAL BANK OF CHICAGO,
as Agent

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS...................................................................... 1

ARTICLE II THE FACILITY..................................................................... 12
2.1. The Facility..................................................................... 12
2.1.1. Description of Facility.................................................. 12
2.1.2. Facility Amount.......................................................... 12
2.1.3. Availability of Facility................................................. 12
2.2. Ratable Advances................................................................. 13
2.2.1. Ratable Advances......................................................... 13
2.2.2. Ratable Advance Rate Options............................................. 13
2.2.3. Method of Selecting Types and Interest Periods for Ratable Advances...... 13
2.2.4. Conversion and Continuation of Outstanding Ratable Advances.............. 13
2.3. Competitive Bid Advances......................................................... 14
2.3.1. Competitive Bid Option................................................... 14
2.3.2. Competitive Bid Quote Request............................................ 14
2.3.3. Invitation for Competitive Bid Quotes.................................... 15
2.3.4. Submission and Contents of Competitive Bid Quotes........................ 15
2.3.5. Notice to Borrower....................................................... 16
2.3.6. Acceptance and Notice by Borrower........................................ 17
2.3.7. Allocation by Agent...................................................... 17
2.4. Availability of Funds............................................................ 17
2.5. Facility Fee; Reductions in Aggregate Commitment................................. 17
2.6. Minimum Amount of Each Advance................................................... 18
2.7. Optional Principal Payments...................................................... 18
2.8. Changes in Interest Rate, etc.................................................... 18
2.9. Rates Applicable After Default................................................... 18
2.10. Method of Payment................................................................ 18
2.11. Notes; Telephonic Notices........................................................ 19
2.12. Interest Payment Dates; Interest and Fee Basis................................... 19
2.13. Notification of Advances, Interest Rates, Prepayments and Commitment Reductions.. 19
2.14. Lending Installations............................................................ 20
2.15. Non-Receipt of Funds by the Agent................................................ 20
2.16. Withholding Tax Exemption........................................................ 20
2.17. Extension of Termination Date.................................................... 20

ARTICLE III CHANGE IN CIRCUMSTANCES.......................................................... 21
3.1. Yield Protection................................................................. 21
3.2. Changes in Capital Adequacy Regulations.......................................... 22
3.3. Availability of Types of Advances................................................ 22
3.4. Funding Indemnification.......................................................... 22

(i)

3.5. Lender Statements; Survival of Indemnity........................................ 22
3.6. Right to Substitute Lender...................................................... 23

ARTICLE IV CONDITIONS PRECEDENT............................................................ 23
4.1. Initial Advance................................................................. 23
4.2. Each Advance.................................................................... 24

ARTICLE V REPRESENTATIONS AND WARRANTIES.................................................. 24
5.1. Corporate Existence and Standing................................................ 24
5.2. Authorization and Validity...................................................... 25
5.3. No Conflict; Government Consent................................................. 25
5.4. Financial Statements............................................................ 25
5.5. Material Adverse Change......................................................... 25
5.6. Taxes........................................................................... 25
5.7. Litigation and Contingent Obligations........................................... 26
5.8. Subsidiaries.................................................................... 26
5.9. ERISA........................................................................... 26
5.10. Accuracy of Information......................................................... 26
5.11. Regulation U.................................................................... 26
5.12. Material Agreements............................................................. 26
5.13. Compliance With Laws............................................................ 27
5.14. Ownership of Properties......................................................... 27
5.15. Investment Company Act.......................................................... 27
5.16. Public Utility Holding Company Act.............................................. 27
5.17. Insurance Licenses.............................................................. 27

ARTICLE VI COVENANTS....................................................................... 27
6.1. Financial Reporting............................................................. 28
6.2. Use of Proceeds................................................................. 29
6.3. Certain Notices................................................................. 29
6.4. Conduct of Business............................................................. 30
6.5. Taxes........................................................................... 30
6.6. Insurance....................................................................... 30
6.7. Compliance with Laws............................................................ 30
6.8. Maintenance of Properties....................................................... 30
6.9. Inspection...................................................................... 30
6.10. Merger.......................................................................... 31
6.11. Sale of Assets.................................................................. 31
6.12. Sale and Leaseback.............................................................. 31
6.13. Investments and Acquisitions.................................................... 31
6.14. Liens........................................................................... 31
6.15. Consolidated Net Worth.......................................................... 31
6.16. Ratio of Consolidated Indebtedness to Consolidated Capitalization............... 31
6.17. Ratio of Consolidated Adjusted Net Income to Consolidated Interest Expense...... 31
6.18. Affiliates...................................................................... 31

(ii)

ARTICLE VII DEFAULTS........................................................................ 32

ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES.................................. 34
8.1. Acceleration.................................................................... 34
8.2. Amendments...................................................................... 34
8.3. Preservation of Rights.......................................................... 35

ARTICLE IX GENERAL PROVISIONS.............................................................. 35
9.1. Survival of Representations..................................................... 35
9.2. Governmental Regulation......................................................... 35
9.3. Taxes........................................................................... 35
9.4. Headings........................................................................ 35
9.5. Entire Agreement................................................................ 35
9.6. Several Obligations; Benefits of this Agreement................................. 35
9.7. Expenses; Indemnification....................................................... 36
9.8. Numbers of Documents............................................................ 36
9.9. Accounting...................................................................... 36
9.10. Severability of Provisions...................................................... 36
9.11. Nonliability of Lenders......................................................... 36
9.12. CHOICE OF LAW................................................................... 37
9.13. CONSENT TO JURISDICTION......................................................... 37
9.14. Confidentiality................................................................. 37
9.15. Nonreliance..................................................................... 37
9.16. WAIVER OF JURY TRIAL............................................................ 37
9.17. Disclosure...................................................................... 38

ARTICLE X THE AGENT....................................................................... 38
10.1. Appointment..................................................................... 38
10.2. Powers.......................................................................... 38
10.3. General Immunity................................................................ 38
10.4. No Responsibility for Loans, Recitals, etc...................................... 38
10.5. Action on Instructions of Lenders............................................... 38
10.6. Employment of Agents and Counsel................................................ 39
10.7. Reliance on Documents; Counsel.................................................. 39
10.8. Agent's Reimbursement and Indemnification....................................... 39
10.9. Notice of Default............................................................... 39
10.10. Rights as a Lender.............................................................. 39
10.11. Lender Credit Decision.......................................................... 40
10.12. Successor Agent................................................................. 40
10.13. Agent's Fee..................................................................... 40

ARTICLE XI SETOFF; RATABLE PAYMENTS........................................................ 40
11.1. Setoff.......................................................................... 41
11.2. Ratable Payments................................................................ 41

(iii)

ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS............................... 41
12.1. Successors and Assigns.......................................................... 41
12.2. Participations.................................................................. 41
12.2.1. Permitted Participants; Effect......................................... 41
12.2.2. Voting Rights.......................................................... 42
12.2.3. Benefit of Setoff...................................................... 42
12.3. Assignments..................................................................... 42
12.3.1. Permitted Assignments.................................................. 42
12.3.2. Effect; Effective Date................................................. 42
12.4. Dissemination of Information.................................................... 43
12.5. Tax Treatment................................................................... 43

ARTICLE XIII NOTICES......................................................................... 43
13.1. Giving Notice................................................................... 43
13.2. Change of Address............................................................... 43

ARTICLE XIV COUNTERPARTS.................................................................... 43

(iv)

Exhibit "A" - Note (Ratable Loan)

Exhibit "B" - Note (Competitive Bid Loan)

Exhibit "C" - Competitive Bid Quote Request

Exhibit "D" - Invitation for Competitive Bid Quotes

Exhibit "E" - Competitive Bid Quote

Exhibit "F" - Opinion

Exhibit "G" - Compliance Certificate

Schedule I to Compliance Certificate

Exhibit "H" - Assignment Agreement

Exhibit "I" - to Assignment Agreement
(Notice of Assignment)

Exhibit "II" - to Assignment Agreement (Consent and Release of the
Borrower and Agent)

Exhibit "I" - Transfer Instructions

Schedule "1" - Significant Subsidiaries

Schedule "2" - Insurance Licenses

Schedule "3" - Pricing Grid

(v)

CREDIT AGREEMENT

This Agreement, dated as of October 24, 1996, is among Torchmark
Corporation, the Lenders and The First National Bank of Chicago, as Agent. The
parties hereto agree as follows:

ARTICLE I

DEFINITIONS
-----------

As used in this Agreement:

"Absolute Rate" means, with respect to an Absolute Rate Loan made by a
given Lender for the relevant Absolute Rate Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender
and accepted by the Borrower.

"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Interest Period.

"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to Section 2.3.

"Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance, a period of not less than 30 and not more than 180 days commencing on a
Business Day selected by the Borrower pursuant to this Agreement. If such
Absolute Rate Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next succeeding Business
Day.

"Absolute Rate Loan" means a Loan which bears interest at the Absolute
Rate.

"Acquisition" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or all or substantially all
of the assets of any firm, corporation or division thereof, whether through
purchase of assets, merger or otherwise or (ii) directly or indirectly acquires
(in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
partnership interests of a partnership.

"Advance" means a borrowing hereunder consisting of the aggregate amount of
the several Loans made by some or all of the Lenders to the Borrower on the same
Borrowing Date, of the same Type (or on the same interest basis in the case of
Competitive Bid Advances) and, when applicable, for the same Interest Period and
includes a Competitive Bid Advance.

"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the

management or policies of the controlled Person, whether through ownership of
stock, by contract or otherwise.

"Agent" means The First National Bank of Chicago in its capacity as agent
for the Lenders pursuant to Article X, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article X.

"Agent Balance Transaction" means one or more receivables sales
transactions with respect to receivables arising out of advances made by AIL to
insurance agents in connection with life insurance policies underwritten by AIL.

"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.

"Agreement" means this credit agreement, as it may be amended, modified or
restated and in effect from time to time.

"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
those used in preparing the financial statements referred to in Section 5.4.

"AIL" means American Income Life Insurance Company, an Indiana insurance
company.

"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day and (ii) the sum
of Federal Funds Effective Rate for such day plus 1/2% per annum.

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

"Applicable Eurodollar Margin" means, at any time, the percentage
determined in accordance with the Pricing Grid at such time. The Applicable
Eurodollar Margin shall change as and when the Borrower Debt Rating changes.
The initial Applicable Eurodollar Margin shall be .165%.

"Applicable Facility Fee Percentage" means, at any time, the percentage
determined in accordance with the Pricing Grid at such time. The Applicable
Facility Fee Percentage shall change as and when the Borrower Debt Rating
changes. The initial Applicable Facility Fee Percentage shall be .06%.

"Article" means an article of this Agreement unless another document is
specifically referenced.

Page 2

"Authorized Officer" means any of the Chairman, Vice Chairman, President,
Chief Financial Officer, Chief Accounting Officer, Treasurer, any Vice President
or any Assistant Treasurer of the Borrower, acting singly.

"Borrower" means Torchmark Corporation, a Delaware corporation, and its
successors and assigns.

"Borrower Debt Rating" means the senior unsecured long term debt (without
credit enhancement) rating of the Borrower as determined by a rating agency
identified on the Pricing Grid.

"Borrowing Date" means a date on which an Advance is made hereunder.

"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago and New York for the conduct of substantially all
of their commercial lending activities.

"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.

"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.

"Change" means (i) any change after the date of this Agreement in the Risk-
Based Capital Guidelines for banks or (ii) any adoption of or change in any
other law, governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the force of law)
after the date of this Agreement which affects the amount of capital required or
expected to be maintained by any Lender or any Lending Installation or any
corporation controlling any Lender.

"Change in Control" means 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 outstanding shares of voting stock of the
Borrower.

"Closing Date" means October 24, 1996.

"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

"Commitment" means, for each Lender, the obligation of such Lender to make
Loans not exceeding the amount set forth opposite its signature below or as set
forth in any Notice of Assignment relating to any assignment that has become
effective pursuant to Section 12.3.2, as such amount may be modified from time
to time pursuant to the terms hereof.

Page 3

"Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Interest Period.

"Competitive Bid Borrowing Notice" is defined in Section 2.3.6.

"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute Rate
Loan, or both, as the case may be.

"Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Base Rate.

"Competitive Bid Note" means a promissory note in substantially the form of
Exhibit "B" hereto, with appropriate insertions, duly executed and delivered to
the Agent by the Borrower for the account of a Lender and payable to the order
of such Lender, including any amendment, modification, renewal or replacement of
such promissory note.

"Competitive Bid Quote" means a Competitive Bid Quote substantially in the
form of Exhibit "E" hereto completed and delivered by a Lender to the Agent in
accordance with Section 2.3.4.

"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of Exhibit "C" hereto completed and delivered by the
Borrower to the Agent in accordance with Section 2.3.2.

"Condemnation" is defined in Section 7.8.

"Consolidated Adjusted Net Income" means, for any period of calculation,
Consolidated Net Income plus (to the extent deducted in determining Consolidated
Net Income) (i) the provision for taxes in respect of, or measured by, income or
excess profits and (ii) Consolidated Interest Expense, in each case calculated
for such period for the Borrower and its Subsidiaries on a consolidated basis in
accordance with Agreement Accounting Principles.

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

"Consolidated Indebtedness" means the Indebtedness of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with Agreement
Accounting Principles.

"Consolidated Interest Expense" means, for any period of calculation,
interest expense, whether paid or accrued, of the Borrower and its Subsidiaries
calculated on a consolidated basis in accordance with Agreement Accounting
Principles.

"Consolidated Net Income" means, for any period of calculation, the net
income of the Borrower and the Subsidiaries calculated on a consolidated basis
in accordance with Agreement Accounting Principles consistently applied.

Page 4

provided, however, that the effect of the application of FAS 115 shall be
-------- -------
excluded when computing Consolidated Net Worth.

"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a Letter of Credit, but
excluding (i) the endorsement of instruments for deposit or collection in the
ordinary course of business, (ii) the Payment and Guarantee Agreement and (iii)
obligations arising in connection with the Agent Balance Transaction.

"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.

"Conversion/Continuation Notice" is defined in Section 2.2.4.

"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when and
as said corporate base rate changes. The Corporate Base Rate is a reference rate
and does not necessarily represent the lowest or best rate of interest actually
charged to any customer. First Chicago may make commercial loans or other loans
at rates of interest at, above or below the Corporate Base Rate.

"Default" means an event described in Article VII.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.

"Eurodollar Advance" means a Eurodollar Bid Rate Advance or a Eurodollar
Ratable Advance, or both, as the case may be.

"Eurodollar Auction" means a solicitation of Competitive Bid Quotes setting
forth Eurodollar Bid Rates pursuant to Section 2.3.

"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the rate determined by the Agent to be the
rate at which deposits in U.S. dollars are offered by First Chicago to first-
class banks in the London interbank market at approximately 11 a.m. (London
time) two Business Days prior to the first day of such Eurodollar Interest
Period, in the approximate amount of First Chicago's relevant Eurodollar Ratable
Loan (or in the case of a Eurodollar Bid Rate

Page 5

Advance, in an amount comparable to the amount of such Advance) and having a
maturity approximately equal to such Eurodollar Interest Period.

"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate Loan
made by a given Lender for the relevant Eurodollar Interest Period, the sum of
(i) the Eurodollar Base Rate and (ii) the Competitive Bid Margin offered by such
Lender and accepted by the Borrower.

"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which bears
interest at a Eurodollar Bid Rate.

"Eurodollar Bid Rate Loan" means a Loan which bears interest at the
Eurodollar Bid Rate.

"Eurodollar Interest Period" means, with respect to a Eurodollar Ratable
Advance or a Eurodollar Bid Rate Advance, a period of one, two, three or six
months commencing on a Business Day selected by the Borrower pursuant to this
Agreement. Such Eurodollar Interest Period shall end on (but exclude) the day
which corresponds numerically to such date one, two, three or six months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Eurodollar Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If a Eurodollar Interest Period would
otherwise end on a day which is not a Business Day, such Eurodollar Interest
Period shall end on the next succeeding Business Day, provided, however, that if
said next succeeding Business Day falls in a new month, such Eurodollar Interest
Period shall end on the immediately preceding Business Day.

"Eurodollar Loan" means a Eurodollar Ratable Loan or Eurodollar Bid Rate
Loan, or both, as the case may be.

"Eurodollar Ratable Advance" means an Advance which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to Section 2.2.3.

"Eurodollar Ratable Loan" means a Loan which bears interest at a Eurodollar
Rate requested by the Borrower pursuant to Section 2.2.3.

"Eurodollar Rate" means, with respect to a Eurodollar Ratable Advance for
the relevant Eurodollar Interest Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by
(b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus (ii) the Applicable Eurodollar Margin.
The Eurodollar Rate shall be rounded to the next higher multiple of 1/16 of 1%
if the rate is not such a multiple.

"Existing Credit Agreements" means (i) that certain 364 Day Credit
Agreement dated as of December 6, 1994 among the Borrower, First Chicago, as
agent, and the lenders party thereto, as amended and (ii) that certain 5 Year
Credit Agreement dated as of December 6, 1994 among the Borrower, First Chicago,
as agent, and the lenders party thereto.

Page 6

is not a Business Day, for the immediately preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations at approximately 10
a.m. (Chicago time) on such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by the Agent in its
sole discretion.

"Financial Statements" is defined in Section 5.4.

"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.

"Floating Rate Advance" means an Advance which bears interest at the
Alternate Base Rate.

"Floating Rate Loan" means a Ratable Loan which bears interest at the
Alternate Base Rate.

"Governmental Authority" means the federal government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
including, without limitation, any board of insurance, insurance department or
insurance commissioner.

"Indebtedness" of a Person means, without duplication, such Person's (i)
obligations for borrowed money, (ii) obligations representing the deferred
purchase price of Property or services (excluding accounts payable arising in
the ordinary course of such Person's business payable on terms customary in the
trade and obligations of Insurance Subsidiaries arising under insurance or
annuity products), (iii) obligations, whether or not assumed, secured by Liens
or payable out of the proceeds or production from property now or hereafter
owned or acquired by such Person, (iv) obligations which are evidenced by notes,
acceptances, or similar instruments, (v) Capitalized Lease Obligations, (vi) net
liabilities under interest rate swap, exchange or cap agreements, and (vii)
Contingent Obligations, but excluding any indebtedness of the Borrower arising
under or in connection with the Series A Preferred Securities Loan Agreement.

"Insurance Subsidiary" means any Subsidiary of the Borrower which is
engaged in the life, health or accident insurance business.

"Interest Period" means a Eurodollar Interest Period or an Absolute Rate
Interest Period.

"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable arising
in the ordinary course of business on terms customary in the trade), deposit
account or contribution of capital by such Person to any other Person or any
investment in, or purchase or other acquisition of, the stock, partnership
interests, notes, debentures or other securities of any other Person made by
such Person.

"Invitation for Competitive Bid Quotes" means an Invitation for Competitive
Bid Quotes substantially in the form of Exhibit "D" hereto, completed and
delivered by the Agent to the Lenders in accordance with Section 2.3.3.

Page 7

"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.

"Lending Installation" means, with respect to a Lender or the Agent, any
office, branch, subsidiary or affiliate of such Lender or the Agent.

"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.

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

"Lien" means any lien (statutory or other), security interest, mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, the interest of a
vendor or lessor under any conditional sale, Capitalized Lease or other title
retention agreement but excluding rights in agent balances which are sold in an
Agent Balance Transaction).

"Loan" means, with respect to a Lender, such Lender's portion of any
Advance and "Loans" means, with respect to the Lenders, the aggregate of all
Advances.

"Loan Documents" means this Agreement, the Notes and the other documents,
certificates and agreements contemplated hereby and executed by the Borrower in
favor of the Agent or any Lender.

"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Agent or the Lenders thereunder.

"Modified Required Lenders" means Lenders in the aggregate having at least
75% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 75% of the aggregate
unpaid principal amount of the outstanding Advances.

"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.

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

Page 8

"Notes" means, collectively, the Competitive Bid Notes and the Ratable
Notes; and "Note" means any one of the Notes.

"Notice of Assignment" is defined in Section 12.3.2.

"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Notes, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the Lenders or to any
Lender, the Agent or any indemnified party hereunder arising under the Loan
Documents.

"Participants" is defined in Section 12.2.1.

"Payment and Guarantee Agreement" means the Payment and Guarantee Agreement
dated October 11, 1994, issued by the Borrower for the benefit of the holders of
the Series A Preferred Securities, without giving effect to any amendments
thereto.

"Payment Date" means the last day of each March, June, September and
December.

"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.

"Permitted Acquisition" means the Acquisition of any Person which has been
approved and recommended by the board of directors (or the functional equivalent
thereof) of the Person being acquired.

"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency, department or
instrumentality thereof.

"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.

"Pricing Grid" means the pricing grid attached hereto as Schedule "3".

"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.

"Purchasers" is defined in Section 12.3.1.

"Ratable Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Ratable Loans made by the Lenders to the Borrower at the
same time, of the same Type and for the same Interest Period.

"Ratable Borrowing Notice" is defined in Section 2.2.3.

"Ratable Loan" means a Loan made by a Lender pursuant to Section 2.2
hereof.

Page 9

"Ratable Note" means a promissory note in substantially the form of Exhibit
"A" hereto, duly executed and delivered to the Agent by the Borrower for the
account of each Lender and payable to the order of a Lender in the amount of
its' Commitment, including any amendment, modification, renewal or replacement
of such promissory note.

"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.

"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.

"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.

"Required Lenders" means Lenders in the aggregate having at least 66 2/3%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66 2/3% of the aggregate unpaid
principal amount of the outstanding Advances.

"Reserve Requirement" means, with respect to Eurodollar Interest Period,
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities .

"Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines
in effect in the United States on the date of this Agreement, and (ii) the
corresponding capital regulations promulgated by regulatory authorities outside
the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled "International Convergence
of Capital Measurements and Capital Standards," and any amendments to such
regulations adopted prior to the date of this Agreement.

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

"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.

Page 10

"Series A Preferred Securities" means the 9.18% Preferred Securities,
Series A, issued by Torchmark Capital L.L.C. on October 11, 1994.

