TITAN HOLDINGS INC, 10-Q, 1996-08-14

TITAN HOLDINGS INC
10-Q, 1996-08-14
SURETY INSURANCE

Previous: GREAT NORTHERN INSURED ANNUITY CORP, 10-Q, 1996-08-14

Next: SUN HEALTHCARE GROUP INC, 10-Q, 1996-08-14

<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

(MARK ONE)

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

For the quarterly period ended June 30, 1996
--------------------------------------------------

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

For the transition period from to
------------------------ ------------------------

Commission File Number: 0-22000
---------------------------------------------------------

TITAN HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Texas 74-2289827
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

1020 N.E. Loop 410, Suite 700
San Antonio, Texas 78209
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)

(210) 824-4546
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)

- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)

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

Yes X No
----- -----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

On August 9, 1996 there were outstanding 9,487,164 shares of Common Stock,
$.01 par value of the registrant.
<PAGE> 2
PART I
FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS
- ------------------------------

Page
----
<S> <C>
Condensed Consolidated Balance Sheets 2

Condensed Consolidated Statements of Income 3

Condensed Consolidated Statements of Shareholders' Equity 4

Condensed Consolidated Statements of Cash Flows 5

Notes to Condensed Consolidated Financial Statements 6
</TABLE>
<PAGE> 3
TITAN HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available for sale, at market value
(amortized cost: $118,994 and $112,309) . . . . . . . . . . . . . $ 117,981 $ 112,990
Fixed maturities held to maturity, at amortized cost
(market value: $18,627 and $19,982) . . . . . . . . . . . . . . . 18,747 19,871
Equity securities, at market value (cost: $13,461 and $15,489) . . . . . 12,567 14,679
Short-term investments, at cost which approximates market value . . . . 3,844 4,898
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . 7,120 11,008
Premium finance contracts . . . . . . . . . . . . . . . . . . . . . . . 18,575 12,858
Mortgage notes receivable . . . . . . . . . . . . . . . . . . . . . . . 15,190 12,281
Other invested assets . . . . . . . . . . . . . . . . . . . . . . . . . 2,966 5,273
---------- -------------
Total investments . . . . . . . . . . . . . . . . . . . . . 196,990 193,858

Amounts due from reinsurers . . . . . . . . . . . . . . . . . . . . . . . . . 47,174 42,589
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,346 18,942
Deferred income taxes recoverable . . . . . . . . . . . . . . . . . . . . . . 5,809 4,586
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . 13,269 11,083
Deferred policy acquisition costs . . . . . . . . . . . . . . . . . . . . . . 11,706 10,086
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,064 5,174
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,005 20,769
---------- -------------
$ 327,363 $ 307,087
========== =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Reserve for unpaid losses and loss expenses . . . . . . . . . . . . . . $ 133,837 $ 122,811
Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . . 53,924 45,178
Notes payable and capitalized lease obligations . . . . . . . . . . . . 12,186 12,319
Note payable - premium finance subsidiary . . . . . . . . . . . . . . . 11,000 7,000
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 11,578 19,295
----------- --------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . 222,525 206,603
----------- --------------

Shareholders' equity:
Preferred stock, $.01 par value. Authorized 5,000,000 shares;
no shares issued or outstanding . . . . . . . . . . . . . . . . . - -
Common stock, $.01 par value. Authorized 40,000,000 shares;
issued and outstanding; 1996 - 9,484,300 shares;
1995 - 9,026,511 shares . . . . . . . . . . . . . . . . . . . . . 95 90
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . 61,733 54,274
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 44,171 46,137
Net unrealized loss on investments, net of deferred
tax benefit of $629 and $9 . . . . . . . . . . . . . . . . . . (1,161) (17)
---------- -------------
Total shareholders' equity . . . . . . . . . . . . . . . . . 104,838 100,484
----------- --------------
$ 327,363 $ 307,087
=========== ==============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

2
<PAGE> 4
TITAN HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues and other income:
Premiums written . . . . . . . . . . . . . . . . . $ 39,403 $ 32,421 $ 86,056 $ 69,153
Premiums ceded . . . . . . . . . . . . . . . . . . (2,604) (2,394) (4,894) (5,231)
------------ ------------ ----------- -----------
Net premiums written . . . . . . . . . . . . . . 36,799 30,027 81,162 63,922
Decrease (increase) in unearned premiums . . . . . 864 (581) (8,683) (7,639)
------------ ------------ ----------- -----------
Premiums earned . . . . . . . . . . . . . . . . 37,663 29,446 72,479 56,283
Fee and ceding commission income . . . . . . . . . 2,522 990 3,561 1,672
Net investment income . . . . . . . . . . . . . . 3,036 2,410 6,180 4,646
Net realized gains on sales of investments . . . . 391 45 473 147
----------- ------------ ----------- -----------
Total revenues and other income . . . . . . . 43,612 32,891 82,693 62,748
----------- ------------ ----------- -----------

Expenses:
Losses and loss expenses . . . . . . . . . . . . . 23,365 18,758 45,840 35,422
Agents' commissions . . . . . . . . . . . . . . . 4,794 4,185 8,780 8,103
Other operating expenses . . . . . . . . . . . . . 10,109 6,305 18,243 12,215
----------- ------------ ----------- -----------
Total expenses . . . . . . . . . . . . . . . . 38,268 29,248 72,863 55,740
----------- ------------ ----------- -----------

Income before income tax expense . . . . . . . 5,344 3,643 9,830 7,008

Income tax expense . . . . . . . . . . . . . . . . . 1,652 1,162 3,052 2,135
----------- ------------ ----------- -----------

Net income . . . . . . . . . . . . . . . . . . $ 3,692 $ 2,481 $ 6,778 $ 4,873
=========== ============ =========== ===========

Net income per share . . . . . . . . . . . . . . . . $ .38 $ .32 $ .71 $ .63
=========== ============ =========== ===========

Weighted average shares outstanding . . . . . . . . . 9,607 7,756 9,589 7,744
=========== ============ =========== ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

3
<PAGE> 5
TITAN HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(unaudited)
(in thousands, except share data)

COMMON STOCK ADDITIONAL NET UNREALIZED TOTAL
------------------------- PAID-IN RETAINED GAIN (LOSS) ON SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS INVESTMENTS EQUITY
---------- ---------- ----------- ------------ --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1995 9,026,511 $ 90 $ 54,274 $ 46,137 $ (17) $ 100,484
Effect of stock dividend
at May 13, 1996 451,189 4 7,384 (7,388) -
Common stock issued for
exercise of stock options 6,600 1 75 76
Net income 6,778 6,778
Net unrealized loss (1,144) (1,144)
Dividends to shareholders (1,356) (1,356)
--------- ---------- ----------- ----------- --------- -----------
Balances at June 30, 1996 9,484,300 $ 95 $ 61,733 $ 44,171 $ (1,161) $ 104,838
========= ========== =========== =========== ========= ===========

Balances at December 31, 1994 7,012,382 $ 70 $ 29,808 $ 41,468 $ (4,791) $ 66,555
Effect of stock dividend
at June 1, 1995 350,580 3 3,809 (3,812) -
Net income 4,873 4,873
Net unrealized gain 3,787 3,787
Dividends to shareholders (983) (983)
--------- ---------- ----------- ----------- --------- -----------
Balances at June 30, 1995 7,362,962 $ 73 $ 33,617 $ 41,546 $ (1,004) $ 74,232
========= ========== =========== =========== ========= ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

<PAGE> 6
TITAN HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,778 $ 4,873
Adjustments to reconcile net income to net cash provided by
operating activities:
Receivables (9,989) (8,712)
Deferred income taxes (606) 372
Deferred policy acquisition costs (1,620) (878)
Reserve for unpaid losses and loss expenses 11,026 13,243
Unearned premiums 8,746 8,786
Depreciation and amortization 703 494
Other (2,019) (238)
------------- -------------
Net cash provided by operating activities 13,019 17,940
------------- -------------

Cash flows from investing activities:
Purchases of investments (49,838) (59,569)
Proceeds from sales and maturities of investments 38,870 48,630
Payable for securities 555 (2,696)
Contingent consideration paid, related to 1992
purchase transaction (6,832) (1,801)
Net assets acquired in purchase transactions (2,019) ---
Purchases of building, property and equipment (2,953) (835)
Other 2,723 804
------------- -------------
Net cash used by investing activities (19,494) (15,467)
------------- -------------

Cash flows from financing activities:
Proceeds from borrowings - premium finance subsidiary 4,000 3,000
Repayments of borrowings (133) (132)
Proceeds from sale of common stock issued for
exercise of options 76 ---
Payment of dividends (1,356) (983)
------------- -------------
Net cash provided by financing activities 2,587 1,885
------------- -------------

Net (decrease) increase in cash and cash equivalents (3,888) 4,358
Cash and cash equivalents:
Beginning of the period 11,008 9,449
------------- -------------
End of the period $ 7,120 $ 13,807
============= =============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

5
<PAGE> 7
TITAN HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)

(1) BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of
Titan Holdings, Inc. and subsidiaries ("the Company") have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. In management's opinion, all adjustments, consisting of normal
recurring adjustments, which are necessary for a fair presentation of financial
position and results of operations have been made. It is recommended that
these condensed consolidated financial statements be read in conjunction with
the consolidated financial statements and notes related thereto included in the
December 31, 1995 Annual Report on Form 10-K. Certain prior period amounts
have been reclassified for comparative purposes.

(2) NET INCOME PER SHARE

Net income per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period,
calculated on a daily basis. The weighted average shares outstanding include
common stock equivalents relating to dilutive outstanding stock options and
warrants. On May 13, 1996 the Company effected a 5% stock dividend. Prior
year weighted average shares outstanding and per share amounts have been
restated accordingly.

(3) NOTES PAYABLE AND CAPITALIZED LEASE OBLIGATIONS

In July 1996, the Company increased the limits of its credit facility from
$45 million to $55 million. The credit facility includes a $10 million
revolving line of credit that can be utilized by the Company for working
capital purposes until June 30, 2000 (none outstanding), a $20 million term
loan available to the Company's insurance subsidiaries to increase underwriting
capacity ($10,000,000 currently outstanding and $10,000,000 available through
September 30, 1996), and a $25 million revolving credit facility available to
the Company's premium finance operations ($11,000,000 currently outstanding).
The credit facility bears interest at various interest options and contains
certain financial covenants. At June 30, 1996, the Company was in compliance
with the financial covenants stated in the credit facility.

6
<PAGE> 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

Titan Holdings, Inc. ("Holdings") is a property and casualty insurance
holding company with two insurance subsidiaries, Titan Insurance Company
("Insurance") and Titan Indemnity Company ("Indemnity"). Both Insurance and
Indemnity underwrite non-standard personal lines automobile insurance programs
as ("Titan Auto") in Michigan, Arizona and Nevada, and a program for small to
medium-sized public entities is underwritten nationwide through Indemnity. In
July 1996, Titan Auto commenced underwriting non-standard personal lines
automobile insurance programs in Texas and Colorado. Holdings also offers
premium financing through another subsidiary, Westchester Premium Acceptance
Corporation ("WestPac").

Earnings per share data for the three and six months ended June 30, 1995
have been restated for the effects of a 5% stock dividend effective May 13,
1996.

RESULTS OF OPERATIONS

Premiums by Line

The following table presents the dollar amount and percentage of total
premiums written, net premiums written and premiums earned, by principal line
of business for the periods indicated.

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------------ ---------------------------------------
1996 1995 1996 1995
----------------- ----------------- ------------------ -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Non-standard Automobile
Premiums written $ 24,963 63.4% $ 20,435 63.0% $ 50,537 58.7% $ 38,955 56.3%
Net premiums written 23,786 64.6% 19,121 63.7% 48,491 59.7% 36,407 57.0%
Premiums earned 23,141 61.4% 17,265 58.6% 43,821 60.5% 31,928 56.7%
Public Entity
Premiums written $ 13,076 33.2% 10,905 33.6% 33,014 38.4% 28,208 40.8%
Net premiums written 12,041 32.7% 9,865 32.9% 30,722 37.9% 25,771 40.3%
Premiums earned 13,538 35.9% 11,066 37.6% 26,652 36.8% 22,011 39.1%
Total (including miscellaneous lines)
Premiums written $ 39,403 100.0% 32,421 100.0% 86,056 100.0% 69,153 100.0%
Net premiums written 36,799 100.0% 30,027 100.0% 81,162 100.0% 63,922 100.0%
Premiums earned 37,663 100.0% 29,446 100.0% 72,479 100.0% 56,283 100.0%
</TABLE>

7
<PAGE> 9
Premiums Written

Total premiums written for the three months ended June 30, 1996 increased
$7 million (22%) to $39.4 million and for the six months ended June 30, 1996,
increased $16.9 million (24%) to $86.1 million, versus comparable periods in
1995. The increase is attributable to growth in both of the Company's major
lines of business. Titan Auto's operations in Michigan and Arizona continued
to expand as non-standard automobile premiums written for the three and six
months ended June 30, 1996 increased by 23% and 30%, respectively, over the
same periods in 1995. Titan Auto's Arizona operation, purchased in September
1994, continued its growth, producing $4.7 million in premiums written for the
three months ended June 30, 1996 and $9.9 million for the six months ended June
30, 1996, representing increases of 43% and 70%, respectively, over the three
and six month periods ending June 30, 1995. Titan Auto's growth in Arizona is
attributable in part to a rate increase implemented in mid-1995 and to the
continued success of marketing through Titan's direct response centers. Titan
Auto's Michigan operations experienced increases over 1995 of 16% and 22%,
respectively, for the three months and six months ended June 30, 1996 due to
the Company's ongoing marketing efforts and growth in the marketplace. The
public entity program continued its positive trend by increasing premiums
written by $2.2 million (20%) to $13.1 million and $4.8 million (17%) to $33.0
million for the three months and six months ended June 30, 1996, respectively,
versus comparable periods of a year ago. The increase comes principally from
states where additional State Managers (field marketing representatives) have
been deployed, increasing market coverage.

The Company is currently expanding its non-standard automobile insurance
operations into additional states, principally through the acquisition of
existing non-standard automobile agency distribution systems. On April 15,
1996, the Company commenced underwriting in Nevada, producing $362,000 in
direct written premiums through June 30, 1996. The Company's underwriting
operations in Texas and Colorado commenced in July 1996.

As an enhancement to its public entity program, in the second quarter of
1996 the Company initiated a program to offer workers' compensation insurance
to its public entity insureds in Pennsylvania. The Company plans to expand the
program to other states in the future. This line of business is not expected
to be material to the Company's 1996 operations, as its risk exposure is
limited by the participation of its reinsurer, Munich American Reinsurance
Company, who will absorb 85% of the risk exposure. Also during the second
quarter of 1996, the Company introduced a new public entity underwriting
product, the Horizon package policy. Under the Horizon program, separate
product lines are combined into a single-package policy, allowing a more
streamlined approach to policy quoting, rating and issuance.

Premiums Ceded

Premiums ceded represent the cost of reinsurance purchased by the Company
which generally is a function of the amount of premiums written and the level
of risk transferred to the reinsurer. Premiums ceded as a percent of premiums
written for the three and six months ended June 30, 1996 were 6.6% and 5.7%,
respectively, down from 7.4% and 7.6% for the corresponding periods of 1995.
The decreases in reinsurance costs are attributable to a reduction in the MCCA
assessment rate in early 1996 together with a reduction in the public entity
program's reinsurance premium rates due to the Company increasing its net
retentions. At the renewal of the public entity program's casualty reinsurance
contract effective January 1, 1996, the Company increased its net retention
from $500,000 to $750,000 per occurrence for casualty risks, and effective
April 1, 1996, the Company increased its net retention on public entity
property risks from $200,000 to $500,000 per occurrence.

Premiums Earned

Premiums earned are the result of net premiums written which are recognized
as income on a pro rata basis over the terms of the respective insurance
policies issued. Premiums earned for both the three and six months ended June
30, 1996 increased 28% to $37.7 million and $72.5 million, respectively,
compared to the three and six months ended June 30, 1995. In the three months
ended June 30, 1996 versus the same period in 1995, Titan Auto earned premium
increased $5.9 million (34%) to $23.1 million, and public entity earned premium
increased $2.5 million (22%) to $13.5 million. For the six months ended June
30, 1996 Titan Auto premiums earned increased $11.9 million (37%) to $43.8
million coupled with a $4.6 million increase (21%) to $26.7 million in public
entity earned premium, compared to the same

8
<PAGE> 10
periods of a year earlier. Such increases are primarily attributable to the
increases in premiums written and the overall reduction in premiums ceded
referred to above.

Fee and Ceding Commission Income

The non-standard automobile operations generate certain installment
billing fees and policy fees. Ceding commissions received from reinsurers
represent the reimbursement of policy acquisition expenses or profit
commissions based on loss experience. The increase in fee and ceding commission
income, compared to a year ago, of $1.5 million (155%) to $2.5 million for the
three months ended June 30, 1996 and $1.9 million (113%) to $3.6 million for
the six months ended June 30, 1996 stems primarily from increased policy fee
income associated with the growth of Titan Auto's operations.

Net Investment Income

For the three months ended June 30, 1996, net investment income increased
$626,000 (26%) to $3.0 million versus $2.4 million for the three months ended
June 30, 1995 and increased $1.5 million (33%) to $6.2 million for the six
months ended June 30, 1996 compared to $4.6 million for the same period a year
ago. This increase in the Company's net investment income is the result of
cash provided by operations and the proceeds of the Company's secondary stock
offering in late 1995. At June 30, 1996 the average yield of the investment
portfolio was 6.4% compared to 6.3% at June 30, 1995. The Company continues to
maintain a relatively short average duration of 2.9 years in its investment
portfolio.

Interest income on premium finance contracts increased to $443,000 and
$800,000, respectively, for the three and six month periods ended June 30, 1996
versus $323,000 and $578,000 for the respective three and six month periods
ended June 30, 1995. Total premiums financed during the six months ended June
30, 1996 of $23.2 million represents an increase of 56% over the amount
financed during the first six months of 1995. This growth in the premium
finance program is attributed to successful increased marketing efforts and
expansion into new territories.

Net Realized Gains on Investments

Although for accounting purposes the Company considers a significant
portion of its investment portfolio to be available for sale, the Company's
operating plan does not generally contemplate investment gains as a component
of net income. For the three and six months ended June 30, 1996, net gains of
$391,000 and $473,000, respectively, were realized versus $45,000 and
$147,000, respectively, for the three and six month periods of 1995.

Combined Ratios

The following table sets forth the Company's combined ratio and the
components thereof by principal line of business under generally accepted
accounting principles ("GAAP") and statutory accounting principles ("SAP") for
the periods indicated.

9
<PAGE> 11

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------------- ----------------------------------
1996 1995 1996 1995
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
GAAP
Non-Standard Automobile
Loss 57.7% 62.8% 56.8% 63.2%
Expense* 27.5 24.5 27.7 26.0
------ ------ ------ ------
Combined 85.2 87.3 84.5 89.2
====== ====== ====== ======

Public Entity
Loss 66.7 62.9 71.3 61.9
Expense 30.8 35.2 29.6 33.4
------ ------ ------ ------
Combined 97.5 98.1 100.9 95.3
====== ====== ====== ======

Total (including miscellaneous lines)
Loss 62.0 63.7 63.2 62.9
Expense* 29.0 29.9 28.6 30.7
------ ------ ------ ------
Combined 91.0% 93.6% 91.8% 93.6%
====== ====== ====== ======

SAP
Non-Standard Automobile
Loss 57.7% 65.4% 56.8% 64.5%
Expense* 27.3 24.0 26.8 25.0
------ ------ ------ ------
Combined 85.0 89.4 83.6 89.5
====== ====== ====== ======

Public Entity
Loss 66.7 62.9 71.3 61.9
Expense 31.6 36.5 28.6 31.6
------ ------ ------ ------
Combined 98.3 99.4 99.9 93.5
====== ====== ====== ======

Total (including miscellaneous lines)
Loss 62.0 65.1 63.2 63.9
Expense* 28.6 28.8 27.4 28.7
------ ------ ------ ------
Combined 90.6% 93.9% 90.6% 92.6%
====== ====== ====== ======
</TABLE>

* 1995 Restated to exclude amortization of intangible assets.

For the three months ended June 30, 1996 the Company's overall statutory
combined ratio decreased to 90.6% versus 93.9% for the comparable period of
1995, while for the six months ended June 30, 1996 the overall combined ratio
decreased to 90.6% from 92.6%. The decreases are attributable to improvements
in both the overall loss and expense ratio components. The Company's overall
GAAP combined ratios experienced the same trends as the SAP ratios.

Titan Auto's statutory combined ratio for the three months ended June 30,
1996 decreased to 85.0% compared to 89.4% for the same period a year ago, due
to a decrease in the loss ratio which was partially offset by an increase in
the expense ratio. Titan Auto's loss ratio decrease is attributed to favorable
loss experience in Michigan. The Company's Arizona non-standard automobile
insurance business, consistent with the Arizona insurance market in general, is
underwritten at a higher loss ratio than Titan Auto's Michigan business.
However, the Company's approach in Arizona allows it to operate at a lower
expense ratio relative to its Michigan non-standard automobile insurance
business. Titan Auto's statutory expense ratio for the three months ended June
30, 1996 increased to 27.3% from 24.0% for the same period in 1995, primarily
due to the expansion of the Company's non-standard automobile program into
Nevada, Texas and Colorado and the associated requisite capital and human
resource investment in a number of direct response centers

10
<PAGE> 12
which did not begin producing premium volume until late second quarter and
early third quarter. For the six months ended June 30, 1996 compared to the
same period of 1995, Titan Auto's operating ratios experienced the same trends
as those for the three months ended June 30, 1996 and 1995.

The public entity program's statutory combined ratio for the three months
ended June 30, 1996 decreased compared to the same quarter in 1995, from 99.4%
to 98.3%. This decrease is the result of a lower expense ratio, 31.6% for the
quarter ended June 30, 1996 down from 36.5% for the quarter ended June 30,
1995, offset by an increase in the loss ratio component to 66.7% from 62.9% for
the same period of 1995. The improvement in the expense ratio was in part a
result of the fact that the Company refocused a significant portion of its
developmental efforts to expansion in non-standard automobile markets.
Economies of scale created by the increased volume of net premiums written in
1996 also contributed to the decrease in the expense ratio as a portion of
public entity costs do not vary in direct proportion to premium growth. The
increase in the public entity loss ratio for the three and six month periods
ended June 30, 1996 over the same periods of 1995 is due to adverse loss
development of approximately $1.1 million on prior accident years, and to
property damage losses incurred in the first quarter of 1996 associated with
severe winter storms.

Agent's Commissions

Commissions paid to independent insurance agents currently represent the
Company's most significant policy acquisition cost. For the three and six
months ended June 30, 1996, agent's commissions were 12.7% and 12.1% of
premiums earned, respectively, versus 14.2% and 14.4% of premiums earned,
respectively, for the comparable periods of 1995. Such decrease is primarily
attributable to the growth of the Company's non-standard automobile direct
response centers together with Titan Auto's discontinuation in February 1995 of
an override commission paid to a non-standard automobile agency.

Other Lines

During the three months ended June 30, 1996, the Company's program to offer
personal lines automobile insurance to educators in the State of Minnesota
wrote approximately $1.4 million in premiums, compared to $861,000 during the
same period of 1995. Premiums written for the six months ended June 30, 1996
totaled $2.4 million, up from $1.4 million for the first six months of 1995.
The results of this program were not significant to the Company's results of
operations.

Amortization of Intangible Assets

In connection with its acquisitions of non-standard automobile insurance
operations, the Company has capitalized intangible assets to be amortized in
future periods. For the three and six months ended June 30, 1996, $507,000 and
$1 million, respectively, of such costs were amortized compared to $226,000 and
$414,000, respectively, amortized during the three and six month periods ended
June 30, 1995. The increase in 1996 compared to 1995 is attributable to the
Company's purchases of non-standard automobile insurance distribution systems
in 1996 and 1995.

Net Income

Net income for the three months ended June 30, 1996 increased $1.2 million
(49%) to $3.7 million from $2.5 million and net income for the six months ended
June 30, 1996 increased $1.9 million (39%) to $6.8 million, versus $4.9 million
for the same period a year ago.

Net income per share was $.38 for the three months ended June 30, 1996, up
from $.32 per share for the three months ended June 30, 1995. For the six
months ended June 30, 1996, earnings per share were $.71, up from $.63 for the
first six months of 1995. These 1996 increases in earnings per share are based
on a 24% increase in weighted average shares outstanding over the comparable
periods of 1995, due to the Company's stock offering completed in November
1995. Net after tax realized gains on sales of investments were $.03 per
share for the three and six month periods ending June 30, 1996, versus per
share amounts of less than $.02 for the comparable year-earlier periods.

11
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES

The Company's insurance subsidiaries receive substantial cash from premiums
and, to a lesser extent, investment income. The principal cash outflows are
for the payment of claims, reinsurance premiums, policy acquisition costs and
other operating expenses. Holdings' principal source of cash is dividends from
its insurance subsidiaries.

Net cash provided by operating activities was $13.0 million for the six
months ended June 30, 1996, compared with $17.9 million for the same period in
1995. This decrease of $4.9 million is primarily attributable to an elevated
level of losses paid during the first six months of 1996 as compared to the
first half of 1995.

The Company's liquidity depends largely on its investment portfolio. At
June 30, 1996, cash and cash equivalents and short-term investments comprised
6% of total investments, and fixed maturities, excluding collateralized
mortgage obligations, comprised 68% of total investments.

For the six months ended June 30, 1996, the net unrealized loss on
investments increased $1.1 million from $17,000 at December 31, 1995 to $1.2
million at June 30, 1996 as interest rates rose. Although a significant portion
of the Company's investment portfolio is considered to be available for sale,
management does not intend to liquidate the fixed maturity portfolio. At June
30, 1996, the Company maintained cash and cash equivalents of $7.1 million to
meet payment obligations.

Cash used by investing activities during the first six months of 1996
include the Company's purchase of the assets of non-standard automobile
insurance distribution systems in Texas and Nevada for approximately $2.0
million. Also, Indemnity expended approximately $1.2 million on capital
improvements to its future home office facilities in San Antonio, Texas during
the six months ended June 30, 1996. Future capital improvements to the
building and adjacent retail center are not expected to be material to the
working capital of Indemnity. A portion of these facilities will be utilized
by the Company and the remainder will be leased.

In July 1996, the Company and WestPac renegotiated the existing credit
facility, at substantially the same terms, with Dresdner Bank AG as agent
which includes: a $10 million revolving credit facility which can be utilized
until June 30, 2000 for working capital purposes by the Company (no borrowings
currently outstanding), a $20 million term loan ($10 million currently
outstanding and $10 million which can be utilized until September 30, 1996),
and a $25 million revolving credit facility which can be utilized until August
7, 1997 by WestPac ($11,000,000 outstanding). The Company plans to borrow the
remaining $10 million available to the insurance subsidiaries in order to
reduce the underwriting leverage of those subsidiaries.

The Company's insurance subsidiaries are subject to state insurance laws
that restrict their ability to pay dividends. In 1996, Holdings could receive
up to $5.9 million in dividends from Indemnity without prior regulatory
approval. Based upon the current working capital of Holdings and its $10
million revolving credit facility, Holdings currently does not anticipate that
any payment of dividends in 1996 from the insurance subsidiaries will be
necessary to meet its current liquidity requirements, including its obligations
under the credit facility and to pay dividends to its shareholders.

12
<PAGE> 14
PART II
OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

There have been no material developments to the legal proceedings as
reported in the Company's form 10-K for the year ended December 31, 1995.

ITEM 2 - CHANGES IN SECURITIES

Not applicable.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5 - OTHER INFORMATION

Not applicable.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

10.64 - Loan Agreement dated July 30, 1996 among Titan Holdings, Inc.
as borrower, and Dresdner Bank AG, New York and Grand Cayman
Branches, Bank One Texas, N.A., and Nationsbank of Texas, N.A.
and Dresdner Bank AG, New York Branch as Agent

10.65 - Pledge Agreement dated as of July 30, 1996 among Titan
Holdings, Inc. and Dresdner Bank, AG, New York and Grand
Cayman Branches, Bank One Texas, N.A., and Nationsbank of
Texas, N.A. and Dresdner Bank, AG, New York Branch as Agent

10.66 - Loan Agreement dated July 30, 1996 among Westchester Premium
Acceptance Corporation as borrower, and Dresdner Bank AG, New
York and Grand Cayman Branches, Bank One Texas, N.A., and
Nationsbank of Texas, N.A. and Dresdner Bank AG, New York
Branch as Agent

10.67 - Pledge and Security Agreement dated as of July 30, 1996 among
Westchester Premium Acceptance Corporation and Dresdner Bank,
AG, New York and Grand Cayman Branches, Bank One Texas, N.A.,
and Nationsbank of Texas, N.A. and Dresdner Bank, AG, New York
Branch as Agent and Collateral Agent

27.2 - Financial Data Schedule - June 30, 1996

(b) During the quarter ended June 30, 1996, there were no current reports
on Form 8-K filed.