"Series A Preferred Securities Loan Agreement" means the Loan Agreement
dated as of October 11, 1994 between the Borrower and Torchmark Capital L.L.C.
entered into in connection with the Series A Preferred Securities, as in effect
on the date hereof.

"Significant Insurance Subsidiary" means any Significant Subsidiary which
is an Insurance Subsidiary.

"Significant Subsidiary" of a Person means a "significant subsidiary" as
defined in Rule 1-02(v) of Regulation S-X of the Securities and Exchange
Commission (17 CFR Part 210), but excluding Xxxxxxx. Unless otherwise expressly
provided, all references herein to a "Significant Subsidiary" shall mean a
Significant Subsidiary of the Borrower.

"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.

"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture, limited liability company or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Borrower.

"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which (i) represents more than 10% of the
consolidated assets of the Borrower and its Subsidiaries as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries as at
the beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Borrower and its
Subsidiaries as reflected in the financial statements referred to in clause (i)
above.

"Termination Date" means (i) October 23, 1997, as such date may be from
time to time extended pursuant to Section 2.17, or (ii) such earlier date on
------------
which the obligations of the Lenders to make Loans hereunder are terminated
pursuant to the terms of this Agreement.

"Transferee" is defined in Section 12.4.

"Type" means, with respect to any Advance, its nature as a Floating Rate
Advance, Eurodollar Advance or Absolute Rate Advance.

"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested nonforfeitable benefits under all Single Employer Plans exceeds
the fair market value of all such Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans.

Page 11

"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.

"Xxxxxxx" means Xxxxxxx Gas Company, Ltd., a Texas limited partnership and
Wholly-Owned Subsidiary of the Borrower.

"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (ii) any partnership, association, joint venture, limited
liability company or similar business organization 100% of the ownership
interests having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Wholly-Owned Subsidiary" shall mean a Wholly-Owned Subsidiary of the Borrower.

The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.

ARTICLE II

THE FACILITY
------------

2.1. The Facility.
------------

2.1.1. Description of Facility. The Lenders hereby establish in
-----------------------
favor of the Borrower a revolving credit facility pursuant to which, and upon
the terms and subject to the conditions herein set out:

(i) each Lender severally agrees to make Ratable Loans to the Borrower
in accordance with Section 2.2 in amounts not to exceed in the aggregate at any
one time outstanding the amount of its Commitment less the amount of such
Lender's pro rata (relative to its Commitment amount) share of the outstanding
principal amount of all Competitive Bid Advances (regardless of which Lender or
Lenders made such Competitive Bid Advances) exclusive of Competitive Bid
Advances being repaid substantially contemporaneously with the making of any
such Ratable Loans; and

(ii) each Lender may, in its sole discretion, make bids to make
Competitive Bid Loans to the Borrower, and make such Loans, in accordance with
Section 2.3.

2.1.2. Facility Amount. In no event may the aggregate principal
---------------
amount of all outstanding Advances (including both the Ratable Advances and the
Competitive Bid Advances) at any time exceed the Aggregate Commitment.

2.1.3. Availability of Facility. Subject to the terms hereof, such
------------------------
facility is available from the date hereof to the Termination Date. Subject to
the terms of this Agreement, the Borrower may borrow, repay and reborrow
Advances at any time prior to the Termination Date. Any outstanding Advances
and all other unpaid Obligations shall be paid in full by the Borrower on the
Termination Date.

Page 12

2.2. Ratable Advances.
----------------

2.2.1. Ratable Advances. Each Ratable Advance hereunder shall
----------------
consist of borrowings made from the several Lenders ratably in proportion to the
amounts of their respective Commitments. The Borrower's obligation to pay the
principal of, and interest on, the Ratable Advances shall be evidenced by the
Ratable Notes. Although the Ratable Notes shall be dated the Closing Date,
interest in respect thereof shall be payable only for the periods during which
the Loans evidenced thereby are outstanding and, although the stated amount of
each Ratable Note shall be equal to the applicable Lender's Commitment, each
Ratable Note shall be enforceable, with respect to the Borrower's obligation to
pay the principal amount thereof, only to the extent of the unpaid principal
amount of the Ratable Loans at the time evidenced thereby.

2.2.2. Ratable Advance Rate Options. The Ratable Advances may be
----------------------------
Floating Rate Advances or Eurodollar Ratable Advances, or a combination thereof,
selected by the Borrower in accordance with Section 2.2.3 or 2.2.4. No Ratable
Advance may mature after, or have an Interest Period which extends beyond, the
Termination Date.

2.2.3. Method of Selecting Types and Interest Periods for Ratable
----------------------------------------------------------
Advances. The Borrower shall select the Type of each Ratable Advance and, in
--------
the case of each Eurodollar Ratable Advance, the Eurodollar Interest Period
applicable to such Ratable Advance from time to time; provided, however, that
-------- -------
for a period of at least three Business Days after the initial Advances the
Borrower shall maintain all Ratable Advances as Floating Rate Advances. The
Borrower shall give the Agent irrevocable notice (a "Ratable Borrowing Notice")
not later than 10:00 a.m. (Chicago time) on the Borrowing Date of each Floating
Rate Advance and three Business Days before the Borrowing Date for each
Eurodollar Ratable Advance. Notwithstanding the foregoing, a Ratable Borrowing
Notice for a Floating Rate Advance may be given not later than 15 minutes after
the time which the Borrower is required to reject one or more bids offered in
connection with an Absolute Rate Auction pursuant to Section 2.3.6 and a Ratable
Borrowing Notice for a Eurodollar Ratable Advance may be given not later than 15
minutes after the time the Borrower is required to reject one or more bids
offered in connection with a Eurodollar Auction pursuant to Section 2.3.6. A
Ratable Borrowing Notice shall specify:

(i) the Borrowing Date, which shall be a Business Day, of such Ratable
Advance;

(ii) the aggregate amount of such Ratable Advance, which, when added
to all outstanding Ratable Advances and Competitive Bid Advances and after
giving effect to the repayment of any such outstanding Advances out of the
proceeds of the requested Ratable Advance, shall not exceed the Aggregate
Commitment;

(iii) the Type of Advance selected; and

(iv) in the case of each Eurodollar Ratable Advance, the Eurodollar
Interest Period applicable thereto (which may not end after the Termination
Date).

Page 13

converted into Eurodollar Ratable Advances. Each Eurodollar Ratable Advance
shall continue as a Eurodollar Ratable Advance until the end of the then
applicable Eurodollar Interest Period therefor, at which time such Eurodollar
Ratable Advance shall be automatically converted into a Floating Rate Advance
unless the Borrower shall have given the Agent a Conversion/Continuation Notice
requesting that, at the end of such Eurodollar Interest Period, such Eurodollar
Ratable Advance continue as a Eurodollar Ratable Advance for the same or another
Eurodollar Interest Period. Subject to the terms of Section 2.6, the Borrower
may elect from time to time to convert all or any part of a Ratable Advance of
any Type into any other Type or Types of Ratable Advances; provided that any
conversion of any Eurodollar Ratable Advance shall be made on, and only on, the
last day of the Eurodollar Interest Period applicable thereto. The Borrower
shall give the Agent irrevocable notice (a "Conversion/Continuation Notice") of
each conversion of a Ratable Advance or continuation of a Eurodollar Ratable
Advance not later than 10:00 a.m. (Chicago time) at least three Business Days,
in the case of a conversion into or continuation of a Eurodollar Ratable
Advance, prior to the date of the requested conversion or continuation,
specifying:

(i) the requested date, which shall be a Business Day, of such
conversion or continuation;

(ii) the aggregate amount and Type of Ratable Advance which is to be
converted or continued; and

(iii) the amount and Type(s) of Ratable Advance(s) into which such
Ratable Advance is to be converted or continued and, in the case of a conversion
into or continuation of an Eurodollar Ratable Advance, the duration of the
Eurodollar Interest Period applicable thereto.

2.3. Competitive Bid Advances.
------------------------

2.3.1. Competitive Bid Option. In addition to Ratable Advances
----------------------
pursuant to Section 2.2, but subject to the terms and conditions of this
Agreement (including, without limitation, the limitation set forth in Section
2.1.2 as to the maximum aggregate principal amount of all outstanding Advances
hereunder), the Borrower may, as set forth in this Section 2.3, request the
Lenders, prior to the Termination Date, to make offers to make Competitive Bid
Advances to the Borrower. Each Lender may, but shall have no obligation to,
make such offers and the Borrower may, but shall have no obligation to, accept
any such offers in the manner set forth in this Section 2.3. The Borrower's
obligation to pay the principal of, and interest on, the Competitive Bid
Advances shall be evidenced by the Competitive Bid Notes. Although the
Competitive Bid Notes shall be dated the Closing Date, interest in respect
thereof shall be payable only for the periods during which the Loans evidenced
thereby are outstanding.

2.3.2. Competitive Bid Quote Request. When the Borrower wishes to
-----------------------------
request offers to make Competitive Bid Loans under this Section 2.3, it shall
transmit to the Agent by telex or telecopy a Competitive Bid Quote Request
substantially in the form of Exhibit "C" hereto so as to be received no later
than (i) 10:00 a.m. (Chicago time) at least four Business Days prior to the
Borrowing Date proposed therein, in the case of a Eurodollar Auction or (ii)
9:00 a.m. (Chicago time) at least one Business Day prior to the Borrowing Date
proposed therein, in the case of an Absolute Rate Auction specifying:

Page 14

(i) the proposed Borrowing Date, which shall be a Business Day, for
the proposed Competitive Bid Advance;

(ii) the aggregate principal amount of such Competitive Bid Advance;

(iii) whether the Competitive Bid Quotes requested are to set forth a
Eurodollar Bid Rate, an Absolute Rate, or both; and

(iv) the Interest Period applicable thereto (which may not end after
the Termination Date).

The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period in a single Competitive Bid Quote Request. No Competitive Bid
Quote Request shall be given within 5 Business Days (or such other number of
days as the Borrower and the Agent may agree) of any other Competitive Bid Quote
Request. A Competitive Bid Quote Request that does not conform substantially to
the format of Exhibit "C" hereto shall be rejected, and the Agent shall promptly
notify the Borrower of such rejection by telex or telecopy.

2.3.3. Invitation for Competitive Bid Quotes. Promptly and in any
-------------------------------------
event before the close of business on the same Business Day of receipt of a
Competitive Bid Quote Request that is not rejected pursuant to Section 2.3.2,
the Agent shall send to each of the Lenders by telex or telecopy an Invitation
for Competitive Bid Quotes substantially in the form of Exhibit "D" hereto,
which shall constitute an invitation by the Borrower to each Lender to submit
Competitive Bid Quotes offering to make the Competitive Bid Loans to which such
Competitive Bid Quote Request relates in accordance with this Section 2.3.

2.3.4. Submission and Contents of Competitive Bid Quotes.
-------------------------------------------------

(i) Each Lender may, in its sole discretion, submit a Competitive Bid
Quote containing an offer or offers to make Competitive Bid Loans in response to
any Invitation for Competitive Bid Quotes. Each Competitive Bid Quote must
comply with the requirements of this Section 2.3.4 and must be submitted to the
Agent by telex or telecopy at its offices specified in or pursuant to Article
XIII not later than (a) 9:00 a.m. (Chicago time) at least three Business Days
prior to the proposed Borrowing Date, in the case of a Eurodollar Auction or (b)
9:00 a.m. (Chicago time) on the proposed Borrowing Date, in the case of an
Absolute Rate Auction (or, in either case upon reasonable prior notice to the
Lenders, such other time and date as the Borrower and the Agent may agree);

provided that Competitive Bid Quotes submitted by First Chicago may only be
--------
submitted if the Agent or First Chicago notifies the Borrower of the terms of
the offer or offers contained therein not later than 15 minutes prior to the
latest time at which the relevant Competitive Bid Quotes must be submitted by
the other Lenders. Subject to Articles IV and VIII, any Competitive Bid Quote
so made shall be irrevocable except with the written consent of the Agent given
on the instructions of the Borrower.

(ii) Each Competitive Bid Quote shall be in substantially the form of
Exhibit "E" hereto and shall in any case specify:

Page 15

(a) the proposed Borrowing Date, which shall be the same as that set
forth in the applicable Invitation for Competitive Bid Quotes;

(b) the principal amount of the Competitive Bid Loan for which each
such offer is being made, which principal amount (1) may be greater than, less
than or equal to the Commitment of the quoting Lender, (2) must be at least
$10,000,000 and an integral multiple of $1,000,000, and (3) may not exceed the
principal amount of Competitive Bid Loans for which offers were requested;

(d) the minimum amount, if any, of the Competitive Bid Loan which may
be accepted by the Borrower;

(e) in the case of an Absolute Rate Auction, the Absolute Rate offered
for each such Competitive Bid Loan; and

(f) the identity of the quoting Lender.

(iii) The Agent shall reject any Competitive Bid Quote that:

(a) is not substantially in the form of Exhibit "E" hereto or does not
specify all of the information required by Section 2.3.4(ii);

(b) contains qualifying, conditional or similar language, other than
any such language contained in Exhibit "E" hereto;

(c) proposes terms other than or in addition to those set forth in the
applicable Invitation for Competitive Bid Quotes; or

(d) arrives after the time set forth in Section 2.3.4(i).

If any Competitive Bid Quote shall be rejected pursuant to this Section
2.3.4(iii), then the Agent shall notify the relevant Lender of such rejection
promptly.

2.3.5. Notice to Borrower. The Agent shall promptly notify the
------------------
Borrower of the terms (i) of any Competitive Bid Quote submitted by a Lender
that is in accordance with Section 2.3.4 and (ii) of any Competitive Bid Quote
that amends, modifies or is otherwise inconsistent with a previous Competitive
Bid Quote submitted by such Lender with respect to the same Competitive Bid
Quote Request. Any such subsequent Competitive Bid Quote shall be disregarded
by the Agent unless such subsequent Competitive Bid Quote specifically states
that it is submitted solely to correct a manifest error in such former
Competitive Bid Quote. The Agent's notice to the Borrower shall specify the
aggregate principal amount of Competitive Bid Loans for which offers have been
received for each Interest Period specified in the related Competitive Bid Quote
Request and the respective principal amounts and Eurodollar Bid Rates or
Absolute Rates, as the case may be, so offered.

Page 16

2.3.6. Acceptance and Notice by Borrower. Not later than (i) 10:00
---------------------------------
a.m. (Chicago time) at least three Business Days prior to the proposed Borrowing
Date, in the case of a Eurodollar Auction or (ii) 10:00 a.m. (Chicago time) on
the proposed Borrowing Date, in the case of an Absolute Rate Auction (or, in
either case upon reasonable prior notice to the Lenders, such other time and
date as the Borrower and the Agent may agree), the Borrower shall notify the
Agent of its acceptance or rejection of the offers so notified to it pursuant to
Section 2.3.5; provided, however, that the failure by the Borrower to give such
-------- -------
notice to the Agent shall be deemed to be a rejection of all such offers. In
the case of acceptance, such notice (a "Competitive Bid Borrowing Notice") shall
specify the aggregate principal amount of offers for each Interest Period that
are accepted. The Borrower may accept any Competitive Bid Quote in whole or in
part (subject to the terms of Section 2.3.4(ii)(d)); provided that:
--------

(i) the aggregate principal amount of each Competitive Bid Advance may
not exceed the applicable amount set forth in the related Competitive Bid Quote
Request,

(ii) acceptance of offers may only be made on the basis of ascending
Eurodollar Bid Rates or Absolute Rates, as the case may be, and

(iii) the Borrower may not accept any offer that is described in
Section 2.3.4(iii) or that otherwise fails to comply with the requirements of
this Agreement.

2.3.7. Allocation by Agent. If offers are made by two or more
-------------------
Lenders with the same Eurodollar Bid Rates or Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of which
offers are accepted for the related Interest Period, the principal amount of
Competitive Bid Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Lenders as nearly as possible (in such
multiples, not greater than $1,000,000, as the Agent may deem appropriate) in
proportion to the aggregate principal amount of such offers; provided, however,
-------- -------
that no Lender shall be allocated a portion of any Competitive Bid Advance which
is less than the minimum amount which such Lender has indicated that it is
willing to accept. Allocations by the Agent of the amounts of Competitive Bid
Loans shall be conclusive in the absence of manifest error. The Agent shall
promptly, but in any event on the same Business Day, notify each Lender of its
receipt of a Competitive Bid Borrowing Notice and the aggregate principal amount
of such Competitive Bid Advance allocated to each participating Lender.

2.4. Availability of Funds. Not later than noon (Chicago time) on each
---------------------
Borrowing Date, each Lender (or in the case of a Competitive Bid Advance, each
Lender making a portion of such Advance) shall make available its Loan or Loans,
in funds immediately available in Chicago to the Agent at its address specified
pursuant to Article XIII. The Agent will make the funds so received from the
Lenders available to the Borrower at the Agent's aforesaid address.

2.5. Facility Fee; Reductions in Aggregate Commitment. The
------------------------------------------------
Borrower agrees to pay to the Agent for the ratable account of each Lender a
facility fee equal to the Applicable Facility Fee Percentage times such Lender's
Commitment from the date hereof to and including the Termination Date applicable
to such Lender, payable in arrears on each Payment Date hereafter and on the
Termination Date. The Borrower may permanently reduce the Aggregate Commitment
in whole, or in part ratably among the Lenders in integral multiples of
$25,000,000, upon at least three Business Days' written notice to the Agent,
which notice shall specify the amount of any such reduction; provided, however,
that the amount

Page 17

of the Aggregate Commitment may not be reduced below the aggregate principal
amount of the outstanding Advances. All accrued facility fees shall be payable
on the effective date of any termination of the obligations of the Lenders to
make Loans hereunder.

2.6. Minimum Amount of Each Advance. Each Advance shall be in the
------------------------------
minimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess
thereof), provided, however, that any Floating Rate Advance may be in the amount
of the unused Aggregate Commitment.

2.7. Optional Principal Payments. The Borrower may from time to time
---------------------------
pay, without penalty or premium, all outstanding Advances, or, in a minimum
aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof, any portion of the outstanding Advances upon two Business Days' prior
notice to the Agent. Any prepayment of a Eurodollar Advance or Absolute Rate
Advance prior to the last day of the applicable Eurodollar Interest Period shall
be subject to the indemnity provisions of Section 3.4.

2.8. Changes in Interest Rate, etc. Each Floating Rate Advance shall
------------------------------
bear interest at the Alternate Base Rate from and including the date such
Advance is made or is converted from a Ratable Eurodollar Advance into a
Floating Rate Advance pursuant to Section 2.2.4 to but excluding the date it
becomes due or is converted into a Eurodollar Ratable Advance pursuant to
Section 2.2.4 hereof, at a rate per annum equal to the Floating Rate for such
day. Changes in the rate of interest on that portion of any Advance maintained
as a Floating Rate Advance will take effect simultaneously with each change in
the Alternate Base Rate. Each Eurodollar Advance and Absolute Rate Advance
shall bear interest from and including the first day of the Interest Period
applicable thereto to (but not including) the last day of such Eurodollar
Interest Period at the interest rate determined as applicable to such Eurodollar
Advance or Absolute Rate Advance. No Interest Period may end after the
Termination Date.

2.9. Rates Applicable After Default. Notwithstanding anything to the
------------------------------
contrary contained in Section 2.2.3 or 2.2.4, no Advance may be made as,
converted into or continued as a Eurodollar Ratable Advance (except with the
consent of the Required Lenders) when any Default or Unmatured Default has
occurred and is continuing. During the continuance of a Default, the Required
Lenders may, at their option, by notice to the Borrower (which notice may be
revoked at the option of the Required Lenders notwithstanding any provision of
Section 8.2 requiring unanimous consent of the Lenders to changes in interest
rates), declare that (i) each Eurodollar Advance and Absolute Rate Advance shall
bear interest for the remainder of the applicable Interest Period at the
Eurodollar Rate or Absolute Rate otherwise applicable to such Interest Period
plus 2% per annum and (ii) each Floating Rate Advance shall bear interest at a
rate per annum equal to the Alternate Base Rate plus 2% per annum.

2.10. Method of Payment. All payments of the Obligations hereunder shall
-----------------
be made, without setoff, deduction, or counterclaim, in immediately available
funds to the Agent at the Agent's address specified pursuant to Article XIII, or
at any other Lending Installation of the Agent specified in writing by the Agent
to the Borrower, by 12:00 noon (local time) on the date when due and shall be
applied ratably by the Agent (i) first, ratably among the Lenders with respect
to any principal and interest due in connection with Ratable Advances, (ii)
second, after all amounts described in clause (i) have been satisfied, ratably
among those Lenders for whom any payment of principal and interest is due in
connection with any Competitive Bid Advances and (iii) third, after all amounts
described in clauses (i) and (ii) have been satisfied, ratably to any other
Obligations then due. Each payment delivered to the

Page 18

Agent for the account of any Lender shall be delivered by the Agent to such
Lender in the same type of funds that the Agent received at its address
specified pursuant to Article XIII or at any Lending Installation specified in a
notice received by the Agent from such Lender. If such payment is received by
the Agent by 1:00 p.m. (Chicago time) such delivery to the Lenders shall be made
on the same day and if received thereafter shall be made on the next succeeding
Business Day. The Agent is hereby authorized to charge the account of the
Borrower maintained with First Chicago for each payment of principal, interest
and fees as it becomes due hereunder.

2.11. Notes; Telephonic Notices. Each Lender is hereby authorized to
-------------------------
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Note, provided, however, that neither the failure to so
record nor any error in such recordation shall affect the Borrower's obligations
under such Note. The Borrower hereby authorizes the Lenders and the Agent to
extend, convert or continue Advances, effect selections of Types of Advances,
submit Competitive Bid Quotes and to transfer funds based on telephonic notices
made by any one of the Chairman, Vice Chairman, Treasurer, the Chief Accounting
Officer, any Vice-President or any Assistant Treasurer of the Borrower or any
person who identifies himself or herself to be any such officer; provided that,
without written notice from the Borrower, no proceeds of any Advance shall be
transferred based upon telephonic notice to any bank account other than a bank
account maintained by the Borrower. The Borrower agrees to deliver promptly to
the Agent a written confirmation, if such confirmation is requested by the Agent
or any Lender, of each telephonic notice signed by an Authorized Officer. If
the written confirmation differs in any material respect from the action taken
by the Agent and the Lenders, the records of the Agent and the Lenders shall
govern absent manifest error.