13
<PAGE> 15
SIGNATURES

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

TITAN HOLDINGS, INC.
(Registrant)

Date August 12, 1996 By: /s/ MARK E. WATSON, JR.
--------------------------------
Mark E. Watson, Jr.
President
Chief Executive Officer

Date August 12, 1996 By: /s/ MIKE BODAYLE
--------------------------------
Mike Bodayle
Executive Vice President
Chief Financial Officer

14
<PAGE> 16
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
10.64 - Loan Agreement dated July 30, 1996 among Titan Holdings, Inc.
as borrower, and Dresdner Bank AG, New York and Grand Cayman
Branches, Bank One Texas, N.A., and Nationsbank of Texas, N.A.
and Dresdner Bank AG, New York Branch as Agent

27.2 - Financial Data Schedule - June 30, 1996
</TABLE>

<PAGE> 1
EXHIBIT 10.64

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

LOAN AGREEMENT

Dated as of July 30, 1996

among

TITAN HOLDINGS, INC.
as Borrower,

and

THE BANKS AND FINANCIAL INSTITUTIONS
LISTED ON THE SIGNATURE PAGES HERETO,
as Lenders

and

DRESDNER BANK AG, NEW YORK BRANCH,
as Agent

================================================================================
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
LOAN AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION . . . . . . . . . . . . . . . 1

1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Rules of Construction . . . . . . . . . . . . . . . . . 16

ARTICLE II THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

2.1 Revolving Credit Loans . . . . . . . . . . . . . . . . . 17
2.2 Loan Requests . . . . . . . . . . . . . . . . . . . . . 18
2.3 Term Loans . . . . . . . . . . . . . . . . . . . . . . . 18
2.4 Notes . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.5 Reductions of the Commitments . . . . . . . . . . . . . 19
2.6 Mandatory Prepayments . . . . . . . . . . . . . . . . . 20
2.7 Several Obligations . . . . . . . . . . . . . . . . . . 20
2.8 Pro Rata Treatment . . . . . . . . . . . . . . . . . . 20

ARTICLE III TERMS APPLICABLE TO LOANS . . . . . . . . . . . . . . . . . 21

3.1 Payments and Prepayments . . . . . . . . . . . . . . . . 21
3.2 Payments by the Agent . . . . . . . . . . . . . . . . . 25
3.3 Maximum Interest . . . . . . . . . . . . . . . . . . . . 25
3.4 Computations . . . . . . . . . . . . . . . . . . . . . . 27
3.5 Minimum Amounts . . . . . . . . . . . . . . . . . . . . 27
3.6 Sharing of Setoffs . . . . . . . . . . . . . . . . . . . 27
3.7 Non-Receipt of Funds by the Agent . . . . . . . . . . . 28

ARTICLE IV TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 29

4.1 Termination by the Borrower . . . . . . . . . . . . . . 29

ARTICLE V YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . . . . . 29

5.1 Additional Costs . . . . . . . . . . . . . . . . . . . . 29
5.2 Limitation on Types of Loans . . . . . . . . . . . . . 31
5.3 Illegality . . . . . . . . . . . . . . . . . . . . . . . 31
5.4 Certain Conversions . . . . . . . . . . . . . . . . . . 32
5.5 Compensation . . . . . . . . . . . . . . . . . . . . . . 32

ARTICLE VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . 33

6.1 No Default . . . . . . . . . . . . . . . . . . . . . . . 33
6.2 Opinions of Counsel . . . . . . . . . . . . . . . . . . 33
6.3 Other Supporting Documents . . . . . . . . . . . . . . . 33
</TABLE>

i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
6.4 Control of the Borrower . . . . . . . . . . . . . . . . 34
6.5 Loan Request . . . . . . . . . . . . . . . . . . . . . . 34
6.6 Fees Paid . . . . . . . . . . . . . . . . . . . . . . . 35
6.7 Representations and Warranties . . . . . . . . . . . . . 35
6.8 Existing Agreement . . . . . . . . . . . . . . . . . . . 35

ARTICLE VII REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 35

7.1 Organization, Powers, etc. . . . . . . . . . . . . . . . 35
7.2 Corporate Authority, etc. . . . . . . . . . . . . . . . 35
7.3 Government Approvals . . . . . . . . . . . . . . . . . . 36
7.4 Government Regulation . . . . . . . . . . . . . . . . . 36
7.5 Valid and Binding Obligations . . . . . . . . . . . . . 36
7.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . 36
7.7 Use of Proceeds . . . . . . . . . . . . . . . . . . . . 36
7.8 Accuracy of Information . . . . . . . . . . . . . . . . 37
7.9 Accuracy of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . 37
7.10 Financial Position . . . . . . . . . . . . . . . . . . . 37
7.11 Pledged Shares . . . . . . . . . . . . . . . . . . . . . 37
7.12 Title to Pledged Shares . . . . . . . . . . . . . . . . 37
7.13 Tax Returns . . . . . . . . . . . . . . . . . . . . . . 37
7.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.15 No Material Adverse Change . . . . . . . . . . . . . . . 38
7.16 Compliance with Laws . . . . . . . . . . . . . . . . . . 39
7.17 Franchises, Licenses . . . . . . . . . . . . . . . . . . 39
7.18 No Default . . . . . . . . . . . . . . . . . . . . . . . 39
7.19 Capital Stock . . . . . . . . . . . . . . . . . . . . . 39
7.20 Trade Names, etc . . . . . . . . . . . . . . . . . . . . 39

ARTICLE VIII AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 40

8.1 Payment of Taxes, etc. . . . . . . . . . . . . . . . . . 40
8.2 Preservation of Corporate Existence . . . . . . . . . . 40
8.3 Compliance with Laws, etc. . . . . . . . . . . . . . . . 40
8.4 Inspection Rights . . . . . . . . . . . . . . . . . . . 41
8.5 Maintenance of Approvals, Filings and
Registrations . . . . . . . . . . . . . . . . . . . . 41
8.6 Reporting Requirements . . . . . . . . . . . . . . . . . 41
8.7 Performance of Agreements . . . . . . . . . . . . . . . 43
8.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . 43
8.9 Books and Records . . . . . . . . . . . . . . . . . . . 44
8.10 Further Assurances . . . . . . . . . . . . . . . . . . . 44
8.11 Other Agreements. . . . . . . . . . . . . . . . . . . . 44
8.12 Financial Covenants . . . . . . . . . . . . . . . . . . 44
8.13 Maintenance of Ratings . . . . . . . . . . . . . . . . . 46
8.14 Maintenance of Reinsurance . . . . . . . . . . . . . . . 47
</TABLE>

ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
8.15 IRIS Tests . . . . . . . . . . . . . . . . . . . . . . . 47
8.16 Asset Quality Maintenance . . . . . . . . . . . . . . . 47

ARTICLE IX NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 48

9.1 Use of Proceeds . . . . . . . . . . . . . . . . . . . . 49
9.2 Prohibition of Fundamental Changes . . . . . . . . . . . 49
9.3 Business . . . . . . . . . . . . . . . . . . . . . . . . 49
9.4 Liens . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.5 Transactions with Affiliates . . . . . . . . . . . . . . 49
9.6 Dividends to the Borrower by
Subsidiaries . . . . . . . . . . . . . . . . . . . . . 50
9.7 Statutory Surplus . . . . . . . . . . . . . . . . . . . 50
9.8 Indebtedness . . . . . . . . . . . . . . . . . . . . . . 50

ARTICLE X EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 50

10.1 Events of Default . . . . . . . . . . . . . . . . . . . 50

ARTICLE XI FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

11.1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 54
11.3 Invoices for Fees . . . . . . . . . . . . . . . . . . . 55

ARTICLE XII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 55

12.1 Indemnification by Borrower . . . . . . . . . . . . . . 55

ARTICLE XIII THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . 56

13.1 Appointment, Powers and Immunities . . . . . . . . . . . 56
13.2 Reliance by Agent . . . . . . . . . . . . . . . . . . . 57
13.3 Defaults . . . . . . . . . . . . . . . . . . . . . . . . 57
13.4 Rights as a Lender . . . . . . . . . . . . . . . . . . . 58
13.5 Indemnification . . . . . . . . . . . . . . . . . . . . 58
13.6 Non-Reliance on Agent and Other Banks . . . . . . . . . 58
13.7 Failure to Act . . . . . . . . . . . . . . . . . . . . . 59
13.8 Resignation or Removal of Agent . . . . . . . . . . . . 59
13.9 Consents Under Basic Documents . . . . . . . . . . . . . 60

ARTICLE XIV MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 60

14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . 60
14.2 Survival and Termination of Agreement . . . . . . . . . 62
14.3 Applicable Law . . . . . . . . . . . . . . . . . . . . 63
14.4 Waiver; Modifications in Writing . . . . . . . . . . . . 63
14.5 Non-Waiver of Rights . . . . . . . . . . . . . . . . . . 63
14.6 Successors and Assigns . . . . . . . . . . . . . . . . . 63
</TABLE>

iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
14.7 Sale and Transfer of Loans and Notes;
Participations in Loans and Notes. . . . . . . . . . . 64
14.8 Confidentiality . . . . . . . . . . . . . . . . . . . . 66
14.9 Captions . . . . . . . . . . . . . . . . . . . . . . . . 67
14.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . 67
14.11 Severability . . . . . . . . . . . . . . . . . . . . . . 67
14.12 Waiver of Trial by Jury; Consent
to Jurisdiction. . . . . . . . . . . . . . . . . . . . 68
14.13 Set-off . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>

iv
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SCHEDULES

SCHEDULE I Booking Offices

EXHIBITS

EXHIBIT A-1 Form of Term Loan Note
EXHIBIT A-2 Form of Revolving Credit Loan Note
EXHIBIT B Form of Certificate
EXHIBIT C Form of Loan Request
EXHIBIT D Form of Notice of Conversion or
Continuation
EXHIBIT E Form of Convention Statement
</TABLE>

<PAGE> 7
LOAN AGREEMENT

LOAN AGREEMENT dated as of July 30, 1996 among TITAN HOLDINGS,
INC. (the "Borrower"), DRESDNER BANK AG, acting through its New York and Grand
Cayman Branches ("Dresdner"), BANK ONE TEXAS, N.A. ("Bank One") and NATIONSBANK
OF TEXAS, N.A. ("NationsBank") (Dresdner, Bank One and NationsBank
collectively, together with their successors and assigns, the "Lenders" and
each a "Lender") and Dresdner Bank AG, New York Branch, as agent for the
Lenders (together with its successors and assigns, the "Agent").

ARTICLE I

DEFINITIONS; RULES OF CONSTRUCTION

SECTION 1.1 Definitions. The capitalized terms used in this
Agreement shall have the following meanings, unless otherwise defined herein.

"Additional Costs" shall have the meaning assigned to such
term in Section 5.1 of this Agreement.

"Affiliate" of a referenced Person shall mean (a) another
Person controlling, controlled by or under common control with such referenced
Person, (b) any other Person beneficially owning or controlling ten percent
(10%) or more of the outstanding voting securities or rights of or the interest
in the capital, distributions or profits of the referenced Person, or (c) any
officer (exclusive of a "ministerial officer" with no authority to bind a
Person) or, director of, or partner in, the referenced Person. The terms
"control", "controlling", "controlled" and the like shall mean the direct or
indirect possession of the power to direct or cause the direction of the
management or policies of a Person or the disposition of its assets or
properties, whether through ownership, by contract, arrangement or
understanding, or otherwise.

"Agent" shall have the meaning assigned to such term in the
introduction to this Agreement.

"Agent's Account" shall have the meaning assigned to such term
in Section 2.1(a) hereof.
LOAN AGREEMENT

ARTICLE I

DEFINITIONS; RULES OF CONSTRUCTION

SECTION 1.1 Definitions. The capitalized terms used in this
Agreement shall have the following meanings, unless otherwise defined herein.

"Additional Costs" shall have the meaning assigned to such
term in Section 5.1 of this Agreement.

"Agent" shall have the meaning assigned to such term in the
introduction to this Agreement.

"Agent's Account" shall have the meaning assigned to such term
in Section 2.1(a) hereof.
<PAGE> 8
"Agreement" shall mean this Loan Agreement, as the same from
time to time may be extended, amended, supplemented, waived or modified.

"Airplane Lease" shall mean that certain Aircraft Lease
Agreement dated January 19, 1994, between 1st Source Leasing, Inc. and Titan
Indemnity, as the same from time to time may be extended, amended,
supplemented, waived or modified.

"Applicable Law" shall mean (i) all applicable laws and
treaties, judgments, decrees, injunctions, writs and orders of any court,
arbitrator or governmental agency or authority and rules, regulations, orders,
licenses and permits of any governmental body, instrumentality, agency or
authority, and (ii) any of the foregoing.

"Applicable Margin Rate" shall mean (i) in respect of the
calculation of interest on any Eurodollar Loans the amount computed by
reference to the table below:

<TABLE>
<CAPTION>
From and From and
including including
July 30, 1996 July 30, 1997
to and excluding
July 30, 1997
--------------- -------------
<S> <C> <C>
Titan Level 1 1.00% 1.50%

Titan Level 2 1.10% 1.75%

Titan Level 3 1.50% 2.00%
</TABLE>

and (ii) in respect of the calculation of interest on any Base Rate Loans, the
number set forth in the table set forth in clause (i) above less 1.00%.

"Authorized Control Level Risk-Based Capital" shall mean, with
respect to either Titan Indemnity or Titan Insurance, the number which appears
on page 20 (Five-Year Historical Data, first of two pages), line 26, column 1
of such company's most recently filed Convention Statement.

"Base Rate" shall mean a fluctuating rate of interest per
annum equal to the higher of:

(a) the rate of interest most recently announced by the
Agent at its Booking Office as its base rate; and

2
<PAGE> 9
(b) the Federal Funds Rate, plus 1/2 of 1% per annum.

The Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Agent in connection with extensions of
credit. Changes in the rate of interest on any Loan maintained as a
Base Rate Loan shall take effect simultaneously with each change in
the Base Rate. The Agent shall give notice promptly to the Borrower
of changes in the Base Rate.

"Base Rate Loan" shall mean a Loan bearing interest based on
the Base Rate.

"Booking Office" shall mean, with respect to any Eurodollar
Loans or Base Rate Loans, the respective office of the Agent and each Lender or
an Affiliate designated as its "Eurodollar Lending Office" or "Base Rate
Lending Office", respectively, in Schedule 1 to this Agreement; provided, the
Agent or a Lender may designate a different Booking Office with respect to its
Eurodollar Loans or Base Rate Loans from time to time upon notice to the
Borrower; provided, further, that the Base Rate Lending Office of the Agent and
each Lender shall be located in the United States.

"Borrower" shall have the meaning assigned to such term in the
introduction to this Agreement.

"Business Day" shall mean any day other than a Saturday,
Sunday or a day when banks are authorized or required by law to close in New
York, New York and, if such day relates to a borrowing of, a payment or
prepayment of principal of, or interest on, or a conversion of or into, or an
Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect
to any such borrowing, payment, prepayment, conversion or Interest Period, any
day which is also a London Banking Day.

"C&S" shall mean, with respect to any of the Borrower, Titan
Indemnity or Titan Insurance at the time of any determination thereof, the
capital and surplus of such company, (a) in the case of the Borrower, computed
in accordance with GAAP and (b) in the case of Titan Indemnity and Titan
Insurance, as it would then be computed in accordance with statutory accounting
principles, as it would then appear on page 22 (Five-Year Historical Data,
first of two pages), line 24, column 1, of such company's most recently filed
Convention Statement.

3
<PAGE> 10
"Capacity Utilization Ratio" shall mean, with respect to Titan
Indemnity or Titan Insurance at the time of any determination thereof, the
ratio of such company's net written premiums for the Applicable Period computed
in accordance with statutory accounting principles divided by its Statutory
Capital at the end of the Applicable Period. As used herein, "Applicable
Period" means the period of four consecutive calendar quarters ending with the
calendar quarter that has most recently ended at the time of calculation of
Capacity Utilization Ratio.

"Capital Lease" shall mean as applied to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee
which, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.

"Capital Stock" shall mean with respect to any Person, any
capital stock of such Person, regardless of class or designation, and all
warrants, options, purchase rights, conversion or exchange rights, voting
rights, calls or claims of any character with respect thereto.

"Code" shall mean the Internal Revenue Code of 1986, as
amended.

"Combined Ratio" shall mean with respect to Titan Insurance or
Titan Indemnity at the time of any determination thereof, the sum of (i) the
number which appears on page 23 (Five-Year Historical Data, second of two
pages), line 59, column 1 of such company's most recently filed Convention
Statement plus (ii) the number which appears on page 23 (Five-Year Historical
Data, second of two pages), line 60, column 1 of such company's most
recently-filed Convention Statement. The Combined Ratio computed at the end of
any calendar quarter other than the end of a calendar year shall be computed
for such quarter utilizing the methodology used in preparing such Convention
Statement as though such Convention Statement were prepared as of the end of
such calendar quarter.

"Commitments" shall mean with respect to any Lender the Term
Loan Commitment and the Revolving Credit Loan Commitment of such Lender.

4
<PAGE> 11
"Commitment Expiration Date" shall mean (i) in respect of
Revolving Credit Loans, July 30, 2001, and (ii) in respect of Term Loans,
October 30, 2001.

"Commitment Fee" shall have the meaning assigned to such term
in Section 11.1 hereof.

"Commitment Fee Percentage" shall mean, as of the date of any
calculation thereof, a percentage computed by reference to the table below:

Titan Level 1 .20%

Titan Level 2 .25%

Titan Level 3 .50%

"Consolidated Equity" shall mean at the time of any
determination thereof the stockholders equity of the Borrower and its
Subsidiaries on a consolidated basis, computed in accordance with GAAP.

"Consolidated Indebtedness" shall mean the Indebtedness of the
Borrower and its Subsidiaries on a consolidated basis, computed in accordance
with GAAP but excluding the Indebtedness related to (i) the WestPac Credit
Agreement and (ii) the Airplane Lease.

"Consolidated Net Earnings" shall mean at the time of any
determination thereof, the combined Net Earnings of the Borrower and its
Subsidiaries, computed in accordance with GAAP.

"Contingent Obligation" shall mean any contractual obligation,
contingent or otherwise, of one Person with respect to any Indebtedness,
obligation or liability of another, including, without limitation, direct or
indirect guaranties, endorsements (except for collection or deposit in the
ordinary course of business), notes co-made or discounted, recourse agreements,
keep-well agreements, agreements to purchase or repurchase such Indebtedness,
obligation or liability or any security therefor or to provide funds for the
payment or discharge thereof, agreements to maintain solvency, assets, level of
income, or other financial condition, and agreements to make payment other than
for value received.

5
<PAGE> 12

"Convention Statement" shall mean the financial statements and
accompanying schedules and exhibits filed by Titan Indemnity or Titan Insurance
with their applicable state insurance regulators, substantially in the form
heretofore filed by such company (or such other form as may in the future be
required by applicable state insurance regulatory authorities), and prepared in
accordance with statutory accounting principles.

"Credit Expiration Date" shall mean (i) for Revolving Credit
Loans, July 30, 2001 and (ii) for Term Loans, (a) with respect to one-half of
the Term Loan Commitments, the Effective Date, and (b) with respect to the
remainder of the Term Loan Commitments, September 30, 1996, or in any of the
above cases such earlier date as provided in Section 10.

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

"Dollars" and "$" shall mean lawful money of the United States
of America.

"Effective Date" shall mean the first date on which the
conditions precedent set forth in Section 6 have been satisfied.

"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.

"ERISA Affiliate" shall mean (i) any corporation which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or WestPAC; (ii) a trade or
business (whether or not incorporated) which is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower or with WestPAC;
and (iii) a member of the same affiliated service group (within the meaning of
Section 414(m) of the Code) as the Borrower or WestPAC, as any corporation
described in clause (i) above or as any trade or business described in clause
(ii) above.

"Eurodollar Loan" shall mean a Loan bearing interest based on
the Eurodollar Rate.

"Eurodollar Rate" shall mean, with respect to any Interest
Period for any Eurodollar Loan, the rate per annum determined by the Agent to
be equal to the quotient (rounded

6
<PAGE> 13
upwards, if necessary, to the next higher 1/16 of 1%) of (y) (i) the rate of
interest for deposits in Dollars for a period equal to the number of days in
such Interest Period which appears on the Telerate Page 3750 as of 11:00 A.M.,
London time, on the day that is two London Banking Days prior to the first day
of such Interest Period, or (ii) if such rate does not appear on the Telerate
Page 3750 at such time, the rate per annum at which deposits in Dollars are
offered by the Agent in immediately available funds at its Eurodollar Lending
Office specified in Schedule 1 to this Agreement in an amount comparable to the
principal amount of such Eurodollar Loan for a period equal to such Interest
Period at approximately 10:00 A.M., New York City time, on the date two
Business Days before the first day of such Interest Period, divided by (z) a
number equal to 1.00 minus the Eurodollar Reserve Percentage.

"Eurodollar Reserve Percentage" shall mean, for any day, the
maximum percentage (expressed as a decimal) specified from time to time by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirements (including, but not limited to,
supplemental, marginal and emergency reserves) with respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities") of a member bank
in such System. The Eurodollar Rate shall be adjusted automatically with
respect to any Eurodollar Loan outstanding on the effective date of any change
in the Eurodollar Reserve Percentage, as of such effective date.

"Event of Default" shall mean any of the Events of Default
described in Section 10 of this Agreement.

"Existing Agreement" shall mean that certain Loan Agreement
dated as of August 8, 1995 among Dresdner, First Interstate Bank of Texas,
N.A., the Borrower and Dresdner, as agent, as the same from time to time may be
extended, supplemented, waived or modified.

"Expense Ratio" shall mean with respect to Titan Insurance or
Titan Indemnity at the time of any determination thereof, the number which
appears on page 23 (Five-Year Historical Data, second of two pages), line 59,
column 1 of such company's most recently filed Convention Statement. The
Expense Ratio computed at the end of any calendar quarter other than the end of
a calendar year shall be computed for such quarter utilizing the methodology
used in preparing such Convention Statement as though such

7
<PAGE> 14
Convention Statement were prepared as of the end of such calendar quarter.

"Federal Bankruptcy Code" shall mean Title 11 of the United
States Code, Sections 101, et seq., and the rules and regulations promulgated
thereunder, as amended from time to time.

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

"Funded Debt" shall mean any Indebtedness which by its terms
become payable more than one year from the date of origination thereof or which
is renewable at the option of the obligor beyond one year from such date of
origination.

"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.

"GIA" shall mean with respect to Titan Indemnity or Titan
Insurance at the time of any determination thereof, such company's assets
appearing on that portion of its balance sheet in its most recently filed
Convention Statement (page 2) which shows invested assets used by such company
to support its own contract and other obligations.

"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

"Guarantee" shall mean the Guarantee dated as of the date
hereof between WestPAC, the Lenders, and the Agent, as the same may from time
to time be amended, supplemented, waived or modified.

8
<PAGE> 15
"Highest Lawful Rate" shall mean, with respect to each Lender,
the maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the Loans
or on any of the Borrower's obligations under this Agreement under laws
applicable to such Lender which are presently in effect or, to the extent
allowed by law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable laws now
allow.

"Indebtedness" shall mean with respect to any Person, at any
time, (a) all indebtedness, obligations or other liabilities of such Person (i)
for borrowed money or evidenced by debt securities, debentures, acceptances,
notes or other similar instruments, (ii) under profit payment agreements (other
than profit-sharing or bonus plans or agreements for employees) or in respect
of obligations to redeem, repurchase or exchange any securities of such Person
or to pay dividends in respect of any stock, (iii) with respect to letters of
credit issued for such Person's account, (iv) to pay the deferred purchase
price of property or services, (v) in respect of Capital Leases or (vi) which
are Contingent Obligations, (b) all indebtedness, obligations or other
liabilities of such Person or others secured by a Lien on any property of such
Person, whether or not such indebtedness, obligations or liabilities is or are
assumed by such Person, all as of such time, (c) all indebtedness, obligations
or other liabilities of such Person in respect of currency hedging agreements,
net of liabilities owed to such Person by the counterparties thereon, and (d)
all preferred stock subject (upon the occurrence of any contingency or
otherwise) to mandatory redemption.

"Interest Expense" shall mean, the time of any determination
thereof, interest expense for the Borrower computed in accordance with GAAP
during the twelve-month period ended at the end of the most recently-concluded
calendar quarter.

9
<PAGE> 16
Interest Period which commences on the last Business Day of a calendar month
(or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of
the appropriate subsequent calendar month.

Notwithstanding the foregoing, (i) no Interest Period may
extend beyond the Commitment Expiration Date; (ii) each Interest Period which
would otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day); (iii) each
Interest Period which would otherwise commence before and end after the
Commitment Expiration Date shall end on the Commitment Expiration Date; and
(iv) notwithstanding clauses (i) and (iii) above, if any Interest Period would
have a duration of less than one month, such Eurodollar Loans shall be Base
Rate Loans during such period.

"IRIS" shall mean the Insurance Regulatory Information System.

"Lenders" shall have the meaning assigned to such term in the
introduction to this Agreement.

"Lien" shall mean any mortgage, deed of trust, pledge,
security interest, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the UCC of any jurisdiction in
connection with any of the foregoing).

"Loan" shall mean each Term Loan or Revolving Credit Loan.

"Loan Request" shall have the meaning assigned to such term in
Section 2.2 of this Agreement.

"London Banking Day" shall mean any day on which dealings in
Dollar deposits are carried out in the London interbank markets.

"Majority Lenders" means, at any time of any determination
thereof, such of the Lenders holding in excess of 66 2/3% of the aggregate
principal amount of the

10
<PAGE> 17
outstanding Loans or, if Loans are not at the time outstanding, such of the
Lenders the Commitments of which, taken in the aggregate, are in excess of 66
2/3% of the Total Commitment.

"Material Jurisdiction" shall mean any jurisdiction in which
the amount of Titan Indemnity's or Titan Insurance's, as the case may be, gross
direct written premiums accounted for at least 20% of that company's total
amount of gross direct written premiums in the immediately preceding calendar
year.

"Minimum Risk-Based Capital" shall mean, with respect to
either Titan Indemnity or Titan Insurance at the time of any determination
thereof, the result obtained by dividing (i) Total Adjusted Capital for such
company by (ii) the Authorized Control Level Risk-Based Capital for such
company.

"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA which is, or was at any time during the
five preceding years, contributed to by the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate for the benefit of its employees.

"NAIC" shall mean the National Association of Insurance
Commissioners, or any successor thereto; and any NAIC rating shall refer to
those ratings which are issued by the NAIC, which appear in Schedule D of Titan
Indemnity's and Titan Insurance's respective most recently filed Convention
Statements.

"Net Available Cash Flow" for the Borrower at the time of any
determination thereof shall mean a number determined in accordance with the
following formula:

A = B + C + D + E - F

where:

A = Net Available Cash Flow

B = The maximum amount of dividends which Titan Indemnity,
in compliance with statutory accounting principles,
would be entitled to declare and pay to the Borrower
without prior regulatory approval as of the end of the
most recently-concluded calendar quarter;

11
<PAGE> 18
C = the aggregate intercompany fees paid by all
Subsidiaries to the Borrower during the twelve-month
period ended at the end of the most recently-concluded
calendar quarter;

D = the difference (not less than zero) between (i) cash
and cash equivalents on hand at the Borrower and (ii)
the outstanding principal amount of Revolving Credit
Loans, in each case as of the end of the most
recently-concluded calendar quarter;

E = the difference between (i) the tax expense for each of
Titan Indemnity and Titan Insurance, computed in
accordance with statutory accounting principles and
(ii) the consolidated current tax expense for the
Borrower, computed in accordance with GAAP, in each
case for the twelve-month period ended at the end of
the most recently-concluded calendar quarter; and

F = the total Operating Expenses of the Borrower for the
twelve-month period ended at the end of the most
recently-concluded calendar quarter;

"Net Earnings" of any Person shall mean, at the time of any
determination thereof, the net income (or the net deficit) of such Person for
such period, determined in accordance with GAAP (in the case of the Borrower)
or statutory accounting principles (in the case of Titan Indemnity or Titan
Insurance).

"Note" shall mean each promissory note issued by the Borrower
and payable to the order of each Lender evidencing the Term Loan or Revolving
Credit Loans, respectively, made by such Lender, as provided herein, in
substantially the form attached as Exhibit A-1 or A-2 to this Agreement.

"Notice of Conversion or Continuation" shall mean a written
notice, in substantially the form of Exhibit D to this Agreement, delivered by
the Borrower to the Agent pursuant to Section 3.1(c) of this Agreement.

"Operating Expenses" shall mean, at the time of any
determination thereof, the aggregate during the twelve-month period ended at
the end of the most recently concluded

12
<PAGE> 19
calendar quarter of all amounts which in accordance with GAAP would be so
classified and appear on the income statement of the Borrower (on an
unconsolidated basis).

"PBGC" shall mean Pension Benefits Guaranty Corporation or any
successor thereto.

"Person" shall mean an individual, a corporation, a
partnership, a joint venture, a limited liability company, a trust or
unincorporated organization, a joint stock company or other similar
organization, a government or any political subdivision thereof, a court, or
any other legal entity whether acting in an individual, fiduciary or other
capacity.

"Plan" shall mean any "employee benefit pension plan" or other
"plan" (including a Multiemployer Plan) established or maintained, as to which
contributions have been made, by any Person for its respective employees and
which is covered by Title IV of ERISA or to which Section 412 of the Code
applies.

"Pledge Agreement" shall mean the Pledge Agreement dated as of
the date hereof between the Borrower and the Agent, as the same may from time
to time be amended, supplemented waived or modified.

"Pledged Shares" has the meaning assigned to that term in the
Pledge Agreement.

"Post-Default Rate" shall mean the Base Rate as in effect from
time to time plus three percent (3.0%).

"Program Documents" shall mean this Agreement, the Notes, the
Guarantee, the Pledge Agreement and each other agreement, document or
instrument delivered in connection herewith or therewith.

"Property" shall mean all types of real, personal tangible,
intangible or mixed property, including fixtures.

"Regulatory Change" shall mean any change after the date
hereof in United States federal, state or foreign laws or the making of any
interpretations, directives or requests applying to a class of banks, including
any Lender, under any United States federal, state, or foreign laws or
regulations (whether or not having the force of law) by any

13
<PAGE> 20
court or governmental or monetary authority charged with the interpretation or
administration thereof.

"Reportable Event" shall mean any event described in Section
4043(b) of ERISA.

"Revolving Credit Commitment" means either (i) when used with
reference to a Lender at the time any determination is to be made, the amount
set opposite the name of such Lender below, as the same may be lowered in
accordance with the terms hereof, or (ii) when used with reference to any
Lender, the commitment of such Lender to make Loans hereunder in an amount
equal to the amount described in the foregoing clause (i), as the context may
require.

<TABLE>
<S> <C>
Dresdner $5,000,000.00
Bank One $3,636,363.64
NationsBank $1,363,636.36
</TABLE>

"Revolving Credit Loan" shall mean a loan made by a Lender
pursuant to Section 2.1 hereof.

"Statutory Capital" shall mean with respect to Titan Indemnity
or Titan Insurance at the time of any determination thereof, the C&S of such
company reported in its most recently filed Convention Statement.

"Subsidiary" shall mean as to any Person, (i) a corporation of
which shares of stock having ordinary voting power (other than stock having
such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation are at
the time owned, or the management of which is otherwise controlled, directly or
indirectly, through one or more intermediaries, or both, by such Person, (ii) a
limited or general partnership of which such Person or any of its subsidiaries
is a general partner, or (iii) a business trust or limited liability company in
which such Person holds a majority interest comparable to that for a
corporation as described above.

14
<PAGE> 21
on the overall net income of the applicable Lender or any similar tax in lieu
of an overall net income tax on such Lender imposed by any jurisdiction with
respect to which such Lender is subject to such tax without regard to the
transactions contemplated by the Program Documents.

"Term Loan Commitment" means when used with reference to a
Lender at the time any determination is to be made, the amount set opposite the
name of such Lender below, as the same may be lowered in accordance with the
terms hereof.

Dresdner $10,000,000.00
Bank One $ 7,272,727.27
NationsBank $ 2,727,272.73

"Term Loan" shall mean a loan made by a Lender pursuant to
Section 2.3 hereof.

"Termination Event" shall mean (i) any Reportable Event with
respect to a Plan, as to which the requirements of Section 4043(a) of ERISA
have not been waived by the PBGC (provided that a failure to meet the minimum
funding standard of Section 302 of ERISA shall be a reportable event regardless
of the issuance of any waivers by the PBGC); (ii) the filing of a notice of
intent to terminate any Plan under Section 4041 of ERISA or any other event or
condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any Plan;
(iii) the complete or partial withdrawal of the Borrower or any Subsidiary from
a Multiemployer Plan or the receipt by the Borrower or any Subsidiary of notice
from a Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA; (iv) the institution of a proceeding
by a fiduciary of any Multiemployer Plan against the Borrower or any Subsidiary
to enforce Section 515 of ERISA; or (v) any event or circumstance under which
the Borrower or any Subsidiary may reasonably be expected to incur any
liability under Title IV of ERISA with respect to any Plan other than
liabilities to make contributions and pay premiums in the ordinary course.

"Titan Indemnity" shall mean Titan Indemnity Company, a Texas
corporation, and any successor thereto.

15
<PAGE> 22
"Titan Insurance" shall mean Titan Insurance Company, a
Michigan corporation, and any successor thereto.

"Titan Level 1" shall mean as of the date of determination
thereof the state of facts where the Consolidated Indebtedness of the Borrower
is equal to or less than $30,000,000 and Titan Indemnity's C&S, as certified in
reasonable detail by the chief financial officer of the Borrower, is greater
than $80,000,000.

"Titan Level 2" shall mean as of the date of determination
thereof the state of facts where the Consolidated Indebtedness of the Borrower
is equal to or less than $30,000,000 and Titan Indemnity's C&S, as certified in
reasonable detail by the chief financial officer of the Borrower, is greater
than $55,000,000 but less than or equal to $80,000,000.

"Titan Level 3" shall mean as of the date of determination
thereof the state of facts where either the Consolidated Indebtedness of the
Borrower is greater than $30,000,000 or Titan Indemnity's C&S, as certified in
reasonable detail by the chief financial officer of the Borrower, is less than
or equal to $55,000,000.

"Total Commitment" shall mean the aggregate amount of the
Revolving Credit Commitments and the Term Loan Commitments of the Lenders.

"Total Adjusted Capital" shall mean with respect to either
Titan Indemnity or Titan Insurance at the time of any determination thereof,
the number which appears on page 22 (Five-Year Historical Data, first of two
pages), line 25, column 1 of such company's most recently filed Convention
Statement.

"WestPAC" shall mean Westchester Premium Acceptance
Corporation and any successor thereto.

"WestPAC Credit Agreement" shall mean the Loan Agreement dated
as of the date hereof among WestPAC, the Lenders and Dresdner Bank, AG, New
York Branch, as Agent, as the same may be amended, extended, supplemented or
otherwise modified from time to time.

SECTION 1.2. Rules of Construction. For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires (a) each

16
<PAGE> 23
use in this Agreement of a singular version of a pronoun shall be deemed to
include references to the plural, and vice versa, (b) Article and Section
headings are for convenience of reference only and shall not affect the
construction of this Agreement, (c) references to "this section" or words of
similar import shall be deemed to refer to the entire section and not to a
particular subsection, and references to "hereunder", "herein" or words of
similar import shall be deemed to refer to this entire Agreement and not to the
particular section or subsection, and (d) references to line items on a
company's Convention Statement shall be deemed changed to the appropriate line
items in the event of a change in the format of such Convention Statements from
that set forth in Exhibit E.

ARTICLE II

THE LOANS

SECTION 2.1 Revolving Credit Loans. (a) Subject to the terms
and conditions set forth in this Agreement, each Lender hereby severally agrees
that it will, from time to time prior to the Credit Expiration Date, make
Revolving Credit Loans to the Borrower. Anything contained herein to the
contrary notwithstanding, no Lender shall be obligated in any manner to make
any Revolving Credit Loan in a principal amount which together with the
Revolving Credit Loans to be made by the other Lender on such day, would exceed
the positive result of (i) the Revolving Credit Commitments of the Lenders,
less (ii) the aggregate principal amount of all Revolving Credit Loans
outstanding on the proposed date of the making of such Revolving Credit Loan,
after giving effect to all proposed Revolving Credit Loans on such day. Not
later than 1:00 P.M., New York City time, on the date of the proposed
borrowing, each Lender shall make funds in respect of the Loan to be made by
such Lender available to the Agent at account No. 108066 15 maintained by the
Agent at its offices at 75 Wall Street, New York, New York (the "Agent's
Account") for the account of the Borrower. The amounts so received by the
Agent shall, subject to the terms and conditions of this Agreement, be made
available to the Borrower not later than 2:00 P.M., New York City time by
disbursing such funds in Dollars to the Borrower in accordance with the
disbursement instructions set forth in the Loan Request delivered to such
Lender.