2.12. Interest Payment Dates; Interest and Fee Basis. Interest accrued
----------------------------------------------
on each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, on any date on which
such Floating Rate Advance is prepaid, whether due to acceleration or otherwise,
and at maturity. Interest accrued on that portion of the outstanding principal
amount of any Floating Rate Advance converted into a Eurodollar Ratable Advance
on a day other than a Payment Date shall be payable on the date of conversion.
Interest accrued on each Eurodollar Advance or Absolute Rate Advance shall be
payable on the last day of its applicable Interest Period, on any date on which
the Eurodollar Advance or Absolute Rate Advance is prepaid, whether by
acceleration or otherwise, and at maturity. Interest accrued on each Eurodollar
Advance or Absolute Rate Advance having an Interest Period longer than three
months shall also be payable on the last day of each three-month interval during
such Interest Period. Interest and facility fees shall be calculated for actual
days elapsed on the basis of a 360-day year. Interest shall be payable for the
day an Advance is made but not for the day of any payment on the amount paid if
payment is received prior to 12:00 noon (local time) at the place of payment.
If any payment of principal of or interest on an Advance shall become due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a principal payment, such extension
of time shall be included in computing interest in connection with such payment.

2.13. Notification of Advances, Interest Rates, Prepayments and
---------------------------------------------------------
Commitment Reductions. Promptly after receipt thereof, the Agent will notify
---------------------
each Lender of the contents of each Aggregate Commitment reduction notice,
Ratable Borrowing Notice, Conversion/Continuation Notice, Invitation for
Competitive Quotes and repayment notice received by it hereunder. The Agent
will notify each Lender

Page 19

of the interest rate applicable to each Eurodollar Advance promptly upon
determination of such interest rate and will give each Lender prompt notice of
each change in the Alternate Base Rate.

2.14. Lending Installations. Each Lender may book its Loans at any
---------------------
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Agent and the Borrower, designate a Lending Installation through
which Loans will be made by it and for whose account Loan payments are to be
made.

2.15. Non-Receipt of Funds by the Agent. Unless the Borrower or a
---------------------------------
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption.
If such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (i) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day or (ii) in the case of payment by the
Borrower, the interest rate applicable to the relevant Loan.

2.16. Withholding Tax Exemption. At least five Business Days prior to the
-------------------------
first date on which interest or fees are payable hereunder for the account of
any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to each of
the Borrower and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case that such Lender is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Lender
which so delivers a Form 1001 or 4224 further undertakes to deliver to each of
the Borrower and the Agent two additional copies of such form (or a successor
form) on or before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the Agent, in
each case certifying that such Lender is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes, unless an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender advises the Borrower and the Agent that
it is not capable of receiving payments without any deduction or withholding of
United States federal income tax.

2.17. Extension of Termination Date. The Borrower may request an
-----------------------------
extension of the Termination Date by submitting a request for an extension to
the Agent (an "Extension Request") no more than 60 days, but no less than 40
days, prior to the then effective Termination Date. Each extension effected
pursuant to this Section 2.17 shall commence on the then effective Termination
------------
Date (the "Extension Date"). The

Page 20

Extension Request must specify the new Termination Date requested by the
Borrower, which date shall be no more than 364 days (the "Extension Period")
after the Extension Date, including the Extension Date as one of the days in the
calculation of the days elapsed. Promptly upon receipt of an Extension Request,
the Agent shall notify each Lender of the contents thereof and shall request
each Lender to approve the Extension Request. Each Lender approving the
Extension Request shall deliver its written consent to the Agent no earlier than
30 days prior to the then effective Termination Date and no later than 30 days
after receipt of the Extension Request. Any consent delivered by a Lender prior
to such response date may be revoked prior to the Extension Date by the Lender
giving written notice of such revocation to the Agent before the Extension Date.
If the consent of the Required Lenders is received by the Agent and remains in
effect on the Extension Date, the new Termination Date specified in the
Extension Request shall become effective on the Extension Date as to such
consenting Lenders only (and not as to any Lender which has not consented to
such extension) and the Agent shall promptly notify the Borrower and each
consenting Lender of the new Termination Date. Notwithstanding anything
contained in this Agreement to the contrary, (a) all Obligations owing to the
non-extending Lenders shall be due and payable on the Termination Date without
giving effect to any requested extension, (b) the Aggregate Commitment as of the
commencement of the Extension Period shall be reduced to an amount equal to the
sum of the Commitments of the Lenders ultimately granting the Extension Request,
and (c) each Lender may, in its sole discretion, grant or deny its consent with
respect to any proposed extension of the Termination Date. Any Lender not
granting the Extension Request shall, if the Borrower has selected a "Purchaser"
(as defined in Section 12.3.1) for such Lender reasonably acceptable to the
--------------
Agent prior to the Extension Date, promptly assign to such Purchaser its rights
and obligations under the Loan Documents in respect of all or that portion of
such Lender's Commitment as such Purchaser is willing to accept, all in
accordance with Section 12.3.
------------

ARTICLE III

CHANGE IN CIRCUMSTANCES
-----------------------

3.1. Yield Protection. If, after the date hereof, in connection with a
----------------
Eurodollar Loan the adoption of or any change in any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any change in the interpretation or
administration thereof, or the compliance of any Lender therewith,

(i) subjects any Lender or any applicable Lending Installation to any
tax, duty, charge or withholding on or from payments due from the Borrower
(excluding federal taxation of the overall net income of any Lender or
applicable Lending Installation imposed by the jurisdiction in which such Lender
or Lending Installation is incorporated or has its principal place of business),
or changes the basis of taxation of payments to any Lender or Lending
Installation in respect of its Loans or other amounts due it hereunder, or

(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurodollar Advances), or

Page 21

(iii) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation of making, funding
or maintaining Loans or reduces any amount receivable by any Lender or any
applicable Lending Installation in connection with Loans, or requires any Lender
or any applicable Lending Installation to make any payment calculated by
reference to the amount of Loans held or interest received by it, by an amount
deemed material by such Lender,

then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Loans and its Commitment.

3.2. Changes in Capital Adequacy Regulations. If a Lender determines the
---------------------------------------
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender determines is attributable to this Agreement, its Loans or its
obligation to make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy).

3.3. Availability of Types of Advances. If any Lender determines that
---------------------------------
maintenance of any of its Eurodollar Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation or directive, whether or not
having the force of law, the Agent shall suspend the availability of the
affected Type of Advance and require any Eurodollar Advances to be repaid or
converted into a Floating Rate Advance within five days after Borrower's receipt
of notice by such Lender; or if the Required Lenders determine that (i) deposits
of a type or maturity appropriate to match fund Eurodollar Advances are not
available, or (ii) an interest rate applicable to an Eurodollar Advance does not
accurately reflect the cost of making a Eurodollar Advance of such Type, then,
the Agent shall suspend the availability of Eurodollar Advances with respect to
any Eurodollar Advances made after the date of any such determination.

3.4. Funding Indemnification. If any payment of a Eurodollar Advance
-----------------------
occurs on a date which is not the last day of the applicable Eurodollar Interest
Period, whether because of acceleration, prepayment or otherwise, or a
Eurodollar Advance is not made on the date specified by the Borrower for any
reason other than default by the Lenders, the Borrower will indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Eurodollar Advance.

3.5. Lender Statements; Survival of Indemnity. To the extent reasonably
----------------------------------------
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of the Borrower to such
Lender under Sections 3.1 and 3.2 or to avoid the unavailability of a Type of
Advance under Section 3.3, so long as such designation is not disadvantageous to
such Lender. Each Lender shall deliver a written statement of such Lender to
the Borrower (with a copy to the Agent) as to the amount due, if any, under
Sections 3.1, 3.2 or 3.4. Such written statement shall set forth in reasonable
detail the calculations upon which such Lender determined such amount and shall
be final, conclusive and binding on the Borrower in the absence of manifest
error. Determination of amounts payable under such Sections in connection with
a Eurodollar Loan shall be calculated as though each Lender funded its
Eurodollar Loan through the purchase of a deposit of the type and maturity
corresponding to the deposit

Page 22

used as a reference in determining the Eurodollar Rate applicable to such Loan,
whether in fact that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement of any Lender shall be payable on
demand after receipt by the Borrower of the written statement. The obligations
of the Borrower under Sections 3.1, 3.2 and 3.4 shall survive payment of the
Obligations and termination of this Agreement.

3.6. Right to Substitute Lender. Any Lender claiming any additional
--------------------------
amounts payable pursuant to Section 3.1 or 3.2 materially in excess of those
being charged by other Lenders or unable to make a Eurodollar Advance available
in accordance with Section 3.3, shall, so long as no Default or Unmatured
Default has occurred and is continuing, upon the written request of the Borrower
delivered to such Lender and the Agent, assign, pursuant to and in accordance
with the provisions of Section 12.3, all of its rights and obligations under
this Agreement and under the Loan Documents to another Lender or to a commercial
bank, other financial institution, commercial finance company or other business
lender selected by the Borrower and reasonably acceptable to the Agent in
consideration for (a) the payment by such assignee to such assigning Lender of
the principal of, and interest accrued and unpaid to the date of such assignment
on, the Notes held by such assigning Lender, (b) the payment by the Borrower to
such assigning Lender of any and all other amounts owing to such assigning
Lender under any provision of this Agreement accrued and unpaid to the date of
such assignment and (c) the Borrower's release of such assigning Lender from any
further obligation or liability under this Agreement and the Loan Documents.
Notwithstanding anything to the contrary contained in this Section 3.6, in no
-----------
event shall the replacement of any Lender result in a decrease or reallocation
of the aggregate Commitments without the prior written consent of the remaining
Lenders.

ARTICLE IV

CONDITIONS PRECEDENT
--------------------

4.1. Initial Advance. The Lenders shall not be required to make the
---------------
initial Advance hereunder unless the Borrower has furnished to the Agent with
sufficient copies for the Lenders:

(i) Copies of the articles of incorporation of the Borrower, together
with all amendments thereto, both certified by the appropriate governmental
officer in its jurisdiction of incorporation, together with a good standing
certificate issued by the Secretary of State of the jurisdiction of its
incorporation and such other jurisdictions as shall be requested by the Agent.

(ii) Copies, certified by the Secretary or an Assistant Secretary of
the Borrower, of its by-laws and Board of Directors' resolutions authorizing the
execution of the Loan Documents.

(iii) An incumbency certificate, executed by the Secretary or an
Assistant Secretary of the Borrower, which shall identify by name and title and
bear the signature of the officers of the Borrower authorized to sign the Loan
Documents and to make borrowings hereunder, upon which certificate the Agent and
the Lenders shall be entitled to rely until informed of any change in writing by
the Borrower.

Page 23

(iv) A certificate, signed by the Chief Financial Officer or the
Treasurer of the Borrower, stating that on the date hereof (a) no Default or
Unmatured Default has occurred and is continuing and (b) each of the
representations and warranties set forth in Article V of this Agreement is true
and correct as of such date.

(v) A written opinion of the Borrower's counsel, addressed to the
Lenders in substantially the form of Exhibit "F" hereto.

(vi) Notes payable to the order of each of the Lenders.

(vii) Written money transfer instructions, in substantially the form
of Exhibit "I" hereto, addressed to the Agent and signed by an Authorized
Officer, together with such other related money transfer authorizations as the
Agent may have reasonably requested.

(viii) The Existing Credit Agreements shall have been terminated and
all amounts owing thereunder shall have been paid (or shall contemporaneously be
paid) in full.

(ix) Such other documents as any Lender or its counsel may have
reasonably requested.

4.2. Each Advance. The Lenders shall not be required to make any
------------
Advance, unless on the applicable Borrowing Date:

(i) There exists no Default or Unmatured Default.

(ii) The representations and warranties contained in Article V (other
than Section 5.4 and 5.5) are true and correct as of such Borrowing Date except
for changes in the Schedules hereto reflecting transactions permitted by this
Agreement.

Each Ratable Borrowing Notice and Competitive Bid Quote Request with
respect to each such Advance shall constitute a representation and warranty by
the Borrower that the conditions contained in Sections 4.2(i) and (ii) have been
satisfied. Any Lender may require a duly completed compliance certificate in
substantially the form of Exhibit "G" hereto as a condition to making an
Advance.

ARTICLE V

REPRESENTATIONS AND WARRANTIES
------------------------------

The Borrower represents and warrants to the Lenders that:

5.1. Corporate Existence and Standing. Each of the Borrower and its
--------------------------------
Significant Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation and has
all requisite authority to conduct its business in each jurisdiction in which
its business is conducted.

Page 24

5.2. Authorization and Validity. The Borrower has the corporate power
--------------------------
and authority and legal right to execute and deliver the Loan Documents and to
perform its obligations thereunder. The execution and delivery by the Borrower
of the Loan Documents and the performance of its obligations thereunder have
been duly authorized by proper corporate proceedings, and the Loan Documents
constitute legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.

5.3. No Conflict; Government Consent. Neither the execution and delivery
-------------------------------
by the Borrower of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
any law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on the Borrower or any of its Subsidiaries or the Borrower's or any of
its Subsidiaries' articles of incorporation or by-laws or the provisions of any
indenture, instrument or agreement to which the Borrower or any of its
Subsidiaries is a party or is subject, or by which it, or its Property, is
bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien in, of or on the Property of the Borrower or
any of its Subsidiaries pursuant to the terms of any such indenture, instrument
or agreement, other than such violations, conflicts or defaults which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. No order, consent, approval, license, authorization,
or validation of, or filing, recording or registration with, or exemption by,
any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with the execution, delivery
and performance of, or the legality, validity, binding effect or enforceability
of, any of the Loan Documents.

5.4. Financial Statements. The December 31, 1995 audited consolidated
--------------------
financial statements of the Borrower and its Subsidiaries and the June 30, 1996
unaudited consolidated financial statements of the Borrower and its
Subsidiaries heretofore delivered to the Lenders (the "Financial Statements")
were prepared in accordance with generally accepted accounting principles in
effect on the date such statements were prepared and fairly present the
consolidated financial condition and operations of the Borrower and its
Subsidiaries at such date and the consolidated results of their operations for
the period then ended.

5.5. Material Adverse Change. Since December 31, 1995, there has been no
-----------------------
change in the business, Property, prospects, condition (financial or otherwise)
or results of operations of the Borrower and its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect.

5.6. Taxes. The Borrower and its Subsidiaries have filed all United
-----
States federal tax returns and all other tax returns which are required to be
filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to which, in the good
faith judgment of the Borrower, adequate reserves have been provided. The
United States income tax returns of the Borrower and its Subsidiaries have been
audited by the Internal Revenue Service through the fiscal year ended December
31, 1989. No tax liens have been filed and no claims against the Borrower or
its Subsidiaries are being asserted with respect to any such taxes except claims
being contested in good faith and as to which, in the good faith judgment of the
Borrower, adequate reserves have been provided. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of any
taxes or other governmental charges are adequate in the good faith judgment of
the Borrower.

Page 25

5.7. Litigation and Contingent Obligations. There is no litigation,
-------------------------------------
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of their officers, threatened against or affecting the
Borrower or any of its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect (after giving effect to reserves which have been
provided with respect thereto on the books of the Borrower and its
Subsidiaries). As of the date hereof, the Borrower has no material Contingent
Obligations not provided for or disclosed in the Financial Statements. Solely
for purposes of any reaffirmation of the foregoing representations pursuant to
Section 4.2(ii) in connection with any Loans the proceeds of which are used to
repay maturing commercial paper, such representations shall not extend to any
proceeding in which a punitive damages judgment has been entered against the
Borrower or any Subsidiary, such judgment has been stayed on appeal or the time
for appeal from such judgment has not expired and such judgment could not
reasonably be expected to have a material adverse effect on the ability of the
Borrower to perform its obligations under the Loan Documents.

5.8. Subsidiaries. Schedule "1" hereto contains an accurate list of all
------------
of the Significant Subsidiaries of the Borrower in existence on the date of this
Agreement, setting forth their respective jurisdictions of incorporation and the
percentage of their respective capital stock owned by the Borrower or other
Subsidiaries. All of the issued and outstanding shares of capital stock of such
Subsidiaries have been duly authorized and issued and are fully paid and non-
assessable.

5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do not
-----
in the aggregate exceed $10,000,000. Each Plan complies in all material
respects with all applicable requirements of law and regulations. No Reportable
Event has occurred with respect to any Plan and neither the Borrower nor any
other members of the Controlled Group has withdrawn from any Plan or initiated
steps to do so, which occurrence or withdrawal could result in a Material
Adverse Effect. No steps have been taken to terminate any Plan which has
Unfunded Liabilities.

5.10. Accuracy of Information. No information, exhibit or report
-----------------------
furnished by the Borrower or any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact, omitted to state a
material fact or omitted to state any fact necessary to make the statements
contained therein not misleading in any material respect.

5.11. Regulation U. Margin stock (as defined in Regulation U)
------------
constitutes less than 25% of those assets of the Borrower and its Subsidiaries
which are subject to any limitation on sale, pledge or other restriction
hereunder.

5.12. Material Agreements. Neither the Borrower nor any Subsidiary is a
-------------------
party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect. Neither the
Borrower nor any Significant Subsidiary is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument evidencing or governing Indebtedness.

Page 26

5.13. Compliance With Laws. The Borrower and its Subsidiaries have
--------------------
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property, except where the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any Subsidiary has received any notice to the
effect that its operations are not in material compliance with any of the
requirements of applicable federal, state and local environmental, health and
safety statutes and regulations or the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect.

5.14. Ownership of Properties. Except for Liens permitted by Section
-----------------------
6.14, on the date of this Agreement, the Borrower and its Subsidiaries have good
title to all of the Property and assets reflected in the Financial Statements as
owned by it, free of all Liens other than those permitted by this Agreement,
except for assets sold, transferred or otherwise disposed of in the ordinary
course of business since the date of such Financial Statements.

5.15. Investment Company Act. Neither the Borrower nor any Subsidiary
----------------------
thereof is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.

5.16. Public Utility Holding Company Act. Neither the Borrower nor any
----------------------------------
Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

5.17. Insurance Licenses. Schedule "2" attached hereto (as said Schedule
------------------
"2" shall be revised or supplemented from time to time to reflect withdrawals or
changes in jurisdictions permitted by Section 6.4 or additional jurisdictions
set forth in the Annual Statements furnished pursuant to Section 6.1(vii)) lists
all of the jurisdictions in which any Significant Insurance Subsidiary holds
active Licenses and is authorized to transact insurance business. No such
License is the subject of a proceeding for suspension or revocation, there is no
sustainable basis for such suspension or revocation, and to the Borrower's best
knowledge no such suspension or revocation has been threatened by any
Governmental Authority. Schedule "2" also indicates the type or types of
insurance in which each such Insurance Subsidiary is permitted to engage with
respect to each License therein listed. None of the Insurance Subsidiaries
transacts any insurance business, directly or indirectly, in any state other
than those enumerated in Schedule "2".

ARTICLE VI

COVENANTS
---------

During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:

Page 27

6.1. Financial Reporting. The Borrower will maintain, for itself and
-------------------
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Lenders:

(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by independent certified public accountants,
acceptable to the Lenders, prepared in accordance with Agreement Accounting
Principles on a consolidated and consolidating basis (consolidating statements
need not be certified by such accountants) for itself and the Subsidiaries,
including balance sheets as of the end of such period, related profit and loss
and reconciliation of surplus statements, and a statement of cash flows,
accompanied by certificate of said accountants that, in the course of their
examination necessary for their certification of the foregoing, they have
obtained no knowledge of any Default or Unmatured Default, or if, in the opinion
of such accountants, any Default or Unmatured Default shall exist, stating the
nature and status thereof.

(ii) Within 45 days after the close of the first three quarterly
periods of each of its fiscal years, for itself and the Subsidiaries,
consolidated and consolidating unaudited balance sheets as at the close of each
such period and consolidated and consolidating profit and loss statements and a
statement of cash flows for the period from the beginning of such fiscal year to
the end of such quarter, all certified by its Chief Financial Officer, Chief
Accounting Officer or Treasurer.

(iii) Together with the financial statements required hereunder, a
compliance certificate in substantially the form of Exhibit "G" hereto signed by
the Chief Financial Officer, Chief Accounting Officer or Treasurer of the
Borrower showing the calculations necessary to determine compliance with this
Agreement and stating that no Default or Unmatured Default exists, or if any
Default or Unmatured Default exists, stating the nature and status thereof.

(iv) Within 330 days after the close of each fiscal year, a statement
of the Unfunded Liabilities of each Single Employer Plan, certified as correct
by an actuary enrolled under ERISA.

(v) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect to any Plan,
a statement, signed by the Chief Financial Officer, Chief Accounting Officer,
Treasurer or Vice President of the Borrower, describing said Reportable Event
and the action which the Borrower proposes to take with respect thereto.

(vi) As soon as possible and in any event within 10 days after receipt
by the Borrower, a copy of (a) any notice or claim to the effect that the
Borrower or any of its Subsidiaries is or may be liable to any Person as a
result of the release by the Borrower, any of its Subsidiaries, or any other
Person of any toxic or hazardous waste or substance into the environment, and
(b) any notice alleging any violation of any federal, state or local
environmental, health or safety law or regulation by the Borrower or any of its
Subsidiaries, which, in either the case of either (a) or (b) above, could
reasonably be expected to have a Material Adverse Effect.

Page 28

(vii) Within 75 days after the close of each fiscal year of each
Insurance Subsidiary, copies of the Annual Statement of each of the Insurance
Subsidiaries, as certified by the president, secretary and treasurer of and the
actuary for each such Insurance Subsidiary and prepared on the NAIC annual
statement blanks (or such other form as shall be required by the jurisdiction of
incorporation of each such Insurance Subsidiary), all such statements to be
prepared in accordance with SAP consistently applied throughout the periods
reflected therein and to be certified by independent certified public
accountants reasonably acceptable to the Agent if so required by any
Governmental Authority.