17
<PAGE> 24
(b) Each Loan Request, to be effective, shall include a
computation demonstrating compliance with the limits set forth in the second
sentence of paragraph (a) hereof.

SECTION 2.2 Loan Requests. The Borrower shall in respect of
all Revolving Credit Loans deliver to the Agent a written request, in
substantially the form of Exhibit C to this Agreement (a "Loan Request") (i)
for a Eurodollar Loan, not later than 11:00 A.M., New York City time, at least
three Business Days prior to the date of the proposed borrowing and (ii) for a
Base Rate Loan, not later than 10:00 A.M., New York City time, on the day of
the proposed borrowing and the Agent shall promptly forward a copy of such Loan
Request to each Lender. The Loan Request shall specify (i) the date of the
proposed borrowing (which shall be a Business Day), (ii) the principal amount
of the Revolving Credit Loan to be made by each such Lender on that date, (iii)
whether such Revolving Credit Loan is a Base Rate Loan or a Eurodollar Loan,
(iv) if a Eurodollar Loan, the Interest Period requested by the Borrower
thereof or (which shall be one, two,three or six months), and (v) the
disbursement instructions for the proceeds of such Revolving Credit Loan. Each
Loan Request submitted by the Borrower shall be an affirmation by the Borrower
that (x) the representations and warranties of the Borrower set forth in
Article VII of this Agreement are on the date of such Loan Request, and will be
on the date of the proposed borrowing, true and correct as if made on and as of
such dates (except to the extent any such representations or warranty relates
solely to an earlier date), and (y) no Default or Event of Default shall have
occurred and be continuing on such dates. Any Loan Request given pursuant
hereto shall be irrevocable.

SECTION 2.3 Term Loans. Subject to the terms and conditions
set forth in this Agreement, each Lender hereby severally agrees that it will
(a) on the Effective Date make a Term Loan to the Borrower in an amount equal
to one-half of such Lender's Term Loan Commitment and (b) upon the delivery of
a Loan Request by the Borrower three Business Days prior to the requested date
of the proposed borrowing (which shall be on or prior to the Credit Expiration
Date), make a Term Loan to the Borrower in an amount equal to the remainder of
such Lender's Term Loan Commitment. Each Term Loan made on the Effective Date
shall initially be a Eurodollar Loan with an Interest Period of one month;
provided, however, that the Borrower in accordance with Section 3.1(c) may
convert Term Loans (or portions thereof in a minimum principal amount of
$1,000,000 or integral

18
<PAGE> 25
multiples of $100,000 in excess thereof) from one type to another; provided,
that no more than five Eurodollar Loans may be outstanding from each Bank at
any one time. Not later than 1:00 P.M., New York City time, on the Effective
Date and on the date of the proposed borrowing of the remaining Term Loan,
respectively, each Lender shall make funds in respect of the Term Loan to be
made by such Lender on such date available to the Borrower by disbursing such
funds in Dollars to the Borrower in accordance with the disbursement
instructions specified in writing to such Lender.

SECTION 2.4 Notes. Each Revolving Credit Loan or Term Loan
made by a Lender shall be evidenced by, and recorded on, the applicable Note
payable to such Lender. The Borrower hereby authorizes each Lender to make the
appropriate notations on the schedule annexed to each Note payable to such
Lender for purposes of recording any Loan made thereon and any payments or
prepayments made with respect thereto (provided that any failure by a Lender to
make any such notation shall not affect the obligations of the Borrower
hereunder or under any Note in respect of any Loan). The Borrower agrees that
each notation made by a Lender on the schedule annexed to a Note shall be final
and conclusive absent manifest error. The aggregate principal amount of the
Revolving Credit Loans or Term Loans made by a Lender outstanding at any time
shall constitute the principal amount owing on the applicable Note payable to
such Lender at such time.

SECTION 2.5 Reductions of the Commitments. (a) Subject to
Section 2.8, the Borrower may from time to time reduce the Revolving Credit
Commitments of the Lenders by $1,000,000 or a multiple thereof upon two
Business Days' written notice to the Agent (which shall promptly notify each
Lender). Any such reduction shall be permanent and irrevocable and pro rata
among the Lenders, provided that the amount of the aggregate Revolving Credit
Commitments after giving effect to such reduction of the Revolving Credit
Commitments shall at no time be less than the aggregate principal amount of all
outstanding Revolving Credit Loans.

(b) Upon the occurrence of the Credit Expiration Date
pursuant to Section 4.1 hereof, the Revolving Credit Commitments shall be
reduced to zero. Upon the occurrence of the Effective Date, the Term Loan
Commitments shall be reduced to one-half of their initial amounts, and upon the

19
<PAGE> 26
occurrence of the earlier of (i) the funding of the remainder of the Term Loans
in accordance with Section 2.3 and (ii) the Credit Expiration Date with respect
to the Term Loans, the Term Loan Commitments shall be reduced to zero.

(c) After the effective date of any reduction pursuant to
Section 2.5(a) hereof, the term "Revolving Credit Commitment" shall mean the
Revolving Credit Commitments of each Lender in effect immediately prior to such
reduction less the amount of such reduction of the Revolving Credit Commitment.

SECTION 2.6 Mandatory Prepayments. If at any time the
principal amount of outstanding Revolving Credit Loans shall exceed the
aggregate Revolving Credit Commitments then the Borrower shall immediately
prepay the Revolving Credit Loans in an amount equal to such excess.

SECTION 2.7 Several Obligations. The failure of any Lender
to make any Loan to be made by it on the date specified therefor shall not
relieve any other Lender of its obligation to make its Loan on such date, and
neither the Agent nor any Lender shall be responsible for the failure of any
other Lender to make a Loan to be made by such other Lender.

SECTION 2.8 Pro Rata Treatment. Each borrowing from the
Lenders hereunder shall be made from the Lenders, each payment of the
Commitment Fee or other fees and expenses under Section 11 hereof shall be made
for account of the Lenders, and each termination or reduction of the amount of
the Commitments shall be applied to the Revolving Credit Commitments of the
Lenders, pro rata according to the amounts of their respective Revolving Credit
Commitments; the making, conversion and continuation of Loans of a particular
type (other than Conversions provided for by Sections 5.1, 5.2 and 5.3 hereof)
shall be made pro rata among the Lenders according to the amounts of their
respective Revolving Credit Commitments or Term Loan Commitments, as the case
may be, and the then current Interest Period for each Loan of such type shall
be coterminous; each payment or prepayment of principal of Loans by the
Borrower shall be made for account of the Lenders pro rata in accordance with
the respective unpaid principal amounts of the Loans held by the Lenders; and
each payment of interest on Loans by the Borrower shall be made for account of
Lenders pro rata in accordance with the

20
<PAGE> 27
amounts of interest due and payable to the respective Lenders.

ARTICLE III

TERMS APPLICABLE TO LOANS

SECTION 3.1 Payments and Prepayments. (a) Payments
Generally. Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower to the Lenders
of the Agent hereunder and under each Note shall be made in accordance with
Section 2.8 hereof and in Dollars, in immediately available funds, to the
Agent's Account. Such payments shall be made no later than 2:00 P.M., New York
City time, on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). The Borrower shall, at the time of making
each payment hereunder or under the Notes, specify to the Agent the Loans or
other amounts payable by the Borrower hereunder to which such payment is to be
applied (and in the event that it fails to so specify, or if a Default or an
Event of Default has occurred and is continuing, the Agent, may apply such
payment to such type of Loan(s) or other amounts payable hereunder as it may
elect in its sole discretion, but subject to Sections 2.8 and 3.1(g) hereof).
If the due date of any payment hereunder or under any Note would otherwise fall
on a day which is not a Business Day, such due date shall be extended to the
next succeeding Business Day and interest shall be payable for any principal so
extended for the period of such extension; provided, that, with respect to
Eurodollar Loans, if such next succeeding Business Day falls in the next
succeeding calendar month, such due date shall be the next preceding Business
Day.

(b) Borrower's Obligations Absolute. The Borrower's
obligations to pay each Lender hereunder and under the Notes shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms hereof and thereof, under any and all circumstances and irrespective
of any setoff, counterclaim or defense to payment which the Borrower may have
or have had against the Agent any Lender.

21
<PAGE> 28
(c) Optional Conversions. Subject to Section 2.8, the
Borrower may, at its option, (i) on the last day of any Interest Period,
convert a Eurodollar Loan into a Base Rate Loan, (ii) on the last day of any
Interest Period, continue a Eurodollar Loan as a Eurodollar Loan, and (iii) on
any Business Day, convert a Base Rate Loan into a Eurodollar Loan; provided,
that, except as otherwise provided in this Agreement to the contrary, the
Borrower shall deliver to the Agent (which will promptly send a copy to each
Lender) a Notice of Conversion or Continuation by 11:00 A.M., New York City
time, (A) in the case of clauses (ii) and (iii) above, not less than three
Business Days prior to the date of each such conversion or continuation, and
(B) in the case of clause (i) above, on or prior to the date of such
conversion. Each Notice of Conversion or Continuation shall specify (x) the
amount of each Loan to be continued or converted, (y) the date of such
continuation or conversion, and (z) the type of Loan to be continued or
converted (and in the case of a conversion, the type of Loan to result from
such conversion and, if such Loan is to be converted into a Eurodollar Loan,
the Interest Period).

(d) Optional Prepayments. The Borrower may, at its option,
without penalty or premium, (i) on the last day of any Interest Period, prepay
all or any portion of the principal of the Eurodollar Loans, and (ii) on any
Business Day, prepay all or any portion of the principal of the Base Rate
Loans; provided, in each case, that except for prepayments made pursuant to
Section 2.6 hereof, any such prepayment, if a partial prepayment, shall be an
integral multiple of $100,000 with a minimum amount of $500,000. The Borrower
shall deliver to the Agent (which will promptly send a copy to each Lender)
notice of such prepayment by 11:00 A.M., New York City time on such prepayment
date, specifying the amount and type of each Loan to be prepaid on such date.
Any prepayments of Term Loans under this Section 3.1(d) shall be applied to
required principal repayments of the Term Loans under Section 3.1(e) in inverse
order of maturity.

(e) Payments of Principal. (i) The aggregate outstanding
principal amount of all Revolving Credit Loans, together with all accrued
interest on such principal amount, shall be payable on the Commitment
Expiration Date.

(ii) The principal amount of the outstanding Term Loans,
together with all accrued interest on such principal amount to be so repaid,
shall be payable in installments

22
<PAGE> 29
payable on each of the dates and in the amounts specified below:

<TABLE>
<CAPTION>
Date Repayment
---- ---------
<S> <C>
January 30, 1997 $1,000,000
April 30, 1997 $1,000,000
July 30, 1997 $1,000,000
October 30, 1997 $1,000,000
January 30, 1998 $1,000,000
April 30, 1998 $1,000,000
July 30, 1998 $1,000,000
October 30, 1998 $1,000,000
January 30, 1999 $1,000,000
April 30, 1999 $1,000,000
July 30, 1999 $1,000,000
October 30, 1999 $1,000,000
January 30, 2000 $1,000,000
April 30, 2000 $1,000,000
July 30, 2000 $1,000,000
October 30, 2000 $1,000,000
January 30, 2001 $1,000,000
April 30, 2001 $1,000,000
July 30, 2001 $1,000,000
October 30, 2001 (final maturity) $1,000,000
</TABLE>

In the event that the aggregate outstanding principal amount
of all Term Loans outstanding on the Credit Expiration Date therefor shall be
less than $20,000,000, the foregoing repayment amounts shall each be reduced to
an amount which bears the same relationship to $1,000,000 as such aggregate
outstanding principal amount of the Term Loans bears to $20,000,000.

(f) Payment of Interest. (i) The Borrower hereby promises to
pay to the Lenders interest on the unpaid principal amount of each Loan for the
period commencing on the date of such Loan until but not including the stated
maturity thereof (whether by acceleration or otherwise) or the date of
prepayment thereof (a) during the periods such Loan is a Base Rate Loan, at the
Base Rate plus the Applicable Margin Rate per annum and (b) during the periods
such Loan is a Eurodollar Loan, at the Eurodollar Rate plus the Applicable
Margin Rate per annum; provided, however, that after the occurrence and during
the continuance of an Event of Default, all outstanding Loans shall bear
interest at the Post-Default Rate.

23
<PAGE> 30
(ii) Notwithstanding the foregoing, the Borrower hereby
promises to pay interest on any Loan or any installment thereof and (to the
extent that the payment of such interest shall be legally enforceable) on any
overdue installment of interest, and on any other amount payable by the
Borrower hereunder which shall not be paid in full when due (whether at stated
maturity, by acceleration or otherwise), for the period commencing on the due
date thereof until but not including the date the same is paid in full at the
Post-Default Rate.

(iii) Except as provided in the next sentence, accrued
interest on each Loan shall be payable (x) in respect of each Base Rate Loan,
quarterly, on the last Business Day of each calendar quarter, (y) in respect of
each Eurodollar Loan on the last day of each Interest Period (and, if such
Interest Period shall exceed three months, at three-month intervals following
the first day of such Interest Period) and (z) in the case of all Loans
together with each repayment of principal thereof. Interest payable at the
Post-Default Rate shall be payable from time to time on demand of the Agent.

(g) Application of Payments. If the amount of any payment or
prepayment received by a Lender in respect of a Loan is less than the principal
of and interest accrued on such Loan and required to be paid on the date of
payment or prepayment, the amount paid or prepaid on such Loan shall be applied
by such Lender first to accrued interest and then to principal.

(h) Net Payments. (i) All payments made by the Borrower
under this Agreement or any other Program Document shall be made free and clear
of, and without reduction or withholding for or on account of, any present or
future Taxes now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, and all liabilities related thereto. If any
Taxes are required to be withheld or deducted from any amounts payable to the
Agent or any Lender under this Agreement or any other Program Document, the
Borrower shall pay the relevant amount of such Taxes and the amounts so payable
to the Agent or any such Lender shall be increased to the extent necessary to
yield to the Agent or such Lender, as the case may be (after payment of all
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement and the other Program Documents.

24
<PAGE> 31
Whenever any Taxes are paid by the Borrower with respect to payments made in
connection with this Agreement or any other Program Document, as promptly as
possible thereafter, the Borrower shall send to each Lender a certified copy of
an original official receipt received by the Borrower showing payment thereof.

(ii) The Borrower hereby agrees to indemnify the Agent and
each Lender for the full amount of all Taxes attributable to payments by or on
behalf of the Borrower hereunder or under any other Program Document, any Taxes
paid by the Agent, as the case may be, and any present or future claims,
liabilities or losses with respect to or resulting from any omission to pay or
delay in paying such Taxes (including, without limitation, any incremental
Taxes, interest or penalties that may become payable by the Agent or any
Lender, as the case may be, as a result of any failure to pay such Taxes),
whether or not such Taxes were correctly or legally asserted. Such
indemnification shall be made within three (3) days from the date the Agent or
the affected Lender makes written demand therefor.

(iii) Upon the request of the Borrower or the Agent, each
Lender that is organized under the laws of a jurisdiction other than the United
States shall, prior to the due date of any payments under its Notes, execute
and deliver to the Borrower and the Agent, one or more (as the Borrower or the
Agent may reasonably request) United States Internal Revenue Service Form 4224
or Form 1001 or such other forms or documents (or successor forms or
documents), approximately completed, as may be applicable to establish the
extent, if any, to which a payment to such Lender is exempt from withholding or
deduction of Taxes.

SECTION 3.2 Payments by the Agent. Each payment received by
the Agent under this Agreement for the account of a Lender shall be paid
promptly to such Lender, in immediately available funds, to such account as
such Lender shall from time to time designate in writing to the Agent at least
two (2) Business Days prior to any such payment.

SECTION 3.3 Maximum Interest. (a) Anything in this Agreement
or the Note to the contrary notwithstanding, the interest rate on any Loan
shall in no event be in excess of the maximum permitted by Applicable Law.

(b) It is the intention of the parties hereto that each
Lender shall conform strictly to usury laws applicable

25
<PAGE> 32
to it. Accordingly, if the transactions contemplated hereby would be usurious
as to any Lender under laws applicable to it (including the laws of the United
States of America and the State of Texas or any other jurisdiction whose laws
may be mandatorily applicable to such Lender notwithstanding the other
provision of this Agreement), then, in the event, notwithstanding anything to
the contrary in this Agreement or in any other Program Document, it is agreed
as follows: (i) the aggregate of all consideration which constitutes interest
under law applicable to any Lender that is contracted for, taken, reserved,
charged or received by such Lender in respect of the Loans, this Agreement or
under any of other Program Documents shall under no circumstances exceed the
maximum amount allowed by such applicable law, and any excess shall be canceled
automatically and if therefore paid shall be credited by such Lender on the
principal amount of such indebtedness (or, to the extent that the principal
amount of such the indebtedness shall have been or would thereby be paid in
full, refunded by such Lender to the Borrower); and (ii) in the event that the
maturity of the Loans is accelerated by reasons of an Event of Default under
this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under law
applicable to any Lender may never include more than the maximum amount allowed
by such applicable law, and excess interest, if any, provided for in this
agreement or otherwise shall be canceled automatically by such Lender as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of such indebtedness (or, to
the extent that the principal amount of such indebtedness shall have been or
would thereby be paid in full, refunded by such Lender to the Borrower). All
sums paid or agreed to be paid to any Lender for the use, forbearance or
detention of sums due hereunder shall, to the extent permitted by law
applicable to such Lender, be amortized, prorated, allocated and spread
throughout the full term of the Loans until payment in full so that the rate or
amount of interest on account of the Loans hereunder does not exceed the
maximum amount allowed by such applicable law. If at any time and from time to
time (i) the amount of interest payable to any Lender on any date shall be
computed at the Highest Lawful Rate applicable to such Lender pursuant to this
Section 3.3 and (ii) in respect of any subsequent interest computation period
the amount of interest otherwise payable to such Lender would be less than the
amount of interest payable to such Lender computed at the Highest Lawful Rate
applicable to such Lender, then the

26
<PAGE> 33
amount of interest payable to such Lender in respect of such subsequent
interest computation period shall continue to be computed at the Highest Lawful
Rate applicable to such Lender until the total amount of interest payable to
such Lender shall equal the total amount of interest which would have been
applicable to such lender if the total amount of interest had been computed
without giving effect to this Section.

SECTION 3.4 Computations. Interest on all Loans and the
Commitment Fee shall be computed on the basis of the actual number of days
elapsed in the period during which interest accrues and a year of 365/366 days,
in the case of Base Rate Loans and the Commitment Fee, and a year of 360 days,
in the case of Eurodollar Loans. In computing interest on any Loan, the date
of the making of the Loan or the first day of an Interest Period, as the case
may be, shall be included and the date of payment or the expiration date of an
Interest Period, as the case may be, shall be excluded; provided, that if a
Loan is repaid on the same day on which it is made, one day's interest shall be
paid on such Loan. All computations made by the Agent or any Lender under
this Agreement shall be conclusive absent manifest error.

SECTION 3.5 Minimum Amounts. Except for conversions made
pursuant to Section 5.4 hereof, each borrowing or conversion of Loans shall be
an integral multiple of $100,000 with a minimum amount of $500,000 (for
Eurodollar Loans) or $250,000 (for Base Rate Loans) (borrowings or conversions
of or into Loans of different types or with different Interest Periods, at the
same time hereunder are to be deemed separate borrowings and conversions for
purposes of the foregoing, one for each type). The maximum number of Interest
Periods for Revolving Credit Loans which are Eurodollar Loans outstanding at
any one time hereunder shall be five.

SECTION 3.6 Sharing of Setoffs. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, setoff or
counterclaim or pursuant to a secured claim under Section 506 of the Federal
Bankruptcy Code or other security or interest arising from, or in lieu of, such
secured claim, exercised or received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, obtain payment (voluntary or involuntary) in respect of any Loan or
Loans as a result of which the unpaid principal portion of its Loans (and
accrued and unpaid interest thereon) shall be proportionately less than the
unpaid principal portion of the Loans (and accrue and unpaid interest thereon)
of any other Lender, it shall be deemed simultaneously to have purchased from
such other Lender at face value, and shall promptly pay to such other Lender
the purchase price for, a participation in the Loans of such other Lender so
that the aggregate unpaid principal amount of the Loans (and accrued and unpaid
interest thereon) and participations in the Loans held by each Lender shall be
in the same proportion to the aggregate unpaid principal amount of all Loans
then outstanding as the principal amount of its

27
<PAGE> 34
Loans (and accrued and unpaid interest thereon) prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the principal
amount of all Loans outstanding (and accrued and unpaid interest thereon) prior
to such exercise of banker's lien, setoff or counterclaim or other event;
provided, however, that, if any such purchase or purchased or adjustments shall
be made pursuant to this Section 3.6 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. Any Lender holding a participation in a
Loan deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
to such Lender by reason thereof as fully as if such Lender had made a Loan in
the amount of such participation. The Borrower expressly consents to the
foregoing arrangement.

SECTION 3.7 Non-Receipt of Funds by the Agent. Unless the
Agent shall have been notified by a Lender or the Borrower (the "Payor") prior
to the date on which the Payor is scheduled to make payment to the Agent or (in
the case of a Lender) the proceeds of a Loan to be made by it hereunder or (in
the case of the Borrower) a payment to the Agent for account of one or more of
the Lenders hereunder (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that the Payor does
not intend to make the Required Payment to the Agent, the Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date and, if the Payor has not in fact made the
Required Payment to the Agent, the recipient(s) of such payment shall, on
demand, repay to the Agent the amount so made available together with interest

28
<PAGE> 35
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 the Federal Funds Rate for such day
and, if such recipient(s) shall fail promptly to make such payment, the Agent
shall be entitled to recover such amount, on demand, from the Payor, together
with interest as aforesaid.

ARTICLE IV

TERMINATION

SECTION 4.1 Termination by the Borrower. The Borrower may
terminate this Agreement and the Revolving Credit Commitment and Term Loan
Commitment of each Lender upon not less than sixty (60) days prior written
notice to each Lender and upon payment of all amounts owing to the Agent and
each Lender hereunder, under each Note and under the other Program Documents.

ARTICLE V

YIELD PROTECTION AND ILLEGALITY

SECTION 5.1 Additional Costs. (a) The Borrower shall pay
directly to each Lender from time to time immediately upon demand such amounts
as the Lender may determine to be necessary to compensate it (or any Booking
Office) for any costs incurred by such Lender (or any Booking Office) or any
reduction of the rate of return on assets or equity of such Lender (or any
Booking Office) to a level below that which such Lender (or any Booking Office)
could have achieved, which it determines are attributable to its making or
maintaining of any Loans hereunder or its obligation to make or maintain any
Loans hereunder, or any reduction in any amount receivable by such Lender (or
any Booking Office) hereunder in respect of any Loans or such obligation (such
increases in costs and reductions in amounts receivable or rate of return being
herein called "Additional Costs"), resulting from any Regulatory Change which
(i) changes the basis of taxation of any amounts payable to such Lender under
this Agreement or any Note payable to it (other than taxes imposed on the
overall net income of such Lender unless such tax is imposed solely as a result
of the transactions contemplated by the Program

29
<PAGE> 36
Documents); (ii) imposes or modifies any reserve, special deposit, capital
adequacy, capital maintenance or similar requirements, or results in any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or the compliance by such Lender (or any Booking
Office) or such Lender's holding company with any request or directive
regarding capital adequacy or capital maintenance (whether or not having the
force of law) or with any such authority, central bank or comparable agency,
other than such reserves as are included in the determination of the Eurodollar
Rate; or (iii) imposes any other condition affecting such Lender's return under
this Agreement (or any of such extensions of credit or liabilities). Each
Lender will notify the Borrower of any event which will entitle such Lender to
compensation pursuant to this Section 5.1(a) as promptly as practicable after
it obtains knowledge thereof and determines to request such compensation;
provided, that the failure of any Lender to so notify the Borrower shall not
affect the obligations of the Borrower hereunder in respect of such Additional
Costs. Each Lender will furnish the Borrower with a notice setting forth the
basis and amount of each request by such Lender for compensation under this
Section 5.1(a).

(b) Without limiting the effect of the foregoing provisions
of this Section 5.1, in the event that, by reason of any Regulatory Change, any
Lender becomes subject to restrictions on the amount of a category of deposits
or other liabilities of such Lender which includes deposits by reference to
which the interest rate on Eurodollar Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Lender
which includes Eurodollar Loans, then, if such Lender so elects by notice to
the Borrower, the obligation of the Lender to make, and to convert Base Rate
Loans into, Eurodollar Loans hereunder shall be suspended until the date such
Regulatory Change ceases to be in effect (and all Eurodollar Loans held by such
Lender then outstanding shall be converted into Base Rate Loans in accordance
with Section 5.4 hereof).

(c) Determinations by a Lender for purposes of this Section
5.1 of the effect of any Regulatory Change on its costs of making or
maintaining the Loans, the Commitment or on amounts receivable by it hereunder
or under any Note, and of the additional amounts required to compensate such

30
<PAGE> 37
Lender in respect of any Additional Costs, shall be conclusive absent manifest
error.

SECTION 5.2 Limitation on Types of Loans. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of any
interest rate for any Eurodollar Loan for any Interest Period therefor:

(a) a Lender determines in good faith (which
determination shall be conclusive) that the rate of interest
which appears on the Telerate Page or the quotations of
interest rates for the relevant deposit referred to in the
definition of the Eurodollar Rate in Section 1.1 hereof are
not being provided in the relevant amounts or for the relevant
maturities for purposes of determining the rate of interest
for such Eurodollar Loan as provided in this Agreement; or

(b) a Lender determines in good faith (which
determination shall be conclusive) that the relevant rates of
interest referred to in the definition of the Eurodollar Rate
in Section 1.1 hereof upon the basis of which the rate of
interest for such Eurodollar Loan for such Interest Period is
to be determined do not accurately reflect the cost to such
Lender of making or maintaining such Eurodollar Loan for such
Interest Period;

then such Lender shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, (i) the Lenders shall be under no obligation
to make Eurodollar Loans or to convert Base Rate Loans into Eurodollar Loans,
(ii) each request for a Eurodollar Loan from the Lenders shall instead be
deemed to be a request for a Base Rate Loan, and (iii) and the Borrower shall,
on the last day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Loans, either prepay such Eurodollar Loans or convert such
Eurodollar Loans into Base Rate Loans in accordance with Section 5.4 hereof.

SECTION 5.3 Illegality. Notwithstanding any other provision
in this Agreement, in the event that it becomes unlawful for a Lender or its
Booking Office to (a) honor its obligation to make Eurodollar Loans hereunder,
or (b) maintain Eurodollar Loans hereunder, then such Lender shall promptly
notify the Borrower thereof, and such Lender's obligation to make Eurodollar
Loans and to convert

31
<PAGE> 38
Base Rate Loans into Eurodollar Loans hereunder shall be
suspended until such time as such Lender may again make and maintain Eurodollar
Loans, and such Lender's outstanding Eurodollar Loans shall be converted into
Base Rate Loans in accordance with Section 5.4 hereof.

SECTION 5.4 Certain Conversions. If a Eurodollar Loan (such
Eurodollar Loan being herein called "Affected Loan") is to be converted
pursuant to Sections 5.1, 5.2 or 5.3 hereof, such Affected Loan shall be
automatically converted into a Base Rate Loan on the last day(s) of the then
current Interest Period for the Affected Loan (or, in the case of a conversion
required by Section 5.3 hereof, on such earlier date as such Lender may specify
to the Borrower) and, unless and until the Lender gives notice that the
circumstances specified in Sections 5.1, 5.2 or 5.3 hereof which gave rise to
such conversion no longer exist, to the extent that the Affected Loan has been
so converted, all payments and prepayments of principal which would otherwise
be applied to the Affected Loans shall be applied instead to its Base Rate
Loans.

SECTION 5.5 Compensation. The Borrower shall pay to each
Lender, upon the request of such Lender, such amount or amounts as shall be
sufficient (in the opinion of such Lender) to compensate it for any loss, cost
or expense incurred by it as a result of:

(a) any payment, prepayment or conversion of a
Eurodollar Loan made by such Lender on a date other than the
last day of an Interest Period for such Eurodollar Loan; or

(b) any failure by the Borrower to borrow, convert
or prepay a Eurodollar Loan held by such Lender on the date
for such borrowing, conversion or prepayment specified in the
relevant Loan Request, Notice of Conversion or Continuation or
notice of prepayment delivered under Section 3.1(d) hereof,
respectively;

such compensation to include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount so paid, prepaid or converted or not borrowed for the period
from the date of such payment, prepayment or conversion or failure to borrow to
the last day of the then current Interest Period for such Eurodollar Loan (or,
in the case of a failure to

32
<PAGE> 39
borrow, the Interest Period for such Eurodollar Loan which would have commenced
on the date of such failure to borrow) at the applicable rate of interest for
such Eurodollar Loan provided for herein over (ii) the interest component (as
reasonably determined by such Lender) of the amount (as reasonably determined
by such Lender) such Lender would have bid in the Eurocurrency market for
Dollar deposits of amounts comparable to such principal amount and maturities
comparable to such period.

ARTICLE VI

CONDITIONS PRECEDENT

Each borrowing of a Loan pursuant to this Agreement may be
made only if the following conditions precedent are met and each request for a
Loan shall constitute a representation and warranty that such conditions
precedent have been met:

SECTION 6.1 No Default. On the date of each borrowing, no
Default or Event of Default shall have occurred or be continuing on such date.

SECTION 6.2 Opinions of Counsel. On or prior to the date of
the initial borrowing, each Lender shall have received:

(a) the favorable written opinion of counsel to the Borrower
and WestPAC, addressed to and satisfactory in form, scope and
substance to the Lenders; and

(b) such other opinions as may be reasonably requested by the
Lenders or counsel for the Lenders.

SECTION 6.3 Other Supporting Documents. On or prior to the
date of the initial borrowing, the Borrower shall deliver, or cause to be
delivered, to each Lender:

(a) this Agreement, executed by each of the parties
hereto, together with all schedules hereto;

(b) an executed Pledge Agreement;

33
<PAGE> 40
(d) good standing certificates as of dates no more than
twenty days prior to the date of such initial borrowing, with respect
to each of the Borrower and each Subsidiary, from the Secretary of
State of the States of Texas and Michigan;

(e) a certificate of the Secretary or an Assistant
Secretary and President or Chief Financial Officer of the Borrower
substantially in the form attached hereto as Exhibit B, appropriately
completed;

(f) a certificate of the Secretary or an Assistant
Secretary and President or Chief Financial Officer of WestPAC
substantially in the form attached hereto as Exhibit B, appropriately
completed;

(g) original stock certificates representing all of the
issued and outstanding shares of stock of Titan Indemnity, together
with stock powers executed by the Borrower in blank and irrevocable
proxy relating thereto, as provided in the Pledge Agreement;

(h) a copy of the consolidated annual audited financial
statements of the Borrower and its Subsidiaries for the fiscal year
ended December 31, 1995 including therein the consolidated balance
sheet of the Borrower and such Subsidiaries as at the end of such year
and the related consolidated statements of income and cash flows of
the Borrower and such Subsidiaries for such year, certified by the
Borrower's independent accountants as fairly presenting the financial
position and the results of operations of the Borrower and such
Subsidiaries as at and for such year and as having been prepared in
accordance with GAAP;

(i) the Guarantee, duly executed by WestPAC; and

(j) such other documents as any Lender, or counsel for
any Lender, may reasonably request.

SECTION 6.4 Control of the Borrower. The Borrower shall own,
directly or indirectly, 100% of the then outstanding Capital Stock of WestPAC,
Titan Indemnity and Titan Insurance.

SECTION 6.5 Loan Request. The Borrower shall have delivered
to each Lender a Loan Request complying with the provisions of Section 2.2 or
2.3, as applicable.

34
<PAGE> 41
SECTION 6.6 Fees Paid. There shall have been paid to each
Lender the fees due and payable to each Lender under Section 11 hereof on the
date or through the date of such borrowing or 2.3, as applicable.

SECTION 6.7 Representations and Warranties. The
representations and warranties of each of the Borrower and WestPAC set forth in
the Program Documents shall be true and correct in all respects except to the
extent any such representation or warranty relates solely to an earlier date.

SECTION 6.8 Existing Agreement. Concurrently with the
initial borrowing, arrangements satisfactory to each Lender shall have been
made to repay in full all Indebtedness evidenced by the Existing Agreement and
to release (or assign to the Agent) all Liens granted by the Borrower to secure
such Indebtedness.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to each Lender on the
date hereof and on each borrowing of a Loan that:

SECTION 7.1 Organization, Powers, etc. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of organization and is duly qualified to do business
as a foreign corporation in each other jurisdiction in which the conduct of its
business requires such qualification. The Borrower has all requisite corporate
power and authority to conduct its business as contemplated to be conducted, to
own its properties and to execute, deliver, and perform all of its obligations
under this Agreement and the other Program Documents to which it is a party.