(viii) Promptly upon the filing thereof, copies of all Forms 10Q, 10K
and 8K which the Borrower or any Subsidiary files with the Securities and
Exchange Commission and any Form A and any annual update of Form B which any
Insurance Subsidiary files with any insurance commission or department or
analogous Governmental Authority, and, together with copies of each Form 10K so
furnished, a list of such revisions to Schedule "1", if any, as shall be
necessary to cause Schedule "1" to accurately set forth all then existing
Significant Subsidiaries of the Borrower, their respective jurisdictions of
incorporation and the percentage of their respective capital stock owned by the
Borrower or other Subsidiaries.

(ix) Promptly upon the Borrower's receipt thereof, copies of reports
or valuations prepared by any Governmental Authority or actuary in respect of
any action or event which has resulted in the reduction by 5% or more in the
capital and surplus of any Insurance Subsidiary.

(x) Promptly and in any event within ten days after learning thereof,
notification of any decrease after the Closing Date in the rating given by A.M.
Best & Co. in respect of any Insurance Subsidiary.

(xi) Such other information (including, without limitation, non-
financial information) as the Agent or any Lender may from time to time
reasonably request.

6.2. Use of Proceeds. The Borrower will, and will cause each Subsidiary
---------------
to, use the proceeds of the Advances (i) for general corporate purposes,
including, without limitation, the repayment of Indebtedness and (ii) to finance
Permitted Acquisitions. The Borrower will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Advances to purchase or carry any
"margin stock" (as defined in Regulation U).

6.3. Certain Notices. The Borrower will give prompt notice in writing to
---------------
the Agent and the Lenders of (i) the occurrence of any Default or Unmatured
Default and of any other development, financial or otherwise, relating
specifically to the Borrower which could reasonably be expected to have a
Material Adverse Effect, (ii) the receipt of any notice from any Governmental
Authority of the expiration without renewal, revocation or suspension of, or the
institution of any proceedings to revoke or suspend, any License now or
hereafter held by any Insurance Subsidiary which is required to conduct
insurance business in compliance with all applicable laws and regulations, other
than such expiration, revocation or suspension which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
(iii) the receipt of any notice from any Governmental Authority of the
institution of any disciplinary proceedings against or in respect of any
Insurance Subsidiary, or the issuance of any order, the taking of any action or
any request for an extraordinary audit for cause by any Governmental Authority

Page 29

which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect or (iv) any judicial or administrative order limiting or
controlling the insurance business of any Insurance Subsidiary (and not the
insurance industry generally) which has been issued or adopted and which could
reasonably be expected to have a Material Adverse Effect. Any such notice shall
state that it is given pursuant to this Section 6.3.

6.4. Conduct of Business. The Borrower will, and will cause each
-------------------
Significant Subsidiary to, do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted. The
Borrower will cause each Significant Insurance Subsidiary to (i) carry on or
otherwise be associated with the business of a licensed insurance carrier and
(ii) do all things necessary to renew, extend and continue in effect all
Licenses which may at any time and from time to time be necessary for such
Significant Insurance Subsidiary to operate its insurance business in compliance
with all applicable laws and regulations; provided, however, that any such
-------- -------
Significant Insurance Subsidiary may withdraw from one or more states as an
admitted insurer or change the state of its domicile, if such withdrawal or
change is in the best interests of the Borrower and such Significant Insurance
Subsidiary and could not reasonably be expected to have a Material Adverse
Effect.

6.5. Taxes. The Borrower will, and will cause each Subsidiary to, pay
-----
when due all taxes, assessments and governmental charges and levies upon it or
its income, profits or Property, except those which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been set aside.

6.6. Insurance. The Borrower will, and will cause each Subsidiary to,
---------
maintain with financially sound and reputable insurance companies insurance on
all or substantially all of its Property, or shall maintain self-insurance, in
such amounts and covering such risks as is consistent with sound business
practice for Persons in substantially the same industry as the Borrower or such
Subsidiary, and the Borrower will furnish to any Lender upon request full
information as to the insurance carried.

6.7. Compliance with Laws. The Borrower will, and will cause each
--------------------
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, except
where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect.

6.8. Maintenance of Properties. The Borrower will, and will cause each
-------------------------
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times, except where the
failure to so maintain, preserve, protect and repair could not reasonably be
expected to have a Material Adverse Effect.

6.9. Inspection. The Borrower will, and will cause each Subsidiary to,
----------
permit the Agent and the Lenders, by their respective representatives and
agents, to inspect any of the Property, corporate books and financial records of
the Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each Subsidiary
with, and to be advised as to the same by, their

Page 30

respective officers upon reasonable notice and at such reasonable times and
intervals as the Lenders may designate.

6.10. Merger. The Borrower will not, nor will it permit any Subsidiary
------
to, merge or consolidate with or into any other Person, except that (i) a
Subsidiary may merge with the Borrower or a Wholly-Owned Subsidiary and (ii) the
Borrower and any Subsidiary may merge or consolidate with or into any other
Person provided that the Borrower or such Subsidiary shall be the continuing or
surviving corporation and, after giving effect to such merger or consolidation,
no Default or Unmatured Default shall exist.

6.11. Sale of Assets. The Borrower will not, nor will it permit any
--------------
Subsidiary to, lease, sell or otherwise dispose of all or a Substantial Portion
of its Property (exclusive of Investments sold in the ordinary course of
business) to any other Person(s) in any calendar year.

6.12. Sale and Leaseback. The Borrower will not, nor will it permit any
------------------
Subsidiary to, sell or transfer a Substantial Portion of its Property in order
to concurrently or subsequently lease as lessee such or similar Property.

6.13. Investments and Acquisitions. The Borrower will not make, and will
----------------------------
not permit any Subsidiary to make, any Acquisitions except Permitted
Acquisitions.

6.14. Liens. The Borrower will not, nor will it permit any Subsidiary
-----
to, create, incur, or suffer to exist any Lien in, of or on its Property other
than Liens securing in the aggregate not more than $100,000,000 of
Indebtedness.

6.15. Consolidated Net Worth. The Borrower will maintain at all times
----------------------
Consolidated Net Worth equal to not less than the sum of (i) $1,500,000,000 plus
(ii) 25% of the Borrower's Consolidated Net Income, if positive, for each fiscal
quarter ending after June 30, 1996.

6.16. Ratio of Consolidated Indebtedness to Consolidated Capitalization.
-----------------------------------------------------------------
The Borrower will maintain at all times a ratio of Consolidated Indebtedness to
Consolidated Capitalization of not greater than .5 to 1.0.

6.17. Ratio of Consolidated Adjusted Net Income to Consolidated Interest
------------------------------------------------------------------
Expense. The Borrower will maintain, as at the last day of each fiscal quarter,
-------
a ratio of (i) Consolidated Adjusted Net Income to (ii) Consolidated Interest
Expense, in each case calculated for the four fiscal quarters then ending, of
not less than 2.5 to 1.0.

6.18. Affiliates. The Borrower will not, and will not permit any
----------
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate (other than a Wholly-Owned Subsidiary) except (i) any
such transactions, payments or transfers with or to such Affiliates as are made
in the ordinary course of business and pursuant to the reasonable requirements
of the Borrower's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary than the Borrower or
such Subsidiary would obtain in a comparable arms-length transaction and (ii)
any such other transactions,

Page 31

payments or transfers with or to such Affiliates as could not reasonably be
expected to have a Material Adverse Effect.

6.19 Series A Preferred Securities. The Borrower will not, and will not
-----------------------------
permit Torchmark Capital L.L.C. to, declare or pay dividends or distributions
on, or redeem, purchase or otherwise acquire, the Series A Preferred Securities
or any portion thereof if, after giving effect thereto, a Default or Unmatured
Default would exist.

ARTICLE VII

DEFAULTS
--------

The occurrence of any one or more of the following events shall constitute
a Default:

7.1. Any representation or warranty made or deemed made by or on behalf of
the Borrower or any of its Subsidiaries to the Lenders or the Agent under or in
connection with this Agreement, any Loan, or any certificate or information
delivered in connection with this Agreement or any other Loan Document shall be
materially false or misleading on the date as of which made.

7.2. Nonpayment of any principal of any Note when due, or nonpayment of
any interest upon any Note or of any facility fee or other obligations under any
of the Loan Documents within five days after the same becomes due.

7.3. The breach by the Borrower of any of the terms or provisions of
Section 6.2, 6.3, 6.10, 6.11, 6.12, 6.13, 6.15, 6.16, 6.17 or 6.19; or the
breach by the Borrower of any of the terms or provisions of Section 6.14 or 6.18
which is not remedied within ten days after the Borrower learns thereof.

7.4. The breach by the Borrower (other than a breach which constitutes a
Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of this
Agreement which is not remedied within twenty days after written notice from the
Agent or any Lender.

7.5. Failure of the Borrower or any of its Subsidiaries to pay when due
any Indebtedness in excess of, singly or in the aggregate for all such
Subsidiaries, $10,000,000; or the default by the Borrower or any of its
Subsidiaries in the performance of any term, provision or condition contained in
any agreement under which any such Indebtedness was created or is governed, or
any other event shall occur or condition exist, the effect of which is to cause,
or to permit the holder or holders of such Indebtedness to cause, such
Indebtedness to become due prior to its stated maturity (which default,
condition or event, in the case of Xxxxxxx, shall continue for at least 30 days
beyond any applicable grace period); or any such Indebtedness of the Borrower or
any Subsidiary shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the stated maturity
thereof.

Page 32

(iv) institute any proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any corporate
action to authorize or effect any of the foregoing actions set forth in this
Section 7.6, (vi) fail to contest in good faith any appointment or proceeding
described in Section 7.7 or not pay, or admit in writing its inability to pay,
its debts generally as they become due.

7.7. Without the application, approval or consent of the Borrower or any
of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in Section
7.6(iv) shall be instituted against the Borrower or any of its Subsidiaries and
such appointment continues undischarged or such proceeding continues undismissed
or unstayed for a period of 30 consecutive days.

7.8. Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of (each a "Condemnation"),
all or any portion of the Property of the Borrower or any of its Subsidiaries
which, when taken together with all other Property of the Borrower and its
Subsidiaries so condemned, seized, appropriated, or taken custody or control of,
during the twelve-month period ending with the month in which any such
Condemnation occurs, constitutes a Substantial Portion of its Property.

7.9. The Borrower or any of its Subsidiaries shall fail within 45 days to
pay, bond or otherwise discharge any judgment or order for the payment of money,
either singly or in the aggregate, in excess of $10,000,000, which is not stayed
on appeal or otherwise being appropriately contested in good faith.

7.10. The Unfunded Liabilities of all Single Employer Plans shall exceed
in the aggregate $10,000,000 or any Reportable Event shall occur in connection
with any Plan.

7.11. The Borrower or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be paid to Multiemployer Plans by
the Borrower or any other member of the Controlled Group as withdrawal liability
(determined as of the date of such notification), exceeds $5,000,000 or requires
payments exceeding $500,000 per annum.

7.12. The Borrower or any of its Subsidiaries shall be the subject of any
proceeding or investigation pertaining to the release by the Borrower or any of
its Subsidiaries, or any other person of any toxic or hazardous waste or
substance into the environment, or any violation of any federal, state or local
environmental, health or safety law or regulation, which, in either case, could
reasonably be expected to have a Material Adverse Effect.

7.13. Any Change in Control shall occur.

Page 33

by the state which shall have issued such License, or any action (whether
administrative or judicial) to revoke such License shall have been commenced
against such Insurance Subsidiary which shall not have been dismissed or
contested in good faith within 30 days of the commencement thereof, (ii) shall
be suspended by such state for a period in excess of 30 days or (iii) shall not
be reissued or renewed by such state upon the expiration thereof following
application for such reissuance or renewal by such Insurance Subsidiary.

ARTICLE VIII

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------

8.1. Acceleration. If any Default described in Section 7.6 or 7.7 occurs
------------
with respect to the Borrower, the obligations of the Lenders to make Loans
hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the Agent
or any Lender. If any other Default occurs, the Required Lenders (or the Agent
with the consent of the Required Lenders) may terminate or suspend the
obligations of the Lenders to make Loans hereunder, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrower hereby expressly waives.

If, before any judgment or decree for the payment of the Obligations due
shall have been obtained or entered, the Modified Required Lenders (or, in the
case of an automatic termination upon the occurrence of a Default under Section
7.6 or 7.7, all the Lenders), in their sole discretion, shall so direct, the
Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination.

8.2. Amendments. Subject to the provisions of this Article VIII, the
----------
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or thereunder
or waiving any Default hereunder or thereunder; provided, however, that no such
supplemental agreement shall, without the consent of each Lender:

(i) Extend the Termination Date (other than as provided in Section
-------
2.17), or compromise or forgive the principal amount of any Loan, or reduce the
----
rate of interest or compromise or forgive payment of interest on any Loan, or
reduce the amount of any fee payable hereunder.

(ii) Reduce the percentage specified in the definition of Required
Lenders or Modified Required Lenders.

(iii) Increase the amount of the Commitment of any Lender hereunder,
or permit the Borrower to assign its rights under this Agreement.

(iv) Amend this Section 8.2.

Page 34

No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 12.3.2 without obtaining the consent of any
other party to this Agreement.

8.3. Preservation of Rights. No delay or omission of the Lenders or the
----------------------
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 8.2, and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.

ARTICLE IX

GENERAL PROVISIONS
------------------

9.1. Survival of Representations. All representations and warranties of
---------------------------
the Borrower contained in this Agreement shall survive delivery of the Notes and
the making of the Loans herein contemplated.

9.2. Governmental Regulation. Anything contained in this Agreement to
-----------------------
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

9.3. Taxes. Any taxes (excluding federal income taxes on the overall net
-----
income of any Lender) or other similar assessments or charges payable or ruled
payable by any governmental or revenue authority in respect of the Loan
Documents shall be paid by the Borrower, together with interest and penalties,
if any.

9.4. Headings. Section headings in the Loan Documents are for
--------
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.

9.5. Entire Agreement. The Loan Documents embody the entire agreement
----------------
and understanding among the Borrower, the Agent and the Lenders and supersede
all prior agreements and understandings among the Borrower, the Agent and the
Lenders relating to the subject matter thereof other than the Commitment Letter
dated August 26, 1996 and that certain fee letter agreement dated August 26,
1996, in each case by and between the Borrower and First Chicago.

9.6. Several Obligations; Benefits of this Agreement. The respective
-----------------------------------------------
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any
of its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This

Page 35

Agreement shall not be construed so as to confer any right or benefit upon any
Person other than the parties to this Agreement and their respective successors
and assigns.

9.7. Expenses; Indemnification. The Borrower shall reimburse the Agent
-------------------------
for any costs, internal charges and out-of-pocket expenses (including reasonable
attorneys' fees and time charges of attorneys for the Agent, which attorneys may
be employees of the Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review, amendment, modification,
and administration of the Loan Documents. The Borrower also agrees to reimburse
the Agent and the Lenders for any costs, internal charges and out-of-pocket
expenses (including attorneys' fees and time charges of attorneys for the Agent
and the Lenders, which attorneys may be employees of the Agent or the Lenders)
paid or incurred by the Agent or any Lender in connection with the collection of
the Obligations or the enforcement of the Loan Documents. The Borrower further
agrees to indemnify the Agent and each Lender, its directors, officers and
employees against all losses, claims, damages, penalties, judgments, liabilities
and expenses (collectively, the "indemnified obligations") (including, without
limitation, all expenses of litigation or preparation therefor whether or not
the Agent or any Lender is a party thereto, but excluding those indemnified
obligations arising solely from any Lender's failure to perform its obligations
under this Agreement) which any of them may pay or incur arising out of or
relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Loan hereunder, except that no indemnified
party shall be indemnified for any indemnified obligations arising from its own
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction. The obligations of the Borrower under this Section 9.7
shall survive the termination of this Agreement.

9.8. Numbers of Documents. All statements, notices, closing documents,
--------------------
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders. The
Agent shall promptly remit same to the Lenders.

9.9. Accounting. Except as provided to the contrary herein, all
----------
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.

9.10. Severability of Provisions. Any provision in any Loan Document
--------------------------
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.

9.11. Nonliability of Lenders. The relationship between the Borrower and
-----------------------
the Lenders and the Agent shall be solely that of borrower and lender. Neither
the Agent nor any Lender shall have any fiduciary responsibilities to the
Borrower. Neither the Agent nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with any
phase of the Borrower's business or operations. The Borrower shall rely
entirely upon its own judgment with respect to its business, and any review,
inspection or supervision of, or information supplied to the Borrower by the
Agent or the Lenders is for the protection of the Agent and the Lenders and
neither the Borrower nor any other Person is entitled to rely thereon. The
Borrower agrees that neither the Agent nor any Lender shall have any liability
with respect to, and the Borrower hereby waives, releases and agrees not to xxx
for,

Page 36

any punitive damages in connection with, arising out of, or in any way related
to the Loan Documents or the transactions contemplated thereby or the
relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith.

9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
-------------
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS
-----------------------
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS
OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,
ILLINOIS.

9.14. Confidentiality. Each Lender agrees to hold any confidential
---------------
information which it may receive from the Borrower pursuant to this Agreement in
confidence and for use in connection with this Agreement, including without
limitation, for use in connection with its rights and remedies hereunder, except
for disclosure (i) to other Lenders and their respective Affiliates, (ii) to
legal counsel, accountants, and other professional advisors to, and Affiliates
of, that Lender, (iii) to regulatory officials, (iv) as requested pursuant to or
as required by law, regulation, or legal process, (v) in connection with any
legal proceeding to which that Lender is a party, and (vi) permitted by Section
12.4.

9.15. Nonreliance. Each Lender hereby represents that it is not relying
-----------
on or looking to any margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) for the repayment of the Loans provided
for herein.

9.16. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER
--------------------
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.

Page 37

9.17. Disclosure. The Borrower and each Lender hereby (a) acknowledge
----------
and agree that First Chicago and/or its Affiliates from time to time may hold
other investments in, make other loans to or have other relationships with the
Borrower and its Subsidiaries, including, without limitation, acting as
commercial paper dealer or in connection with any securitizations, interest rate
hedging instruments or agreements or swap transactions, and (b) waive any
liability of First Chicago or such Affiliate to the Borrower or any Lender,
respectively, arising out of or resulting from such investments, loans or other
relationships other than liabilities arising out of the gross negligence or
willful misconduct of First Chicago or its Affiliates.

ARTICLE X

THE AGENT
---------

10.1. Appointment. The First National Bank of Chicago is hereby
-----------
appointed Agent hereunder and under each other Loan Document, and each of the
Lenders irrevocably authorizes the Agent to act as the agent of such Lender.
The Agent agrees to act as such upon the express conditions contained in this
Article X. The Agent shall not have a fiduciary relationship in respect of the
Borrower or any Lender by reason of this Agreement or any other Loan Document.

10.2. Powers. The Agent shall have and may exercise such powers under
------
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder, except any action specifically provided
by the Loan Documents to be taken by the Agent.

10.3. General Immunity. Neither the Agent nor any of its directors,
----------------
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
for its or their own gross negligence or willful misconduct.

10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor
-------------------------------------------
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (i) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent; or (iv) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith. Except
for notices or reports which the Agent is expressly hereby required to provide
to the Lenders, the Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Borrower to the Agent at
such time, but is voluntarily furnished by the Borrower to the Agent (either in
its capacity as Agent or in its individual capacity).

10.5. Action on Instructions of Lenders. The Agent shall in all cases be
---------------------------------
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written

Page 38

instructions signed by the Required Lenders, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders and on all holders of Notes. The Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its satisfaction by the Lenders
pro rata against any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action. The Lenders hereby
acknowledge that the Agent shall be under no duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
unless it shall be requested in writing to do so by the Required Lenders.

10.6. Employment of Agents and Counsel. The Agent may execute any of its
--------------------------------
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.

10.7. Reliance on Documents; Counsel. The Agent shall be entitled to
------------------------------
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.

10.8. Agent's Reimbursement and Indemnification. The Lenders agree to
-----------------------------------------
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by the Borrower for which the Agent is entitled to reimbursement by
the Borrower under the Loan Documents, (ii) for any other expenses not
reimbursed by the Borrower under the Loan Documents and incurred by the Agent on
behalf of the Lenders in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents and (iii) for any
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 in any way relating to or
arising out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents, provided that no Lender shall
be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent. The obligations of the Lenders
under this Section 10.8 shall survive payment of the Obligations and termination
of this Agreement.

10.9. Notice of Default. The Agent shall not be deemed to have knowledge
-----------------
or notice of the occurrence of any Default or Unmatured Default hereunder unless
the Agent has received written notice from a Lender or the Borrower referring to
this Agreement describing such Default or Unmatured Default and stating that
such notice is a "notice of default". In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Lenders stating that
such notice is a "notice of default".

10.10. Rights as a Lender. In the event the Agent is a Lender, the Agent
------------------
shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as

Page 39

though it were not the Agent, and the term "Lender" or "Lenders" shall, at any
time when the Agent is a Lender, unless the context otherwise indicates, include
the Agent in its individual capacity. The Agent may accept deposits from, lend
money to, and generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with the Borrower or any of its Subsidiaries in which the
Borrower or such Subsidiary is not restricted hereby from engaging with any
other Person. The Agent, in its individual capacity, is not obligated to remain
a Lender.

10.11. Lender Credit Decision. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.

10.12. Successor Agent. The Agent may resign at any time by giving
---------------
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. The Agent may be removed at any time with or without cause
by written notice received by the Agent from the Required Lenders, such removal
to be effective on the date specified by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint, on
behalf of the Borrower and the Lenders, a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders within thirty days
after the resigning Agent's giving notice of its intent to resign, then the
resigning Agent may appoint, on behalf of the Borrower and the Lenders, a
successor Agent. If the Agent has resigned or been removed and no successor
Agent has been appointed, the Lenders may perform all the duties of the Agent
hereunder and the Borrower shall make all payments in respect of the Obligations
to the applicable Lenders and for all other purposes shall deal directly with
the Lenders. No successor Agent shall be deemed to be appointed hereunder until
such successor Agent has accepted the appointment. Any such successor Agent
shall be a Lender or another commercial bank having capital and retained
earnings of at least $200,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning or removed Agent, and the resigning or removed Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents. After the effectiveness of the resignation or removal of an Agent,
the provisions of this Article X shall continue in effect for the benefit of
such Agent in respect of any actions taken or omitted to be taken by it while it
was acting as the Agent hereunder and under the other Loan Documents.

10.13. Agent's Fee. The Borrower agrees to pay to the Agent, for its own
-----------
account, the fees agreed to by the Borrower and the Agent pursuant to that
certain letter agreement dated August 26, 1996, or as otherwise agreed from time
to time.

Page 40

ARTICLE XI

SETOFF; RATABLE PAYMENTS
------------------------

11.1. Setoff. In addition to, and without limitation of, any rights of
------
the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or owing by
any Lender to or for the credit or account of the Borrower may be offset and
applied toward the payment of the Obligations owing to such Lender, whether or
not the Obligations, or any part hereof, shall then be due.

11.2. Ratable Payments. Except for payments received from the Agent
----------------
pursuant to Section 2.10, if any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
Sections 3.1, 3.2 or 3.4) in a proportion greater than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to their Loans. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made.

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------

12.1. Successors and Assigns. The terms and provisions of the Loan
----------------------
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in compliance
with Section 12.3. Notwithstanding clause (ii) of the immediately preceding
sentence, any Lender may at any time, without the consent of the Borrower or the
Agent, assign all or any portion of its rights under this Agreement and its
Notes to a Federal Reserve Bank; provided, however, that no such assignment to a
Federal Reserve Bank shall release the transferor Lender from its obligations
hereunder. The Agent may treat the payee of any Note as the owner thereof for
all purposes hereof unless and until such payee complies with Section 12.3 in
the case of an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with the Agent. Any assignee or
transferee of a Note agrees by acceptance thereof to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.

12.2. Participations.
--------------

Page 41

under the Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
such Lender shall remain the holder of any such Note for all purposes under the
Loan Documents, all amounts payable by the Borrower under this Agreement shall
be determined as if such Lender had not sold such participating interests, and
the Borrower and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under the Loan
Documents.

12.2.2. Voting Rights. Each Lender shall retain the sole right to
-------------
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
modification or waiver with respect to any Loan or Commitment in which such
Participant has an interest which forgives principal, interest or fees or
reduces the interest rate or fees payable with respect to any such Loan or
Commitment, postpones any date fixed for any regularly-scheduled payment of
principal of, or interest or fees on, any such Loan or Commitment, or extends
the Termination Date.

12.2.3. Benefit of Setoff. The Borrower agrees that each Participant
-----------------
shall be deemed to have the right of setoff provided in Section 11.1 in respect
of its participating interest in amounts owing under the Loan Documents to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under the Loan Documents, provided that each Lender shall
retain the right of setoff provided in Section 11.1 with respect to the amount
of participating interests sold to each Participant. Each Participant, by
exercising the right of setoff provided in Section 11.1, agrees to share with
each Lender, any amount received pursuant to the exercise of its right of
setoff, such amounts to be shared in accordance with Section 11.2 as if each
Participant were a Lender.

12.3. Assignments.
-----------

12.3.1. Permitted Assignments. Any Lender may, in the ordinary course of
---------------------
its business and in accordance with applicable law, at any time assign to one or
more banks or other entities ("Purchasers") all or any part of its rights and
obligations under the Loan Documents; provided, however, that in the case of an
-------- -------
assignment to an entity which is not a Lender or an Affiliate of a Lender, such
assignment shall be in a minimum amount of $5,000,000 or, if less, the entire
amount of its Commitment and Loans. Such assignment shall be substantially in
the form of Exhibit "H" hereto or in such other form as may be agreed to by the
parties thereto. The consent of the Borrower and the Agent shall be required
prior to an assignment becoming effective with respect to a Purchaser which is
not a Lender or an Affiliate thereof; provided, however, that the consent of the
Borrower shall not be required if, on the date of such assignment, a Default
shall have occurred and be continuing. Such consent shall not be unreasonably
withheld or delayed.

Page 42

consent or action by the Borrower, the Lenders or the Agent shall be required to
release the transferor Lender with respect to the percentage of the Aggregate
Commitment and Loans assigned to such Purchaser. Upon the consummation of any
assignment to a Purchaser pursuant to this Section 12.3.2, the transferor
Lender, the Agent and the Borrower shall make appropriate arrangements so that a
replacement Note is issued to such transferor Lender and a new Note or, as
appropriate, replacement Note, is issued to such Purchaser, in each case in
principal amounts reflecting their respective Commitments, as adjusted pursuant
to such assignment.

12.4. Dissemination of Information. The Borrower authorizes each Lender
----------------------------
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries; provided
that each Transferee and prospective Transferee agrees to be bound by Section
9.14 of this Agreement.

12.5. Tax Treatment. If any interest in any Loan Document is transferred
-------------
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 2.16.

ARTICLE XIII

NOTICES
-------

13.1. Giving Notice. Except as otherwise permitted by Section 2.11 with
-------------
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing and shall be delivered or mailed (or in the case of telegraphic
communication, delivered by telecopy or telex) addressed to such party at its
address set forth below its signature hereto or at such other address as may be
designated by such party in a notice to the other parties. Any notice, if
personally delivered or mailed (properly addressed with postage prepaid), shall
be deemed given when received; any notice, if transmitted by telecopy or telex,
shall be deemed given when transmitted (receipt confirmed by telephone in the
case of telecopies and answerback confirmed in the case of telexes).

13.2. Change of Address. The Borrower, the Agent and any Lender may each
-----------------
change the address for service of notice upon it by a notice in writing to the
other parties hereto.

ARTICLE XIV

COUNTERPARTS
------------

This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower, the Agent and the Lenders
and each party has notified the Agent by telex or telephone, that it has taken
such action.

Page 43

IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.

Commitments TORCHMARK CORPORATION
-----------

By: /s/ Xxxxxxx X. Xxxxx
----------------------

Print Name: Xxxxxxx X. Xxxxx
------------------

Title: Vice President and Treasurer
-----------------------------

0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000

Attention: Xx. Xxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$20,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
-----------
Individually and as Agent

By: /s/ Xxxx X. Xxxxxxx
-------------------------------

Print Name: Xxxx X. Xxxxxxx
----------------

Title: Managing Director
------------------

Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000

Attention: Financial Services Division
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Telex No.: 4330253

Page 44

$13,000,000 AMSOUTH BANK OF ALABAMA
-----------

By: /s/ Xxxx X. Xxxxxx
-------------------------------

Print Name: Xxxx X. Xxxxxx

Title: Senior Vice President

0000 0xx Xxxxxx Xxxxx - 0xx Xxxxx
Xxxxxxxxxx, XX 00000

Attention: Xxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$13,000,000 BANK OF AMERICA ILLINOIS
-----------

By: /s/ Xxxx X. Xxxxxx
-------------------------------

Print Name: Xxxx X. Xxxxxx

Title: Vice President

000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000

Attention: Xxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 45

$13,000,000 BANK OF MONTREAL
-----------

By: /s/ Xxx Xxxxxxx
-------------------------------

Print Name: Xxx Xxxxxxx

Title:

000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000

Attention: Xxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$13,000,000 THE BANK OF NEW YORK
-----------

By: /s/ Xxxxxxx Xxxxx
-------------------------------

Print Name: Xxxxxxx Xxxxx

Title: Assistant Treasurer

Xxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000

Attention: Xxxxxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 46

$13,000,000 THE CHASE MANHATTAN BANK
-----------

By: /s/ J. Xxxxx Xxxxxx, Jr.
-------------------------------

Print Name: J. Xxxxx Xxxxxx, Jr.

Title: Vice President

Xxx Xxxxx Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000

Attention: J. Xxxxx Xxxxxx, Jr.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$13,000,000 FIRST ALABAMA BANK
-----------

By: /s/ Xxxxxx Xxxx
-------------------------------

Print Name: Xxxxxx Xxxx

Title: Vice President

000 Xxxxx 00xx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000

Attention: Xxxxxx Xxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 47

$13,000,000 FLEET NATIONAL BANK
-----------

By: /s/ Xxxxxxx Xxxxxxx
-------------------------------

Print Name: Xxxxxxx Xxxxxxx

Title: Vice President

000 Xxxx Xxxxxx, XXX 000
Xxxxxxxx, XX 00000

Attention: Xxxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$13,000,000 SOUTHTRUST BANK OF ALABAMA
-----------

By: /s/ Xxxxxx X. Xxxxx
-------------------------------

Print Name: Xxxxxx X. Xxxxx

Title: Vice President

000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, XX 00000

Attention: Xxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 48

$10,000,000 COMPASS BANK
-----------

By: /s/ Con Holland
-------------------------------

Print Name: Con Holland

Title: Vice President

00 Xxxxx 00xx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000

Attention: Con Holland
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$10,000,000 UNION BANK OF SWITZERLAND, NEW YORK
----------- BRANCH

By: /s/ Xxxxxx Xxxxxxxx
-------------------------------

Print Name: Xxxxxx Xxxxxxxx

Title: Assistant Vice President

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

Print Name:

Title:

000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000

Attention: Xxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 49

$8,000,000 BANQUE NATIONALE DE PARIS
----------

By: /s/ Xxxx Xxxxxxxx
-------------------------------

Print Name: Xxxx Xxxxxxxx

Title: Vice President

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

Print Name:

Title:

000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000

Attention: Xxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$8,000,000 BOATMEN'S NATIONAL BANK
----------

By: /s/ Xxxx Xxxxx
-------------------------------

Print Name: Xxxx Xxxxx

Title: Senior Vice President

00xx xxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000

Attention: Xxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 50

$8,000,000 DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR
---------- CAYMAN ISLANDS BRANCH

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

Print Name:

Title:

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

Print Name:

Title:

00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000

Attention:
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$8,000,000 DRESDNER BANK AG, NEW YORK BRANCH AND
---------- GRAND CAYMAN BRANCH

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

Print Name:

Title:

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

Print Name:

Title:

00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000

Attention: Xxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 51

$8,000,000 MELLON BANK, N.A.
----------

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

Print Name: Xxxxxx X. Xxxxxxxxxxxx

Title: Vice President

Xxx Xxxxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000

Attention: Xxxxxx X. Xxxxxxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$8,000,000 THE SAKURA BANK, LIMITED
----------

By: /s/ Xxxxxxxx Xxxxxxxx
-------------------------------

Print Name: Xxxxxxxx Xxxxxxxx

Title: Vice President and Senior Manager

000 Xxxxxxxxx Xxxxxx Xxx. X.X.
Xxxxxxx, XX 00000

Attention: Xxxxxxx Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 52

$8,000,000 UMB BANK, N.A.
----------

By: /s/ Xxx Xxxxxxxx
-------------------------------

Print Name: Xxx Xxxxxxxx

Title: Divisional Executive Vice President

0000 Xxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000

Attention: Xxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 53

EXECUTION COPY

[5 Year]

$400,000,000

CREDIT AGREEMENT

Dated as of October 24, 1996

among

TORCHMARK CORPORATION,

THE LENDERS

and

THE FIRST NATIONAL BANK OF CHICAGO,
as Agent

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS....................................................... 1

ARTICLE II THE FACILITY...................................................... 13
2.1. The Facility...................................................... 13
2.1.1. Description of Facility.................................. 13
2.1.2. Facility Amount.......................................... 13
2.1.3. Availability of Facility................................. 13
2.2. Ratable Advances.................................................. 14
2.2.1. Ratable Advances......................................... 14
2.2.2. Ratable Advance Rate Options............................. 14
2.2.3. Method of Selecting Types and Interest Periods for
Ratable Advances......................................... 14
2.2.4. Conversion and Continuation of Outstanding Ratable
Advances................................................. 15
2.3. Competitive Bid Advances.......................................... 15
2.3.1. Competitive Bid Option................................... 15
2.3.2. Competitive Bid Quote Request............................ 16
2.3.3. Invitation for Competitive Bid Quotes.................... 16
2.3.4. Submission and Contents of Competitive Bid Quotes........ 16
2.3.5. Notice to Borrower....................................... 18
2.3.6. Acceptance and Notice by Borrower........................ 18
2.3.7. Allocation by Agent...................................... 18
2.4. Availability of Funds............................................. 19
2.5. Facility Fee; Reductions in Aggregate Commitment.................. 19
2.6. Minimum Amount of Each Advance.................................... 19
2.7. Optional Principal Payments....................................... 19
2.8. Changes in Interest Rate, etc..................................... 19
2.9. Rates Applicable After Default.................................... 20
2.10. Method of Payment................................................. 20
2.11. Notes; Telephonic Notices......................................... 20
2.12. Interest Payment Dates; Interest and Fee Basis.................... 21
2.13. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions............................................. 21
2.14. Lending Installations............................................. 21
2.15. Non-Receipt of Funds by the Agent................................. 21
2.16. Withholding Tax Exemption......................................... 22

ARTICLE III CHANGE IN CIRCUMSTANCES........................................... 22
3.1. Yield Protection.................................................. 22
3.2. Changes in Capital Adequacy Regulations........................... 23

(i)

3.3. Availability of Types of Advances................................. 23
3.4. Funding Indemnification........................................... 23
3.5. Lender Statements; Survival of Indemnity.......................... 24
3.6. Right to Substitute Lender........................................ 24

ARTICLE IV CONDITIONS PRECEDENT.............................................. 25
4.1. Initial Advance................................................... 25
4.2. Each Advance...................................................... 26

ARTICLE V REPRESENTATIONS AND WARRANTIES.................................... 26
5.1. Corporate Existence and Standing.................................. 26
5.2. Authorization and Validity........................................ 26
5.3. No Conflict; Government Consent................................... 26
5.4. Financial Statements.............................................. 27
5.5. Material Adverse Change........................................... 27
5.6. Taxes............................................................. 27
5.7. Litigation and Contingent Obligations............................. 27
5.8. Subsidiaries...................................................... 28
5.9. ERISA............................................................. 28
5.10. Accuracy of Information........................................... 28
5.11. Regulation U...................................................... 28
5.12. Material Agreements............................................... 28
5.13. Compliance With Laws.............................................. 28
5.14. Ownership of Properties........................................... 29
5.15. Investment Company Act............................................ 29
5.16. Public Utility Holding Company Act................................ 29
5.17. Insurance Licenses................................................ 29

ARTICLE VI COVENANTS......................................................... 29
6.1. Financial Reporting............................................... 29
6.2. Use of Proceeds................................................... 31
6.3. Certain Notices................................................... 31
6.4. Conduct of Business............................................... 32
6.5. Taxes............................................................. 32
6.6. Insurance......................................................... 32
6.7. Compliance with Laws.............................................. 32
6.8. Maintenance of Properties......................................... 32
6.9. Inspection........................................................ 33
6.10. Merger............................................................ 33
6.11. Sale of Assets.................................................... 33
6.12. Sale and Leaseback................................................ 33
6.13. Investments and Acquisitions...................................... 33
6.14. Liens............................................................. 33
6.15. Consolidated Net Worth............................................ 33

(ii)

6.16. Ratio of Consolidated Indebtedness to............................ 33
Consolidated Capitalization
6.17. Ratio of Consolidated Adjusted Net Income to
Consolidated Interest Expense.................................... 33
6.18. Affiliates....................................................... 34

ARTICLE VII DEFAULTS......................................................... 34

ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES................... 36
8.1. Acceleration..................................................... 36
8.2. Amendments....................................................... 37
8.3. Preservation of Rights........................................... 37

ARTICLE IX GENERAL PROVISIONS............................................... 37
9.1. Survival of Representations...................................... 37
9.2. Governmental Regulation.......................................... 38
9.3. Taxes............................................................ 38
9.4. Headings......................................................... 38
9.5. Entire Agreement................................................. 38
9.6. Several Obligations; Benefits of this Agreement.................. 38
9.7. Expenses; Indemnification........................................ 38
9.8. Numbers of Documents............................................. 39
9.9. Accounting....................................................... 39
9.10. Severability of Provisions....................................... 39
9.11. Nonliability of Lenders.......................................... 39
9.12. CHOICE OF LAW.................................................... 39
9.13. CONSENT TO JURISDICTION.......................................... 39
9.14. Confidentiality.................................................. 40
9.15. Nonreliance...................................................... 40
9.16. WAIVER OF JURY TRIAL............................................. 40
9.17. Disclosure....................................................... 40

ARTICLE X THE AGENT........................................................ 41
10.1. Appointment...................................................... 41
10.2. Powers........................................................... 41
10.3. General Immunity................................................. 41
10.4. No Responsibility for Loans, Recitals, etc....................... 41
10.5. Action on Instructions of Lenders................................ 41
10.6. Employment of Agents and Counsel................................. 42
10.7. Reliance on Documents; Counsel................................... 42
10.8. Agent's Reimbursement and Indemnification........................ 42
10.9. Notice of Default................................................ 42
10.10. Rights as a Lender............................................... 42
10.11. Lender Credit Decision........................................... 43
10.12. Successor Agent.................................................. 43

(iii)

10.13. Agent's Fee...................................................... 43

ARTICLE XI SETOFF; RATABLE PAYMENTS......................................... 44
11.1. Setoff........................................................... 44
11.2. Ratable Payments................................................. 44

ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS................ 44
12.1. Successors and Assigns........................................... 44
12.2. Participations................................................... 44
12.2.1. Permitted Participants; Effect......................... 45
12.2.2. Voting Rights.......................................... 45
12.2.3. Benefit of Setoff...................................... 45
12.3. Assignments...................................................... 45
12.3.1. Permitted Assignments.................................. 45
12.3.2. Effect; Effective Date................................. 46
12.4. Dissemination of Information..................................... 46
12.5. Tax Treatment.................................................... 46

ARTICLE XIII NOTICES.......................................................... 46
13.1. Giving Notice.................................................... 46
13.2. Change of Address................................................ 47

ARTICLE XIV COUNTERPARTS..................................................... 47

(iv)

Exhibit "A" - Note (Ratable Loan)

Exhibit "B" - Note (Competitive Bid Loan)

Exhibit "C" - Competitive Bid Quote Request

Exhibit "D" - Invitation for Competitive Bid Quotes

Exhibit "E" - Competitive Bid Quote

Exhibit "F" - Opinion

Exhibit "G" - Compliance Certificate

Schedule I to Compliance Certificate

Exhibit "H" - Assignment Agreement

Exhibit "I" - to Assignment Agreement
(Notice of Assignment)

Exhibit "II" - to Assignment Agreement (Consent and Release of
the Borrower and Agent)

Exhibit "I" - Transfer Instructions

Schedule "1" - Significant Subsidiaries

Schedule "2" - Insurance Licenses

Schedule "3" - Pricing Grid
(v)

CREDIT AGREEMENT

This Agreement, dated as of October 24, 1996, is among Torchmark
Corporation, the Lenders and The First National Bank of Chicago, as Agent. The
parties hereto agree as follows:

ARTICLE I

DEFINITIONS
-----------

As used in this Agreement:

"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to Section 2.3.

"Absolute Rate Interest Period" means, with respect to an Absolute
Rate Advance, a period of not less than 30 and not more than 180 days commencing
on a Business Day selected by the Borrower pursuant to this Agreement. If such
Absolute Rate Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next succeeding Business
Day.

"Absolute Rate Loan" means a Loan which bears interest at the Absolute
Rate.

"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or division thereof,
whether through purchase of assets, merger or otherwise or (ii) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage or voting power) of the
outstanding partnership interests of a partnership.

"Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by some or all of the Lenders to the Borrower
on the same Borrowing Date, of the same Type (or on the same interest basis in
the case of Competitive Bid Advances) and, when applicable, for the same
Interest Period and includes a Competitive Bid Advance.

"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
A Person shall be deemed to control another Person if the controlling Person
owns 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.

"Agent" means The First National Bank of Chicago in its capacity as
agent for the Lenders pursuant to Article X, and not in its individual capacity
as a Lender, and any successor Agent appointed pursuant to Article X.

"Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders, as reduced from time to time pursuant to the terms hereof.

"Agreement" means this credit agreement, as it may be amended,
modified or restated and in effect from time to time.

"AIL" means American Income Life Insurance Company, an Indiana
insurance company.

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

Page 2

"Applicable Facility Fee Percentage" means, at any time, the
percentage determined in accordance with the Pricing Grid at such time. The
Applicable Facility Fee Percentage shall change as and when the Borrower Debt
Rating changes. The initial Applicable Facility Fee Percentage shall be .08%.

"Article" means an article of this Agreement unless another document
is specifically referenced.

"Authorized Officer" means any of the Chairman, Vice Chairman,
President, Chief Financial Officer, Chief Accounting Officer, Treasurer, any
Vice President or any Assistant Treasurer of the Borrower, acting singly.

"Borrower" means Torchmark Corporation, a Delaware corporation, and
its successors and assigns.

"Borrower Debt Rating" means the senior unsecured long term debt
(without credit enhancement) rating of the Borrower as determined by a rating
agency identified on the Pricing Grid.

"Borrowing Date" means a date on which an Advance is made hereunder.

"Business Day" means (i) with respect to any borrowing, payment or
rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday)
on which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago and New York for the conduct of substantially all
of their commercial lending activities.

"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.

"Change" means (i) any change after the date of this Agreement in the
Risk-Based Capital Guidelines for banks or (ii) any adoption of or change in any
other law, governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the force of law)
after the date of this Agreement which affects the amount of capital required or
expected to be maintained by any Lender or any Lending Installation or any
corporation controlling any Lender.

Page 3

"Change in Control" means 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 outstanding shares of voting stock
of the Borrower.

"Closing Date" means October 24, 1996.

"Code" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.

"Commitment" means, for each Lender, the obligation of such Lender to
make Loans not exceeding the amount set forth opposite its signature below or as
set forth in any Notice of Assignment relating to any assignment that has become
effective pursuant to Section 12.3.2, as such amount may be modified from time
to time pursuant to the terms hereof.

"Competitive Bid Advance" means a borrowing hereunder consisting of
the aggregate amount of the several Competitive Bid Loans made by some or all of
the Lenders to the Borrower at the same time and for the same Interest Period.

"Competitive Bid Borrowing Notice" is defined in Section 2.3.6.

"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute
Rate Loan, or both, as the case may be.

"Competitive Bid Margin" means the margin above or below the
applicable Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan,
expressed as a percentage (rounded to the nearest 1/100 of 1%) to be added or
subtracted from such Eurodollar Base Rate.