35
<PAGE> 42
a breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which it is a party or
by which it or any of its properties are bound, or (iii) result in, or require,
the creation or imposition of any mortgage, deed of trust, assignment, pledge,
Lien, security interest or other charge or encumbrance of any nature upon or
with respect to any of its properties except as otherwise provided by this
Agreement and the Pledge Agreement; nor is it in violation of any Applicable
Law or in default under any such indenture, agreement, lease or instrument.

SECTION 7.3 Government Approvals. No authorization, consent,
approval, license, exemption of or filing or registration with any Governmental
Authority or other Person, is or will be necessary to the valid execution,
delivery or performance by the Borrower of this Agreement and the other Program
Documents to which it is a party.

SECTION 7.4 Government Regulation. The Borrower is not
subject to regulation under the Investment Company Act of 1940, as amended, or
any other federal or state statute or regulation which limits the ability of
the Borrower to incur indebtedness or the ability of the Borrower or WestPAC to
consummate the transactions contemplated by this Agreement and the other
Program Documents.

SECTION 7.5 Valid and Binding Obligations. This Agreement
and the other Program Documents to which the Borrower is a party are the legal,
valid and binding obligations of the Borrower enforceable against the Borrower
in accordance with their terms.

SECTION 7.6 Litigation. There are no actions, suits or
proceedings pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any Subsidiary of the Borrower, the business or any
property of any of them, or involving the legality, validity or enforceability
of any Program Document at law or in equity before any Governmental Authority,
which, if adversely determined, could have a material adverse effect on the
business, operations, property or financial or other condition of the Borrower.

SECTION 7.7 Use of Proceeds. No part of the proceeds of any
Loan will be used to purchase or carry any

36
<PAGE> 43
"margin stock" (as defined in Federal Reserve Regulation U) or to extend credit
to others for such purpose. The Borrower does not engage in, nor have as one
of its important activities, the business of extending credit for the purpose
of purchasing or carrying any margin stock.

SECTION 7.8 Accuracy of Information. All information,
financial or otherwise, written or verbal, furnished or to be furnished at any
time by or on behalf of the Borrower to any Lender is and will be true,
complete and accurate in all material respects as of its date, and does not or
will not contain any untrue statement of a material fact or omit to state a
material fact as of such date.

SECTION 7.9 Accuracy of Representations and Warranties. The
representations and warranties of the Borrower contained in each Program
Document to which it is a party are and will be true and correct as of the date
given.

SECTION 7.10 Financial Position. The consolidated balance
sheets of the Borrower and its consolidated Subsidiaries as at December 31,
1995 and the related statements of income and shareholders' equity of the
Borrower and its consolidated Subsidiaries for the fiscal year then ended,
audited by its independent accountants, copies of which have been furnished to
the Lenders, present the consolidated financial position of the Borrower and
its consolidated Subsidiaries as at such date and the consolidated results of
the operations of the Borrower and its consolidated Subsidiaries for the period
ended on such date, all in accordance with GAAP.

SECTION 7.11 Pledge of Shares. The Agent on behalf of each
Lender, pursuant to the Pledge Agreement and the actions taken hereunder, holds
a valid, perfected and first priority security interest in the Pledged Shares
free and clear of all Liens.

SECTION 7.12 Title to Pledged Shares. The Borrower has legal
title to all of the Pledged Shares, free and clear of all Liens, except as
contemplated by the Pledge Agreement.

37
<PAGE> 44
incorporated and the state in which it has its principal place of business, and
all other state and local tax returns required to be filed by it, and (ii) has
not failed to pay any taxes, or interest and penalties relating thereto, on or
before the due dates thereof. There are no federal, state or local tax
liabilities of the Borrower due or to become due for any tax year ended on or
prior to the date of execution of this Agreement relating to the Borrower,
whether incurred in respect of or measured by the income of the Borrower, which
are required to be reflected in accordance with GAAP in the financial
statements delivered pursuant to Section 7.10 and have not been so reflected,
and there are no claims pending, proposed or, to the best of the Borrower's
knowledge, threatened against the Borrower for past federal, state or local
taxes, except those, if any, as to which proper reserves in accordance with
GAAP are reflected in such financial statements.

SECTION 7.14 ERISA. Each Plan of the Borrower is in
compliance with all of the applicable provisions of ERISA, and each Plan
intended to be qualified under Section 401(a) of the Code is so qualified. No
Plan of the Borrower has incurred an "accumulated funding deficiency" (within
the meaning of Section 302 of ERISA or Section 412 of the Code) whether or not
waived. Neither the Borrower nor any ERISA Affiliate (i) has incurred or
expects to incur any liability under Title IV of ERISA with respect to any Plan
which could give rise to a Lien in favor of the PBGC, other than liability for
the payment of premiums, all of which have been timely paid when due in
accordance with Section 4007 of ERISA, (ii) has incurred or expects to incur
any withdrawal liability, within the meaning of Section 4201 of ERISA, (iii) is
subject to any Lien under Section 412(n) of the Code or Sections 302(f) or 4068
of ERISA or arising out of any action brought under Sections 4070 or 4301 of
ERISA, or (iv) is required to provide security to a Plan under Section
401(a)(29) of the Code. The PBGC has not instituted proceedings to terminate
any Plan or to appoint a trustee or administrator of any such Plan and no
circumstances exist that constitute grounds under Section 4042 of ERISA to
commence any such proceedings.

38
<PAGE> 45
WestPAC to perform their respective obligations under this Agreement or the
other Program Documents to which either of them is a party or upon the ability
of the Agent or any Lender to enforce this Agreement or the other Program
Documents.

SECTION 7.16 Compliance with Laws. (a) The Borrower is in
compliance in all material respects with all Applicable Laws; and

(b) The Borrower and each Subsidiary of the Borrower is in
compliance in all material respects with all Applicable Laws;

except in each case where the failure to so comply would not have a material
adverse effect on the Borrower.

SECTION 7.17 Franchises, Licenses. The Borrower and its
Subsidiaries have all franchises, permits, licenses and other authority as are
necessary to enable them to conduct their respective businesses as currently
being conducted and as proposed to be conducted, and none of them is in default
under any of such franchises, permits, licenses or other authority.

SECTION 7.18 No Default. The Borrower is in compliance with
all of the terms and provisions contained herein and in the other Program
Documents to which it is a party and no Default or Event of Default has
occurred and is continuing.

SECTION 7.19 Capital Stock. The Borrower owns, beneficially
and of record, 100% of the issued and outstanding Capital Stock of Titan
Indemnity, and Titan Indemnity owns, beneficially and of record, 100% of the
issued and outstanding Capital Stock of Titan Insurance and WestPAC.

SECTION 7.20 Trade Names, etc. The Borrower (a) does not
conduct or transact, nor has it ever conducted or transacted, business in any
jurisdiction under any assumed name, fictitious name, trade name, alternate
corporate name or other like name (each a "Trade Name"), and (b) has not made
any filing or application with or otherwise sought the approval of any
Governmental Authority with respect to the use by the Borrower of a Trade Name
in any jurisdiction. The Borrower has not at any time (i) incurred any under
any Trade Name, (ii) granted any security interest

39
<PAGE> 46
or permitted or suffered any Lien to exist against the Borrower or any portion
of its assets or property, whether real or personal (including, without
limitation, any of the Pledged Shares) under any Trade Name, (iii) executed or
filed any financing statement as a debtor under the Uniform Commercial Code as
in effect in any jurisdiction under any Trade Name, except pursuant to this
Agreement or the Pledge Agreement, or (iv) had any judgment entered or rendered
against it under any Trade Name.

ARTICLE VIII

AFFIRMATIVE COVENANTS

The Borrower covenants and agrees with the Agent and each
Lender that from and after the Effective Date and so long as this Agreement
shall remain in effect or any Loans or any other amounts owing under this
Agreement or any Program Document shall be unpaid, it shall:

SECTION 8.1 Payment of Taxes, etc. Pay and discharge, and
cause each of its Subsidiaries to pay and discharge, all taxes imposed upon it
or such Subsidiary or upon its or such Subsidiary's income or profits, prior to
the date on which penalties attach thereto, and all lawful claims, which, if
unpaid, might become a Lien or charge upon any of its or such Subsidiary's
assets; provided, however, that neither the Borrower nor any Subsidiary shall
be required to pay or discharge any taxes which are being contested in good
faith by appropriate proceedings diligently pursued and for which adequate
reserves have been established.

SECTION 8.2 Preservation of Corporate Existence. Continue to
engage, and cause each of is Subsidiaries to continue to engage, in business of
the same general type as now conducted and preserve and maintain its existence
in the jurisdiction of its incorporation, and its rights, franchises and
privileges material to the conduct of its business as now being conducted, and
qualify and remain qualified as a foreign corporation or entity in each
jurisdiction in which such qualification is necessary in view of its business
operations or the ownership of its properties.

SECTION 8.3 Compliance with Laws, etc. Comply, and cause
each of its Subsidiaries to comply, with the

40
<PAGE> 47
requirements of all Applicable Laws of any Governmental Authority.

SECTION 8.4 Inspection Rights. At any time and from time to
time during normal business hours permit the Lenders or any agents or
representatives thereof, to examine and make copies of the records and books of
account of the Borrower and its Subsidiaries and to visit its properties, and
to discuss its affairs, finances and accounts with any of its authorized agents
or officers.

SECTION 8.5 Maintenance of Approvals, Filings and
Registrations. At all times maintain in effect, renew and comply with, and
cause each of its Subsidiaries to maintain in effect, renew and comply with,
all the terms and conditions of all consents, licenses, approvals and
authorizations as may be necessary or appropriate under any Applicable Law (i)
for the execution, delivery and performance of the Program Documents, (ii) to
make the Program Documents legal, valid, binding and enforceable against the
Borrower and WestPAC, and (iii) to conduct its business.

SECTION 8.6 Reporting Requirements. Furnish or cause to be
furnished to the Agent with sufficient copies for each Lender:

(a) as soon as available, but, in any event not later
than ninety (90) days after the end of each fiscal year of the
Borrower, a copy of the annual audited consolidated financial
statements for the Borrower and its Subsidiaries for such year,
including therein the consolidated balance sheets of the Borrower and
its Subsidiaries as at the end of such year and the related
consolidated statements of income and cash flows of the Borrower and
its Subsidiaries for such year, or statements providing substantially
similar information, in each case certified without qualification by
an independent public accountant of recognized national standing as
fairly representing the financial position and results of operation of
the Borrower and its Subsidiaries as at and for the year ending on its
date and having been prepared in accordance with GAAP; and

(b) as soon as available, but in any event not later than
forty-five (45) days after the end of each of the first three
quarterly periods of each fiscal year of the Borrower, the unaudited
consolidated balance sheets

41
<PAGE> 48
of the Borrower and its Subsidiaries as at the end of each such
quarter and the related unaudited consolidated statements of income
and cash flows of the Borrower and its Subsidiaries for such quarter
and the portion of the fiscal year through such date, certified by a
responsible officer of the Borrower as fairly presenting the financial
position and the results of operations of the Borrower and its
Subsidiaries in all material respects as at and for the quarter ending
on its date and as having been prepared in accordance with GAAP
(subject to normal year-end audit adjustments);

(c) concurrently with the delivery of the financial
statements referred to in Sections 8.6(a) and (b) above, (i) a
certificate of a duly authorized officer of the Borrower stating that
such officer has reviewed the terms of this Agreement and the other
Program Documents to which the Borrower is a party and has made, or
caused to be made under his supervision, a review in reasonable detail
of the transactions and condition of the Borrower during the
accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that such officer does not have knowledge of
the existence as at the date of such certificate, of any Default or
Event of Default except as specified in such certificate and (ii) a
certificate of the chief financial officer of the Borrower
demonstrating in detail satisfactory to the Agent compliance by the
Borrower and its Subsidiaries with the financial covenants set forth
in Section 8.12 and 8.17 hereof;

(d) promptly and in any event within five (5) Business
Days after the same are publicly available, copies of all regular and
periodic financial information, proxy materials and other information
and reports, if any, which the Borrower, the Borrower or any of its
Subsidiaries shall file with the Securities and Exchange Commission or
any securities exchange or any state insurance regulatory agencies;
and

(e) such other information with respect to the business,
condition or operations of the Borrower, WestPAC or any of their
respective Subsidiaries, financial or otherwise, as the Agent or any
Lender may from time to time reasonably request.

42
<PAGE> 49
SECTION 8.7 Performance of Agreements. Duly and punctually
pay and perform each of its obligations under this Agreement and the other
Program Documents.

SECTION 8.8 Notices. Promptly give notice to the Agent and
each Lender of:

(a) the occurrence of any Default or Event of Default;

(b) any (i) default or event of default under any
contractual obligation of the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding to which the Borrower or any of its
Subsidiaries is a party, including any which may exist at any time between the
Borrower or any of its Subsidiaries and any Governmental Authority, which in
either case, if not cured or if adversely determined, as the case may be, could
have a material adverse effect on the business, operations, property or
financial or other condition of the Borrower or any of its Subsidiaries;

(c) of the occurrence of any event which could have a
material adverse effect upon the business, properties, liabilities, condition
(financial or otherwise), results of operations or prospects of the Borrower or
any of its Subsidiaries, or upon the ability of the Borrower or WestPAC to
perform its respective obligations under this Agreement or any other Program
Document to which it is a party;

(d) any material regulatory action with respect to the
Borrower or any Subsidiary, together with a copy of any notice of such action,
within ten days after such action is taken or such notice given;

(e) the release of the triennial examination of the
Borrower and each of its Subsidiaries that is an insurance company, together
with a copy of that report, within 30 days after the release of such report;

(f) the lowering of any claims paying rating assigned to
any Subsidiary by any of A.M. Best, Standard & Poor's Rating Group or Moody's
Investors Service, Inc. within five days after such lowering; and

43
<PAGE> 50
(g) any agreement reached that involves the sale or
merger of the Borrower or the Borrower's acquisition of any Person or book of
business.

Each notice pursuant to this subsection shall be accompanied by a statement of
a responsible officer setting forth details of the occurrence referred to
therein and stating what action are being taken with respect thereto.

SECTION 8.9 Books and Records. Keep, and cause its
Subsidiaries to keep, adequate records and books of account, in which complete
entries are to be made reflecting its business and financial transactions and
its performance under the Program Documents, such entries to be made in
accordance with GAAP (or, in the case of Subsidiaries which are insurance
companies, statutory accounting principles) as in effect in the United States
consistently applied in the case of financial transactions or as otherwise
required by Applicable Laws.

SECTION 8.10 Further Assurances. As from time to time
requested by the Agent or any Lender, at the cost and expense of the Borrower,
execute and deliver to the Agent and each Lender all such documents and
instruments and do all such other acts and things as may be reasonably required
to enable the Agent and each Lender to exercise and enforce its rights under
this Agreement, and record and file and re-record and re-file all such
documents and instruments, at such time or times, in such manner and at such
place or places, all as may be necessary or desirable to validate, preserve and
protect the position of the Agent and each Lender under the Program Documents.

SECTION 8.11 Other Agreements. Comply in all respects with
all indentures, loan or credit agreements and any other agreement, lease or
instrument to which the Borrower is a party.

SECTION 8.12 Financial Covenants.

(a) Interest Coverage Ratio. Maintain the ratio of Net
Available Cash Flow of the Borrower to Interest Expense for the Borrower,
calculated at the end of the most recently concluded calendar quarter, at a
level equal to or greater than:

44
<PAGE> 51
(i) during the period from the date hereof through July
31, 1998, 3.2 to 1; and

(ii) from and after August 1, 1998, 6.0 to 1.

(b) Total Debt Service Ratio. Maintain the ratio of Net
Available Cash Flow of the Borrower to the sum of Interest Expense plus
scheduled quarterly principal repayments on all Indebtedness of the Borrower
during the immediately preceding four calendar quarters at a level equal to or
greater than:

(i) during the period from the date hereof through July
31, 1998, 1.1 to 1; and

(ii) from and after August 1, 1998, 1.35 to 1.

(c) Consolidated Earnings. Maintain Consolidated Net Earnings
of the Borrower, calculated as of the end of each fiscal year of the Borrower,
of an amount equal to or greater than:

(i) for the fiscal years ending December 31, 1996 and
1997, $10,000,000; and

(ii) for all succeeding fiscal years, $18,000,000.

(d) Titan Indemnity Earnings. Maintain the Net Earnings for
Titan Indemnity, calculated as of the end of each fiscal year of Titan
Indemnity, at an amount equal to or greater than:

(i) for the fiscal years ending December 31, 1996 and
1997, $4,000,0000; and

(ii) for all succeeding fiscal years, $6,000,000.

(e) Titan Insurance Earnings. Maintain the Net Earnings for
Titan Insurance, calculated as of the end of each fiscal year of Titan
Indemnity, at an amount equal to or greater than:

(i) for the fiscal years ending December 31, 1996 and
1997, $5,000,000; and

(ii) for all succeeding fiscal years, $8,000,000.

45
<PAGE> 52
(f) Minimum Risk-Based Capital. At the end of each calendar
year maintain the Minimum Risk-Based Capital (i) for Titan Indemnity at a rate
greater than 300% and (ii) for Titan Insurance at a rate greater than 250%.

(g) Consolidated Equity. At all times maintain the
Consolidated Equity of the Borrower at an amount greater than $55,000,000.

(h) Capacity Utilization Ratio. At the end of each calendar
quarter maintain the Capacity Utilization Ratio (i) of Titan Indemnity at less
than 1.5 and (ii) of Titan Insurance at a level less than 3.0.

(i) Expense Ratio. At the end of each calendar quarter
(calculated for such calendar quarter only, except for any calendar quarter
ending December 31, which shall be calculated for the calendar year ending such
date) maintain the Expense Ratio for Titan Indemnity and for Titan Insurance at
less than 40%.

(j) Combined Ratio. At the end of each calendar quarter
(calculated for such calendar quarter only, except for any calendar quarter
ending December 31, which shall be calculated for the calendar year ending such
date) maintain the Combined Ratio (i) for Titan Indemnity at a rate less than
100%, except that such ratio may be greater than 100% during an aggregate of
four calendar quarters during the term of this Agreement, but in no event shall
be greater than 140%, and (ii) for Titan Insurance at a rate less than 100%,
except that such ratio may be greater than 100% during an aggregate of four
calendar quarters during the term of this Agreement, but in no event shall be
greater than 105%.

(k) Minimum C&S. At all times maintain the C&S of Titan
Indemnity at an amount in excess of $45,000,000.

Section 8.13 Maintenance of Ratings. Ensure that at all
times Titan Indemnity and Titan Insurance shall maintain ratings from A.M. Best
(a) in the case of Titan Insurance, of B+ or higher and (b) in the case of
Titan Indemnity, of A- or higher, provided, in the case of Titan Indemnity's
rating, so long as such rating is at least B+, the Borrower shall not be deemed
in default under this covenant if such rating is below A- but is B+ or better
for an aggregate period of one year or less.

46
<PAGE> 53
Section 8.14 Maintenance of Reinsurance. Cause each of Titan
Indemnity and Titan Insurance to obtain and maintain reinsurance from reputable
reinsurance companies at such levels and pursuant to such policies as may be
reasonably consistent from time to time with the practices of a prudent
insurance company.

Section 8.15 IRIS Tests. Ensure that each of Titan Indemnity
and Titan Insurance shall pass at least 8 of the 11 tests performed by IRIS
during each fiscal year of each such company.

Section 8.16 Asset Quality Maintenance. Ensure that each of
Titan Indemnity and Titan Insurance shall comply with the following
requirements with respect to their assets:

(a) with respect to investments consisting of mortgages on
real property held by either such company:

(i) mortgage investments shall not constitute
more than 20% of the value of such company's
GIA;

(ii) no more than 10% in principal amount of
mortgage investment held by such company
shall be delinquent by more than three months
in payment or otherwise in default; and

(iii) no one mortgagee (together with any
Affiliates of such mortgagee) shall account
for more than 5% of the value of such
company's GIA;

(b) with respect to bonds held by either such company, as
reported under the heading "Bonds" on Schedule D of such company's most
recently-filed Convention Statement,

(i) 85% in principal amount of such bonds shall
be rated in NAIC Classes 1 or 2;

(ii) no more than 15% in principal amount of such
bonds shall be rated in NAIC Classes 3 or 4;

47
<PAGE> 54
(iii) no more than 5% in principal amount of such
bonds shall be rated in NAIC Classes 5 or 6;

(iv) no one non-governmental issuer (together with
any Affiliates of such issuer) shall account
for more than 5% of the outstanding principal
amount of all bonds held by such company;

(v) structured financial instruments, such as
collateralized mortgage obligations, shall
not exceed 10% of the value of such company's
GIA; and

(vi) loan-backed bonds shall not exceed 10% of
the value of such company's GIA; and

(i) the market value of all equity securities
issued by entities which are not Affiliates
of such company shall not exceed 20% of the
value of such company's GIA;

(ii) the market value of all equity securities
issued by any one entity (together with those
of any Affiliate of such entity) which are
not Affiliates of such company shall not
exceed 5% of the value of such company's GIA;
and

(iii) the market value of all equity securities
issued by Affiliates of such company shall
not exceed 150% of such company's C&S.

ARTICLE IX

NEGATIVE COVENANTS

The Borrower covenants and agrees with the Agent and each
Lender that, from and after the Effective Date and so long as this Agreement
shall remain in effect or Loans or any other amounts owing under this Agreement
or any other Program Document shall be unpaid, it shall not, directly or
indirectly:

SECTION 9.1 Use of Proceeds. Use the proceeds of the Loans
for any purpose other than to pay fees and transaction expenses incurred in
connection with the transactions contemplated by the

48
<PAGE> 55
Program Documents and provide funds for general corporate purposes in
accordance with the terms of this Agreement.

SECTION 9.2 Prohibition of Fundamental Changes. Wind-up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time), whether in one or a series of
transactions, all or substantially all of its assets, or permit any of its
Subsidiaries to do any of the foregoing; provided, that Titan Indemnity and
Titan Insurance shall be permitted to make intercompany asset transfers not
exceeding 10% of such company's surplus computed in accordance with statutory
accounting principles during any fiscal year of such company.

SECTION 9.3 Business. Make or permit any change in the
character of its or its Subsidiaries' business or operations which could
adversely affect to rights and remedies of the Agent or the Lenders under the
Program Documents.

SECTION 9.4 Liens. Contract for, create, incur, assume or
suffer to exist any Lien, security interest, charge or other encumbrance of any
nature upon any of the Pledged Shares except as provided for in the Pledge
Agreement.

SECTION 9.5 Transactions with Affiliates. The Borrower will
not, and will not permit any Subsidiary to, make any sale to, make any purchase
from, make payment (including, without limitation, any management fee payment)
for services rendered by, or enter into any other transaction with, any
Affiliate unless as a whole such sales, purchases, payments and other
transactions are (at the time such sale, purchase, rendition of services, or
other transaction is entered into) on terms and conditions reasonably fair in
all material respects to the Borrower or such Subsidiary; provided, that this
Section 9.5 shall not prohibit or restrict (a) intercompany agency commissions,
(b) sales of receivables from WestPAC to Titan Indemnity,

49
<PAGE> 56
(c) any intercompany loans among the Borrower and its Subsidiaries not
aggregating in excess of $50,000 at any time and (d) loans to officers and
directors of the Borrower or any Subsidiary not exceeding $50,000 to any one
such person or $500,000 in the aggregate at any time, except for the loan to
the principal shareholder of the Borrower outstanding on the date hereof, as
reflected on the December 31, 1995 consolidated financial statements of the
Borrower and its Subsidiaries.

SECTION 9.6 Dividends to the Borrower by Subsidiaries. The
Borrower will not permit any Subsidiary to issue any securities or enter into
any agreements (other than with or as required by applicable regulatory
authorities) that will either (i) limit such Subsidiary's ability to declare or
pay or set apart any funds for the payment of any dividend or make any
distribution to the Borrower or (ii) prevent such Subsidiary from paying to the
Borrower the entire amount available to be paid as dividends or distributions
by such Subsidiary; provided, that in no event shall any Subsidiary be
permitted to transfer assets to the Borrower or another Subsidiary in excess of
such Subsidiary's surplus (computed in accordance with statutory accounting
principles).

SECTION 9.7 Statutory Surplus. The Borrower shall not permit
the capital and surplus, as defined in Article 2.02 of the Texas Insurance Code
or Chapter 500.410 of the Michigan Insurance Code of 1956, of any insurance
company Subsidiary to be less than the minimum amount required under any
applicable insurance law to which it is subject.

SECTION 9.8 Indebtedness. Incur any Funded Debt in excess of
$1,000,000 outstanding at any one time, except for the Indebtedness in respect
of the Airplane Lease.

ARTICLE X

EVENTS OF DEFAULT

SECTION 10.1 Events of Default. In case of the happening of
any of the following events (herein sometimes called "Events of Default"):

(a) the principal amount of any Loan or any Note, any
interest payable thereon, the Commitment Fee or any other fees or
expenses related to this Agreement or the

50
<PAGE> 57
transactions contemplated hereby or any other amount payable under
this Agreement shall not be paid in full on the date due and payable
and, in the case of a default in the payment of interest, Commitment
Fee or any other fees and expenses, such default shall continue
unremedied for a period of five days; or

(b) any representation or warranty made or deemed to be
made or reaffirmed by the Borrower or any other Person herein or in
any Program Document, certificate, agreement, instrument or statement
contemplated by or made or delivered pursuant to or in connection
herewith, shall prove to have been incorrect when made or deemed made;
or

(c) (i) the Borrower shall fail to perform or observe any
term, covenant or agreement contained in Sections 8.12, 8.13 or 8.15
or in Article IX of this Agreement, or (ii) the Borrower or WestPAC
shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement or any other Program Document and not
otherwise constituting an Event of Default hereunder, and such default
shall continue unremedied for a period of 30 days; or

(d) any Program Document shall, at any time after its
execution and delivery, for any reason cease to be in full force and
effect (unless such occurrence is in accordance with its terms or
after payment thereof) or shall be declared to be null and void or the
validity or enforceability thereof shall be contested by the Borrower
or WestPAC, or either the Borrower or WestPAC shall deny that it has
any or further liability or obligation thereunder; or

(e) the Borrower or any Subsidiary shall (i) apply for or
consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due, (iii)
make a general assignment for the benefit of its creditors, (iv)
commence a voluntary case under the Federal Bankruptcy Code (as now or
hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi)
commence a voluntary case under, or file a petition seeking to take
advantage, of any other law relating to bankruptcy, insolvency,
reorganization, winding-up or

51
<PAGE> 58
composition or adjustment of debts, (vii) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any
allegations, or any petition filed, against it in an involuntary case
under such Federal Bankruptcy Code or other law, or (viii) take any
corporate action for the purpose of effecting any of the foregoing; or

(f) a proceeding or case shall be commenced without the
application or consent of the Borrower or any Subsidiary of any of
them in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of debts, of the Borrower or any
Subsidiary, (ii) the appointment of a trustee, receiver, custodian,
liquidator, supervisor or the like of the Borrower or any Subsidiary
or of all or any substantial part of their respective assets or (iii)
similar relief in respect of the Borrower or any Subsidiary under any
law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed
and in effect, for a period of sixty consecutive days, or an order for
relief against the Borrower or any Subsidiary shall be entered in an
involuntary case under the Federal Bankruptcy Code (as now or
hereafter in effect); or any judgment, writ, warrant of attachment or
execution or similar process shall be issued or levied in respect of
an obligation (alleged or otherwise) of the Borrower or any Subsidiary
against a substantial part of its respective properties and such
judgment, writ, or similar process shall not be released, vacated,
stayed or fully bonded within thirty days after its issue or levy; or

(g) the Borrower or any Subsidiary shall fail to pay when
due any amount in respect of any in excess of $500,000 in the
aggregate for money borrowed or for the deferred purchase price of
property created, issued, guaranteed, incurred or assumed by such
Person or any other event shall occur or any condition shall exist in
respect of any such the effect of which is to cause (or permit any
holder thereof or a trustee to cause), without giving effect to the
giving of notice or the lapse of time, or both, such to become due
prior to its stated maturity; or

52
<PAGE> 59
(h) The Borrower shall not directly or indirectly own
100% of all of the outstanding Capital Stock of Titan Indemnity, Titan
Insurance or WestPAC;

(i) the occurrence of and continuation of an Event of
Default as defined in the WestPAC Credit Agreement; or

(j) the lien of the Pledge Agreement in favor of the
Agent shall cease to be a valid assignment of, and valid and perfected
first priority lien upon and security interest in, the Pledged Shares,
as security for the repayment of the Borrower's obligations under this
Agreement, or such lien shall cease to be valid as against creditors
of the Borrower; or

(k) a final judgment or judgments for the payment of
money in excess of $500,000 in the aggregate shall be rendered by a
court or courts against the Borrower or any Subsidiary (exclusive of
any judgment amount fully covered by insurance where the insurer has
admitted liability in respect of such judgment amount), and the same
shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured,
within thirty (30) days from the date of entry thereof; or

(l) a Termination Event shall have occurred with respect
to a Plan, resulting in the imposition of liability against the
Borrower or any Subsidiary; or

(m) the Guarantee shall cease to be in full force and
effect, or the Guarantor shall so assert; or

(n) the Borrower or any of its Subsidiaries that is an
insurance company shall cease to be permitted to engage in business in
any Material Jurisdiction; or

(o) any action is taken by the insurance department or
other insurance regulatory agency in any state for supervision over or
the suspension, rehabilitation or liquidation of the Borrower or any
Subsidiary;

then, at any time after the occurrence of such event, the Majority Lenders may
direct the Agent to take one or more of the following actions: (i) direct the
Agent to give notice

53
<PAGE> 60
(which may be telephone notice confirmed in writing) to the Borrower of the
occurrence of an Event of Default, and the date of the giving of such notice
shall become the Credit Expiration Date and each Lender's obligation to make
Loans shall be terminated; (ii) direct the Agent to by notice to the Borrower
(except that in the case of the occurrence of any Event of Default described in
Section 10.1(e) or 10.1(f), no such notice shall be required and such
termination and acceleration shall be automatic) declare the unpaid principal
amount and interest under the Notes, the Loans and all other amounts payable to
the Lenders and the Agent by the Borrower hereunder to be forthwith due and
payable, whereupon such amounts shall become forthwith due and payable, both as
to principal and interest, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, anything
contained herein or in any Note to the contrary notwithstanding; and (iii) any
and all other and further acts and actions which the Agent or the Lenders may
take pursuant to the Pledge Agreement or under the UCC or other Applicable Law.

ARTICLE XI

FEES

SECTION 11.1 Fees. As consideration for incurring the
obligation to make the Loans, the Borrower shall pay to the Agent (a) the fees
in the amounts and at the times set forth in a separate letter agreement
between the Agent and the Borrower and (b) for the account of each Lender a fee
(the "Commitment Fee"), from and including the Effective Date to but excluding
the Credit Expiration Date, at the per annum rate of the applicable Commitment
Fee Percentage on the average daily unused portion of the aggregate Revolving
Credit Commitments. The Commitment Fee is payable in arrears quarterly on the
last Business Day of each of March, June, September and December, commencing
September 30, 1996, and on the Credit Expiration Date.

SECTION 11.2 Expenses. The Borrower shall pay not later than
five (5) days after its receipt of a statement therefor, the reasonable fees
and out-of-pocket expenses of counsel to the Agent incurred in connection with
the preparation of this Agreement and the other Program Documents, whether or
not the transaction hereby or thereby contemplated shall be consummated. The
Borrower shall also

54
<PAGE> 61
pay, not later than five (5) days after its receipt of a statement therefor, all
reasonable out-of-pocket costs and expenses incurred by the Agent and any Lender
(including, without limitation, the reasonable fees and out-of-pocket expenses
of counsel to the Agent) in connection with any waivers, amendments or
extensions with respect to this Agreement and the other Program Documents. The
Borrower will also pay all costs and expenses incurred by the Agent and any
Lender (including the fees and out-of-pocket expenses of counsel) in connection
with the enforcement and protection of the rights of the Agent and such Lender,
as the case may be, in connection with this Agreement and the other Program
Documents.

SECTION 11.3 Invoices for Fees. The Lender shall from time
to time submit to the Borrower for payment invoices for fees under this
Agreement when the same shall become due and payable and for any costs and
expenses incurred by the Lender in connection with this Agreement and the
transactions contemplated hereby.