"Competitive Bid Note" means a promissory note in substantially the
form of Exhibit "B" hereto, with appropriate insertions, duly executed and
delivered to the Agent by the Borrower for the account of a Lender and payable
to the order of such Lender, including any amendment, modification, renewal or
replacement of such promissory note.

"Competitive Bid Quote" means a Competitive Bid Quote substantially in
the form of Exhibit "E" hereto completed and delivered by a Lender to the Agent
in accordance with Section 2.3.4.

"Condemnation" is defined in Section 7.8.

Page 4

"Consolidated Adjusted Net Income" means, for any period of
calculation, Consolidated Net Income plus (to the extent deducted in determining
Consolidated Net Income) (i) the provision for taxes in respect of, or measured
by, income or excess profits and (ii) Consolidated Interest Expense, in each
case calculated for such period for the Borrower and its Subsidiaries on a
consolidated basis in accordance with Agreement Accounting Principles.

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

"Consolidated Indebtedness" means the Indebtedness of the Borrower and
its Subsidiaries determined on a consolidated basis in accordance with Agreement
Accounting Principles.

"Consolidated Net Income" means, for any period of calculation, the
net income of the Borrower and the Subsidiaries calculated on a consolidated
basis in accordance with Agreement Accounting Principles consistently applied.

"Consolidated Net Worth" means, at any date of determination, the
amount of consolidated common and preferred shareholders' equity of the Borrower
and its Subsidiaries (including, without limitation, the Series A Preferred
Securities), determined as at such date in accordance with Agreement Accounting
Principles; provided, however, that the effect of the application of FAS 115
-------- -------
shall be excluded when computing Consolidated Net Worth.

"Contingent Obligation" of a Person means any agreement, undertaking
or arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a Letter of Credit, but
excluding (i) the endorsement of instruments for deposit or collection in the
ordinary course of business, (ii) the Payment and Guarantee Agreement and (iii)
obligations arising in connection with the Agent Balance Transaction.

"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.

"Conversion/Continua tion Notice" is defined in Section 2.2.4.

Page 5

reference rate and does not necessarily represent the lowest or best rate of
interest actually charged to any customer. First Chicago may make commercial
loans or other loans at rates of interest at, above or below the Corporate Base
Rate.

"Default" means an event described in Article VII.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.

"Eurodollar Advance" means a Eurodollar Bid Rate Advance or a
Eurodollar Ratable Advance, or both, as the case may be.

"Eurodollar Auction" means a solicitation of Competitive Bid Quotes
setting forth Eurodollar Bid Rates pursuant to Section 2.3.

"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for
the relevant Eurodollar Interest Period, the rate determined by the Agent to be
the rate at which deposits in U.S. dollars are offered by First Chicago to
first-class banks in the London interbank market at approximately 11 a.m.
(London time) two Business Days prior to the first day of such Eurodollar
Interest Period, in the approximate amount of First Chicago's relevant
Eurodollar Ratable Loan (or in the case of a Eurodollar Bid Rate Advance, in an
amount comparable to the amount of such Advance) and having a maturity
approximately equal to such Eurodollar Interest Period.

"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate
Loan made by a given Lender for the relevant Eurodollar Interest Period, the sum
of (i) the Eurodollar Base Rate and (ii) the Competitive Bid Margin offered by
such Lender and accepted by the Borrower.

"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which
bears interest at a Eurodollar Bid Rate.

"Eurodollar Bid Rate Loan" means a Loan which bears interest at the
Eurodollar Bid Rate.

"Eurodollar Interest Period" means, with respect to a Eurodollar
Ratable Advance or a Eurodollar Bid Rate Advance, a period of one, two, three or
six months commencing on a Business Day selected by the Borrower pursuant to
this Agreement. Such Eurodollar Interest Period shall end on (but exclude) the
day which corresponds numerically to such date one, two, three or six months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Eurodollar Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If a Eurodollar Interest Period would
otherwise end on a day which is not a Business Day, such Eurodollar Interest
Period shall end on the next succeeding Business Day, provided, however, that if
said next succeeding Business Day falls in a new month, such Eurodollar Interest
Period shall end on the immediately preceding Business Day.

Page 6

"Eurodollar Loan" means a Eurodollar Ratable Loan or Eurodollar Bid
Rate Loan, or both, as the case may be.

"Eurodollar Ratable Advance" means an Advance which bears interest at
a Eurodollar Rate requested by the Borrower pursuant to Section 2.2.3.

"Eurodollar Ratable Loan" means a Loan which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to Section 2.2.3.

"Eurodollar Rate" means, with respect to a Eurodollar Ratable Advance
for the relevant Eurodollar Interest Period, the sum of (i) the quotient of (a)
the Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided
by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus (ii) the Applicable Eurodollar Margin. The
Eurodollar Rate shall be rounded to the next higher multiple of 1/16 of 1% if
the rate is not such a multiple.

"Federal Funds Effective Rate" means, for any day, an interest rate
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.

"Financial Statements" is defined in Section 5.4.

"First Chicago" means The First National Bank of Chicago in its
individual capacity, and its successors.

"Floating Rate Advance" means an Advance which bears interest at the
Alternate Base Rate.

"Floating Rate Loan" means a Ratable Loan which bears interest at the
Alternate Base Rate.

"Governmental Authority" means the federal government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government including, without limitation, any board of insurance, insurance
department or insurance commissioner.

Page 7

"Indebtedness" of a Person means, without duplication, such Person's
(i) obligations for borrowed money, (ii) obligations representing the deferred
purchase price of Property or services (excluding accounts payable arising in
the ordinary course of such Person's business payable on terms customary in the
trade and obligations of Insurance Subsidiaries arising under insurance or
annuity products), (iii) obligations, whether or not assumed, secured by Liens
or payable out of the proceeds or production from property now or hereafter
owned or acquired by such Person, (iv) obligations which are evidenced by notes,
acceptances, or similar instruments, (v) Capitalized Lease Obligations, (vi) net
liabilities under interest rate swap, exchange or cap agreements, and (vii)
Contingent Obligations, but excluding any indebtedness of the Borrower arising
under or in connection with the Series A Preferred Securities Loan Agreement.

"Insurance Subsidiary" means any Subsidiary of the Borrower which is
engaged in the life, health or accident insurance business.

"Interest Period" means a Eurodollar Interest Period or an Absolute
Rate Interest Period.

"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade), deposit account or contribution of capital by such Person to any other
Person or any investment in, or purchase or other acquisition of, the stock,
partnership interests, notes, debentures or other securities of any other Person
made by such Person.

"Invitation for Competitive Bid Quotes" means an Invitation for
Competitive Bid Quotes substantially in the form of Exhibit "D" hereto,
completed and delivered by the Agent to the Lenders in accordance with Section
2.3.3.

"Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.

"Lending Installation" means, with respect to a Lender or the Agent,
any office, branch, subsidiary or affiliate of such Lender or the Agent.

Page 8

vendor or lessor under any conditional sale, Capitalized Lease or other title
retention agreement but excluding rights in agent balances which are sold in an
Agent Balance Transaction).

"Loan" means, with respect to a Lender, such Lender's portion of any
Advance and "Loans" means, with respect to the Lenders, the aggregate of all
Advances.

"Loan Documents" means this Agreement, the Notes and the other
documents, certificates and agreements contemplated hereby and executed by the
Borrower in favor of the Agent or any Lender.

"Modified Required Lenders" means Lenders in the aggregate having at
least 75% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 75% of the aggregate
unpaid principal amount of the outstanding Advances.

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

"Notes" means, collectively, the Competitive Bid Notes and the Ratable
Notes; and "Note" means any one of the Notes.

"Notice of Assignment" is defined in Section 12.3.2.

"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the Lenders
or to any Lender, the Agent or any indemnified party hereunder arising under the
Loan Documents.

"Participants" is defined in Section 12.2.1.

Page 9

"Payment and Guarantee Agreement" means the Payment and Guarantee
Agreement dated October 11, 1994, issued by the Borrower for the benefit of the
holders of the Series A Preferred Securities, without giving effect to any
amendments thereto.

"Payment Date" means the last day of each March, June, September and
December.

"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.

"Permitted Acquisition" means the Acquisition of any Person which has
been approved and recommended by the board of directors (or the functional
equivalent thereof) of the Person being acquired.

"Plan" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code as to which the Borrower or any member of the Controlled Group may
have any liability.

"Pricing Grid" means the pricing grid attached hereto as Schedule "3".

"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.

"Purchasers" is defined in Section 12.3.1.

"Ratable Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Ratable Loans made by the Lenders to the
Borrower at the same time, of the same Type and for the same Interest Period.

"Ratable Borrowing Notice" is defined in Section 2.2.3.

"Ratable Loan" means a Loan made by a Lender pursuant to Section 2.2
hereof.

"Ratable Note" means a promissory note in substantially the form of
Exhibit "A" hereto, duly executed and delivered to the Agent by the Borrower for
the account of each Lender and payable to the order of a Lender in the amount of
its' Commitment, including any amendment, modification, renewal or replacement
of such promissory note.

"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.

Page 10

"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.

"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.

"Required Lenders" means Lenders in the aggregate having at least 66
2/3% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 66 2/3% of the aggregate
unpaid principal amount of the outstanding Advances.

"Reserve Requirement" means, with respect to Eurodollar Interest
Period, the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed under Regulation D
on Eurocurrency liabilities .

"Risk-Based Capital Guidelines" means (i) the risk-based capital
guidelines in effect in the United States on the date of this Agreement, and
(ii) the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards," and
any amendments to such regulations adopted prior to the date of this Agreement.

"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.

"Series A Preferred Securities" means the 9.18% Preferred Securities,
Series A, issued by Torchmark Capital L.L.C. on October 11, 1994.

"Series A Preferred Securities Loan Agreement" means the Loan
Agreement dated as of October 11, 1994 between the Borrower and Torchmark
Capital L.L.C. entered into in connection with the Series A Preferred
Securities, as in effect on the date hereof.

Page 11

"Significant Insurance Subsidiary" means any Significant Subsidiary
which is an Insurance Subsidiary.

"Significant Subsidiary" of a Person means a "significant subsidiary"
as defined in Rule 1-02(v) of Regulation S-X of the Securities and Exchange
Commission (17 CFR Part 210), but excluding Xxxxxxx. Unless otherwise expressly
provided, all references herein to a "Significant Subsidiary" shall mean a
Significant Subsidiary of the Borrower.

"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.

"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, association, joint venture, limited liability company
or similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Borrower.

"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (i) represents more than 10% of
the consolidated assets of the Borrower and its Subsidiaries as would be shown
in the consolidated financial statements of the Borrower and its Subsidiaries as
at the beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Borrower and its
Subsidiaries as reflected in the financial statements referred to in clause (i)
above.

"Termination Date" means (i) October 24, 2001, or (ii) such earlier
date on which the obligations of the Lenders to make Loans hereunder are
terminated pursuant to the terms of this Agreement.

"Transferee" is defined in Section 12.4.

"Type" means, with respect to any Advance, its nature as a Floating
Rate Advance, Eurodollar Advance or Absolute Rate Advance.

"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans.

"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.

Page 12

"Xxxxxxx" means Xxxxxxx Gas Company, Ltd., a Texas limited partnership
and Wholly-Owned Subsidiary of the Borrower.

"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, association, joint
venture, limited liability company or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled. Unless otherwise expressly provided, all references
herein to a "Wholly-Owned Subsidiary" shall mean a Wholly-Owned Subsidiary of
the Borrower.

The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.

ARTICLE II

THE FACILITY
------------

2.1. The Facility.
------------

(ii) each Lender may, in its sole discretion, make bids to make
Competitive Bid Loans to the Borrower, and make such Loans, in accordance with
Section 2.3.

Page 13

may borrow, repay and reborrow Advances at any time prior to the Termination
Date. Any outstanding Advances and all other unpaid Obligations shall be paid
in full by the Borrower on the Termination Date.

2.2. Ratable Advances.
----------------

2.2.3. Method of Selecting Types and Interest Periods for Ratable
----------------------------------------------------------
Advances. The Borrower shall select the Type of each Ratable Advance and, in
--------
the case of each Eurodollar Ratable Advance, the Eurodollar Interest Period
applicable to such Ratable Advance from time to time; provided, however, that
for a period of at least three Business Days after the initial Advances the
Borrower shall maintain all Ratable Advances as Floating Rate Advances. The
Borrower shall give the Agent irrevocable notice (a "Ratable Borrowing Notice")
not later than 10:00 a.m. (Chicago time) on the Borrowing Date of each Floating
Rate Advance and three Business Days before the Borrowing Date for each
Eurodollar Ratable Advance. Notwithstanding the foregoing, a Ratable Borrowing
Notice for a Floating Rate Advance may be given not later than 15 minutes after
the time which the Borrower is required to reject one or more bids offered in
connection with an Absolute Rate Auction pursuant to Section 2.3.6 and a Ratable
Borrowing Notice for a Eurodollar Ratable Advance may be given not later than 15
minutes after the time the Borrower is required to reject one or more bids
offered in connection with a Eurodollar Auction pursuant to Section 2.3.6. A
Ratable Borrowing Notice shall specify:

(i) the Borrowing Date, which shall be a Business Day, of such Ratable
Advance;

Page 14

(iii) the Type of Advance selected; and

(iv) in the case of each Eurodollar Ratable Advance, the Eurodollar
Interest Period applicable thereto (which may not end after the Termination
Date).

2.2.4. Conversion and Continuation of Outstanding Ratable Advances.
-----------------------------------------------------------
Floating Rate Advances shall continue as Floating Rate Advances unless and until
such Floating Rate Advances are converted into Eurodollar Ratable Advances.
Each Eurodollar Ratable Advance shall continue as a Eurodollar Ratable Advance
until the end of the then applicable Eurodollar Interest Period therefor, at
which time such Eurodollar Ratable Advance shall be automatically converted into
a Floating Rate Advance unless the Borrower shall have given the Agent a
Conversion/Continuation Notice requesting that, at the end of such Eurodollar
Interest Period, such Eurodollar Ratable Advance continue as a Eurodollar
Ratable Advance for the same or another Eurodollar Interest Period. Subject to
the terms of Section 2.6, the Borrower may elect from time to time to convert
all or any part of a Ratable Advance of any Type into any other Type or Types of
Ratable Advances; provided that any conversion of any Eurodollar Ratable Advance
shall be made on, and only on, the last day of the Eurodollar Interest Period
applicable thereto. The Borrower shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of a Ratable Advance or
continuation of a Eurodollar Ratable Advance not later than 10:00 a.m. (Chicago
time) at least three Business Days, in the case of a conversion into or
continuation of a Eurodollar Ratable Advance, prior to the date of the requested
conversion or continuation, specifying:

(i) the requested date, which shall be a Business Day, of such
conversion or continuation;

(ii) the aggregate amount and Type of Ratable Advance which is to be
converted or continued; and

2.3. Competitive Bid Advances.
------------------------

Page 15

by the Competitive Bid Notes. Although the Competitive Bid Notes shall be dated
the Closing Date, interest in respect thereof shall be payable only for the
periods during which the Loans evidenced thereby are outstanding.

(i) the proposed Borrowing Date, which shall be a Business Day, for
the proposed Competitive Bid Advance;

(ii) the aggregate principal amount of such Competitive Bid Advance;

(iii) whether the Competitive Bid Quotes requested are to set forth a
Eurodollar Bid Rate, an Absolute Rate, or both; and

(iv) the Interest Period applicable thereto (which may not end after
the Termination Date).

2.3.4. Submission and Contents of Competitive Bid Quotes.
-------------------------------------------------

Page 16

at its offices specified in or pursuant to Article XIII not later than (a) 9:00
a.m. (Chicago time) at least three Business Days prior to the proposed Borrowing
Date, in the case of a Eurodollar Auction or (b) 9:00 a.m. (Chicago time) on the
proposed Borrowing Date, in the case of an Absolute Rate Auction (or, in either
case upon reasonable prior notice to the Lenders, such other time and date as
the Borrower and the Agent may agree); provided that Competitive Bid Quotes
--------
submitted by First Chicago may only be submitted if the Agent or First Chicago
notifies the Borrower of the terms of the offer or offers contained therein not
later than 15 minutes prior to the latest time at which the relevant Competitive
Bid Quotes must be submitted by the other Lenders. Subject to Articles IV and
VIII, any Competitive Bid Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions of the Borrower.

(ii) Each Competitive Bid Quote shall be in substantially the form of
Exhibit "E" hereto and shall in any case specify:

(a) the proposed Borrowing Date, which shall be the same as that
set forth in the applicable Invitation for Competitive Bid Quotes;

(b) the principal amount of the Competitive Bid Loan for which
each such offer is being made, which principal amount (1) may be greater than,
less than or equal to the Commitment of the quoting Lender, (2) must be at least
$10,000,000 and an integral multiple of $1,000,000, and (3) may not exceed the
principal amount of Competitive Bid Loans for which offers were requested;

(d) the minimum amount, if any, of the Competitive Bid Loan which
may be accepted by the Borrower;

(e) in the case of an Absolute Rate Auction, the Absolute Rate
offered for each such Competitive Bid Loan; and

(f) the identity of the quoting Lender.

(iii) The Agent shall reject any Competitive Bid Quote that:

(a) is not substantially in the form of Exhibit "E" hereto or does
not specify all of the information required by Section 2.3.4(ii);

(b) contains qualifying, conditional or similar language, other
than any such language contained in Exhibit "E" hereto;

Page 17

(c) proposes terms other than or in addition to those set forth in
the applicable Invitation for Competitive Bid Quotes; or

(d) arrives after the time set forth in Section 2.3.4(i).

If any Competitive Bid Quote shall be rejected pursuant to this Section
2.3.4(iii), then the Agent shall notify the relevant Lender of such rejection
promptly.

(i) the aggregate principal amount of each Competitive Bid Advance may
not exceed the applicable amount set forth in the related Competitive Bid Quote
Request,

(ii) acceptance of offers may only be made on the basis of ascending
Eurodollar Bid Rates or Absolute Rates, as the case may be, and

(iii) the Borrower may not accept any offer that is described in
Section 2.3.4(iii) or that otherwise fails to comply with the requirements of
this Agreement.

Page 18

principal amount of Competitive Bid Loans in respect of which such offers are
accepted shall be allocated by the Agent among such Lenders as nearly as
possible (in such multiples, not greater than $1,000,000, as the Agent may deem
appropriate) in proportion to the aggregate principal amount of such offers;

provided, however, that no Lender shall be allocated a portion of any
-------- -------
Competitive Bid Advance which is less than the minimum amount which such Lender
has indicated that it is willing to accept. Allocations by the Agent of the
amounts of Competitive Bid Loans shall be conclusive in the absence of manifest
error. The Agent shall promptly, but in any event on the same Business Day,
notify each Lender of its receipt of a Competitive Bid Borrowing Notice and the
aggregate principal amount of such Competitive Bid Advance allocated to each
participating Lender.

2.4. Availability of Funds. Not later than noon (Chicago time) on
---------------------
each Borrowing Date, each Lender (or in the case of a Competitive Bid Advance,
each Lender making a portion of such Advance) shall make available its Loan or
Loans, in funds immediately available in Chicago to the Agent at its address
specified pursuant to Article XIII. The Agent will make the funds so received
from the Lenders available to the Borrower at the Agent's aforesaid address.

2.7. Optional Principal Payments. The Borrower may from time to
---------------------------
time pay, without penalty or premium, all outstanding Advances, or, in a minimum
aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof, any portion of the outstanding Advances upon two Business Days' prior
notice to the Agent. Any prepayment of a Eurodollar Advance or Absolute Rate
Advance prior to the last day of the applicable Eurodollar Interest Period shall
be subject to the indemnity provisions of Section 3.4.

2.8. Changes in Interest Rate, etc. Each Floating Rate Advance
------------------------------
shall bear interest at the Alternate Base Rate from and including the date such
Advance is made or is converted from a Ratable Eurodollar Advance into a
Floating Rate Advance pursuant to Section 2.2.4 to but excluding the date it
becomes due or is converted into a Eurodollar Ratable Advance pursuant to
Section 2.2.4 hereof, at a rate per annum equal to the Floating Rate for such
day. Changes in the rate

Page 19

of interest on that portion of any Advance maintained as a Floating Rate Advance
will take effect simultaneously with each change in the Alternate Base Rate.
Each Eurodollar Advance and Absolute Rate Advance shall bear interest from and
including the first day of the Interest Period applicable thereto to (but not
including) the last day of such Eurodollar Interest Period at the interest rate
determined as applicable to such Eurodollar Advance or Absolute Rate Advance.
No Interest Period may end after the Termination Date.

2.9. Rates Applicable After Default. Notwithstanding anything to
------------------------------
the contrary contained in Section 2.2.3 or 2.2.4, no Advance may be made as,
converted into or continued as a Eurodollar Ratable Advance (except with the
consent of the Required Lenders) when any Default or Unmatured Default has
occurred and is continuing. During the continuance of a Default, the Required
Lenders may, at their option, by notice to the Borrower (which notice may be
revoked at the option of the Required Lenders notwithstanding any provision of
Section 8.2 requiring unanimous consent of the Lenders to changes in interest
rates), declare that (i) each Eurodollar Advance and Absolute Rate Advance shall
bear interest for the remainder of the applicable Interest Period at the
Eurodollar Rate or Absolute Rate otherwise applicable to such Interest Period
plus 2% per annum and (ii) each Floating Rate Advance shall bear interest at a
rate per annum equal to the Alternate Base Rate plus 2% per annum.

2.10. Method of Payment. All payments of the Obligations hereunder
-----------------
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XIII, or at any other Lending Installation of the Agent specified in
writing by the Agent to the Borrower, by 12:00 noon (local time) on the date
when due and shall be applied ratably by the Agent (i) first, ratably among the
Lenders with respect to any principal and interest due in connection with
Ratable Advances, (ii) second, after all amounts described in clause (i) have
been satisfied, ratably among those Lenders for whom any payment of principal
and interest is due in connection with any Competitive Bid Advances and (iii)
third, after all amounts described in clauses (i) and (ii) have been satisfied,
ratably to any other Obligations then due. Each payment delivered to the Agent
for the account of any Lender shall be delivered by the Agent to such Lender in
the same type of funds that the Agent received at its address specified pursuant
to Article XIII or at any Lending Installation specified in a notice received by
the Agent from such Lender. If such payment is received by the Agent by 1:00
p.m. (Chicago time) such delivery to the Lenders shall be made on the same day
and if received thereafter shall be made on the next succeeding Business Day.
The Agent is hereby authorized to charge the account of the Borrower maintained
with First Chicago for each payment of principal, interest and fees as it
becomes due hereunder.

Page 20

Assistant Treasurer of the Borrower or any person who identifies himself or
herself to be any such officer; provided that, without written notice from the
Borrower, no proceeds of any Advance shall be transferred based upon telephonic
notice to any bank account other than a bank account maintained by the Borrower.
The Borrower agrees to deliver promptly to the Agent a written confirmation, if
such confirmation is requested by the Agent or any Lender, of each telephonic
notice signed by an Authorized Officer. If the written confirmation differs in
any material respect from the action taken by the Agent and the Lenders, the
records of the Agent and the Lenders shall govern absent manifest error.

2.12. Interest Payment Dates; Interest and Fee Basis. Interest
----------------------------------------------
accrued on each Floating Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which such Floating Rate Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on that portion of the outstanding
principal amount of any Floating Rate Advance converted into a Eurodollar
Ratable Advance on a day other than a Payment Date shall be payable on the date
of conversion. Interest accrued on each Eurodollar Advance or Absolute Rate
Advance shall be payable on the last day of its applicable Interest Period, on
any date on which the Eurodollar Advance or Absolute Rate Advance is prepaid,
whether by acceleration or otherwise, and at maturity. Interest accrued on each
Eurodollar Advance or Absolute Rate Advance having an Interest Period longer
than three months shall also be payable on the last day of each three-month
interval during such Interest Period. Interest and facility fees shall be
calculated for actual days elapsed on the basis of a 360-day year. Interest
shall be payable for the day an Advance is made but not for the day of any
payment on the amount paid if payment is received prior to 12:00 noon (local
time) at the place of payment. If any payment of principal of or interest on an
Advance shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment.

Page 21

of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case of
the Borrower, a payment of principal, interest or fees to the Agent for the
account of the Lenders, that it does not intend to make such payment, the Agent
may assume that such payment has been made. The Agent may, but shall not be
obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. If such Lender or the Borrower, as
the case may be, has not in fact made such payment to the Agent, the recipient
of such payment shall, on demand by the Agent, repay to the Agent the amount so
made available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to (i)
in the case of payment by a Lender, the Federal Funds Effective Rate for such
day or (ii) in the case of payment by the Borrower, the interest rate applicable
to the relevant Loan.

2.16. Withholding Tax Exemption. At least five Business Days prior
-------------------------
to the first date on which interest or fees are payable hereunder for the
account of any Lender, each Lender that is not incorporated under the laws of
the United States of America, or a state thereof, agrees that it will deliver to
each of the Borrower and the Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either case that such
Lender is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes.
Each Lender which so delivers a Form 1001 or 4224 further undertakes to deliver
to each of the Borrower and the Agent two additional copies of such form (or a
successor form) on or before the date that such form expires (currently, three
successive calendar years for Form 1001 and one calendar year for Form 4224) or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent forms so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by the Borrower or the Agent,
in each case certifying that such Lender is entitled to receive payments under
this Agreement and the Notes without deduction or withholding of any United
States federal income taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender advises the Borrower
and the Agent that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax.

ARTICLE III

CHANGE IN CIRCUMSTANCES
-----------------------

3.1. Yield Protection. If, after the date hereof, in connection
----------------
with a Eurodollar Loan the adoption of or any change in any law or any
governmental or quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any change in the
interpretation or administration thereof, or the compliance of any Lender
therewith,

(i) subjects any Lender or any applicable Lending Installation to any
tax, duty, charge or withholding on or from payments due from the Borrower
(excluding federal

Page 22

taxation of the overall net income of any Lender or applicable Lending
Installation imposed by the jurisdiction in which such Lender or Lending
Installation is incorporated or has its principal place of business), or changes
the basis of taxation of payments to any Lender or Lending Installation in
respect of its Loans or other amounts due it hereunder, or

3.2. Changes in Capital Adequacy Regulations. If a Lender
---------------------------------------
determines the amount of capital required or expected to be maintained by such
Lender, any Lending Installation of such Lender or any corporation controlling
such Lender is increased as a result of a Change, then, within 15 days of demand
by such Lender, the Borrower shall pay such Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans or its obligation to make Loans hereunder (after taking
into account such Lender's policies as to capital adequacy).

3.3. Availability of Types of Advances. If any Lender determines
---------------------------------
that maintenance of any of its Eurodollar Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation or directive,
whether or not having the force of law, the Agent shall suspend the availability
of the affected Type of Advance and require any Eurodollar Advances to be repaid
or converted into a Floating Rate Advance within five days after Borrower's
receipt of notice by such Lender; or if the Required Lenders determine that (i)
deposits of a type or maturity appropriate to match fund Eurodollar Advances are
not available, or (ii) an interest rate applicable to an Eurodollar Advance does
not accurately reflect the cost of making a Eurodollar Advance of such Type,
then, the Agent shall suspend the availability of Eurodollar Advances with
respect to any Eurodollar Advances made after the date of any such
determination.

3.4. Funding Indemnification. If any payment of a Eurodollar
-----------------------
Advance occurs on a date which is not the last day of the applicable Eurodollar
Interest Period, whether because of acceleration, prepayment or otherwise, or a
Eurodollar Advance is not made on the date specified

Page 23

by the Borrower for any reason other than default by the Lenders, the Borrower
will indemnify each Lender for any loss or cost incurred by it resulting
therefrom, including, without limitation, any loss or cost in liquidating or
employing deposits acquired to fund or maintain the Eurodollar Advance.

3.5. Lender Statements; Survival of Indemnity. To the extent
----------------------------------------
reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Eurodollar Loans to reduce any liability of the
Borrower to such Lender under Sections 3.1 and 3.2 or to avoid the
unavailability of a Type of Advance under Section 3.3, so long as such
designation is not disadvantageous to such Lender. Each Lender shall deliver a
written statement of such Lender to the Borrower (with a copy to the Agent) as
to the amount due, if any, under Sections 3.1, 3.2 or 3.4. Such written
statement shall set forth in reasonable detail the calculations upon which such
Lender determined such amount and shall be final, conclusive and binding on the
Borrower in the absence of manifest error. Determination of amounts payable
under such Sections in connection with a Eurodollar Loan shall be calculated as
though each Lender funded its Eurodollar Loan through the purchase of a deposit
of the type and maturity corresponding to the deposit used as a reference in
determining the Eurodollar Rate applicable to such Loan, whether in fact that is
the case or not. Unless otherwise provided herein, the amount specified in the
written statement of any Lender shall be payable on demand after receipt by the
Borrower of the written statement. The obligations of the Borrower under
Sections 3.1, 3.2 and 3.4 shall survive payment of the Obligations and
termination of this Agreement.

3.6. Right to Substitute Lender. Any Lender claiming any
--------------------------
additional amounts payable pursuant to Section 3.1 or 3.2 materially in excess
of those being charged by other Lenders or unable to make a Eurodollar Advance
available in accordance with Section 3.3, shall, so long as no Default or
Unmatured Default has occurred and is continuing, upon the written request of
the Borrower delivered to such Lender and the Agent, assign, pursuant to and in
accordance with the provisions of Section 12.3, all of its rights and
obligations under this Agreement and under the Loan Documents to another Lender
or to a commercial bank, other financial institution, commercial finance company
or other business lender selected by the Borrower and reasonably acceptable to
the Agent in consideration for (a) the payment by such assignee to such
assigning Lender of the principal of, and interest accrued and unpaid to the
date of such assignment on, the Notes held by such assigning Lender, (b) the
payment by the Borrower to such assigning Lender of any and all other amounts
owing to such assigning Lender under any provision of this Agreement accrued and
unpaid to the date of such assignment and (c) the Borrower's release of such
assigning Lender from any further obligation or liability under this Agreement
and the Loan Documents. Notwithstanding anything to the contrary contained in
this Section 3.6, in no event shall the replacement of any Lender result in a
-----------
decrease or reallocation of the aggregate Commitments without the prior written
consent of the remaining Lenders.

Page 24

ARTICLE IV

CONDITIONS PRECEDENT
--------------------

4.1. Initial Advance. The Lenders shall not be required to make
---------------
the initial Advance hereunder unless the Borrower has furnished to the Agent
with sufficient copies for the Lenders:

(i) Copies of the articles of incorporation of the Borrower, together
with all amendments thereto,both certified by the appropriate governmental
officer in its jurisdiction of incorporation, together with a good standing
certificate issued by the Secretary of State of the jurisdiction of its
incorporation and such other jurisdictions as shall be requested by the Agent.

(ii) Copies, certified by the Secretary or an Assistant Secretary of
the Borrower, of its by-laws and Board of Directors' resolutions authorizing the
execution of the Loan Documents.

(v) A written opinion of the Borrower's counsel, addressed to the
Lenders in substantially the form of Exhibit "F" hereto.

(vi) Notes payable to the order of each of the Lenders.

(viii) The Existing Credit Agreements shall have been terminated and
all amounts owing thereunder shall have been paid (or shall contemporaneously be
paid) in full.

(ix) Such other documents as any Lender or its counsel may have
reasonably requested.

Page 25

4.2. Each Advance. The Lenders shall not be required to make any
------------
Advance, unless on the applicable Borrowing Date:

(i) There exists no Default or Unmatured Default.

ARTICLE V

REPRESENTATIONS AND WARRANTIES
------------------------------

The Borrower represents and warrants to the Lenders that:

5.1. Corporate Existence and Standing. Each of the Borrower and
--------------------------------
its Significant Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.

5.2. Authorization and Validity. The Borrower has the corporate
--------------------------
power and authority and legal right to execute and deliver the Loan Documents
and to perform its obligations thereunder. The execution and delivery by the
Borrower of the Loan Documents and the performance of its obligations thereunder
have been duly authorized by proper corporate proceedings, and the Loan
Documents constitute legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.

5.3. No Conflict; Government Consent. Neither the execution and
-------------------------------
delivery by the Borrower of the Loan Documents, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions thereof
will violate any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on the Borrower or any of its Subsidiaries or the
Borrower's or any of its Subsidiaries' articles of incorporation or by-laws or
the provisions of any indenture, instrument or agreement to which the Borrower
or any of its Subsidiaries is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the Property of
the Borrower or any of its Subsidiaries pursuant to the terms of any such
indenture, instrument or agreement, other than

Page 26

such violations, conflicts or defaults which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. No order,
consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental or public body
or authority, or any subdivision thereof, is required to authorize, or is
required in connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, any of the Loan
Documents.

5.4. Financial Statements. The December 31, 1995 audited
--------------------
consolidated financial statements of the Borrower and its Subsidiaries and the
June 30, 1996 unaudited consolidated financial statements of the Borrower and
its Subsidiaries heretofore delivered to the Lenders (the "Financial
Statements") were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of the Borrower and
its Subsidiaries at such date and the consolidated results of their operations
for the period then ended.

5.5. Material Adverse Change. Since December 31, 1995, there has
-----------------------
been no change in the business, Property, prospects, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect.

5.6. Taxes. The Borrower and its Subsidiaries have filed all
-----
United States federal tax returns and all other tax returns which are required
to be filed and have paid all taxes due pursuant to said returns or pursuant to
any assessment received by the Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to which, in the good
faith judgment of the Borrower, adequate reserves have been provided. The
United States income tax returns of the Borrower and its Subsidiaries have been
audited by the Internal Revenue Service through the fiscal year ended December
31, 1989. No tax liens have been filed and no claims against the Borrower or
its Subsidiaries are being asserted with respect to any such taxes except claims
being contested in good faith and as to which, in the good faith judgment of the
Borrower, adequate reserves have been provided. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of any
taxes or other governmental charges are adequate in the good faith judgment of
the Borrower.

5.7. Litigation and Contingent Obligations. There is no
-------------------------------------
litigation, arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of any of their officers, threatened against or
affecting the Borrower or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect (after giving effect to reserves
which have been provided with respect thereto on the books of the Borrower and
its Subsidiaries). As of the date hereof, the Borrower has no material
Contingent Obligations not provided for or disclosed in the Financial
Statements. Solely for purposes of any reaffirmation of the foregoing
representations pursuant to Section 4.2(ii) in connection with any Loans the
proceeds of which are used to repay maturing commercial paper, such
representations shall not extend to any proceeding in which a punitive damages
judgment has been entered against the Borrower or any Subsidiary, such judgment
has been stayed on appeal or the time for appeal from such judgment has not
expired and such

Page 27

judgment could not reasonably be expected to have a material adverse effect on
the ability of the Borrower to perform its obligations under the Loan Documents.

5.8. Subsidiaries. Schedule "1" hereto contains an accurate list
------------
of all of the Significant Subsidiaries of the Borrower in existence on the date
of this Agreement, setting forth their respective jurisdictions of incorporation
and the percentage of their respective capital stock owned by the Borrower or
other Subsidiaries. All of the issued and outstanding shares of capital stock
of such Subsidiaries have been duly authorized and issued and are fully paid and
non-assessable.

5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans
-----
do not in the aggregate exceed $10,000,000. Each Plan complies in all material
respects with all applicable requirements of law and regulations. No Reportable
Event has occurred with respect to any Plan and neither the Borrower nor any
other members of the Controlled Group has withdrawn from any Plan or initiated
steps to do so, which occurrence or withdrawal could result in a Material
Adverse Effect. No steps have been taken to terminate any Plan which has
Unfunded Liabilities.

5.12. Material Agreements. Neither the Borrower nor any Subsidiary
-------------------
is a party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect. Neither the
Borrower nor any Significant Subsidiary is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument evidencing or governing Indebtedness.

Page 28

remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which non-compliance or remedial action
could reasonably be expected to have a Material Adverse Effect.

5.14. Ownership of Properties. Except for Liens permitted by Section
-----------------------
6.14, on the date of this Agreement, the Borrower and its Subsidiaries have
good title to all of the Property and assets reflected in the Financial
Statements as owned by it, free of all Liens other than those permitted by this
Agreement, except for assets sold, transferred or otherwise disposed of in the
ordinary course of business since the date of such Financial Statements.

5.15. Investment Company Act. Neither the Borrower nor any
----------------------
Subsidiary thereof is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.

5.16. Public Utility Holding Company Act. Neither the Borrower nor
----------------------------------
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

5.17. Insurance Licenses. Schedule "2" attached hereto (as said
------------------
Schedule "2" shall be revised or supplemented from time to time to reflect
withdrawals or changes in jurisdictions permitted by Section 6.4 or additional
jurisdictions set forth in the Annual Statements furnished pursuant to Section
6.1(vii)) lists all of the jurisdictions in which any Significant Insurance
Subsidiary holds active Licenses and is authorized to transact insurance
business. No such License is the subject of a proceeding for suspension or
revocation, there is no sustainable basis for such suspension or revocation, and
to the Borrower's best knowledge no such suspension or revocation has been
threatened by any Governmental Authority. Schedule "2" also indicates the type
or types of insurance in which each such Insurance Subsidiary is permitted to
engage with respect to each License therein listed. None of the Insurance
Subsidiaries transacts any insurance business, directly or indirectly, in any
state other than those enumerated in Schedule "2".

ARTICLE VI

COVENANTS
---------

During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:

6.1. Financial Reporting. The Borrower will maintain, for itself
-------------------
and each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Lenders:

(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by independent certified public accountants,
acceptable to

Page 29

the Lenders, prepared in accordance with Agreement Accounting Principles on a
consolidated and consolidating basis (consolidating statements need not be
certified by such accountants) for itself and the Subsidiaries, including
balance sheets as of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of cash flows, accompanied
by certificate of said accountants that, in the course of their examination
necessary for their certification of the foregoing, they have obtained no
knowledge of any Default or Unmatured Default, or if, in the opinion of such
accountants, any Default or Unmatured Default shall exist, stating the nature
and status thereof.

(iv) Within 330 days after the close of each fiscal year, a statement
of the Unfunded Liabilities of each Single Employer Plan, certified as correct
by an actuary enrolled under ERISA.

(vii) Within 75 days after the close of each fiscal year of each
Insurance Subsidiary, copies of the Annual Statement of each of the Insurance
Subsidiaries, as certified

Page 30

by the president, secretary and treasurer of and the actuary for each such
Insurance Subsidiary and prepared on the NAIC annual statement blanks (or such
other form as shall be required by the jurisdiction of incorporation of each
such Insurance Subsidiary), all such statements to be prepared in accordance
with SAP consistently applied throughout the periods reflected therein and to be
certified by independent certified public accountants reasonably acceptable to
the Agent if so required by any Governmental Authority.

(xi) Such other information (including, without limitation, non-
financial information) as the Agent or any Lender may from time to time
reasonably request.

6.2. Use of Proceeds. The Borrower will, and will cause each
---------------
Subsidiary to, use the proceeds of the Advances (i) for general corporate
purposes, including, without limitation, the repayment of Indebtedness and (ii)
to finance Permitted Acquisitions. The Borrower will not, nor will it permit
any Subsidiary to, use any of the proceeds of the Advances to purchase or carry
any "margin stock" (as defined in Regulation U).

6.3. Certain Notices. The Borrower will give prompt notice in
---------------
writing to the Agent and the Lenders of (i) the occurrence of any Default or
Unmatured Default and of any other development, financial or otherwise, relating
specifically to the Borrower which could reasonably be expected to have a
Material Adverse Effect, (ii) the receipt of any notice from any Governmental
Authority of the expiration without renewal, revocation or suspension of, or the
institution of any proceedings to revoke or suspend, any License now or
hereafter held by any Insurance Subsidiary which is required to conduct
insurance business in compliance with all applicable laws and regulations, other
than such expiration, revocation or suspension which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
(iii) the receipt of

Page 31

any notice from any Governmental Authority of the institution of any
disciplinary proceedings against or in respect of any Insurance Subsidiary, or
the issuance of any order, the taking of any action or any request for an
extraordinary audit for cause by any Governmental Authority which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect or
(iv) any judicial or administrative order limiting or controlling the insurance
business of any Insurance Subsidiary (and not the insurance industry generally)
which has been issued or adopted and which could reasonably be expected to have
a Material Adverse Effect. Any such notice shall state that it is given
pursuant to this Section 6.3.

6.5. Taxes. The Borrower will, and will cause each Subsidiary to,
-----
pay when due all taxes, assessments and governmental charges and levies upon it
or its income, profits or Property, except those which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves have been set aside.

6.6. Insurance. The Borrower will, and will cause each Subsidiary
---------
to, maintain with financially sound and reputable insurance companies insurance
on all or substantially all of its Property, or shall maintain self-insurance,
in such amounts and covering such risks as is consistent with sound business
practice for Persons in substantially the same industry as the Borrower or such
Subsidiary, and the Borrower will furnish to any Lender upon request full
information as to the insurance carried.

6.8. Maintenance of Properties. The Borrower will, and will cause
-------------------------
each Subsidiary to, do all things necessary to maintain, preserve, protect and
keep its Property in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at

Page 32

all times, except where the failure to so maintain, preserve, protect and repair
could not reasonably be expected to have a Material Adverse Effect.

6.9. Inspection. The Borrower will, and will cause each Subsidiary
----------
to, permit the Agent and the Lenders, by their respective representatives and
agents, to inspect any of the Property, corporate books and financial records of
the Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each Subsidiary
with, and to be advised as to the same by, their respective officers upon
reasonable notice and at such reasonable times and intervals as the Lenders may
designate.

6.10. Merger. The Borrower will not, nor will it permit any
------
Subsidiary to, merge or consolidate with or into any other Person, except that
(i) a Subsidiary may merge with the Borrower or a Wholly-Owned Subsidiary and
(ii) the Borrower and any Subsidiary may merge or consolidate with or into any
other Person provided that the Borrower or such Subsidiary shall be the
continuing or surviving corporation and, after giving effect to such merger or
consolidation, no Default or Unmatured Default shall exist.

6.12. Sale and Leaseback. The Borrower will not, nor will it permit
------------------
any Subsidiary to, sell or transfer a Substantial Portion of its Property in
order to concurrently or subsequently lease as lessee such or similar Property.

6.13. Investments and Acquisitions. The Borrower will not make, and
----------------------------
will not permit any Subsidiary to make, any Acquisitions except Permitted
Acquisitions.

6.14. Liens. The Borrower will not, nor will it permit any
-----
Subsidiary to, create, incur, or suffer to exist any Lien in, of or on its
Property other than Liens securing in the aggregate not more than $100,000,000
of Indebtedness.

6.15. Consolidated Net Worth. The Borrower will maintain at all
----------------------
times Consolidated Net Worth equal to not less than the sum of (i)
$1,500,000,000 plus (ii) 25% of the Borrower's Consolidated Net Income, if
positive, for each fiscal quarter ending after June 30, 1996.

6.16. Ratio of Consolidated Indebtedness to Consolidated
--------------------------------------------------
Capitalization. The Borrower will maintain at all times a ratio of Consolidated
--------------
Indebtedness to Consolidated Capitalization of not greater than .5 to 1.0.

6.17. Ratio of Consolidated Adjusted Net Income to Consolidated
---------------------------------------------------------
Interest Expense. The Borrower will maintain, as at the last day of each fiscal
----------------
quarter, a ratio of (i) Consolidated Adjusted

Page 33

Net Income to (ii) Consolidated Interest Expense, in each case calculated for
the four fiscal quarters then ending, of not less than 2.5 to 1.0.

6.19 Series A Preferred Securities. The Borrower will not, and will
-----------------------------
not permit Torchmark Capital L.L.C. to, declare or pay dividends or
distributions on, or redeem, purchase or otherwise acquire, the Series A
Preferred Securities or any portion thereof if, after giving effect thereto, a
Default or Unmatured Default would exist.

ARTICLE VII

DEFAULTS
--------

The occurrence of any one or more of the following events shall
constitute a Default:

7.1. Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent
under or in connection with this Agreement, any Loan, or any certificate or
information delivered in connection with this Agreement or any other Loan
Document shall be materially false or misleading on the date as of which made.