ARTICLE XII

INDEMNIFICATION

SECTION 12.1 Indemnification by Borrower. Without limiting
any other rights which the Agent and each Lender and its officers, directors,
employees, agents and affiliates may have hereunder or under Applicable Law,
the Borrower, hereby agrees to indemnify such parties and hold them harmless
from and against any and all damages, losses, claims, liabilities and related
costs and expenses (including attorneys' fees and disbursements) incurred by
any of them arising out of or resulting from the transactions contemplated by
this Agreement and the other Program Documents (other than in respect of any of
the foregoing arising out of the gross negligence or willful misconduct of the
Agent and such Lender, as the case may be), including, without limitation:

(a) the reliance by the Agent or such Lender on any
representation or warranty made by the Borrower or WestPAC (or any of their
respective officers) under or in connection with this Agreement or any other
Program Document which was incorrect when made;

55
<PAGE> 62
(b) the failure by the Borrower or WestPAC, as the case
may be, to comply with any covenant set forth in this Agreement or in any other
Program Document to which the Borrower or WestPAC, respectively, is a party;

(c) the failure to establish and maintain the lien of the
Pledge Agreement in favor of the Agent as a valid assignment of, and valid and
perfected first priority lien upon and security interest in, the Pledged
Shares, as security for the repayment of the Borrower's obligations under this
Agreement, or the failure of such lien to be valid as against creditors of the
Borrower; or

(d) the use of proceeds of the Loans.

If and to the extent that the foregoing undertaking may be unenforceable for
any reason, the Borrower hereby agrees to make the maximum contribution to the
payment of the amounts indemnified against in this Section which is permissible
under applicable law.

ARTICLE XIII

THE AGENT

SECTION 13.1 Appointment, Powers and Immunities. Each Lender
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under the other Program Documents with such powers as are
delegated to the Agent by the terms of this Agreement and of the other Program
Documents, together with such other powers as reasonably incidental thereto.
The Agent (which term as used in this sentence and in Section 13.5 and the
first sentence of Section 13.6 hereof shall include reference to its Affiliates
and its own affiliates' officers, directors, employees and agents): (a) shall
have no duties or responsibilities except those expressly set forth in this
Agreement and in the other Program Documents, and shall not by reason of this
Agreement or any other Program Documents be a trustee for any Lender; (b) shall
not be responsible to the Lenders for any recitals, statements, representations
or warranties contained in this Agreement or in any other Program Documents, or
in any certificate or other document referred to or provided for in, or
received by any of them under, this Agreement or any other Program Documents,
or for the value, validity, effectiveness, genuineness,

56
<PAGE> 63
enforceability or sufficiency of this Agreement or any other Program Documents
or any other document referred to or provided for herein or therein or for any
failure by the Borrower or any other Person to perform any of its obligations
hereunder or thereunder; (c) shall not be required to initiate or conduct any
litigation or collected proceedings hereunder or under any other Program
Documents; and (d) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other Program Documents or under any
other documents or instrument referred to or provided for herein or therein or
in connection herewith or therewith, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. The Agent may deem that the
payee of any Note is the holder thereof for all purposes hereunder unless and
until a written notice of the assignment or transfer thereof shall have been
filed with the Agent.

SECTION 13.2 Reliance by Agent. The Agent shall be entitled
to rely upon any certificate, notice or other communication believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent. As to any
matters not expressly provided for by this Agreement or any other Program
Documents, the Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder and thereunder in accordance with
instructions of the Majority Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders.

SECTION 13.3 Defaults. The Agent shall not be deemed to have
knowledge or notice of the occurrence of an Event of Default (other than the
non-payment of principal of or interest on Loans or of commitment fees) unless
the Agent has received notice from a Lender or the Borrower specifying such
Default and stating that such notice is a "Notice of Default". In the event
that the Agent receives such a notice of the occurrence of an Event of Default,
the Agent shall give prompt notice thereof to the Lenders (and shall give each
Lender prompt notice of each such non- payment). The Agent shall (subject to
Section 13.7 hereof) take such action with respect to such Event of Default as
shall be directed by the Majority Lenders, provided that, unless and

57
<PAGE> 64
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable in the best interest of the
Lenders.

SECTION 13.4 Rights as a Lender. With respect to its
Commitment and the Loans made by it, Dresdner (and any successor acting as
Agent) in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it
were not acting as the Agent, and the term "Lender" and "Lenders" shall, unless
the context otherwise indicates, include the Agent in its individual capacity.
Dresdner (and any successor acting as Agent) and its Affiliates may (without
having to account therefor to any Lender) accept deposits from, lend money to
and generally engage in any kind of banking, trust or other business with the
Borrower (and any of its Affiliates) as if it were not acting as the Agent, and
Dresdner and its Affiliates may accept fees and other consideration from the
Borrower for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.

SECTION 13.5 Indemnification. The Lenders agree to indemnify
the Agent (to the extent not reimbursed under Section 11.2 or 12.1 hereof, but
without limiting the obligations of the Borrower under said Sections 11.2 and
12.1), ratably in accordance with the aggregate principal amount of the Loans
made by the Lenders (or, if no Loans are at the time outstanding, ratably in
accordance with their respective Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement or any other Program Document or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or the enforcement of any of the terms hereof or 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 party to be indemnified.

SECTION 13.6 Non-Reliance on Agent and Other Banks. Each
Lender agrees that it has, independently and without reliance on the Agent or
any other Lender, and based

58
<PAGE> 65
on such documents and information as it has deemed appropriate, made its own
credit analysis of the Borrower and its Subsidiaries and decision to enter into
this Agreement and 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 analysis and
decisions in taking or not taking action under this Agreement or any of the
other Program Documents. The Agent shall not be required to keep itself
informed as to the performance or observance by the Borrower of this Agreement
or any of the other Program Documents or any other document referred to or
provided for herein or therein or to inspect the properties or books of the
Borrower or any of its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial conditions or business of the Borrower or any of its Subsidiaries (or
any of their affiliates) which may come into the possession of the Agent or any
of its Affiliates.

SECTION 13.7 Failure to Act. Except for action expressly
required of the Agent hereunder and under the other Program Documents, the
Agent shall in all cases be fully justified in failing or refusing to act
hereunder and thereunder unless it shall receive further assurances to its
satisfaction from the Lenders of their indemnification obligations under
Section 13.5 hereof against and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action.

59
<PAGE> 66
least $500,000,000. 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 rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article XIII shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as the Agent.

SECTION 13.9 Consents Under Basic Documents. Without the
prior written consent of the Majority Lenders, the Agent will not consent to
any modification, supplement or waiver under any of the Program Documents,
provided that without the prior written consent of each Lender the Agent will
not release any collateral or otherwise terminate any Lien under the Pledge
Agreement, except that no such consent shall be required, and the Agent is
hereby authorized, to release any of property permitted hereunder or to which
the Majority Lenders have consented.

ARTICLE XIV

MISCELLANEOUS

SECTION 14.1 Notices. Except where telephonic (which shall
be confirmed in writing promptly) instructions or notices are authorized herein
to be given, all notices, demands, instructions and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be personally delivered or sent by registered, certified or express mail,
postage prepaid, return receipt requested, or by facsimile (with telephone
confirmation of such transmission), or telegram (with messenger delivery
specified in the case of a telegram), and shall be deemed to be given for
purposes of this Agreement on the date on which such writing is delivered or
sent to the intended recipient thereof in accordance with the provisions of
this Section 14.1. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section 14.1, notices,
demands, instructions and other communications in writing shall be given to or
made upon the respective parties hereto at their respective addresses (or to
their respective facsimile numbers) indicated below, and, in the case of
telephonic instructions or notices, by calling the telephone number or numbers
indicated for such party below:

60
<PAGE> 67
(a) with respect to the Borrower:

Titan Holdings, Inc.
1020 N.E. Loop 410
San Antonio, Texas 78209

Attention: Chief Financial Officer
Telephone: (210) 824-4546
Facsimile: (210) 824-3681

(b) with respect to Dresdner:

Dresdner Bank AG,
New York and Grand Cayman Branches
75 Wall Street
New York, New York 10005
Attention: Mr. Lloyd C. Stevens
Telephone: (212)429-2229
Facsimile: (212)429-2524

with a copy to:
Dresdner Bank AG,
New York Branch
75 Wall Street
New York, New York 10005
Attention: Credit Services Department

Bank One Texas, N.A.
105 South St. Mary's Street
San Antonio, Texas 78205
Attention: Mr. Charles T. Bridgman,
Senior Vice President
Telephone: (210) 271-8680
Facsimile: (210) 271-6588

61
<PAGE> 68
with a copy to:
Bank One Texas, N.A.
1717 Main Street, 4th Floor
Bank One Center
Dallas, Texas 75201
Attention: Mr. James V. Miller,
Vice President
Telephone: (214) 290-2309
Facsimile: (214) 290-2332

(d) with respect to NationsBank:

NationsBank of Texas, N.A.
300 Convent Street
San Antonio, Texas 78205
Attention: Mr. D. Kirk McDonald,
Senior Vice President
Telephone: (210) 270-5300
Facsimile: (210) 270-5569

Any party may designate a different or additional address for the delivery of
notices by providing notice thereof to the other parties. Except as provided
to the contrary above, all notices, demands, and other communications shall be
effective upon personal delivery or upon the date of receipt by the addressee
as shown on the return receipt. Rejection or other refusal to accept notices,
demands, or other communications shall be of no effect, and all notices,
demands, and other communications which are rejected or acceptance of which is
refused shall be deemed to be effective upon the date on which the same were
rejected or refused.

SECTION 14.2 Survival and Termination of Agreement. All
covenants, agreements, representations and warranties made herein and in the
certificates and other documents delivered pursuant hereto shall survive (i)
the making by the Lenders of the Loans herein contemplated, (ii) the execution
and delivery to the Lenders of the Notes, and (iii) the making of any
investigation, and shall continue in full force and effect to the Credit
Expiration Date or so long as any Loan or any amount payable to any Lender or
the Agent in connection with this Agreement or any other Program Document is
unpaid whichever is later, at which time this Agreement shall terminate, it
being expressly understood that the obligations of the Borrower under Article
V, X and XII hereof shall survive any termination of this Agreement.

62
<PAGE> 69
SECTION 14.3 Applicable Law. THIS AGREEMENT AND THE NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.

SECTION 14.4 Waiver; Modifications in Writing. No failure or
delay on the part of the Agent or any Lender in exercising any right, power or
remedy hereunder or under the Note or with respect to the Loans shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies provided for herein
are cumulative and are not exclusive of any remedies that may be available to
the Agent or any Lender at law or in equity. No amendment, modification,
supplement, termination or waiver of or to any provision of this Agreement, nor
consent to any departure by the Borrower therefrom, shall be effective unless
the same shall be in writing and signed by the Agent and the Majority Lenders,
except that any amendment, modification, or waiver (i) reducing the principal
amount of, reducing the interest rate borne by, or extending the final maturity
of the Loans, or (ii) reducing the amount of the fees payable pursuant hereto,
or (iii) changing the provisions contained in this Section 14.4 or (iv)
releasing Pledged Shares, except to the extent the sale of such Pledged Shares
is permitted by the Pledge Agreement, shall not be effective unless evidenced
by a writing signed by or on behalf of the Agent and each Lender. Any waiver
of any provisions of this Agreement, and any consent to any departure by the
Borrower from the terms of any provision of this Agreement, shall be effective
only in the specific instance and for the specific purpose for which given. No
notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances.

SECTION 14.5 Non-Waiver of Rights. Neither any failure nor
any delay on the part of the Agent or any Lender in exercising any right, power
or privilege hereunder or under the Program Documents shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise of any other right, power or privilege.

SECTION 14.6 Successors and Assigns. (a) This Agreement
shall be binding upon and inure to the benefit of each party hereto and its
respective successors and assigns,

63
<PAGE> 70
except that the Borrower shall not assign or transfer (by operation of law or
otherwise) all or any part of its rights or obligations hereunder without the
prior written consent of the Agent and each Lender.

(b) Notwithstanding the foregoing, the Agent and any Lender
may at any time change the Booking Office designated by it on Schedule 1. The
Agent or such Lender, as the case may be, shall give prompt notice to the
Borrower of any change in any Booking Office.

SECTION 14.7 Sale and Transfer of Loans and Notes;
Participations in Loans and Notes. Each Lender may assign, or sell
participations in, its Loans and Commitments to one or more other Persons in
accordance with this Section 14.7.

SECTION 14.7.1 Assignments. Any Lender,

(a) with the written consents of the Borrower and the Agent
(which consents shall not be unreasonably delayed or withheld and which
consent, in the case of the Borrower, shall be deemed to have been given in the
absence of a written notice delivered by the Borrower to the Agent, on or
before the fifth Business Day after receipt by the Borrower of such Lender's
request for consent, stating, in reasonable detail, the reasons why the
Borrower proposes to withhold such consent) may at any time assign and delegate
to one or more commercial banks or other financial institutions, and

(b) with notice to the Borrower and the Agent, but without
the consent of the Borrower or the Agent, may assign and delegate to any of its
Affiliates or to any other Lender

64
<PAGE> 71
delegated to an Assignee Lender until written notice of such assignment and
delegation, together with payment instructions, addresses and related
information with respect to such Assignee Lender, shall have been given to the
Borrower and the Agent by such Lender and such Assignee Lender. In connection
with any assignment made under this Section 14.7.1, the assigning Lender shall
pay to the Agent a fee of $3,000. From and after the date that the Agent
accepts such assignment, (x) the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee Lender
in connection with such assignment, shall have the rights and obligations of a
Lender hereunder and under the Guarantee, the Pledge Agreement and all related
documents, and (y) the assignor Lender, to the extent that rights and
obligations hereunder have been assigned and delegated by it in connection with
such assignment, shall be released from its obligations hereunder and under the
Guarantee, the Pledge Agreement and all related documents. Within five
Business Days after its receipt of notice that the Agent has accepted an
assignment, the Borrower shall executed and deliver to the Agent (for delivery
to the relevant Assignee Lender) new Notes evidencing such Assignee Lender's
assigned Loans and Commitments and replacement Notes in the principal amount of
the Loans and Commitments retained by the assignor Lender hereunder (such Notes
to be in exchange for, but not in payment of, those Notes then held by such
assignor Lender). Each such Note shall be dated the date of the predecessor
Note. The assignor Lender shall mark the predecessor Note "exchanged" and
deliver it to the Borrower. Accrued interest on that part of the predecessor
Note evidenced by the new Note, and accrued fees, shall be paid as the Agent
shall direct. Accrued interest on that part of the predecessor Note evidenced
by the replacement Note shall be paid to the assignor Lender. Accrued interest
and accrued fees shall be paid at the same time or times provided in the
predecessor Note and in this Agreement. Any attempted assignment and
delegation not made in accordance with this Section 14.7.1 shall be null and
void.

SECTION 14.7.2 Participations. Any Lender may at any time sell to one
or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "Participant") participating interests in
any of the Loans, its Commitments, or other interests of such Lender hereunder;
provided, however, that

65
<PAGE> 72
(a) no participation contemplated in this Section
14.7.2 shall relieve such Lender from its Commitments or its
other obligations hereunder or under the Guarantee or the
Pledge Agreement,

(b) such Lender shall remain solely responsible
for the performance of its Commitments and such other
obligations,

(c) 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 this Agreement, the
Guarantee and the Pledge Agreement,

(d) no Participant, unless such Participant is an
Affiliate of such Lender, or its itself a Lender, shall be
entitled to require such Lender to take or refrain from taking
any action hereunder or under the Guarantee or the Pledge
Agreement, except that such Lender may agree with any
Participant that such Lender will not, without such
Participant's consent, (i) extend the scheduled maturities of
the Loans, the Commitment Expiration Date or the Credit
Expiration Date, (ii) reduce the interest rate or any fees
hereunder, or (iii) increase the aggregate amount of the
Commitments or the Loans of such Lender, and

(e) the Borrower shall not be required to pay any
amount under Section 3.1(g) or Article V that is greater than
the amount which it would have been required to pay had no
participating interest been sold.

The Borrower acknowledges and agrees that each Participant, for purposes of
Section 3.1(g) and Article V, shall be considered a Lender.

66
<PAGE> 73
Agreement or as reasonably required by any bona fide potential or actual
transferee, participant or assignee or as required or requested by any
governmental agency or representative thereof or pursuant to legal process;
provided, however, that

(a) unless prohibited by applicable law or court
order, each Lender shall notify the Borrower of any request by
any governmental agency or representative thereof (other than
any such request in connection with an examination of the
financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information
prior to disclosure of such information;

(b) prior to any such disclosure pursuant to this
Section 14.8, each Lender shall require any such bona fide
potential or actual transferee, participant and assignee
receiving a disclosure of non-public information to agree in
writing

(i) to be bound by this Section 14.8; and

(ii) to require such Person to require any
other Person to whom such Person discloses such non-public
information to be similarly bound by this Section 14.8; and

(c) except as may be required by an order of a
court of competent jurisdiction and to the extent set forth
therein, no Lender shall be obligated or required to return
any materials furnished by the Borrower or any Subsidiary.

SECTION 14.9 Captions. Captions and section
headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any
provision of this Agreement.

SECTION 14.10 Counterparts. This Agreement may be executed
in counterparts which, taken together, shall constitute a single document.

67
<PAGE> 74
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.

SECTION 14.12 Waiver of Trial by Jury; Consent to
Jurisdiction. THE PARTIES HERETO, TO THE EXTENT PERMITTED BY LAW, WAIVE TRIAL
BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR
ARISING OUT OF, THIS AGREEMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT
TO THIS AGREEMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR
ENFORCEMENT THEREOF. The Borrower irrevocably consents that any legal action
or proceeding against it under, arising out of or in any manner relating to
this Agreement or any instrument or document delivered pursuant to this
Agreement may be brought in the Supreme Court of the State of New York, County
of New York, or in the United States District Court for the Southern District
of New York. The Borrower, by its execution and delivery of this Agreement,
expressly and irrevocably assents and submits to the personal jurisdiction of
any of such courts in any such action or proceeding. The Borrower has
irrevocably appointed Mayer, Brown & Platt as its agent to receive, accept and
acknowledge for and on its behalf, service of any and all legal process,
summons, notices and documents which may be served in any proceeding brought in
any court which may be made on such agent. If for any reason such agent shall
cease to be available to act as such, the Borrower agrees to designate a new
agent in The City of New York on the terms and for the purposes of this Section
14.12 satisfactory to the Agent and each Lender. The Borrower further
irrevocably consents to the service of summons, notice, or other process
relating to any such action or proceeding by delivery thereof to it by hand or
by mail in the manner provided for in Section 14.1 hereof. The Borrower hereby
expressly and irrevocably waives any claim or defense in any such action or
proceeding in either such court based on any alleged lack of personal
jurisdiction, improper venue or forum non conveniens or any similar basis.
Nothing in this Section 14.12 shall affect or impair in any manner or to any
extent the right of the Agent or any Lender to commence legal proceedings or
otherwise proceed against the Borrower in any jurisdiction or to serve process
in any manner permitted by law.

68
<PAGE> 75
(general or special, matured or unmatured, time or demand, in whatever
currency) and any other at any time held or owing by the Agent or such Lender,
as the case may be, to or for the credit or the account of the Borrower against
and on account of the obligations and liabilities of the Borrower to the Agent
or such Lender, as the case may be, under this Agreement or any other Program
Document, irrespective of whether or not the Agent or such Lender, as the case
may be, shall have made any demand hereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.

69
<PAGE> 76
IN WITNESS WHEREOF, the parties hereto and the Agent have
caused this Agreement to be duly executed by their duly authorized officers,
all of the day and year first above written.

TITAN HOLDINGS, INC.,
as Borrower

By: /s/ [ILLEGIBLE]
-------------------------------
Authorized Signatory

DRESDNER BANK AG, New York and
Grand Cayman Branches, as Lender

By: /s/ [ILLEGIBLE]
-------------------------------
Authorized Signatory

BANK ONE TEXAS, N.A.,
as Lender

By: /s/ [ILLEGIBLE]
-------------------------------
Authorized Signatory

NATIONSBANK OF TEXAS, N.A.,
as Lender

By: /s/ [ILLEGIBLE]
-------------------------------
Authorized Signatory

<PAGE> 77

DRESDNER BANK AG, NEW YORK BRANCH
as Agent

By: /s/ [ILLEGIBLE]
------------------------------
Authorized Signatory

<PAGE> 78
Schedule I
to the Loan Agreement

Booking Offices

DRESDNER AND THE AGENT

Base Rate Lending Office:

Dresdner Bank AG, New York Branch

Eurodollar Lending Office:

Dresdner Bank AG, Grand Cayman Branch

BANK ONE

Base Rate and Eurodollar Lending Office:

San Antonio, Texas

NATIONSBANK

Base Rate and Eurodollar Lending Office:

San Antonio, Texas

<PAGE> 79
EXHIBIT A-1
to the Loan Agreement

[Form of Term Loan Note]

$_______________ August __, 1996

FOR VALUE RECEIVED, the undersigned hereby promises to pay to
the order of [INSERT NAME OF BANK] (the "Lender"), the principal sum which is
the lesser of ____________ ($_______), and the aggregate unpaid principal
amount from time to time of all Term Loans made by the Lender to the
undersigned pursuant to Section 2.3 of the Loan Agreement (defined below), in
immediately available funds and in lawful money of the United States of America
on the dates and in the principal amount provided in the Loan Agreement, and to
pay interest on the unpaid balance of said principal sum from time to time
outstanding, from the date hereof, until the principal sum shall become due
(whether by acceleration or otherwise), in like funds and money, at the office
of the Agent (defined below) set forth in the Loan Agreement, at the rates per
annum and on the dates provided in said Loan Agreement.

This promissory note is the Term Loan Note referred to in the
Loan Agreement dated as of July 30, 1996 (as the same may from time to time be
amended, the "Loan Agreement"), among the undersigned, [INSERT NAMES OF OTHER
LENDERS], the Lender and Dresdner Bank AG, New York Branch, as agent for the
Lenders (the "Agent"), to which Loan Agreement reference is made for a
description of the rights of prepayment, the Events of Default and the rights
of acceleration of maturity upon the occurrence of an Event of Default. All
advances made by the Lender to the undersigned in respect of Term Loans
pursuant to the Loan Agreement and all payments made on account of principal
hereof shall be recorded by the Lender and, prior to any transfer hereof,
endorsed on the grid attached hereto which is part of this promissory note
(provided that any failure by the Lender to make any such endorsement shall not
affect the obligations of the undersigned under this Note in respect of any
such advance).

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

TITAN HOLDINGS, INC.

By:
-----------------------
Authorized Signatory

<PAGE> 80
[REVERSE OF NOTE OR SCHEDULE THERETO]

This Note evidences the Term Loan made by the Lender under
Section 2.3 of the Loan Agreement dated as of July 30, 1996, as from time to
time amended, among Titan Holdings, Inc., [INSERT NAMES OF OTHER BANKS], the
Lender and Dresdner Bank AG, New York Branch, as agent, in the principal
amounts and on the dates set forth below, subject to the payments and
prepayments of principal set forth below:

<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT AMOUNT PAID BALANCE TYPE OF
DATE LOANED OR PREPAID OUTSTANDING LOAN
- ---- --------- ----------- ----------- -------
<S> <C> <C> <C> <C>

</TABLE>

<PAGE> 81
EXHIBIT A-2
to the Loan Agreement

[Form of Revolving Credit Loan Note]

$_______________ August __, 1996

FOR VALUE RECEIVED, the undersigned hereby promises to pay to
the order of [INSERT NAME OF BANK] (the "Lender"), the principal sum which is
the lesser of ____________ ($_______), and the aggregate unpaid principal
amount from time to time outstanding of all Revolving Credit Loans made by the
Lender, to the undersigned pursuant to Section 2.1 of the Loan Agreement
(defined below), in immediately available funds and in lawful money of the
United States of America on the dates and in the principal amount provided in
the Loan Agreement, and to pay interest on the unpaid balance of said principal
sum from time to time outstanding, from the date hereof, until the principal
sum shall become due (whether by acceleration or otherwise), in like funds and
money, at the office of the Agent (defined below) set forth in the Loan
Agreement, at the rates per annum and on the dates provided in said Loan
Agreement.

This promissory note is the Revolving Credit Loan Note
referred to in the Loan Agreement dated as of July 30, 1996 (as the same may
from time to time be amended, the "Loan Agreement"), among the undersigned,
[INSERT NAMES OF OTHER LENDERS], the Lender and Dresdner Bank AG, New York
Branch, as agent for the Lenders (the "Agent"), to which Loan Agreement
reference is made for a description of the rights of prepayment, the Events of
Default and the rights of acceleration of maturity upon the occurrence of an
Event of Default. All advances made by the Lender to the undersigned in
respect of Revolving Credit Loans pursuant to the Loan Agreement and all
payments made on account of principal hereof shall be recorded by the Lender
and, prior to any transfer hereof, endorsed on the grid attached hereto which
is part of this promissory note (provided that any failure by the Lender to
make any such endorsement shall not affect the obligations of the undersigned
under this Note in respect of any such advance).

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

<PAGE> 82
TITAN HOLDINGS, INC.

By:
-------------------------
Authorized Signatory

<PAGE> 83
[REVERSE OF NOTE OR SCHEDULE THERETO]

This Note evidences the Revolving Credit Loans made by the
Lender under Section 2.3 of the Loan Agreement dated as of July 30, 1996, as
from time to time amended, among Titan Holdings, Inc., [INSERT NAMES OF OTHER
BANKS], the Lender and Dresdner Bank AG, New York Branch, as agent, in the
principal amounts and on the dates set forth below, subject to the payments and
prepayments of principal set forth below:

<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT AMOUNT PAID BALANCE TYPE OF
DATE LOANED OR PREPAID OUTSTANDING LOAN
- ---- --------- ----------- ----------- -------
<S> <C> <C> <C> <C>

</TABLE>

<PAGE> 84
EXHIBIT B
to the Loan Agreement

[Form of Certificate]

[WESTCHESTER PREMIUM ACCEPTANCE CORPORATION
TITAN HOLDINGS, INC.]

Certificate

I, the undersigned, Secretary of [WESTCHESTER PREMIUM
ACCEPTANCE CORP./TITAN HOLDINGS INC.], a ________ corporation ([the
"Borrower"/"WestPAC"]), DO HEREBY CERTIFY that:

1. This Certificate is furnished pursuant to Section
6.3[(e)/(f)] of that certain Loan Agreement dated as of July 30, 1996
(the "Agreement") among the Borrower, Dresdner Bank AG, New York and
Grand Cayman Branches, Bank One Texas, N.A. and NationsBank of Texas,
N.A., as the Lenders and Dresdner Bank AG, New York Branch, as agent.
Unless otherwise defined herein, capitalized terms used in this
Certificate have the meanings assigned to those terms in the
Agreement.

2. Attached hereto as Exhibit A is a copy of the
Certificate of Incorporation of [the Borrower/WestPAC], certified by
the Secretary of State of the State of __________.

3. There have been no amendments to the Certificate of
Incorporation of [the Borrower/WestPAC] since __________, 199_.(1)

4. Attached hereto as Exhibit B is a true and correct
copy of the by-laws of [the Borrower/WestPAC] as in effect on the date
hereof.

___________________

(1) Insert the date of the Secretary of State's Certificate furnished pursuant
to paragraph 2.

<PAGE> 85
5. Attached hereto as Exhibit C is a true and correct
copy of resolutions duly adopted by the Board of Directors of [the
Borrower/WestPAC] on _____________, 1996, which resolutions have not
been revoked, modified, amended or rescinded and are still in full
force and effect.

6. The below-named persons have been duly elected, have duly
qualified as of and at all times since ___________, 1996(2) (to and
including the date hereof) have been officers of [the
Borrower/WestPAC], holding the respective offices below set opposite
their names, and the signatures below set opposite their names are
their genuine signatures.

<TABLE>
<CAPTION>
Name Office Signatures
---- ------ ----------
<S> <C> <C>
_______________________ [Title] _____________________

_______________________ [Title] _____________________

_______________________ [Title] _____________________
</TABLE>

7. There are no proceedings pending for the dissolution
or liquidation of [the Borrower/WestPAC].

WITNESS my hand and the seal of [the Borrower/ WestPAC] this
___ day of ________________, 199_.

________________________
Secretary

___________________
(2) Insert the date next preceding the effective date of adoption of the
resolutions referred to in paragraph 4 above.

<PAGE> 86
I, the undersigned, [title] of [the Borrower/ WestPAC], DO
HEREBY CERTIFY that:

1. [Name of Secretary] is the duly elected and qualified
Secretary of [the Borrower/WestPAC] and the signature above is [his/her]
genuine signature.

2. [Each of the Loan Agreement and each other Program
Document to which the undersigned is a party] [the Guarantee] is in existence
and is in full force and effect on the date hereof.

3. The representations and warranties on the part of
[the Borrower/WestPAC] contained or reaffirmed and repeated in the [Loan
Agreement and in each other Program Document to which the undersigned is a
party] [the Guarantee] are true and correct at and as of the date hereof as
though made on and as of the date hereof.

4. No Event of Default or Default (or event which with
the passage of time or notice or both would constitute an Event of Default) has
occurred and is continuing, or would result from the consummation of the
initial borrowing on this date.

WITNESS my hand on this _____ day of ____________, 1996.

__________________________
Authorized Signatory

<PAGE> 87
EXHIBIT C
to the Loan Agreement

[Form of Loan Request]

Dresdner Bank AG, New York Branch, as Agent
[ADDRESS]

Attention: [Name]
[Title]

This Loan Request is delivered to you pursuant to Section
[2.2] [2.3] and Section 6.7 of the Loan Agreement dated as of July 30, 1996 (as
it may be amended, supplemented, restated or otherwise modified from time to
time, the "Agreement") among Titan Holdings, Inc. (the "Borrower") and Dresdner
Bank AG, New York and Grand Cayman Branches, Bank One Texas, N.A. and
NationsBank of Texas, N.A. (the "Lenders") and Dresdner Bank AG, New York
Branch, as agent. Unless otherwise defined herein or the context otherwise
requires, all capitalized terms used herein will have the respective meanings
assigned to them in the Agreement.

The Borrower hereby requests that [Revolving Credit] [Term]
Loans be made in the aggregate principal amount of $___________ on ___________,
199_ as [a Eurodollar Loan/a Base Rate Loan]. [The Borrower requests that the
Interest Period for the Eurodollar Loan requested hereby be [1/2/3/6]
month(s).]

The Borrower hereby affirms that (i) the representations and
warranties of the Borrower set forth in Section 7 of the Agreement are on the
date hereof, and will be on the date of the proposed borrowing, true and
correct as if made on and as of each such date, except to the extent that any
such representation or warranty relates solely to an earlier date, (ii) no
Event of Default has occurred and is continuing on the date hereof or shall
have occurred and be continuing on the date of the proposed borrowing, and
(iii) after giving effect to the making of the [Revolving Credit] [Term] Loans
requested hereby, the aggregate principal amount of all [Revolving Credit]
[Term] Loans outstanding will not exceed the aggregate of the [Revolving
Credit] [Term Loan] Commitments.

<PAGE> 88
The Borrower agrees that if, prior to the time that the
borrowing requested hereby is made, any matter affirmed herein shall no longer
be true and correct, it will immediately so notify the Agent. Except to the
extent, if any, that prior to the time that the borrowing requested hereby is
made the Agent shall receive written notice to the contrary from the Borrower
each matter affirmed herein shall be deemed once again to be affirmed as true
and correct as of the date of such borrowing as if then made.

Please wire transfer the proceeds of the requested borrowing to
the account(s) of the following Persons at the financial institution(s)
indicated below:

<TABLE>
<CAPTION>
Amount to be Person to be Paid Name, Address, etc.
Transferred Name Account No. of Payee Bank
- ------------ ------------- ----------- -------------------
<S> <C> <C> <C>
$
---------- ------------- --------- ------------------
------------------
ABA #
-------------
Attention:
--------

$
---------- ------------- --------- ------------------
------------------
ABA #
-------------
Attention:
--------
</TABLE>

The Borrower has caused this Loan Request to be executed and
delivered, and the affirmations and warranties contained herein to be made, by
its duly authorized officer this ____ day of __________, 199_.

TITAN HOLDINGS, INC.

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

2
<PAGE> 89
EXHIBIT D
to the Loan Agreement

[Form of Notice of Conversion or Continuation]

Dresdner Bank AG, New York Branch, as Agent
[ADDRESS]

Attention: [Name]

[Title]

This Notice of Conversion or Continuation is delivered to you
pursuant to Section 3.1(c) of the Loan Agreement dated as of July 30, 1996 (as
it may be amended, supplemented, restated or otherwise modified from time to
time, the "Agreement") among Titan Holdings, Inc. (the "Borrower") and Dresdner
Bank AG, New York and Grand Cayman Branches, Bank One Texas, N.A. and
NationsBank of Texas, N.A. (the "Lenders") and Dresdner Bank AG, New York
Branch, as agent. Unless otherwise defined herein or the context otherwise
requires, all capitalized terms used herein will have the respective meanings
assigned to them in the Agreement.