7.2. Nonpayment of any principal of any Note when due, or
nonpayment of any interest upon any Note or of any facility fee or other
obligations under any of the Loan Documents within five days after the same
becomes due.

7.3. The breach by the Borrower of any of the terms or provisions
of Section 6.2, 6.3, 6.10, 6.11, 6.12, 6.13, 6.15, 6.16, 6.17 or 6.19; or the
breach by the Borrower of any of the terms or provisions of Section 6.14 or 6.18
which is not remedied within ten days after the Borrower learns thereof.

7.4. The breach by the Borrower (other than a breach which
constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or
provisions of this Agreement which is not remedied within twenty days after
written notice from the Agent or any Lender.

7.5. Failure of the Borrower or any of its Subsidiaries to pay when
due any Indebtedness in excess of, singly or in the aggregate for all such
Subsidiaries, $10,000,000; or the

Page 34

default by the Borrower or any of its Subsidiaries in the performance of any
term, provision or condition contained in any agreement under which any such
Indebtedness was created or is governed, or any other event shall occur or
condition exist, the effect of which is to cause, or to permit the holder or
holders of such Indebtedness to cause, such Indebtedness to become due prior to
its stated maturity (which default, condition or event, in the case of Xxxxxxx,
shall continue for at least 30 days beyond any applicable grace period); or any
such Indebtedness of the Borrower or any Subsidiary shall be declared to be due
and payable or required to be prepaid (other than by a regularly scheduled
payment) prior to the stated maturity thereof.

7.6. The Borrower or any of its Subsidiaries shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate action to authorize or effect any of
the foregoing actions set forth in this Section 7.6, (vi) fail to contest in
good faith any appointment or proceeding described in Section 7.7 or not pay, or
admit in writing its inability to pay, its debts generally as they become due.

7.7. Without the application, approval or consent of the Borrower
or any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in Section
7.6(iv) shall be instituted against the Borrower or any of its Subsidiaries and
such appointment continues undischarged or such proceeding continues undismissed
or unstayed for a period of 30 consecutive days.

7.8. Any court, government or governmental agency shall condemn,
seize or otherwise appropriate, or take custody or control of (each a
"Condemnation"), all or any portion of the Property of the Borrower or any of
its Subsidiaries which, when taken together with all other Property of the
Borrower and its Subsidiaries so condemned, seized, appropriated, or taken
custody or control of, during the twelve-month period ending with the month in
which any such Condemnation occurs, constitutes a Substantial Portion of its
Property.

7.9. The Borrower or any of its Subsidiaries shall fail within 45
days to pay, bond or otherwise discharge any judgment or order for the payment
of money, either singly or in the aggregate, in excess of $10,000,000, which is
not stayed on appeal or otherwise being appropriately contested in good faith.

7.10. The Unfunded Liabilities of all Single Employer Plans shall
exceed in the aggregate $10,000,000 or any Reportable Event shall occur in
connection with any Plan.

Page 35

7.11. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be paid to Multiemployer Plans by
the Borrower or any other member of the Controlled Group as withdrawal liability
(determined as of the date of such notification), exceeds $5,000,000 or requires
payments exceeding $500,000 per annum.

7.12. The Borrower or any of its Subsidiaries shall be the subject of
any proceeding or investigation pertaining to the release by the Borrower or any
of its Subsidiaries, or any other person of any toxic or hazardous waste or
substance into the environment, or any violation of any federal, state or local
environmental, health or safety law or regulation, which, in either case, could
reasonably be expected to have a Material Adverse Effect.

7.13. Any Change in Control shall occur.

7.14. Any License of any Insurance Subsidiary held by such Insurance
Subsidiary on the Closing Date or acquired by such Insurance Subsidiary
thereafter, the loss of which would have, in the reasonable judgment of the
Lenders, a Material Adverse Effect, (i) shall be revoked by a final non-
appealable order by the state which shall have issued such License, or any
action (whether administrative or judicial) to revoke such License shall have
been commenced against such Insurance Subsidiary which shall not have been
dismissed or contested in good faith within 30 days of the commencement thereof,
(ii) shall be suspended by such state for a period in excess of 30 days or (iii)
shall not be reissued or renewed by such state upon the expiration thereof
following application for such reissuance or renewal by such Insurance
Subsidiary.

ARTICLE VIII

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------

8.1. Acceleration. If any Default described in Section 7.6 or 7.7
------------
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on the part of
the Agent or any Lender. If any other Default occurs, the Required Lenders (or
the Agent with the consent of the Required Lenders) may terminate or suspend the
obligations of the Lenders to make Loans hereunder, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrower hereby expressly waives.

If, before any judgment or decree for the payment of the Obligations
due shall have been obtained or entered, the Modified Required Lenders (or, in
the case of an automatic termination upon the occurrence of a Default under
Section 7.6 or 7.7, all the Lenders), in their sole discretion, shall so direct,
the Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination.

Page 36

8.2. Amendments. Subject to the provisions of this Article VIII,
----------
the Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or thereunder
or waiving any Default hereunder or thereunder; provided, however, that no such
supplemental agreement shall, without the consent of each Lender:

(i) Extend the Termination Date or compromise or forgive the principal
amount of any Loan, or reduce the rate of interest or compromise or forgive
payment of interest on any Loan, or reduce the amount of any fee payable
hereunder.

(ii) Reduce the percentage specified in the definition of Required
Lenders or Modified Required Lenders.

(iii) Increase the amount of the Commitment of any Lender hereunder,
or permit the Borrower to assign its rights under this Agreement.

(iv) Amend this Section 8.2.

8.3. Preservation of Rights. No delay or omission of the Lenders
----------------------
or the Agent to exercise any right under the Loan Documents shall impair such
right or be construed to be a waiver of any Default or an acquiescence therein,
and the making of a Loan notwithstanding the existence of a Default or the
inability of the Borrower to satisfy the conditions precedent to such Loan shall
not constitute any waiver or acquiescence. Any single or partial exercise of
any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to Section 8.2, and
then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Agent and the Lenders until the Obligations have been
paid in full.

ARTICLE IX

GENERAL PROVISIONS
------------------

9.1. Survival of Representations. All representations and
---------------------------
warranties of the Borrower contained in this Agreement shall survive delivery of
the Notes and the making of the Loans herein contemplated.

Page 37

9.2. Governmental Regulation. Anything contained in this Agreement
-----------------------
to the contrary notwithstanding, no Lender shall be obligated to extend credit
to the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

9.3. Taxes. Any taxes (excluding federal income taxes on the
-----
overall net income of any Lender) or other similar assessments or charges
payable or ruled payable by any governmental or revenue authority in respect of
the Loan Documents shall be paid by the Borrower, together with interest and
penalties, if any.

9.4. Headings. Section headings in the Loan Documents are for
--------
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.

9.5. Entire Agreement. The Loan Documents embody the entire
----------------
agreement and understanding among the Borrower, the Agent and the Lenders and
supersede all prior agreements and understandings among the Borrower, the Agent
and the Lenders relating to the subject matter thereof other than the Commitment
Letter dated August 26, 1996 and that certain fee letter agreement dated August
26, 1996, in each case by and between the Borrower and First Chicago.

9.6. Several Obligations; Benefits of this Agreement. The
-----------------------------------------------
respective obligations of the Lenders hereunder are several and not joint and no
Lender shall be the partner or agent of any other (except to the extent to which
the Agent is authorized to act as such). The failure of any Lender to perform
any of its obligations hereunder shall not relieve any other Lender from any of
its obligations hereunder. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.

9.7. Expenses; Indemnification. The Borrower shall reimburse the
-------------------------
Agent for any costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' fees and time charges of attorneys for the Agent, which
attorneys may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, negotiation, execution, delivery, review,
amendment, modification, and administration of the Loan Documents. The Borrower
also agrees to reimburse the Agent and the Lenders for any costs, internal
charges and out-of-pocket expenses (including attorneys' fees and time charges
of attorneys for the Agent and the Lenders, which attorneys may be employees of
the Agent or the Lenders) paid or incurred by the Agent or any Lender in
connection with the collection of the Obligations or the enforcement of the Loan
Documents. The Borrower further agrees to indemnify the Agent and each Lender,
its directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (collectively, the "indemnified
obligations") (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Agent or any Lender is a party thereto,
but excluding those indemnified obligations arising solely from any Lender's
failure to perform its obligations under this Agreement) which any of them may
pay or incur arising out of or relating to this Agreement, the other Loan
Documents, the transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan hereunder,
except that no indemnified party shall be indemnified for any indemnified
obligations arising from its own gross

Page 38

negligence or willful misconduct as finally determined by a court of competent
jurisdiction. The obligations of the Borrower under this Section 9.7 shall
survive the termination of this Agreement.

9.8. Numbers of Documents. All statements, notices, closing
--------------------
documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders. The Agent shall promptly remit same to the Lenders.

9.11. Nonliability of Lenders. The relationship between the Borrower
-----------------------
and the Lenders and the Agent shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities to
the Borrower. Neither the Agent nor any Lender undertakes any responsibility to
the Borrower to review or inform the Borrower of any matter in connection with
any phase of the Borrower's business or operations. The Borrower shall rely
entirely upon its own judgment with respect to its business, and any review,
inspection or supervision of, or information supplied to the Borrower by the
Agent or the Lenders is for the protection of the Agent and the Lenders and
neither the Borrower nor any other Person is entitled to rely thereon. The
Borrower agrees that neither the Agent nor any Lender shall have any liability
with respect to, and the Borrower hereby waives, releases and agrees not to xxx
for, any punitive damages in connection with, arising out of, or in any way
related to the Loan Documents or the transactions contemplated thereby or the
relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith.

9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING
-------------
A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS,
BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
-----------------------
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION

Page 39

IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY
AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.

9.15. Nonreliance. Each Lender hereby represents that it is not
-----------
relying on or looking to any margin stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System) for the repayment of the Loans
provided for herein.

9.17. Disclosure. The Borrower and each Lender hereby (a)
----------
acknowledge and agree that First Chicago and/or its Affiliates from time to time
may hold other investments in, make other loans to or have other relationships
with the Borrower and its Subsidiaries, including, without limitation, acting as
commercial paper dealer or in connection with any securitizations, interest rate
hedging instruments or agreements or swap transactions, and (b) waive any
liability of First Chicago or such Affiliate to the Borrower or any Lender,
respectively, arising out of or resulting from such investments, loans or other
relationships other than liabilities arising out of the gross negligence or
willful misconduct of First Chicago or its Affiliates.

Page 40

ARTICLE X

THE AGENT
---------

10.2. Powers. The Agent shall have and may exercise such powers
------
under the Loan Documents as are specifically delegated to the Agent by the terms
of each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder, except any action specifically provided
by the Loan Documents to be taken by the Agent.

10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent
-------------------------------------------
nor any of its directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into, or verify (i) any statement,
warranty or representation made in connection with any Loan Document or any
borrowing hereunder; (ii) the performance or observance of any of the covenants
or agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent; or (iv) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith. Except
for notices or reports which the Agent is expressly hereby required to provide
to the Lenders, the Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Borrower to the Agent at
such time, but is voluntarily furnished by the Borrower to the Agent (either in
its capacity as Agent or in its individual capacity).

10.5. Action on Instructions of Lenders. The Agent shall in all
---------------------------------
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Loan Document in accordance with written instructions signed by
the Required Lenders, and such instructions and any action taken or failure to
act pursuant thereto shall be binding on all of the Lenders and on all holders
of Notes. The Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action. The Lenders hereby acknowledge that the Agent shall be
under no duty to take

Page 41

any discretionary action permitted to be taken by it pursuant to the provisions
of this Agreement unless it shall be requested in writing to do so by the
Required Lenders.

10.6. Employment of Agents and Counsel. The Agent may execute any of
--------------------------------
its duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.

10.8. Agent's Reimbursement and Indemnification. The Lenders agree
-----------------------------------------
to reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by the Borrower for which the Agent is entitled to reimbursement by
the Borrower under the Loan Documents, (ii) for any other expenses not
reimbursed by the Borrower under the Loan Documents and incurred by the Agent on
behalf of the Lenders in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents and (iii) for any
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 in any way relating to or
arising out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents, provided that no Lender shall
be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent. The obligations of the Lenders
under this Section 10.8 shall survive payment of the Obligations and termination
of this Agreement.

10.9. Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Agent has received written notice from a Lender or the
Borrower referring to this Agreement describing such Default or Unmatured
Default and stating that such notice is a "notice of default". In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Lenders stating that such notice is a "notice of default".

10.10. Rights as a Lender. In the event the Agent is a Lender, the
------------------
Agent shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent in its

Page 42

individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which the Borrower or such
Subsidiary is not restricted hereby from engaging with any other Person. The
Agent, in its individual capacity, is not obligated to remain a Lender.

10.13. Agent's Fee. The Borrower agrees to pay to the Agent, for its
-----------
own account, the fees agreed to by the Borrower and the Agent pursuant to that
certain letter agreement dated August 26, 1996, or as otherwise agreed from time
to time.

Page 43

ARTICLE XI

SETOFF; RATABLE PAYMENTS
------------------------

11.1. Setoff. In addition to, and without limitation of, any rights
------
of the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or owing by
any Lender to or for the credit or account of the Borrower may be offset and
applied toward the payment of the Obligations owing to such Lender, whether or
not the Obligations, or any part hereof, shall then be due.

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------

12.2. Participations.
--------------

Page 44

12.2.1. Permitted Participants; Effect. Any Lender may, in the
------------------------------
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the holder of any such Note for all purposes under the Loan Documents, all
amounts payable by the Borrower under this Agreement shall be determined as if
such Lender had not sold such participating interests, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under the Loan Documents.

12.3. Assignments.
-----------

12.3.1. Permitted Assignments. Any Lender may, in the ordinary
---------------------
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities ("Purchasers") all or any part of its
rights and obligations under the Loan Documents; provided, however, that in the
-------- -------
case of an assignment to an entity which is not a Lender or an Affiliate of a
Lender, such assignment shall be in a minimum amount of $5,000,000 or, if less,
the entire amount of its Commitment and Loans. Such assignment shall be
substantially in the form of Exhibit "H" hereto or in such other form as may be
agreed to by the parties thereto. The consent of the Borrower and the Agent
shall be required prior to an assignment becoming effective with respect to a
Purchaser which is not a Lender or an Affiliate thereof; provided, however, that
the consent of the Borrower shall not be required if, on the date of such
assignment, a Default shall have occurred and be continuing. Such consent shall
not be unreasonably withheld or delayed.

Page 45

12.3.2. Effect; Effective Date. Upon (i) delivery to the Agent of a
----------------------
notice of assignment, substantially in the form attached as Exhibit "I" to
Exhibit "H" hereto (a "Notice of Assignment"), together with any consents
required by Section 12.3.1, and (ii) payment of a $3,500 fee to the Agent for
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. On and after the
effective date of such assignment, such Purchaser shall for all purposes be a
Lender party to this Agreement and any other Loan Document executed by the
Lenders and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party hereto, and no
further consent or action by the Borrower, the Lenders or the Agent shall be
required to release the transferor Lender with respect to the percentage of the
Aggregate Commitment and Loans assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this Section 12.3.2,
the transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that a replacement Note is issued to such transferor Lender and
a new Note or, as appropriate, replacement Note, is issued to such Purchaser, in
each case in principal amounts reflecting their respective Commitments, as
adjusted pursuant to such assignment.

12.4. Dissemination of Information. The Borrower authorizes each
----------------------------
Lender to disclose to any Participant or Purchaser or any other Person acquiring
an interest in the Loan Documents by operation of law (each a "Transferee") and
any prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries; provided
that each Transferee and prospective Transferee agrees to be bound by Section
9.14 of this Agreement.

12.5. Tax Treatment. If any interest in any Loan Document is
-------------
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.16.

ARTICLE XIII

NOTICES
-------

13.1. Giving Notice. Except as otherwise permitted by Section 2.11
-------------
with respect to borrowing notices, all notices and other communications provided
to any party hereto under this Agreement or any other Loan Document shall be in
writing and shall be delivered or mailed (or in the case of telegraphic
communication, delivered by telecopy or telex) addressed to such party at its
address set forth below its signature hereto or at such other address as may be
designated by such party in a notice to the other parties. Any notice, if
personally delivered or mailed (properly addressed with postage prepaid), shall
be deemed given when received; any notice, if transmitted by telecopy or telex,
shall be deemed given when transmitted (receipt confirmed by telephone in the
case of telecopies and answerback confirmed in the case of telexes).

Page 46

13.2. Change of Address. The Borrower, the Agent and any Lender may
-----------------
each change the address for service of notice upon it by a notice in writing to
the other parties hereto.

ARTICLE XIV

COUNTERPARTS
------------

This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower, the
Agent and the Lenders and each party has notified the Agent by telex or
telephone, that it has taken such action.

Page 47

IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed this
Agreement as of the date first above written.

Commitments TORCHMARK CORPORATION
-----------

By: /s/ Xxxxxxx X. Xxxxx
--------------------------------

Print Name: Xxxxxxx X. Xxxxx

Title: Vice President and Treasurer

0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000

Attention: Xx. Xxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$40,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
-----------
Individually and as Agent

By: /s/ Xxxx X. Xxxxxxx
----------------------------------

Print Name: Xxxx X. Xxxxxxx

Title: Managing Director

Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000

Attention: Financial Services Division
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Telex No.: 4330253

Page 48

$26,000,000 AMSOUTH BANK OF ALABAMA
-----------

By: /s/ Xxxx X. Xxxxxx
------------------------------

Print Name: Xxxx X. Xxxxxx

Title: Senior Vice President
0000 0xx Xxxxxx Xxxxx - 0xx Xxxxx
Xxxxxxxxxx, XX 00000

Attention: Xxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$26,000,000 BANK OF AMERICA ILLINOIS
-----------

By: /s/ Xxxx X. Xxxxxx
------------------------------

Print Name: Xxxx X. Xxxxxx

Title: Vice President

000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000

Attention: Xxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 49

$26,000,000 BANK OF MONTREAL
-----------

By: /s/ Xxx Xxxxxxx
--------------------------

Print Name: Xxx Xxxxxxx

Title:

000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000

Attention: Xxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$26,000,000 THE BANK OF NEW YORK
-----------

By: /s/ Xxxxxxx Xxxxx
--------------------------

Print Name: Xxxxxxx Xxxxx

Title: Assistant Treasurer

Xxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000

Attention: Xxxxxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 50

$26,000,000 THE CHASE MANHATTAN BANK
-----------

By: /s/ J. Xxxxx Xxxxxx, Jr.
--------------------------

Print Name: J. Xxxxx Xxxxxx, Jr.

Title: Vice President

Xxx Xxxxx Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000

Attention: J. Xxxxx Xxxxxx, Jr.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$26,000,000 FIRST ALABAMA BANK
-----------

By: /s/ Xxxxxx Xxxx
--------------------------

Print Name: Xxxxxx Xxxx

Title: Vice President

000 Xxxxx 00xx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000

Attention: Xxxxxx Xxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 51

$26,000,000 FLEET NATIONAL BANK
-----------

By: /s/ Xxxxxxx Xxxxxxx
--------------------------

Print Name: Xxxxxxx Xxxxxxx

Title: Vice President

000 Xxxx Xxxxxx, XXX 000
Xxxxxxxx, XX 00000

Attention: Xxxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$26,000,000 SOUTHTRUST BANK OF ALABAMA
-----------

By: /s/ Xxxxxx X. Xxxxx
--------------------------

Print Name: Xxxxxx X. Xxxxx

Title: Vice President

000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, XX 00000

Attention: Xxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 52

$20,000,000 COMPASS BANK
-----------

By: /s/ Con Holland
--------------------------

Print Name: Con Holland

Title: Vice President

00 Xxxxx 00xx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000

Attention: Con Holland
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$20,000,000 UNION BANK OF SWITZERLAND, NEW YORK
----------- BRANCH

By: /s/ Xxxxxx Xxxxxxxx
--------------------------

Print Name: Xxxxxx Xxxxxxxx

Title: Assistant Vice President

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

Print Name:

Title:

000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000

Attention: Xxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 53

$16,000,000 BANQUE NATIONALE DE PARIS
-----------

By: /s/ Xxxx Xxxxxxxx
--------------------------

Print Name: Xxxx Xxxxxxxx

Title: Vice President

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

Print Name:

Title:

000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000

Attention: Xxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$16,000,000 BOATMEN'S NATIONAL BANK
-----------

By: /s/ Xxxx Xxxxx
--------------------------

Print Name: Xxxx Xxxxx

Title: Senior Vice President

00xx xxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000

Attention: Xxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 54

$16,000,000 DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR
----------- CAYMAN ISLANDS BRANCH

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

Print Name:

Title:

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

Print Name:

Title:

00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000

Attention:
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$16,000,000 DRESDNER BANK AG, NEW YORK BRANCH AND
----------- GRAND CAYMAN BRANCH

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

Print Name:

Title:

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

Print Name:

Title:

00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000

Attention: Xxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 55

$16,000,000 MELLON BANK, N.A.
-----------

By: /s/ Xxxxxx X. Xxxxxxxxxxxx
--------------------------

Print Name: Xxxxxx X. Xxxxxxxxxxxx
-----------------------

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

Xxx Xxxxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000

Attention: Xxxxxx X. Xxxxxxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

$16,000,000 THE SAKURA BANK, LIMITED
-----------

By: /s/ Xxxxxxxx Xxxxxxxx
--------------------------

Print Name: Xxxxxxxx Xxxxxxxx

Title: Vice President and Senior Manager

000 Xxxxxxxxx Xxxxxx Xxx. X.X.
Xxxxxxx, XX 00000

Attention: Xxxxxxx Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 56

$16,000,000 UMB BANK, N.A.
-----------

By: /s/ Xxx Xxxxxxxx
--------------------------

Print Name: Xxx Xxxxxxxx

Title: Divisional Executive Vice President

0000 Xxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000

Attention: Xxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000

Page 57

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Table of Contents

364 Day] CREDIT AGREEMENT Dated as of October 24, 1996

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