The Borrower hereby requests that on ____________, 199_,

(1) $_________ of the currently outstanding
principal amount of the Revolving Credit Loans originally made
on __________, 199_ [and $________ of the currently
outstanding principal amount of the Term Loans originally made
on August __, 1995],

(2) all currently being maintained as [Base Rate
Loans/Eurodollar Loans],

(3) be [converted into/continued as] [Base Rate
Loans/Eurodollar Loans].

The Borrower hereby certifies that (i) the representations and
warranties of the Borrower set forth in Section 7 of the Agreement are on the
date hereof, and will be on the date of the proposed [conversion/continuation],
true and correct as if made on and as of such date, except to the extent that
any such representation or warranty relates solely to an earlier date, and (ii)
no Default or Event of Default has occurred and is continuing on the date

<PAGE> 90
hereof or shall have occurred and be continuing on the date of the proposed
[conversion/continuation].

The Borrower agrees that if, prior to the time that the
[conversion/continuation] requested hereby is made, any matter certified to
herein shall no longer be true and correct, it will immediately so notify the
Agent. Except to the extent, if any, that prior to the time that the
[conversion/continuation] requested hereby is made the Agent shall receive
written notice to the contrary from the Borrower, each matter certified to
herein shall be deemed once again to be certified as true and correct as of the
date of such [conversion/continuation] as if then made.

The Borrower has caused this Notice of Conversion or
Continuation to be executed and delivered, and the certifications and
warranties contained herein to be made, by its duly authorized officer this
____ day of __________, 199_.

TITAN HOLDINGS, INC.

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

2
<PAGE> 91
EXHIBIT E
to the Loan Agreement

A copy of the Convention Statements
was delivered to the Agent at the closing

<PAGE> 1
EXHIBIT 10.65

PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT is made as of the 30th day of July, 1996
among (i) TITAN HOLDINGS, INC., a corporation organized and existing under the
laws of the State of Texas (the "Pledgor"), (ii) DRESDNER BANK AG, acting
through its New York and Grand Cayman branches ("Dresdner"), BANK ONE TEXAS,
N.A. ("Bank One") and NATIONSBANK OF TEXAS, N.A. ("NationsBank") (Dresdner,
Bank One and NationsBank collectively, together with their respective
successors and assigns, the "Lenders"); and (iii) DRESDNER BANK AG, acting
through its New York branch, in its capacity as agent for the Lenders (the
"Pledgee").

WITNESSETH:

WHEREAS, the Pledgor and the Lenders have entered into a Loan
Agreement (said Agreement, as the same may be amended, supplemented or
otherwise modified from time to time being herein called the "Loan Agreement"),
dated the date hereof, pursuant to which the Lenders have agreed to make
available to the Pledgor (i) a term loan in the principal amount of $20,000,000
and (ii) a revolving credit facility up to the maximum principal amount
outstanding of $10,000,000 (together the "Loans") all on the terms and subject
to the conditions provided therein;

WHEREAS, the Lenders have required as a condition of making
such loan that the Pledgor execute, deliver and perform this Pledge Agreement;

WHEREAS, as of the date hereof, the Pledgor is the registered
and beneficial owner of 4,319,951 shares of common stock, par value $1.00 (the
"Pledged Shares"), of Titan Indemnity Company, a corporation organized and
existing under the laws of the State of Texas (the "Pledged Company"),
constituting all of the issued and outstanding shares of capital stock of the
Pledged Company; and

WHEREAS, the Pledged Shares are represented by stock
certificate Nos. 10, 11, 13, 14 and 18 of the Pledged Company (the "Stock
Certificate");

NOW, THEREFORE, in consideration of the premises the Pledgor
agrees with the Pledgee for the benefit of the Pledgee and the Lenders as
follows:
<PAGE> 2
1. Unless otherwise defined herein, defined terms as
used herein shall have the same meaning as set forth in the Loan Agreement.

2. As security for full and prompt payment to the
Lenders of all sums owing by the Pledgor to the Pledgee and the Lenders under
the Loan Agreement and the other Program Documents, whether for principal,
interest, fees, expenses or otherwise, now or in the future (together called
the "Obligations"), the Pledgor hereby pledges, assigns and transfers the
Pledged Shares to the Pledgee or its designee and delivers to the Pledgee the
Pledged Shares and hereby grants to the Pledgee a first lien on, and first
security interest in, the Pledged Shares (it being understood that enforcement
of the pledge created hereby is subject to the prior approval of the insurance
departments of both Texas and Michigan).

3. Concurrently with the execution of this Pledge
Agreement, the Pledgor shall execute and deliver to the Pledgee an Irrevocable
Proxy in favor of the Pledgee in respect of the Pledged Shares of the Pledged
Company owned by the Pledgor in the form set out in Exhibit A hereto (the
"Irrevocable Proxies"), and shall deliver to the Pledgee the Stock Certificate
together with a signed, undated stock power pertaining to the Stock Certificate
duly executed in blank.

4. The Pledgor represents and warrants that:

(i) all the representations and warranties made by
the Pledgor in the Loan Agreement shall be
deemed incorporated herein with the same effect
as though set forth at length in this Pledge
Agreement;

(ii) it is the legal and beneficial owner of, and
has good and marketable title to, the Pledged
Shares delivered to the Pledgee by it on the
date hereof, subject to no superior pledge,
lien, mortgage, hypothecation, security
interest, charge, option or other superior
encumbrance whatsoever, except the lien and
security interest created by this Pledge
Agreement and the

2
<PAGE> 3
delivery of the Pledged Shares to the Pledgee;

(iii) it has full power, authority and legal right to
execute, deliver and perform this Pledge
Agreement and to create the collateral security
interest for which this Pledge Agree ment
provides, and it has taken all necessary action
(corporate or otherwise) to authorize the
execution, delivery and performance of this
Pledge Agreement and the creation of the
collateral security interests for which this
Pledge Agreement provides;

(iv) the Pledged Shares (a) have been duly and
validly issued and are fully paid and
nonassessable and (b) constitute all of the
issued and outstanding capital stock of the
Pledged Company;

(v) as of the date hereof, the Pledged Company has
not entered into any options, warrants or other
agreements to issue additional capital stock
and there are no voting trusts or other
shareholder agreements or arrangements relating
to the Pledged Shares; and

(vi) the pledge, hypothecation, assignment and
delivery of the Pledged Shares pursuant to this
Pledge Agreement creates a valid first
perfected security interest in each of the
Pledged Shares and the proceeds thereof.

5. The Pledgor hereby covenants that during the
continuance of this security:

(i) it shall warrant and defend the right and title
of the Pledgee conferred by this Pledge
Agreement in and to the Pledged Shares at the
cost of the Pledgor against the claims and
demands of all persons whomsoever;

3
<PAGE> 4
(ii) except as herein provided, it shall not sell,
assign, transfer, charge, pledge or encumber in
any manner any part of the Pledged Shares or
suffer to exist any encumbrance on the Pledged
Shares;

(iii) it shall not vote the Pledged Shares in favor
of the consolidation, merger, dissolution,
liquidation or any other corporate
reorganization of the Pledged Company;

(iv) it shall not take from the Pledged Company any
undertaking or security in respect of its
liability hereunder or in respect of any other
liability of the Pledged Company to the Pledgor
and the Pledgor shall not prove nor have the
right of proof in competition with the Pledgee,
for any monies whatsoever owing from the
Pledged Company to the Pledgor, in any
insolvency or liquidation, or analogous
proceedings under any applicable law, of the
Pledgor; and

(v) it shall not permit the Pledged Company to
issue any additional shares of its capital
stock other than in favor of the Pledgor nor
enter into any options, warrants or other
agreements to do so.

6. If the Pledgor shall become entitled to receive or
shall receive any stock certificates (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital, or issued in connection
with any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for any of the Pledged Shares or upon the
exercise by the Pledgor of an option to purchase additional shares of the
Pledged Company, or otherwise, the Pledgor agrees to accept the same as the
agent of the Pledgee and to hold the same in trust for the benefit of the
Pledgee and to deliver the same forthwith to the Pledgee in the exact form
received, with the endorsement of the Pledgor when necessary and/or appropriate
undated stock powers duly executed in blank, and irrevocable proxies for any
stock certificates or

4
<PAGE> 5
other securities so received, in substantially the form of Exhibit A to be held
by the Pledgee, subject to the terms hereof, as additional collateral security
for the Obligations. Any sums paid upon or in respect of the Pledged Shares on
the liquidation or dissolution of the Pledged Company shall be paid over to the
Pledgee to be held by it as additional collateral security for the Obligations.

7. All property at any time pledged with the Pledgee
hereunder by the Pledgor (whether described herein or not) and all income
therefrom and proceeds thereof, are herein collectively sometimes called the
"Collateral".

8. The Pledgor hereby consents that, without the
necessity of any reservation of rights against the Pledgor, and without notice
to or further assent by the Pledgor, any demand for payment of any of the
Obligations made by the Pledgee may be rescinded by the Pledgee and any of the
Obligations continued, and the Obligations, or the liability of the Pledgor
upon or for any part thereof, or any other collateral security (hereinafter
referred to as the "Security Documents") or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
modified, accelerated, compromised, waived, surrendered, or released by the
Pledgee, and the Security Documents, any other guarantees and any other
collateral security documents executed and delivered by the Pledgor may be
amended, modified, supplemented or terminated, in whole or in part, as the
Pledgee may deem advisable, from time to time, and any other collateral
security at any time held by the Pledgee for the payment of the Obligations
(including, without limitation, any collateral security held pursuant to any
other collateral security document executed and delivered pursuant to the
Security Documents) may be sold, exchanged, waived, surrendered or released,
all without notice to or further assent by the Pledgor, which will remain bound
hereunder, notwithstanding any such renewal, extension, modification,
acceleration, compromise, amendment, supplement, termination, sale, exchange,
waiver, surrender or release. The Pledgor waives any and all notices of the
creation, renewal, extension or accrual of any of the Obligations and notice of
or proof of reliance by the Pledgee upon this Pledge Agreement, and the
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred in reliance upon this Pledge Agreement, and all
dealings between the Pledged Company and the Pledgee shall likewise be
conclusively presumed to have

5
<PAGE> 6
been had or consummated in reliance upon this Pledge Agreement. The Pledgor
waives digence, presentment, protest, demand for payment and notice of default
of non-payment to or upon the Pledgor with respect to the Obligations.

9. Upon the occurrence and during the continuance of an
Event of Default, the Pledgee shall as the Pledgee and as the holder of the
Irrevocable Proxy receive notice and have the right to vote the Pledged Shares
at its own discretion at any annual or special meeting of the shareholders of
the Pledged Company. Prior to the occurrence and continuance of an Event of
Default, the Pledgor shall retain all voting rights with respect to the
Collateral.

10. Upon the occurrence of an Event of Default, the
security constituted by this Pledge Agreement shall become enforceable, and the
Pledgee shall be entitled without further notice to the Pledgor to exercise all
voting and other corporate rights at any meeting of the Pledged Company and
exercise any and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any of the Pledged Shares as if it
were the absolute owner thereof, including, without limitation, the right to
exchange at its discretion, any and all of such Pledged Shares upon the merger,
consolidation, reorganization, recapitalization or other readjustment of the
Pledged Company or, upon the exercise by the Pledged Company or the Pledgee of
any right, privilege or option pertaining to any of the Pledged Shares, and in
connection therewith, to deposit and deliver any and all of the Pledged Shares
with any committee, depository, transfer agent, registrar or other designated
agency upon such terms and conditions as it may determine, all without
liability except to account for property actually received by it.

11. At any time after the security constituted by this
Pledge Agreement shall have become enforceable as aforesaid, the Pledgee shall
be entitled without further notice to the Pledgor to sell, assign or convert
into money all or any part of the Collateral in such manner and upon such terms
and for such consideration (whether in cash, securities or other assets,
whether deferred or not and whether at public or private sale) as the Pledgee
may in its absolute discretion think fit with the right to the Pledgee upon
such sale to purchase the whole or any part of the Collateral, free of any
right or equity of redemption in the

6
<PAGE> 7
Pledgor, which right and/or equity is hereby expressly waived.

12. The Pledgee shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing. In the custody of the Collateral, the
Pledgee shall exercise the same care as it exercises with respect to the
management of its own affairs and property. Except as provided herein, the
Pledgee shall not sell, transfer, pledge, hypothecate or otherwise encumber any
of the Collateral.

13. The Pledgee shall apply the net proceeds of any
collection, recovery, receipt, approximation, realization or sale of the
Collateral after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care, safe-keeping or otherwise of any
and all of the Collateral, or in any way relating to the rights of the Pledgee
hereunder, including attorney's fees and legal expenses, to the payment, in
whole or in part, of the Obligations, and only after so applying such net
proceeds and after the payment by the Pledgee of any other amount required by
any provisions of law, the Pledgee shall account as required by the Uniform
Commercial Code for the surplus, if any, to the Pledgor. The Pledgor agrees
that the Pledgee need not give more than ten (10) days notice of the time and
place of any public sale or of the time after which a private sale may take
place and that such notice is commercially reasonable notification of such
matters. In addition to the rights and remedies granted to it in this Pledge
Agreement and in any other instrument or agreement securing, evidencing or
relating to any of the Obligations, the Pledgee shall have the rights and
remedies of a secured party under the Uniform Commercial Code of the State of
New York (the "UCC"). All of the Pledgee's rights hereunder shall be limited
by, and in accordance with, the UCC.

14. When all of the Obligations shall have been fully
satisfied, the Pledgee agrees that it shall forthwith release the Pledgor from
its Obligations hereunder and the Irrevocable Proxy shall terminate forthwith
and be delivered to the Pledgor forthwith together with the other items
furnished to the Pledgee pursuant to Clause 3 hereof.

15. The Pledgor shall from time to time, and at all times
after the security constituted by this Pledge Agreement shall have become
enforceable, execute all such

7
<PAGE> 8
further instruments and documents and do all such things as the Pledgee may
reasonably deem desirable for the purpose of obtaining the full benefit of this
Pledge Agreement and of the rights, title, interest, powers, authorities and
discretions conferred on the Pledgee by this Pledge Agreement including
(without limitation) causing the Pledged Company to execute any such
instruments and documents as aforesaid. The Pledgor hereby irrevocably
appoints the Pledgee its attorney-in-fact for it and in its name and on its
behalf and as its act and deed to execute, seal and deliver and otherwise
perfect any deed, assurance, agreement, instrument or act which it may
reasonably deem desirable for any of the purposes of this Pledge Agreement;
provided that the Pledgee shall not exercise such power until the security
constituted by this Pledge Agreement shall have become enforceable. The
Pledgee shall have full power to delegate this power of attorney but no such
delegation shall preclude the subsequent exercise of such power by the Pledgee
itself or preclude the Pledgee from subsequent delegation to some other person
and any delegation may be revoked by the Pledgee at any time.

16. (i) Each of the Lenders hereby irrevocably and
exclusively appoints and authorizes the Pledgee to take all actions under this
Pledge Agreement as collateral agent on its behalf and to exercise all powers
under this Pledge Agreement on its behalf as are delegated to the Pledgee by
the terms hereof together with such powers as are reasonably incidental
thereto. By its execution hereof, the Pledgee hereby accepts such appointment
and the rights and obligations created thereby. Neither the Pledgee nor any of
its shareholders, directors, employees or agents shall be liable for any action
taken or omitted to be taken by it or them under this Pledge Agreement or in
connection therewith, except for its or their own gross negligence or willful
misconduct.

(ii) Whenever any payment is received by the Pledgee from the
Pledgor for the account of the Lenders, or any of them, whether of principal or
interest on the Loan, fees under payable hereunder, or otherwise, it will
thereafter cause to be distributed on the same day if received before 11:00
a.m. New York City time, or on the next day if received thereafter, like funds
relating to such payment ratably to the Lenders and the Pledgee according to
the amounts owing to each of them in respect of the Obligations.

8
<PAGE> 9
(iii) The Pledgee shall not at any time be under any duty to
investigate whether an Event of Default or an event which with the giving of
notice or lapse of time, or both, would constitute in Event of Default has
occurred or to investigate the performance of this Pledge Agreement by the
Pledgor.

(iv) The Pledgee shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from taking any
action or actions which it may be able to take under or in respect of, this
Agreement, unless the Pledgee shall have been instructed by the Lenders to
exercise such rights or to take or refrain from taking such action; provided,
however, that the Pledgee shall not be required to take any action which
exposes the Pledgee to personal liability or which is contrary to this Pledge
Agreement or applicable law.

(v) The Pledgee shall in all cases be fully protected in
acting or refraining from acting under this Pledge Agreement in accordance with
the instructions of the Lenders, and any action taken or failure to act
pursuant to such instructions, shall be binding on all of the Lenders.

17. IT IS MUTUALLY AGREED BY AND BETWEEN THE PARTIES
HERETO THAT EACH OF THEM HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO ON
ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS PLEDGE
AGREEMENT.

18. The Pledgee shall not by any act, delay, omis sion or
otherwise be deemed to have waived any of its rights or remedies hereunder, and
no waiver shall be valid unless in writing, signed by the Pledgee, and then
only to the extent therein set forth. A waiver by the Pledgee of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Pledgee would otherwise have had on any future
occasion. No failure to exercise nor any delay in exercising on the part of
the Pledgee, any right, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised

9
<PAGE> 10
singly or concurrently, and are not exclusive of any rights and remedies
provided by law.

19. None of the terms or provisions of this Pledge
Agreement may be waived, altered, modified or amended except by an instrument
in writing, duly executed by the Pledgee and the Pledgor. This Pledge
Agreement and all obligations of the Pledgor hereunder shall be binding upon
the successors and permitted assigns of the Pledgor and shall, together with
the rights and remedies of the Pledgee hereunder, inure to the benefit of the
Pledgee, its respective successors and permitted assigns.

20. Notices and other communications hereunder shall be
telefaxed and confirmed by certified mail if domestic (by federal express,
express mail or courier, if international) as follows:

If to the Pledgor - Titan Holdings, Inc.
1020 N.E. Loop 410
San Antonio, Texas 78209

Attention: Chief Financial Officer

Telefax number: (210) 824-3681

If to Bank One - Bank One Texas, N.A.
105 South St. Mary's Street
San Antonio, Texas 78205

Attention: Mr. Charles T. Bridgman,
Senior Vice President

Telefax number: (210) 271-6588

with a copy to:

Bank One Texas, N.A.
1717 Main Street, 4th Floor
Bank One Center
Dallas, Texas 75201

Attention: Mr. James V. Miller
Vice President

Telefax number: (214) 290-2332

10
<PAGE> 11
If to NationsBank - NationsBank of Texas, N.A.
300 Convent Street
San Antonio, Texas 78205

Attention: Mr. D. Kirk McDonald
Senior Vice President

Telefax number: (210) 270-5569

If to Dresdner
or the Pledgee - Dresdner Bank AG, New York Branch
75 Wall Street
New York, New York 10005

Attention: Mr. Lloyd C. Stevens

Telefax number: (212) 429-2524

with a copy to:

Dresdner Bank AG,
New York Branch
75 Wall Street
New York, New York 10005
Attention: Credit Services Department

Every notice or demand shall, except so far as otherwise
expressly provided by this Pledge Agreement, be deemed to have been received in
the case of a telefax with confirmed answerback at the time of dispatch thereof
(provided that if the date of dispatch is not a Banking Day in the locality of
the party to whom such notice or demand is sent it shall be deemed to have been
received on the next following Banking Day in such locality).

21. This Pledge Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to the principles of conflicts of law thereof.

22. The Pledgor hereby irrevocably submits to the
non-exclusive jurisdiction of state and federal courts located in the Borough
of Manhattan, City of New York, New York in any action or proceeding brought
against it hereunder.

11
<PAGE> 12
IN WITNESS whereof the parties hereto have caused this Pledge
Agreement to be duly executed as of the day and year first above written.

TITAN HOLDINGS, INC.

By: /s/ MARK E. WATSON, JR.
-------------------------------------
Name: Mr. Mark E. Watson, Jr.
Title: President

DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES, as Lender

By: /s/ ANTHONY C. VALENCOURT
-------------------------------------
Name: Anthony C. Valencourt
Title: First Vice President

BANK ONE TEXAS, N.A.,
as Lender

By: /s/ CHARLES T. BRIDGMAN
-------------------------------------
Name: Charles T. Bridgman
Title: Senior Vice President

NATIONSBANK OF TEXAS, N.A.,
as Lender

By: /s/ D. KIRK MCDONALD
-------------------------------------
Name: D. Kirk McDonald
Title: Senior Vice President

DRESDNER BANK AG, NEW YORK BRANCH,
as Pledgee

By: /s/ ANTHONY C. VALENCOURT
-------------------------------------
Name: Anthony C. Valencourt
Title: First Vice President

By: /s/ LLOYD C. STEVENS
-------------------------------------
Name: Lloyd C. Stevens
Title: Assistant Vice President

<PAGE> 13
EXHIBIT A

IRREVOCABLE PROXY

The undersigned, the registered and beneficial owner of the
below described shares of Titan Indemnity Company, a corporation organized
under the laws of the State of Texas (the "Company"), hereby makes, constitutes
and appoints Dresdner Bank AG, New York Branch, as agent, or its designee ("the
Pledgee") with full power to appoint a nominee or nominees to act hereunder
from time to time, upon the occurrence and during the continuance of an Event
of Default (as defined in the Pledge Agreement referred to herein) the true and
lawful attorney and proxy of the undersigned to vote the 4,319,951 issued
shares of common stock, par value $1.00 of the Company represented by Share
Certificate Nos. 10, 11, 13, 14 and 18 at all annual and special meetings of
stockholders of the Company or take any action by written consent with the same
force and effect as the undersigned might or could do, hereby ratifying and
confirming all that the said attorney or their nominee or nominees shall do or
cause to be done by virtue hereof.

The said shares have been pledged (the "Pledge") to the
Pledgee pursuant to the terms and conditions of that certain Pledge Agreement
dated as of July 30, 1996, between the Pledgor, certain Lenders party thereto
and the Pledgee.

This power and proxy is coupled with an interest and is
irrevocable and shall remain irrevocable so long as the Pledge is outstanding
and is in full force and effect.

IN WITNESS whereof the undersigned has caused this instrument
to be executed by its duly authorized representative this ______ day of July,
1996.

TITAN HOLDINGS, INC.

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

<PAGE> 1

EXHIBIT 10.66

GUARANTEE

This GUARANTEE dated as of July 30, 1996 from the undersigned
TITAN HOLDINGS, INC., a Texas corporation (together with its successors and
assigns, the "Guarantor"), in favor of DRESDNER BANK AG, acting through its New
York and Grand Cayman branches ("Dresdner"), BANK ONE TEXAS, N.A. ("Bank One")
and NATIONSBANK OF TEXAS, N.A. ("Nationsbank") (Dresdner, Bank One and
NationsBank, collectively, together with their respective successors, assigns
and transferees, the "Lenders") and Dresdner Bank AG, New York Branch in its
capacity as agent for the Lenders (together with its successors and assigns the
"Agent") and as collateral agent (together with its successors and assigns the
"Collateral Agent").

WHEREAS, the Guarantor desires the Agent and the Lenders to
enter into that certain Loan Agreement (the "Agreement") among the Agent, the
Lenders and Westchester Premium Acceptance Corporation (together with its
successors and assigns, the "Borrower"), whereby the Lenders have agreed, inter
alia, to from time to time make loans to the Borrower (the "Loans");

WHEREAS, the Guarantor is the indirect holder of 100% of the
outstanding capital stock of the Borrower; and

WHEREAS, it is a condition precedent to the effectiveness of
the Agreement that the Guarantor deliver this Guarantee.

WHEREAS, the capitalized terms used herein which are not
defined herein are used herein as defined in the Agreement.

NOW, THEREFORE, in order to induce the Lenders the Agent and
the Collateral Agent to enter into the Program Documents and for the Lenders to
make the Loans and for other good and valuable consideration, receipt of which
is hereby acknowledged, the Guarantor hereby agrees as follows:

1. Guarantee. The Guarantor does hereby acknowledge
that it is fully aware of the Agreement and the other Program Documents and the
transactions contemplated thereby, and does hereby irrevocably and
unconditionally guarantee, as primary obligor and not as surety merely, without
offset or reduction, irrespective of the validity,
<PAGE> 2
enforceability or effectiveness of the Agreement or any other Program Document
and waiving all rights of objection and defenses arising therefrom, full and
prompt payment to the Agent, the Collateral Agent and the Lenders (each a
"Secured Party" and collectively the "Secured Parties") of all of the
Borrower's Obligations and, as primary obligor and not merely as a surety,
agrees to indemnify each of the Secured Parties from and against any loss any
of them may incur as a result of or in connection with any of the Borrower's
Obligations being or becoming void, voidable or unenforceable for any reason
whatsoever, whether or not known to any Secured Party (including, without
limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar proceedings affecting the
status, existence, assets or obligations of, the Borrower, or the disaffirmance
by the Borrower, any court of competent jurisdiction or any trustee in
bankruptcy, receiver or similar official of the Borrower with respect to any
Program Document to which the Borrower is a party in any such proceeding). The
obligations of the Guarantor hereunder shall not be affected by the
genuineness, validity, regularity or enforceability of any of the Borrower's
Obligations, any Program Document or any other agreement to which the Borrower
is a party, or any amendment, waiver or other modification of the Agreement or
any other Program Document (except to the extent of such amendment, waiver or
modification), or release or exchange of the Assigned Collateral (except to the
extent of such release or exchange) without the consent of the Guarantor, any
priority or preference to which any of the Borrower's Obligations may be
entitled over any other Borrower's Obligations under the Agreement or any other
Program Document or, to the fullest extent permitted by applicable law, any
other circumstance which might otherwise constitute a legal or equitable
defense to or discharge of the obligations of a surety or guarantor, including,
without limitation, any defense arising out of any laws of the United States of
America or any state thereof, which would either exempt, modify or delay the
due or punctual payment and performance of th obligations of the Guarantor
hereunder. This Guarantee is a guarantee of prompt payment and performance and
not merely a guarantee of collecton. The Guarantor specifically agrees that it
shall not be necessary or required, and that the Guarantor shall not be
entitled to require, that any Person (i) file suit or proceed to obtain or
assert a claim for

2
<PAGE> 3
personal judgment against the Borrower for the Borrower's Obligations, or (ii)
make any effort at collection of the Borrower's Obligations from the Borrower,
or (iii) foreclose against or seek to realize upon any Assigned Collateral or
other security now or hereafter existing for the Borrower's Obligations, or
(iv) file suit or proceed to obtain or assert a claim for personal judgment
against any other Person liable for the Borrower's Obligations, or make any
effort at collection of the Borrower's Obligations or the Assigned Collateral
from any such other Person, or exercise or assert any other right or remedy to
which any Person is or may be entitled in connection with the Borrower's
Obligations, the Assigned Collateral or any security or other guaranty
therefor, or (v) assert or file any claim against the assets of the Borrower or
the Guarantor or any other guarantor or other Person liable for the Borrower's
Obligations, or any part thereof, before or as a condition of enforcing the
liability of the Guarantor under this Guarantee or requiring payment or
performance of said Borrower's Obligations by the Guarantor hereunder, or at
any time thereafter.

2. Guarantor's Waivers. The Guarantor waives notice of
the acceptance of this Guarantee and of the performance or nonperformance by
the Borrower, demand for payment from the Borrower or any other Person and
notice of nonpayment or failure to perform on the part of the Borrower, all
demands whatsoever, and any other defense which may be available to the
Guarantor under the applicable laws.

3. Nature of Guarantee. The obligations of the
Guarantor shall be absolute and unconditional and shall remain in full force
and effect until satisfaction of all of the Borrower's Obligations and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by the existence of any claims, set-off, defense or other
rights which the Guarantor may have at any time and from time to time against
the Borrower, whether in connection with the transactions contemplated by the
Agreement, any other Program Document or any unrelated transactions. This
Guarantee shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any Borrower's Obligation is rescinded or must
otherwise be returned by the any Secured Party upon the insolvency, bankruptcy,
reorganization or similar proceeding with respect to the Borrower, the

3
<PAGE> 4

Guarantor or otherwise, all as though such payment had not been made.

4. Amendments. No amendment of, or supplement to, this
Guarantee, or waiver or modification, or consent under, the terms hereof, shall
be effective unless evidenced by an instrument in writing signed by each of the
parties hereto.

5. Payments. All payments hereunder shall be made free
and clear of, and without deduction or withholding for or on account of, any
taxes, levies, fees, imposts, duties, expenses, commissions, withholdings,
assessments or other charges, together with all penalties, fines, additions to
tax and interest thereon (collectively, "Withholdings"). If any Withholdings
shall be required by law to be deducted or withheld from any payment hereunder,
the Guarantor shall increase the amount paid so that each of the Secured
Parties, receives, after deduction or withholding on account of Withholdings
required, the payment to be made by the Borrower pursuant to the Agreement or
any other Program Document, or, in the case of payments required solely by
virtue of this Guarantee, the full amount of the payment provided for in this
Guarantee.

6. Guarantor's Representations. The Guarantor hereby
represents and warrants to each of the Secured Parties as follows:

(a) The Guarantor is a corporation duly organized and
validly existing pursuant to the laws of its domicile and has the power and
authority to own and hold its properties wherever located and to enter into and
perform its obligations under this Guarantee. The Guarantor has the power and
authority to carry on its business as now conducted, to own or hold under lease
the properties it holds itself out as owing or leasing and to enter into and
perform its obligations under this Guarantee.

4
<PAGE> 5

Guarantor, and neither the execution and delivery and performance thereof, nor
the consummation of the transactions contemplated thereby, contravenes any law,
judgment, governmental rule, regulation or order applicable to or binding on
the Guarantor or its assets, or contravenes or results in any breach of, or
constitutes any default under, any indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, bank loan or credit agreement or other
material agreement or instrument to which the Guarantor is a party or by which
the Guarantor or its properties may at present be bound or affected.

(c) Neither the execution and delivery by the Guarantor
of this Guarantee, nor the consummation of any of the transactions by the
Guarantor contemplated hereby, (i) requires the consent or approval of or the
giving of notice to, consent or approval or license of, or the registration
with, or the taking of any other action in respect of, any Governmental
Authority or any other Person or (ii) violates any Applicable Law.

(d) This Guarantee has been duly entered into and
delivered by the Guarantor and constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance
with the terms hereof. The obligations of the Guarantor under this Guarantee
rank, and until discharge in full will continue to rank, in right of payment
and security at least pari passu in all respects with all unsecured and
unsubordinated indebtedness for borrowed money of the Guarantor now or
hereafter outstanding.

(e) No proceedings or action are pending and to the best
of the Guarantor's knowledge, threatened against the Guarantor before any court
or administrative agency which if adversely determined might materially
adversely affect the ability of the Guarantor to perform its obligations under
this Guarantee.

(f) It is not necessary (i) in order to exercise or
enforce any rights under this Guarantee in the domicile of the Guarantor or
(ii) by reason of the entry into or performance of this Guarantee that any
Secured Party or any beneficiary under this Guarantee be licensed, qualified or
entitled to do business in the State of Texas.

(g) The Guarantor has furnished to the Agent full

5
<PAGE> 6

and complete information as to its financial condition, and no material adverse
change has occurred in the financial condition of the Guarantor since the date
as of which such financial information was furnished.

7. Covenants. The Guarantor hereby covenants that, so long as
this Guarantee shall remain in effect it will comply with all of its covenants
and agreements set forth in the Titan Loan Agreement.

8. GOVERNING LAW. THIS GUARANTEE SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

9. SUBMISSION TO JURISDICTION. THE GUARANTOR (I) HEREBY
IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK AND TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL
COURT OF THE UNITED STATES LOCATED IN NEW YORK STATE, FOR THE PURPOSES OF ANY
SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTEE, THE SUBJECT
MATTER HEREOF OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY BROUGHT BY ANY
SECURED PARTY, OR THEIR SUCCESSORS OR ASSIGNS, AND (II) HEREBY IRREVOCABLY
WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE,
IN ANY SUCH SUIT, ACTION OR PROCEEDING, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM,
THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS
GUARANTEE OR THE SUBJECT MATTER HEREOF OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY MAY NOT BE ENFORCED IN OR BY SUCH COURTS. THE GUARANTOR HEREBY
IRREVOCABLY AND GENERALLY CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL,
RETURN RECEIPT REQUESTED AT THE NEW YORK CITY OFFICES OF MAYER, BROWN & PLATT,
WHICH THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES AND APPOINTS ITS
ATTORNEY-IN-FACT, AND MAYER, BROWN & PLATT IS IRREVOCABLY DESIGNATED AND
APPOINTED AND SET AS THE DOMICILE TO RECEIVE SERVICE OF PROCESS IN ANY ACTION,
SUIT OR PROCEEDING WITH RESPECT TO ANY MATTER AS TO WHICH IT SUBMITS TO
JURISDICTION AS SET FORTH ABOVE, IT BEING AGREED THAT SERVICE UPON SUCH
ATTORNEY-IN-FACT SHALL CONSTITUTE VALID SERVICE UPON THE GUARANTOR OR ITS
SUCCESSORS OR ASSIGNS. THE GUARANTOR HEREBY AGREES THAT ITS SUBMISSION TO
JURISDICTION AND ITS DESIGNATION OF MAYER, BROWN & PLATT, AS ITS PROCESS AGENT
SET FORTH ABOVE IS MADE FOR THE EXPRESS BENEFIT OF THE SECURED PARTIES. FINAL
JUDGMENT AGAINST THE GUARANTOR IN ANY SUIT IN ANY COURT

6
<PAGE> 7

REFERRED TO ABOVE SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL
BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF ANY INDEBTEDNESS OR
LIABILITY OF THE GUARANTOR THEREIN DESCRIBED; PROVIDED, ALWAYS THAT THE
PLAINTIFF MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL
PROCEEDINGS, AGAINST THE GUARANTOR OR ANY OF ITS ASSETS IN THE COURTS OF ANY
COUNTRY OR PLACE WHERE THE GUARANTOR OR SUCH ASSETS MAY BE FOUND.

10. Time is of the Essence. Time and strict and punctual
performance are of the essence with respect to each provision of this
Guarantee.

11. Subrogation. The Guarantor hereby agrees that it
shall not be subrogated, in whole or in part, to the rights of each Secured
Party against the Borrower or any other Person under any document or instrument
evidencing the Borrower's Obligations until all the Borrower's Obligations now
existing or hereafter entered into have been paid or performed in full.

12. WAIVER OF TRIAL BY JURY. THE GUARANTOR AND THE AGENT AND
THE LENDERS BY THEIR ACCEPTANCE HEREOF HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO OR BENEFICIARY
HEREOF ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS GUARANTEE.

13. Entire Agreement. This Guarantee (a) constitutes the
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the Guarantor and the Secured Parties, with respect to
the subject matter hereof, (b) may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument, and (c) shall be binding upon the successors and
assigns of the Guarantor and shall inure to the benefit of, and shall be
enforceable by, each of the Secured Parties.

14. Notices. Except where telephonic (which shall be
confirmed in writing promptly) instructions or notices are authorized herein to
be given, all notices, demands, instructions and other communications required
or permitted to be given under this Guarantee shall be in writing and shall be
personally delivered or sent by registered, certified or express mail, postage
prepaid,

7
<PAGE> 8

return receipt requested, or by facsimile, or telegram (with messenger delivery
specified in the case of a telegram), and shall be deemed to be given for
purposes of this Guarantee on the date on which such writing is delivered or
sent to the intended recipient thereof in accordance with the provisions of
this Section 14 (except that any notice sent by registered or certified mail
shall be deemed to have been given on the fifth Business Day after such notice
is deposited for delivery in the United States mail). Unless otherwise
specified in a notice sent or delivered in accordance with the foregoing
provisions of this Section 14, notices, demands, instructions and other
communications in writing shall be given to or made upon the respective parties
hereto at their respective addresses (or to their respective facsimile numbers)
indicated below, and, in the case of telephonic instructions or notices, by
calling the telephone number or numbers indicated for such party below:

(a) with respect to the Guarantor:

Titan Holdings, Inc.
1020 N.E. Loop 410
San Antonio, Texas 78209

Attention: Chief Financial Officer
Telephone: (210) 824-4546
Facsimile: (210) 824-3681

(b) with respect to the Agent, the Collateral Agent
or Dresdner:

Dresdner Bank AG, New York
Branch
75 Wall Street
New York, New York 10005
Attention: Mr. Lloyd C. Stevens
Telephone: (212) 429-2229
Facsimile: (212) 429-2524

with a copy to:

Dresdner Bank AG,
New York Branch
75 Wall Street
New York, New York 10005

8
<PAGE> 9

Attention: Credit Services Department

Bank One Texas, N.A.
105 South St. Mary's Street
San Antonio, Texas 78205
Attention: Mr. Charles T. Bridgman
Senior Vice President
Telephone: (210) 271-8680
Facsimile: (210) 271-6588

with a copy to:

Bank One Texas, N.A.
1717 Main Street, 4th Floor
Bank One Center
Dallas, Texas 75201
Attention: Mr. James V. Miller
Vice President
Telephone: (214) 290-2309
Facsimile: (214) 290-2332

(d) with respect to NationsBank:

NationsBank of Texas, N.A.
300 Convent Street
San Antonio, Texas 78205
Attention: Mr. D. Kirk McDonald
Senior Vice President
Telephone: (210) 270-5300
Facsimile: (210) 270-5569

Any party may designate a different or additional address for the delivery of
notices by providing notice thereof to the other parties. Except as provided to
the contrary above, all notices, demands, and other communications shall be
effective upon personal delivery or upon the date of receipt by the addressee
as shown on the return receipt. Rejection or other refusal to accept notices,
demands, or other communications shall be of no effect, and all notices,
demands, and other communications which are rejected or acceptance of which is
refused shall be deemed to be effective upon the date on which the same were
rejected or refused.

9
<PAGE> 10

15. Enforcement. The Guarantor agrees to pay to each Secured
Party any and all reasonable costs and expenses incurred by such Secured Party
and their successors or assigns, including reasonable attorneys' fees and court
costs, in enforcing this Guarantee.

16. Assignment. The Guarantor's obligations hereunder may
not be assigned by the Guarantor either in whole or in part and any attempted
assignment shall be void.

10
<PAGE> 11

IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed as of the date first hereinabove set forth.

TITAN HOLDINGS, INC.

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

<PAGE> 1
EXHIBIT 10.67

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

LOAN AGREEMENT

Dated as of July 30, 1996

among

WESTCHESTER PREMIUM ACCEPTANCE CORPORATION
as Borrower,

and

THE BANKS AND FINANCIAL INSTITUTIONS
LISTED ON THE SIGNATURE PAGES HERETO,
as Lenders

and

DRESDNER BANK AG, NEW YORK BRANCH,
as Agent

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

<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
LOAN AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE II THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.3 Loan Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.4 Reductions of the Commitments . . . . . . . . . . . . . . . . . . . . 20
2.5 Mandatory Payments . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.6 Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.7 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE III TERMS APPLICABLE TO LOANS . . . . . . . . . . . . . . . . . . . . . . . 21
3.1 Payments and Prepayments . . . . . . . . . . . . . . . . . . . . . . 21
3.2 Payments by the Agent . . . . . . . . . . . . . . . . . . . . . . . . 24
3.3 Maximum Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.4 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.5 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.6 Sharing of Setoffs . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.7 Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . . . 27

ARTICLE IV TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.1 Termination by the Borrower . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE V YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . . . . . . . . . . 28
5.1 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2 Limitation on Types of Loans . . . . . . . . . . . . . . . . . . . . 30
5.3 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.4 Certain Conversions . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.1 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.2 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.3 Other Supporting Documents . . . . . . . . . . . . . . . . . . . . . 32
6.4 Control of the Borrower . . . . . . . . . . . . . . . . . . . . . . . 34
6.5 Loan Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.6 Fees Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.7 Existing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>

i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
6.8 Representations and Warranties . . . . . . . . . . . . . . . . . . . 34

ARTICLE VII REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 35
7.1 Organization, Powers, etc. . . . . . . . . . . . . . . . . . . . . . 35
7.2 Corporate Authority, etc. . . . . . . . . . . . . . . . . . . . . . . 35
7.3 Government Approvals . . . . . . . . . . . . . . . . . . . . . . . . 35
7.4 Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . 36
7.5 Valid and Binding Obligations . . . . . . . . . . . . . . . . . . . . 36
7.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.7 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.8 Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . 36
7.9 Accuracy of Representations and Warranties . . . . . . . . . . . . . 36
7.10 Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.11 Pledge of Collateral . . . . . . . . . . . . . . . . . . . . . . . . 37
7.12 Title to Assigned Collateral . . . . . . . . . . . . . . . . . . . . 37
7.13 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.15 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . 38
7.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . 38
7.17 Chief Place of Business . . . . . . . . . . . . . . . . . . . . . . . 39
7.18 Lock-Box Banks; Lock-Box Accounts . . . . . . . . . . . . . . . . . . 39
7.19 Franchises, Licenses . . . . . . . . . . . . . . . . . . . . . . . . 39
7.20 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.21 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.22 Trade Names, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 39

ARTICLE VIII AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.1 Payment of Taxes, etc. . . . . . . . . . . . . . . . . . . . . . . . 40
8.2 Preservation of Corporate Existence . . . . . . . . . . . . . . . . . 40
8.3 Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . 40
8.4 Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.5 Maintenance of Approvals, Filings and Registrations . . . . . . . . . 41
8.6 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . 41
8.7 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . 43
8.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.9 Compliance with Policies and Contracts . . . . . . . . . . . . . . . 44
8.10 Instructions to Obligors . . . . . . . . . . . . . . . . . . . . . . 44
8.11 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.13 Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.14 Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>

ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE IX NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.1 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.3 Maximum Credits Outstanding . . . . . . . . . . . . . . . . . . . . 46
9.4 Prohibition of Fundamental Changes . . . . . . . . . . . . . . . . . 46
9.5 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.6 No Commingling . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.7 Chief Place of Business . . . . . . . . . . . . . . . . . . . . . . . 47
9.8 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.9 Changes to Credit and Collection Policies . . . . . . . . . . . . . . 47

ARTICLE X EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 47

ARTICLE XI FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.3 Invoices for Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 52

ARTICLE XII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.1 Indemnification by Borrower . . . . . . . . . . . . . . . . . . . . . 52

ARTICLE XIII THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.1 Appointment, Powers and Immunities . . . . . . . . . . . . . . . . . 53
13.2 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.3 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
13.4 Rights as a Lender . . . . . . . . . . . . . . . . . . . . . . . . . 55
13.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
13.6 Non-Reliance on Agent and Other Banks . . . . . . . . . . . . . . . . 56
13.7 Failure to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
13.8 Resignation or Removal of Agent . . . . . . . . . . . . . . . . . . . 57
13.9 Consents Under Basic Documents . . . . . . . . . . . . . . . . . . . 57

ARTICLE XIV MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.2 Survival and Termination of Agreement . . . . . . . . . . . . . . . . 60
14.3 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.4 Waiver; Modifications in Writing . . . . . . . . . . . . . . . . . . 60
14.5 Non-Waiver of Rights . . . . . . . . . . . . . . . . . . . . . . . . 61
14.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 61
14.7 Sale and Transfer of Loans and Notes; Participations in
Loans and Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 61
14.8 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
14.9 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
</TABLE>

iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
14.12 Waiver of Trial by Jury; Consent to Jurisdiction . . . . . . . . . . 65
14.13 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>

SCHEDULES

SCHEDULE I Booking Offices
SCHEDULE II List of Lock-Boxes
SCHEDULE III Credit and Collection Policies
SCHEDULE IV Form of Monthly Report

EXHIBITS

EXHIBIT A Form of Note
EXHIBIT B Form of Certificate
EXHIBIT C Form of Loan Request
EXHIBIT D Form of Notice of Conversion or Continuation
EXHIBIT E Form of Finance Contract
EXHIBIT F Form of Convention Statement

iv
<PAGE> 6

LOAN AGREEMENT

LOAN AGREEMENT dated as of July 30, 1996 among WESTCHESTER
PREMIUM ACCEPTANCE CORPORATION (the "Borrower"), DRESDNER BANK AG, acting
through its New York and Grand Cayman Branches ("Dresdner"), BANK ONE TEXAS,
N.A. ("Bank One") and NATIONSBANK OF TEXAS, N.A. ("NationsBank") (Dresdner,
Bank One and NationsBank, collectively, together with their successors and
assigns, the "Lenders" and each a "Lender") and Dresdner Bank AG, New York
Branch, as agent for the Lenders (together with its successors and assigns, the
"Agent").

ARTICLE I

DEFINITIONS; RULES OF CONSTRUCTION

SECTION 1.1 Definitions. The capitalized terms used in this
Agreement shall have the following meanings, unless otherwise defined herein.

"Additional Costs" shall have the meaning assigned to such
term in Section 5.1 of this Agreement.

"Agent" shall have the meaning assigned to such term in the
introduction to this Agreement.

"Agent's Account" shall have the meaning assigned to such term
in Section 2.1(a).
<PAGE> 7
"Agreement" shall mean this Loan Agreement, as the same from
time to time may be extended, amended, supplemented, waived or modified.

"Applicable Margin Rate" shall mean the amount computed by
reference to the table below:

<TABLE>
<CAPTION>
Insurers Insurers Insurers Insurers
Level 1 Level 2 Level 3 Level 4
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Titan Level 1 0.50% 0.55% 0.80% 1.25%

Titan Level 2 0.55% 0.60% 1.00% 1.50%

Titan Level 3 0.65% 0.75% 1.50% 2.00%
</TABLE>

"Assigned Collateral" has the meaning assigned to that term in
the Security Agreement.

"Base Rate" shall mean a fluctuating rate of interest per
annum equal to the higher of

(a) the rate of interest most recently announced by the
Agent at its Booking Office as its base rate; and

(b) the Federal Funds Rate, plus 1/2 of 1% per annum.

The Base Rate is not necessarily intended to be the lowest rate of interest
determined by the Agent in connection with extensions of credit. Changes in
the rate of interest on any Loan maintained as a Base Rate Loan shall take
effect simultaneously with each change in the Base Rate. The Agent shall give
notice promptly to the Borrower of changes in the Base Rate.

2
<PAGE> 8
"Base Rate Loan" shall mean a Loan bearing interest based on
the Base Rate.

"Borrower" shall have the meaning assigned to such term in the
introduction to this Agreement.

"Borrower's Obligations" shall have the meaning assigned to
such term in the Security Agreement.

"Borrowing Base" shall mean, at any time of determination, the
product of (i) eighty-five percent (85%), and (ii) the sum of (a) 100% of the
Outstanding Balance of each Eligible Receivable in respect of which at such
time of determination there is no Cancellation in respect of the related
Finance Contract, (b) 90% of the Outstanding Balance of each Eligible
Receivable in respect of which at such time of determination a Cancellation has
occurred within not more than 30 days in respect of the related Finance
Contract, (c) 50% of the Outstanding Balance of each Eligible Receivable in
respect of which a Cancellation in respect of the related Finance Contract
occurred between 31 days and 60 days prior to such time of determination and
(d) 0% of the Outstanding Balance of each Eligible Receivable in respect of
which a Cancellation in respect of the related Finance Contract occurred over
60 days prior to such time of determination, less the aggregate amount,
determined at such time but without duplication of any reduction already
reflected in the amount specified in clauses (b) through (d) above, by which
the aggregate Outstanding Balance of Eligible Receivables related to each Pool
Insurer and its Affiliates exceeds the product of (x) the Concentration Limit
for each such Pool Insurer, and (y) the aggregate amount specified in clauses
(a) through (d) above with respect to such Pool Insurer.

"Business Day" shall mean any day other than a Saturday,
Sunday or a day when banks are authorized or required by law to close in New
York, New York and, if such

3
<PAGE> 9
day relates to a borrowing of, a payment or prepayment of principal of, or
interest on, or a conversion of or into, or an Interest Period for, a
Eurodollar Loan or a notice by the Borrower with respect to any such borrowing,
payment, prepayment, conversion or Interest Period, any day which is also a
London Banking Day.

"C&S" shall mean, with respect to Titan Indemnity, as of the
date of determination thereof, the capital and surplus of Titan Indemnity as it
would then be computed in accordance with statutory accounting principles, as
it would then appear on page 22 (Five-Year Historical Data, first of two
pages), line 24, column 1, of Titan Indemnity's Convention Statement.

"Cancellation" shall mean with respect to any Finance
Contract, the cancellation of an insurance policy specified therein.

"Code" shall mean the Internal Revenue Code of 1986, as
amended.

"Collateral Account" shall have the meaning assigned to such
term in the Security Agreement.

"Collateral Agent" shall mean Dresdner Bank AG, New York
Branch, in its capacity as collateral agent under the Security Agreement,
together with its successors and assigns.

"Commitment" means either (i) when used with reference to a
Lender at the time any determination is to be made, the amount set opposite the
name of such Lender below, as the same may be lowered in accordance with the
terms hereof, or (ii) when used with reference to any Lender, the commitment of
such Lender to make Loans hereunder in an

4
<PAGE> 10
amount equal to the amount described in the foregoing clause (i), as the
context may require;

<TABLE>
<S> <C>
Dresdner $12,500,000.00
Bank One $ 9,090,909.09
NationsBank $ 3,409,090.91
</TABLE>

"Commitment Expiration Date" shall mean July 30, 1997;
provided, that such Commitment Expiration Date (or any extended Commitment
Expiration Date) may be extended for an additional six calendar months on the
last Business Day of January and July of each year, commencing with January
1997, if the Borrower gives the Agent written notice of the Borrower's desire
for such an extension not later than thirty (30) days prior to the end of July
or January, as the case may be, and the Agent has notified the Borrower, not
later than thirty (30) days after receipt of the Borrower's notice, that each
Lender, in its sole discretion, has consented in writing to such extension.

"Commitment Fee" shall have the meaning assigned to such term
in Section 11.1 hereof.

"Commitment Fee Percentage" shall mean, as of the date of any
calculation thereof, a percentage determined as follows:

-If Insurers Level 1 exists, 0.15%
-If Insurers Level 2 exists, 0.20%
-If Insurers Level 3 exists, 0.25%
-If Insurers Level 4 exists, 0.30%

"Concentration Limit" means in respect of any Pool Insurer 8%;
provided, however, that (i) in respect of the Texas Workers Compensation Fund
the Concentration Limit shall be 10%, and (ii) the Concentration Limit for the
five largest Pool Insurers in terms of the aggregate Outstanding Balances of
the Eligible Receivables which constitute Assigned Collateral, at any time of
determination, shall be 35%.

"Consolidated Indebtedness" shall mean the Indebtedness of the
Parent and its Subsidiaries on a consolidated basis, computed in accordance
with GAAP but excluding the Indebtedness related to (i) this Agreement and (ii)
the Airplane Lease.

5
<PAGE> 11
"Contingent Obligation" shall mean any contractual obligation,
contingent or otherwise, of one Person with respect to any Indebtedness,
obligation or liability of another, including, without limitation, direct or
indirect guaranties, endorsements (except for collection or deposit in the
ordinary course of business), notes co-made or discounted, recourse agreements,
keep-well agreements, agreements to purchase or repurchase such Indebtedness,
obligation or liability or any security therefor or to provide funds for the
payment or discharge thereof, agreements to maintain solvency, assets, level of
income, or other financial condition, and agreements to make payment other than
for value received.

"Convention Statement" shall mean with respect to any Person
the annual financial statements and accompanying schedules and exhibits filed
by such Person with its applicable state insurance regulators (in the case of
Titan Indemnity, substantially in the form heretofore filed by such company or
such other form as may in the future be required by applicable state insurance
regulatory authorities), and prepared in accordance with statutory accounting
principles.

"Credit and Collection Policies" shall mean the Borrower's
credit and collection policies and procedures set forth as Schedule III hereto,
as the same may be amended, supplemented or modified as permitted by this
Agreement.

"Credit Expiration Date" shall mean the Commitment Expiration
Date or such earlier date as provided in Section 10.

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

"Dollars" and "$" shall mean lawful money of the United States of America.

"Effective Date" shall mean the first date on which the
conditions precedent set forth in Section 6 have been satisfied.

6
<PAGE> 12
"Eligible Receivable" shall mean any Receivable:

(a) which arises under a Finance Contract (i) which is the
legal, valid and binding obligation of the parties
thereto; (ii) which is enforceable in accordance with
its terms, (iii) with respect to which no party
thereto is in breach of any of its material
representations, warranties, covenants or agreements
set forth therein, and (iv) which does not contravene
any Applicable Law;

(b) which represents an obligation of an Obligor which is
not an agency, department or instrumentality or
political subdivision of the United States or any
foreign government;

(d) which is not subject to any dispute, claim, defense
or offset;

(e) which is an "account" or "general intangible" within
the meaning of the UCC of the State in which is
located the Borrower's place of business or, if the
Borrower has more than one place of business, its
chief executive office;

(f) in which the Borrower has good and marketable title
free and clear of all liens, security interests and
encumbrances, except liens, security interests and
encumbrances in favor of the Lenders under the
Security Agreement;

(g) that is the legal, valid and binding payment
obligation of the Obligor thereon;

(h) which does not contravene any Applicable Law;

(i) which is not subject to any restrictions on the
transfer, pledge, assignability or sale thereof;

(j) with respect which the Obligor complies with the
eligibility criteria of the Borrower's Credit and
Collection Policies and for which a proceeding of the
type specified in clauses

7
<PAGE> 13
(e) and (f) of Section 10.1 has not occurred; and

(k) the related Finance Contract relates to an insurance
policy.

"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.

"ERISA Affiliate" shall mean (i) any corporation which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or the Parent; (ii) a trade or
business (whether or not incorporated) which is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower or with the
Parent; and (iii) a member of the same affiliated service group (within the
meaning of Section 414(m) of the Code) as the Borrower or the Parent, as any
corporation described in clause (i) above or as any trade or business described
in clause (ii) above.

"Eurodollar Loan" shall mean a Loan bearing interest based on
the Eurodollar Rate.

"Eurodollar Rate" shall mean, with respect to any Interest
Period for any Eurodollar Loan, the rate per annum determined by the Agent to
be equal to the quotient (rounded upwards, if necessary, to the next higher
1/16 of 1%) of (y) (i) the rate of interest for deposits in Dollars for a
period equal to the number of days in such Interest Period which appears on the
Telerate Page 3750 as of 11:00 a.m., London time, on the day that is two London
Banking Days prior to the first day of such Interest Period, or (ii) if such
rate does not appear on the Telerate Page 3750 at such time, the rate per annum
at which deposits in Dollars are offered by the Agent in immediately available
funds at its Eurodollar Lending Office specified in Schedule 1 to this
Agreement in an amount comparable to the principal amount of such Eurodollar
Loan for a period equal to such Interest Period at approximately 10:00 A.M.,
New York City time, on the date two Business Days before the first day of such
Interest Period, divided by (z) a number equal to 1.00 minus the Eurodollar
Reserve Percentage.

8
<PAGE> 14
the maximum reserve requirements (including, but not limited to, supplemental,
marginal and emergency reserves) with respect to eurocurrency funding
(currently referred to as "Eurocurrency Liabilities") of a member bank in such
System. The Eurodollar Rate shall be adjusted automatically with respect to
any Eurodollar Loan outstanding on the effective date of any change in the
Eurodollar Reserve Percentage, as of such effective date.

"Event of Default" shall mean any of the Events of Default
described in Section 10 of this Agreement.

"Existing Agreement" shall mean that certain Loan Agreement,
dated as of August 8, 1995, among Dresdner, First Interstate Bank of Texas,
N.A., the Borrower and Dresdner, as agent, as the same from time to time may be
extended, amended, supplemented, waived or modified.

"Federal Bankruptcy Code" shall mean Title 11 of the United
States Code, Sections 101, et seq., and the rules and regulations promulgated
thereunder, as amended from time to time.

"Finance Contract" shall mean a Premium Finance Agreement
among the seller, an Obligor, and a Producer, substantially in the form of
Exhibit E hereto, as the same may be from time to time be amended, waived,
supplemented or modified as permitted by this Agreement.

"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.

"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof

9
<PAGE> 15
and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

"Guarantee" shall mean the Guarantee dated as of the date
hereof among the Parent, the Lenders, the Collateral Agent and the Agent as the
same from time to time may be amended, supplemented, waived or modified.

"Highest Lawful Rate" shall mean, with respect to each Lender,
the maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the Loans
or on other Borrower's Obligations under laws applicable to such Lender which
are presently in effect or, to the extent allowed by law, under such applicable
laws which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow.

"Insurers Level 1" shall mean as of the date of determination
thereof a state of facts where the Weighted Average Rating of Pool Insurers is
2.5 or below.

10
<PAGE> 16
"Insurers Level 2" shall mean as of the date of determination
thereof a state of facts where the Weighted Average Rating of Pool Insurers is
greater than 2.5 and less than or equal to 4.5.

"Insurers Level 3" shall mean as of the date of determination
thereof a state of facts where the Weighted Average Rating of Pool Insurers is
greater than 4.5 and less than or equal to 5.5.

"Insurers Level 4" shall mean as of the date of determination
thereof a state of facts where the Weighted Average Rating of Pool Insurers is
greater than 5.5.

"Interest Period" shall mean with respect to any Eurodollar
Loan, each period commencing on the date such Eurodollar Loan is made or
converted from a Base Rate Loan or the last day of the next preceding Interest
Period with respect to such Eurodollar Loan and ending on the same day in the
first, second, third or sixth (as selected by the Borrower) calendar month
thereafter, except that each such Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar
month.

Notwithstanding the foregoing, (i) no Interest Period may
extend beyond the Credit Expiration Date; (ii) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day); (iii) each
Interest Period which would otherwise commence before and end after the Credit
Expiration Date shall end on the Credit Expiration Date; and (iv)
notwithstanding clauses (i) and (iii) above, if any Interest Period would have
a duration of less than one month, such Eurodollar Loans shall be Base Rate
Loans during such period.

"Lenders" shall have the meaning assigned to such term in the
introduction to this Agreement.

11
<PAGE> 17
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the UCC of any jurisdiction in connection
with any of the foregoing).

"Loan" shall mean a loan made from time to time by a Lender to
the Borrower under Section 2.1 hereof.

"Loan Request" shall have the meaning assigned to such term in
Section 2.3 of this Agreement.

"Lock-Box" shall mean any lock-box(es) or account(s) to which
Obligors remit payments in respect of Receivables.

"Lock-Box Agreement" shall mean the Lock-Box Agreement dated
as of April 19, 1995, between the Borrower and the Lock-Box Bank, as
supplemented by a letter agreement of even date herewith among the Collateral
Agent, the Lock- Box Bank and the Borrower.

"Lock-Box Bank" shall mean NationsBank of Texas, N.A.,
together with its permitted successors and assigns.

"Lock-Box Notice" shall mean the notice substantially in the
form of Annex A to the Lock-Box Agreement from the Collateral Agent to the
Lock-Box Bank.

"London Banking Day" shall mean any day on which dealings in
Dollar deposits are carried out in the London interbank markets.

"Majority Lenders" means, at any time of any determination
thereof, such of the Lenders holding in excess of 66 2/3% of the aggregate
principal amount of the outstanding Loans or, if Loans are not at the time
outstanding, such of the Lenders the Commitments of which, taken in the
aggregate, are in excess of 66 2/3% of the Total Commitment.

"Monthly Report" shall mean the report to be delivered by the
Borrower pursuant to Section 8.6(e) of this Agreement, in substantially the
form of Schedule IV hereto.

"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA which is, or was at any time during the
five preceding years, contributed

12
<PAGE> 18
to by the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate for
the benefit of its employees.

"Note" shall mean each promissory note issued by the Borrower
and payable to the order of each Lender evidencing the Loans made by such
Lender, as provided herein, in substantially the form attached as Exhibit A to
this Agreement.

"Obligor" any Person which is obligated to make payment in
respect of a Receivable pursuant to the related Finance Contract.

"Outstanding Balance" shall mean in respect of each Eligible
Receivable the amount of credit provided to the Obligor specified under the
heading "Amount Financed" in the related Finance Contract, less all amounts
received and applied to the reduction of such "Amount Financed" pursuant to the
terms of such Finance Contract.

"Parent" shall mean Titan Holdings, Inc. and any successor
thereto.

"PBGC" shall mean Pension Benefits Guaranty Corporation or any
successor thereto.

13
<PAGE> 19
"Pool Insurers" shall mean the insurance carriers issuing
policies financed by the Finance Contracts which are included in the Assigned
Collateral.

"Post-Default Rate" shall mean the Base Rate as in effect from
time to time plus three percent (3.0%).

"Proceeds" shall have, with reference to any property or
asset, the meaning assigned to such term in the UCC.

"Producer" shall have the meaning assigned to such term in the
Finance Contracts.

"Program Documents" shall mean this Agreement, the Notes, the
Guarantee, the Security Agreement, the Lock-Box Agreement, the Finance
Contracts and each other agreement, document or instrument delivered in
connection herewith or therewith.

"Property" shall mean all types of real, personal tangible,
intangible or mixed property, including fixtures.

"Receivable" shall mean all of the rights of the Borrower
under any Finance Contract, including without limitation all rights to (i) the
security interest in unearned premiums granted thereunder, (ii) payments in
respect of the Outstanding Balance and all Late Charges, Service Charges,
Interest Charges and Finance Charges (as specified therein), and (iii) all
Proceeds thereof; provided, that the term "Receivable" shall not include any
Receivables which are the subject of any Titan Indemnity Sales.

"Reportable Event" shall mean any event described in Section
4043(b) of ERISA.

"Security Agreement" shall mean the Pledge and Security
Agreement dated as of the date hereof among the

14
<PAGE> 20
Borrower, the Lenders, the Agent and the Collateral Agent as the same from time
to time may be amended, supplemented, waived or modified.

"Taxes" shall mean all taxes, levies, imposts, duties, or
other charges of whatsoever nature imposed by any government or any political
subdivision or taxing authority thereof, and any liability (including penalties
and interest) arising therefrom or with respect thereto, except for any taxes
(other than United States withholding taxes) on the overall net income of the
applicable Lender or any similar tax in lieu of an overall net income tax on
such Lender imposed by any jurisdiction with respect to which such Lender is
subject to such tax without regard to the transactions contemplated by the
Program Documents.

"Termination Event" shall mean (i) any Reportable Event with
respect to a Plan, as to which the requirements of Section 4043(a) of ERISA
have not been waived by the PBGC (provided that a failure to meet the minimum
funding standard of Section 302 of ERISA shall be a reportable event regardless
of the issuance of any waivers by the PBGC); (ii) the filing of a notice of
intent to terminate any Plan under Section 4041 of ERISA or any other event or
condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any Plan;
(iii) the complete or partial withdrawal of the Borrower or the Parent from a
Multiemployer Plan or the receipt by the Borrower or the Parent of notice from
a Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA; (iv) the institution of a proceeding by a
fiduciary of any

15
<PAGE> 21
Multiemployer Plan against the Borrower or the Parent to enforce Section 515 of
ERISA; or (v) any event or circumstance under which the Borrower or the Parent
may reasonably be expected to incur any liability under Title IV of ERISA with
respect to any Plan other than liabilities to make contributions and pay
premiums in the ordinary course.

"Titan Credit Agreement" shall mean the Loan Agreement dated
as of the date hereof among the Parent, the Lenders, and the Agent, as the same
may be amended, extended, supplemented or otherwise modified from time to time.

"Titan Indemnity" shall mean Titan Indemnity Company, a Texas
corporation, and any successor thereto.

"Titan Indemnity Sales" shall mean sales of Eligible
Receivables by the Borrower to Titan Indemnity in the ordinary course of
business.

"Titan Level 1" shall mean as of the date of determination
thereof the state of facts where the Consolidated Indebtedness of the Parent is
equal to or less than $30,000,000 and Titan Indemnity's C&S, as certified in
reasonable detail by the Chief Financial Officer of the Borrower, is greater
than $80,000,000.

"Titan Level 2" shall mean as of the date of determination
thereof the state of facts where the Consolidated Indebtedness of the Parent is
equal to or less than $30,000,000 and Titan Indemnity's C&S, as certified in
reasonable detail by the Chief Financial Officer of the Borrower, is greater
than $55,000,000 but less than or equal to $80,000,000.

"Titan Level 3" shall mean as of the date of determination
thereof the state of facts where either the Consolidated Indebtedness of the
Parent is greater than $30,000,000 or Titan Indemnity's C&S, as certified in
reasonable detail by the Chief Financial Officer of the Borrower, is less than
or equal to $55,000,000.

"Total Commitment" shall mean the aggregate amount of the
Commitments of the Lenders.

"UCC" shall mean the Uniform Commercial Code, as from time to
time in effect in the applicable jurisdictions.

16
<PAGE> 22
"Weighted Average Rating of Pool Insurers" shall mean a number
computed with respect to all Pool Insurers as follows:

where

X= Weighted Average Rating of Pool Insurers

A= the aggregate for all Pool Insurers of the product of
each Pool Insurer's Weighting Number times the Eligible
Receivables included in the Assigned Collateral
attributable to such Pool Insurer's policies

B= the aggregate of all Eligible Receivables included in the
Assigned Collateral.

"Weighting Number" for any Pool Insurer shall mean the number
set forth below opposite the A.M. Best Rating (or any successor thereto) for
such Pool Insurer:

<TABLE>
<CAPTION>
A.M. Best Rating Weighting Number
---------------- ----------------
<S> <C>
A++ 1.0
A+ 2.0
A 3.0
A- 4.0
B++ 5.0
B+ 6.0
B 7.0
B- 8.0
Below B- or unrated 9.0
</TABLE>

provided, that (x) the Texas Workers Compensation Fund shall at all times be
deemed to have an A.M. Best Rating of at least B+, and (y) the A.M. Best Rating
of any Texas County Mutual shall be deemed to be the weighted average of the
A.M. Best Ratings of such Mutual's reinsurers based on ceded premiums pursuant
to such Texas County Mutual's most current Convention Statement.

SECTION 1.2. Rules of Construction. For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires (a) each use in this Agreement of a singular version of a
pronoun

17
<PAGE> 23
shall be deemed to include references to the plural, and vice versa, (b)
Article and Section headings are for convenience of reference only and shall
not affect the construction of this Agreement, (c) references to "this section"
or words of similar import shall be deemed to refer to the entire section and
not to a particular subsection, and references to "hereunder", "herein" or
words of similar import shall be deemed to refer to this entire Agreement and
not to the particular section or subsection and (d) references to a line item
on a company's Convention Statement shall be deemed changed to the appropriate
line items in the event of a change in the format of such Convention Statements
from that set forth in Exhibit F.

ARTICLE II

THE LOANS

SECTION 2.1 Loans. (a) Subject to the terms and conditions
set forth in this Agreement, each Lender hereby severally agrees that it will,
from time to time prior to the Credit Expiration Date, make Loans to the
Borrower. Anything contained herein to the contrary notwithstanding, no Lender
shall be obligated in any manner to make any Loan in a principal amount which
together with the Loans to be made by the other Lender on such day, would
exceed the positive result of (i) the lesser of (A) the Borrowing Base and (B)
the Total Commitment, less (ii) the aggregate principal amount of Loans
outstanding on the proposed date of the making of such Loan, after giving
effect to all proposed Loans on such day. Not later than 1:00 P.M., New York
City time, on the date of the proposed borrowing, each Lender shall make funds
in respect of the Loan to be made by such Lender available to the Agent at
account No. 108248 15 maintained by the Agent at its offices at 75 Wall Street,
New York, New York (the "Agent's Account") for the account of the Borrower.
The amounts so received by the Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Borrower by disbursing such funds
in Dollars to the Borrower, not later than 2:00 p.m., New York City time on
such day, in accordance with the disbursement instructions set forth in the
Loan Request delivered to the Agent.

(b) Each Loan Request, to be effective, shall include a
computation demonstrating compliance with the

18
<PAGE> 24
limits set forth in the second sentence of paragraph (a) hereof and shall be in
compliance with Section 2.7 hereof.

SECTION 2.2 Notes. Each Loan made by a Lender shall be
evidenced by, and recorded on, the Note payable to such Lender. The Borrower
hereby authorizes each Lender to make the appropriate notations on the schedule
annexed to the Note payable to such Lender for purposes of recording any Loan
made thereon and any payments or prepayments made with respect thereto
(provided that any failure by a Lender to make any such notation shall not
affect the obligations of the Borrower hereunder or under any Note in respect
of any Loan). The Borrower agrees that each notation made by a Lender on the
schedule annexed to a Note shall be final and conclusive absent manifest error.
The aggregate principal amount of the Loans made by a Lender outstanding at any
time shall constitute the principal amount owing on the Note payable to such
Lender at such time. The principal of each Note, together with all accrued and
unpaid interest thereon, shall be payable on the Credit Expiration Date,
subject to Section 3.1 hereof and to acceleration as provided in this
Agreement.

SECTION 2.3 Loan Requests. The Borrower shall deliver to the
Agent a written request, in substantially the form of Exhibit C to this
Agreement (a "Loan Request") (i) for a Eurodollar Loan, not later than 11:00
A.M., New York City time, at least three Business Days prior to the date of the
proposed borrowing and (ii) for a Base Rate Loan, not later than 10:00 A.M.,
New York City time, on the day of the proposed borrowing and the Agent shall
promptly forward a copy of such Loan Request to each Lender. The Loan Request
shall specify (i) the date of the proposed borrowing (which shall be a Business
Day), (ii) the principal amount of the Loan to be made by each Lender on that
date, (iii) whether such Loan is a Base Rate Loan or a Eurodollar Loan, (iv) if
a Eurodollar Loan, the Interest Period requested by the Borrower thereof or
(which shall be one, two, three or six months), and (v) the disbursement
instructions for the proceeds of such Loan. Each Loan Request submitted by the
Borrower shall be an affirmation by the Borrower that (x) the representations
and warranties of the Borrower set forth in Article VII of this Agreement are
on the date of such Loan Request, and will be on the date of the proposed
borrowing, true and correct as if made on and as of such dates (except to the
extent any such representation or warranty relates solely to an earlier date),
and (y) no Default or Event of Default shall have

19
<PAGE> 25
occurred and be continuing on such dates. Any Loan Request given pursuant
hereto shall be irrevocable.

SECTION 2.4 Reductions of the Commitments. (a) Subject to
Section 2.7, the Borrower may from time to time reduce the Commitment of the
Lenders by $1,000,000 or a multiple thereof upon two Business Days' written
notice to the Agent (which shall promptly notify each Lender). Any such
reduction shall be permanent and irrevocable and pro rata among the Lenders
provided that the amount of the Total Commitment after giving effect to the
reductions of the Commitments shall at no time be less than the aggregate
principal amount of all outstanding Loans.

(b) Upon the occurrence of the Credit Expiration Date pursuant
to Section 4.1 hereof, the Commitment shall be reduced to zero.

(c) After the effective date of any reduction pursuant to
Section 2.4(a) hereof, the term "Commitment" shall mean the Commitment of each
Lender in effect immediately prior to such reduction less the amount of such
reduction of the Commitment.

SECTION 2.5 Mandatory Payments. If at any time the principal
amount of outstanding Loans shall exceed the lesser of (i) the Total Commitment
and (ii) the Borrowing Base, then the Borrower shall immediately prepay the
Loans in an amount equal to such excess.

SECTION 2.6 Several Obligations. The failure of any Lender
to make any Loan to be made by it on the date specified therefor shall not
relieve any other Lender of its obligation to make its Loan on such date, and
neither the Agent nor any Lender shall be responsible for the failure of any
other Lender to make a Loan to be made by such other Lender.

SECTION 2.7 Pro Rata Treatment. Each borrowing from the
Lenders hereunder shall be made from the Lenders, each payment of the
Commitment Fee or other expenses under Section 11 hereof shall be made for
account of the Lenders, and each termination or reduction of the amount of the
Commitments shall be applied to the Commitments of the Lenders, pro rata
according to the amounts of their respective Commitments; the making,
conversion and continuation of Loans of a particular type (other than
Conversions provided for by Sections 5.1, 5.2 and 5.3

20
<PAGE> 26
hereof) shall be made pro rata among the Lenders according to the amounts of
their respective Commitments and the then current Interest Period for each Loan
of such type shall be coterminous; each payment or prepayment of principal of
Loans by the Borrower shall be made for account of the Lenders pro rata in
accordance with the respective unpaid principal amounts of the Loans held by
the Lenders; and each payment of interest on Loans by the Borrower shall be
made for account of Lenders pro rata in accordance with the amounts of interest
due and payable to the respective Lenders.

ARTICLE III

TERMS APPLICABLE TO LOANS

SECTION 3.1 Payments and Prepayments. (a) Except to the
extent otherwise provided herein or in the Security Agreement, all payments of
principal, interest and other amounts to be made by the Borrower to the Lenders
or the Agent hereunder and under each Note shall be made in accordance with
Section 2.7 hereof and in Dollars, in immediately available funds, to the
Agent's Account. Such payments shall be made no later than 2:00 P.M., New York
City time, on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). The Borrower shall, at the time of making
each payment hereunder or under the Notes, specify to the Agent the Loans or
other amounts payable by the Borrower hereunder to which such payment is to be
applied (and in the event that it fails to so specify, or if a Default or an
Event of Default has occurred and is continuing, the Agent subject to the terms
of the Security Agreement) may apply such payment to such type of Loan(s) or
other amounts payable hereunder as it may elect in its sole discretion, but
subject to Sections 2.7 and 3.1(f) hereof). If the due date of any payment
hereunder or under any Note would otherwise fall on a day which is not a
Business Day, such due date shall be extended to the next succeeding Business
Day and interest shall be payable for any principal so extended for the period
of such extension; provided, that, with respect to Eurodollar Loans, if such
next succeeding Business Day falls in the next succeeding calendar month, such
due date shall be the next preceding Business Day.

21
<PAGE> 27
(b) Borrower's Obligations Absolute. The Borrower's
obligations to pay each Lender hereunder and under the Notes shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms hereof and thereof, under any and all circumstances and irrespective
of any setoff, counterclaim or defense to payment which the Borrower may have
or have had against the Agent or any Lender.

(c) Optional Conversions. Subject to Section 2.7, the
Borrower may, at its option, (i) on the last day of any Interest Period,
convert a Eurodollar Loan into a Base Rate Loan, (ii) on the last day of any
Interest Period, continue a Eurodollar Loan as a Eurodollar Loan, and (iii) on
any Business Day, convert a Base Rate Loan into a Eurodollar Loan; provided,
that, except as otherwise provided in this Agreement to the contrary, the
Borrower shall deliver to the Agent (which will promptly send a copy to each
Lender) a Notice of Conversion or Continuation by 10:00 A.M., New York City
time, (A) in the case of clauses (ii) and (iii) above, not less than three
Business Days prior to the date of each such conversion or continuation, and
(B) in the case of clause (i) above, on or prior to the date of such
conversion. Each Notice of Conversion or Continuation shall specify (x) the
amount of each Loan to be continued or converted, (y) the date of such
continuation or conversion, and (z) the type of Loan to be continued or
converted (and in the case of a conversion, the type of Loan to result from
such conversion and if such Loan is to be converted into a Eurodollar Loan, the
Interest Period).

(d) Optional Prepayments. The Borrower may, at its
option, without penalty or premium, (i) on the last day of any Interest Period,
prepay all or any portion of the principal of the Eurodollar Loans, and (ii) on
any Business Day, prepay all or any portion of the principal of the Base Rate
Loans; provided, in each case, that except for prepayments made pursuant to
Section 2.5 hereof, any such prepayment, if a partial prepayment, shall be an
integral multiple of $100,000 with a minimum amount of $500,000. The Borrower
shall deliver to the Agent (which will promptly send a copy to the Lender)
notice of such prepayment by 10:00 A.M., New York City time on such prepayment
date, specifying the amount of each Loan to be prepaid on such date.

(e) Payment of Interest. (i) The Borrower hereby
promises to pay to the Lenders interest on the unpaid

22
<PAGE> 28
principal amount of each Loan for the period commencing on the date of such
Loan until but not including the stated maturity thereof (whether by
acceleration or otherwise) or the date of prepayment thereof (a) during the
periods such Loan is a Base Rate Loan, at the Base Rate and (b) during the
periods such Loan is a Eurodollar Loan, at the Eurodollar Rate, plus the
Applicable Margin Rate per annum; provided, however, that after the occurrence
and during the continuance of an Event of Default, all outstanding Loans shall
bear interest at the Post-Default Rate.

(ii) Notwithstanding the foregoing, the Borrower hereby
promises to pay interest on any Loan or any installment thereof and (to the
extent that the payment of such interest shall be legally enforceable) on any
overdue installment of interest, and on any other amount payable by the
Borrower hereunder which shall not be paid in full when due (whether at stated
maturity, by acceleration or otherwise), for the period commencing on the due
date thereof until but not including the date the same is paid in full at the
Post-Default Rate.

(f) Application of Payments. If the amount of any
payment or prepayment received by a Lender in respect of a Loan is less than
the principal of and interest accrued on such Loan and required to be paid on
the date of payment or prepayment, the amount paid or prepaid on such Loan
shall be applied by such Lender first to accrued interest and then to
principal.

(g) Net Payments. (i) All payments made by the Borrower
under this Agreement or any other Program Document shall be made free and clear
of, and without reduction or withholding for or on account of, any present or
future Taxes now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, and all

23
<PAGE> 29
liabilities related thereto. If any Taxes are required to be withheld or
deducted from any amounts payable to the Agent or any Lender under this
Agreement or any other Program Document, the Borrower shall pay the relevant
amount of such Taxes and the amounts so payable to the Agent or any such Lender
shall be increased to the extent necessary to yield to the Agent or such
Lender, as the case may be (after payment of all Taxes), interest or any such
other amounts payable hereunder at the rates or in the amounts specified in
this Agreement and the other Program Documents. Whenever any Taxes are paid by
the Borrower with respect to payments made in connection with this Agreement or
any other Program Document, as promptly as possible thereafter, the Borrower
shall send to each Lender a certified copy of an original official receipt
received by the Borrower showing payment thereof.

(ii) The Borrower hereby agrees to indemnify the Agent and
each Lender for the full amount of all Taxes attributable to payments by or on
behalf of the Borrower hereunder or under any other Program Document, any Taxes
paid by the Agent or any Lender, as the case may be, and any present or future
claims, liabilities or losses with respect to or resulting from any omission to
pay or delay in paying such Taxes (including, without limitation, any
incremental Taxes, interest or penalties that may become payable by the Agent
or any Lender, as the case may be, as a result of any failure to pay such
Taxes), whether or not such Taxes were correctly or legally asserted. Such
indemnification shall be made within three (3) days from the date the Agent or
the affected Lender makes written demand therefor.

24
<PAGE> 30
shall from time to time designate in writing to the Agent at least two (2)
Business Days prior to any such payment.

SECTION 3.3 Maximum Interest. (a) Anything in this
Agreement or the Note to the contrary notwithstanding, the interest rate on any
Loan shall in no event be in excess of the maximum permitted by Applicable Law.

(b) It is the intention of the parties hereto that each
Lender shall conform strictly to usury laws applicable to it. Accordingly, if
the transactions contemplated hereby would be usurious as to any Lender under
laws applicable to it (including the laws of the United States of America and
the State of Texas or any other jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding the other provision of this
Agreement), then, in the event, notwithstanding anything to the contrary in
this Agreement or in any other Program Document, it is agreed as follows: (i)
the aggregate of all consideration which constitutes interest under law
applicable to any Lender that is contracted for, taken, reserved, charged or
received by such Lender in respect of the Loans, this Agreement or under any of
other Program Documents shall under no circumstances exceed the maximum amount
allowed by such applicable law, and any excess shall be canceled automatically
and if therefore paid shall be credited by such Lender on the principal amount
of such indebtedness (or, to the extent that the principal amount of such the
indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower); and (ii) in the event that the maturity of the Loans
is accelerated by reasons of an Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for in this agreement or otherwise shall be
canceled automatically by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the
principal amount of such indebtedness (or, to the extent that the principal
amount of such indebtedness shall have been or would thereby be paid in full,
refunded by such Lender to the Borrower). All sums paid or agreed to be paid
to any Lender for the use, forbearance or detention of sums due hereunder
shall, to the extent permitted by law applicable to such Lender, be amortized,
prorated, allocated and spread throughout the full term of the Loans until
payment in full so that the

25
<PAGE> 31
rate or amount of interest on account of the Loans hereunder does not exceed
the maximum amount allowed by such applicable law. If at any time and from
time to time (i) the amount of interest payable to any Lender on any date shall
be computed at the Highest Lawful Rate applicable to such Lender pursuant to
this Section 3.3 and (ii) in respect of any subsequent interest computation
period the amount of interest otherwise payable to such Lender would be less
than the amount of interest payable to such Lender computed at the Highest
Lawful Rate applicable to such Lender, then the amount of interest payable to
such Lender in respect of such subsequent interest computation period shall
continue to be computed at the Highest Lawful Rate applicable to such Lender
until the total amount of interest payable to such Lender shall equal the total
amount of interest which would have been applicable to such Lender if the total
amount of interest had been computed without giving effect to this Section.

SECTION 3.4 Computations. Interest on all Loans and the
Commitment Fee shall be computed on the basis of the actual number of days
elapsed in the period during which interest accrues and a year of 365/366 days,
in the case of Base Rate Loans and the Commitment Fee, and a year of 360 days,
in the case of Eurodollar Loans. In computing interest on any Loan, the date
of the making of the Loan or the first day of an Interest Period, as the case
may be, shall be included and the date of payment or the expiration date of an
Interest Period, as the case may be, shall be excluded; provided, that if a
Loan is repaid on the same day on which it is made, one day's interest shall be
paid on such Loan. All computations made by the Agent or any Lender under this
Agreement shall be conclusive absent manifest error.

SECTION 3.5 Minimum Amounts. Except for conversions made
pursuant to Section 5.4 hereof, each borrowing or conversion of Loans shall be
an integral multiple of $100,000 with a minimum amount of $500,000 (for
Eurodollar Loans) or $250,000 (for Base Rate Loans) (borrowings or conversions
of or into Loans of different types or with different Interest Periods, at the
same time hereunder are to be deemed separate borrowings and conversions for
purposes of the foregoing, one for each type). The maximum number of Interest
Periods for Eurodollar Loans outstanding at any one time hereunder shall be
five.

26
<PAGE> 32
SECTION 3.6 Sharing of Setoffs. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, setoff or
counterclaim or pursuant to a secured claim under Section 506 of the Federal
Bankruptcy Code or other security or interest arising from, or in lieu of, such
secured claim, exercised or received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, obtain payment (voluntary or involuntary) in respect of any Loan or
Loans as a result of which the unpaid principal portion of its Loans (and
accrued and unpaid interest thereon) shall be proportionately less than the
unpaid principal portion of the Loans (and accrue and unpaid interest thereon)
of any other Lender, it shall be deemed simultaneously to have purchased from
such other Lender at face value, and shall promptly pay to such other Lender
the purchase price for, a participation in the Loans of such other Lender so
that the aggregate unpaid principal amount of the Loans (and accrued and unpaid
interest thereon) and participations in the Loans held by each Lender shall be
in the same proportion to the aggregate unpaid principal amount of all Loans
then outstanding as the principal amount of its Loans (and accrued and unpaid
interest thereon) prior to such exercise of banker's lien, setoff or
counterclaim or other event was to the principal amount of all Loans
outstanding (and accrued and unpaid interest thereon) prior to such exercise of
banker's lien, setoff or counterclaim or other event; provided, however, that,
if any such purchase or purchased or adjustments shall be made pursuant to this
Section 3.6 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored without
interest. Any Lender holding a participation in a Loan deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any nd all moneys owing to such Lender by reason
thereof as fully as if such Lender had made a Loan in the amount of such
participation. The Borrower expressly consents to the foregoing arrangement.

27
<PAGE> 33
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Agent, the Agent may assume that the Required Payment has been
made and may, in reliance upon such assumption (but shall not be required to),
make the amount thereof available to the intended recipient(s) on such date
and, if the Payor has not in fact made the Required Payment to the Agent, the
recipient(s) of such payment shall, on demand, 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 the
Federal Funds Rate for such day and, if such recipient(s) shall fail promptly
to make such payment, the Agent shall be entitled to recover such amount, on
demand, from the Payor, together with interest as aforesaid.

ARTICLE IV

TERMINATION

SECTION 4.1 Termination by the Borrower. The Borrower may
terminate this Agreement and the Commitment of each Lender upon not less than
sixty (60) days prior written notice to each Lender and upon payment of all
amounts owing to the Agent and each Lender hereunder, under each Note and under
the other Program Documents.

ARTICLE V

YIELD PROTECTION AND ILLEGALITY

28
<PAGE> 34
obligation (such increases in costs and reductions in amounts receivable or
rate of return being herein called "Additional Costs"), resulting from any
Regulatory Change which (i) changes the basis of taxation of any amounts
payable to such Lender under this Agreement or any Note payable to it (other
than taxes imposed on the overall net income of such Lender unless such tax is
imposed solely as a result of the transactions contemplated by the Program
Documents); (ii) imposes or modifies any reserve, special deposit, capital
adequacy, capital maintenance or similar requirements, or results in any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or the compliance by such Lender (or any Booking
Office) or such Lender's holding company with any request or directive
regarding capital adequacy or capital maintenance (whether or not having the
force of law) or with any such authority, central bank or comparable agency,
other than such reserves as are included in the determination of the Eurodollar
Rate; or (iii) imposes any other condition affecting such Lender's return under
this Agreement (or any of such extensions of credit or liabilities). Each
Lender will notify the Borrower of any event which will entitle such Lender to
compensation pursuant to this Section 5.1(a) as promptly as practicable after
it obtains knowledge thereof and determines to request such compensation;
provided, that the failure of any Lender to so notify the Borrower shall not
affect the obligations of the Borrower hereunder in respect of such Additional
Costs. Each Lender will furnish the Borrower with a notice setting forth the
basis and amount of each request by such Lender for compensation under this
Section 5.1(a).

(b) Without limiting the effect of the foregoing
provisions of this Section 5.1, in the event that, by reason of any Regulatory
Change, any Lender becomes subject to restrictions on the amount of a category
of deposits or other liabilities of such Lender which includes deposits by
reference to which the interest rate on Eurodollar Loans is determined as
provided in this Agreement or a category of extensions of credit or other
assets of such Lender which includes Eurodollar Loans, then, if such Lender so
elects by notice to the Borrower, the obligation of the Lender to make, and to
convert Base Rate Loans into, Eurodollar Loans hereunder shall be suspended
until the date such Regulatory Change ceases to be in effect (and all
Eurodollar Loans held

29
<PAGE> 35
by such Lender then outstanding shall be converted into Base Rate Loans in
accordance with Section 5.4 hereof).

(c) Determinations by a Lender for purposes of this
Section 5.1 of the effect of any Regulatory Change on its costs of making or
maintaining the Loans, the Commitment or on amounts receivable by it hereunder
or under any Note, and of the additional amounts required to compensate such
Lender in respect of any Additional Costs, shall be conclusive absent manifest
error.

then such Lender shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, (i) the Lenders shall be under no obligation
to make Eurodollar Loans or to convert Base Rate Loans into Eurodollar Loans,
(ii) each request for a Eurodollar Loan from the Lenders shall instead be
deemed to be a request for a Base Rate Loan, and (iii) the Borrower shall, on
the last day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Loans, either prepay such Eurodollar Loans or convert such
Eurodollar Loans into Base Rate Loans in accordance with Section 5.4 hereof.

30
<PAGE> 36
SECTION 5.3 Illegality. Notwithstanding any other provision
in this Agreement, in the event that it becomes unlawful for a Lender or its
Booking Office to (a) honor its obligation to make Eurodollar Loans hereunder,
or (b) maintain Eurodollar Loans hereunder, then such Lender shall promptly
notify the Borrower thereof, and such Lender's obligation to make Eurodollar
Loans and to convert Base Rate Loans into Eurodollar Loans hereunder shall be
suspended until such time as such Lender may again make and maintain Eurodollar
Loans, and such Lender's outstanding Eurodollar Loans shall be converted into
Base Rate Loans in accordance with Section 5.4 hereof.

(a) any payment, prepayment or conversion of a
Eurodollar Loan made by such Lender on a date other than the
last day of an Interest Period for such Eurodollar Loan; or

31
<PAGE> 37
such compensation to include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount so paid, prepaid or converted or not borrowed for the period
from the date of such payment, prepayment or conversion or failure to borrow to
the last day of the then current Interest Period for such Eurodollar Loan (or,
in the case of a failure to borrow, the Interest Period for such Eurodollar
Loan which would have commenced on the date of such failure to borrow) at the
applicable rate of interest for such Eurodollar Loan provided for herein over
(ii) the interest component (as reasonably determined by such Lender) of the
amount (as reasonably determined by such Lender) such Lender would have bid in
the Eurocurrency market for Dollar deposits of amounts comparable to such
principal amount and maturities comparable to such period.

ARTICLE VI

CONDITIONS PRECEDENT

SECTION 6.1 No Default. On the date of each borrowing, no
Default or Event of Default shall have occurred or be continuing on such date.

SECTION 6.2 Opinions of Counsel. On or prior to the date of
the initial borrowing, each Lender shall have received:

(a) the favorable written opinion of counsel to the Borrower
and the Parent, addressed to and satisfactory in form, scope and
substance to the Lenders; and

(b) such other opinions as may be reasonably requested by the
Lenders or counsel for the Lenders.

SECTION 6.3 Other Supporting Documents. On or prior to the
date of the initial borrowing, the Borrower shall deliver, or cause to be
delivered, to each Lender:

32
<PAGE> 38
(a) this Agreement, executed by each of the parties
hereto, together with all schedules hereto;

(b) an executed Security Agreement;

(d) good standing certificates as of dates no more than
twenty days prior to the date of such initial borrowing, with respect
to each of the Borrower and the Parent, from the Secretary of State of
the State of Texas;

(e) a certificate of the Secretary or an Assistant
Secretary and President or Chief Financial Officer of the Borrower
substantially in the form attached hereto as Exhibit B, appropriately
completed;

(f) a certificate of the Secretary or an Assistant
Secretary and President or Chief Financial Officer of the Parent
substantially in the form attached hereto as Exhibit B, appropriately
completed;

(g) evidence of such filings of financing statements and
assignments or notices of assignments in such jurisdictions as the
Lenders may deem necessary or appropriate in order to perfect the
Lender's first priority security interest in the Assigned Collateral;

(h) a copy of the consolidated annual unaudited financial
statements of the Borrower and its Subsidiaries for the fiscal year
ended December 31, 1995, including therein the consolidated balance
sheet of the Borrower and such Subsidiaries as at the end of such year
and the related consolidated statements of income and cash flows of
the Borrower and such Subsidiaries for such year, certified by the
Borrower's chief financial officer as fairly presenting the financial
position and the results of operations of the Borrower and such
Subsidiaries as at and for such year and as having been prepared in
accordance with GAAP;

(i) a copy of the consolidated annual audited financial
statements for the Parent and its Subsidiaries for the fiscal year
ended December 31, 1995, including therein the consolidated balance
sheet of each of the Parent and such Subsidiaries as at the end of
such year and the related consolidated statements of income and

33
<PAGE> 39
cash flows of the Parent and such Subsidiaries for such year,
certified by the Parent's independent accountants as fairly presenting
the financial position and the results of operations of the Parent and
such Subsidiaries as at and for such year and as having been prepared
in accordance with GAAP;

(j) the Lock-Box Agreement executed by each of the
parties thereto;

(k) on the date of the initial borrowing, a Monthly
Report covering the calendar month immediately preceding the month of
such initial borrowing;

(l) the Guarantee, duly executed by the Parent; and

(m) such other documents as the Agent or any Lender, or
counsel for any Lender, may reasonably request.

SECTION 6.4 Control of the Borrower. The Parent shall own
100% of the then outstanding Capital Stock of the Borrower.

SECTION 6.5 Loan Request. The Borrower shall have delivered
to each Lender a Loan Request complying with the provisions of Section 2.3 and
Section 2.7.

SECTION 6.6 Fees Paid. There shall have been paid to each
Lender the fees due and payable to each Lender under Section 11 hereof on the
date or through the date of such borrowing.

SECTION 6.7 Existing Agreement. Concurrently with the
initial borrowing, arrangements satisfactory to each Lender shall have been
made to repay in full all Indebtedness evidenced by the Existing Agreement and
to release (or assign to the Agent) all Liens granted by the Borrower to secure
such Indebtedness.

SECTION 6.8 Representations and Warranties. The
representations and warranties of each of the Borrower and the Parent set forth
in the Program Documents shall be true and correct in all respects except to
the extent any such representation or warranty relates solely to an earlier
date.

34
<PAGE> 40
ARTICLE VII

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to each Lender on the
date hereof and on each borrowing of a Loan that:

SECTION 7.2 Corporate Authority, etc. The execution,
delivery and performance by the Borrower of this Agreement and the other
Program Documents to which it is a party have been duly authorized by all
necessary action (corporate or otherwise), on its part and do not and will not
(i) violate any provision of any Applicable Law or of its certificate of
incorporation or by-laws, (ii) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease
or instrument to which it is a party or by which it or any of its properties
are bound, or (iii) result in, or require, the creation or imposition of any
mortgage, deed of trust, assignment, pledge, Lien, security interest or other
charge or encumbrance of any nature upon or with respect to any of its
properties except as otherwise provided by this Agreement and the Security
Agreement; nor is it in violation of any Applicable Law or in default under any
such indenture, agreement, lease or instrument.

35
<PAGE> 41
SECTION 7.4 Government Regulation. The Borrower is not
subject to regulation under the Investment Company Act of 1940, as amended, or
any other federal or state statute or regulation which limits the ability of
the Borrower to incur indebtedness or the ability of the Borrower to consummate
the transactions contemplated by this Agreement and the other Program
Documents.

SECTION 7.7 Use of Proceeds. No part of the proceeds of any
Loan will be used to purchase or carry any "margin stock" (as defined in
Federal Reserve Regulation U) or to extend credit to others for such purpose.
The Borrower does not engage in, nor have as one of its important activities,
the business of extending credit for the purpose of purchasing or carrying any
margin stock.

SECTION 7.10 Financial Position. (a) The consolidated
balance sheets of the Parent and its

36
<PAGE> 42
consolidated Subsidiaries as at December 31, 1995 and the related statements of
income and shareholders' equity of the Parent and its consolidated Subsidiaries
for the fiscal year then ended, audited by its independent accountants, copies
of which have been furnished to the Lenders, present the consolidated financial
position of the Parent and its consolidated Subsidiaries as at such date and
the consolidated results of the operations of the Parent and its consolidated
Subsidiaries for the period ended on such date, all in accordance with GAAP;
and

(b) The unaudited balance sheet of the Borrower at
December 31, 1995 and the related statement of income of the Borrower for the
fiscal year then ended, copies of which have been furnished to the Lenders,
present the financial position of the Borrower as at such date and the results
of the operations of the Borrower for the period ended on such date, all in
accordance with GAAP.

SECTION 7.11 Pledge of Collateral. The Collateral Agent on
behalf of each Lender, pursuant to the Security Agreement and the actions taken
thereunder, holds a valid, perfected and first priority security interest in
the Assigned Collateral free and clear of all Liens.

SECTION 7.12 Title to Assigned Collateral. The Borrower has
legal title to all of the Assigned Collateral owned by it on the date hereof,
and will have legal title to all assets included in the Assigned Collateral at
any time subsequent to the date hereof, free and clear of all Liens, except as
contemplated by the Security Agreement.

SECTION 7.13 Tax Returns. Except for taxes being contested
in good faith by appropriate proceedings diligently pursued and for which
adequate reserves have been established, the Borrower (i) has filed all federal
tax returns and state tax returns for the state in which it is incorporated and
the state in which it has its principal place of business, and all other state
and local tax returns required to be filed by it, and (ii) has not failed to
pay any taxes, or interest and penalties relating thereto, on or before the due
dates thereof. There are no federal, state or local tax liabilities of the
Borrower due or to become due for any tax year ended on or prior to the date of
execution of this Agreement relating to the Borrower, whether incurred in
respect of or measured by the income of the Borrower, which are required to be
reflected in accordance with GAAP in the financial statements delivered

37
<PAGE> 43
pursuant to Section 7.10 and have not been so reflected, and there are no
claims pending, proposed or, to the best of the Borrower's knowledge,
threatened against the Borrower for past federal, state or local taxes, except
those, if any, as to which proper reserves in accordance with GAAP are
reflected in such financial statements.

SECTION 7.15 No Material Adverse Change. Since December 31,
1995, there has occurred no event which has or had, or could have, a material
adverse effect upon the business, properties, liabilities, condition (financial
or otherwise), results of operations or prospects of the Borrower or the
Parent, or upon the ability of the Borrower or the Parent to perform their
respective obligations under this Agreement or the other Program Documents to
which either of them is a party or upon the ability of the Agent or any Lender
to enforce this Agreement or the other Program Documents.

SECTION 7.16 Compliance with Laws. (a) The Borrower is in
compliance in all material respects with all Applicable Laws; and

38
<PAGE> 44
(b) Each of the Parent, the Borrower and their respective
Subsidiaries is in compliance in all material respects with all Applicable
Laws;

except in each case where the failure to so comply would not have a material
adverse effect on the Borrower.

SECTION 7.17 Chief Place of Business. The chief place of
business and chief executive office of the Borrower and the office where the
Borrower keeps its records concerning the Receivables are located at San
Antonio, Texas.

SECTION 7.18 Lock-Box Banks; Lock-Box Accounts. The account
numbers of all the Lock-Boxes are specified in Schedule III hereto (or as shall
have been notified to Collateral Agent and each Lender pursuant to the Security
Agreement).

SECTION 7.19 Franchises, Licenses. The Borrower and its
Subsidiaries have all franchises, permits, licenses and other authority as are
necessary to enable them to conduct their respective businesses as currently
being conducted and as proposed to be conducted, and none of them is in default
under any of such franchises, permits, licenses or other authority.

SECTION 7.20 No Default. The Borrower is in compliance with
all of the terms and provisions contained herein and in the other Program
Documents to which it is a party and no Default or Event of Default has
occurred and is continuing.

SECTION 7.21 Capital Stock. The Parent owns, beneficially
and of record, 100% of the issued and outstanding Capital Stock of the
Borrower.

SECTION 7.22 Trade Names, etc. Except as set forth on
Schedule 7.22 to this Agreement, the Borrower (a) does not conduct or transact,
nor has it ever conducted or transacted, business in any jurisdiction under any
assumed name, fictitious name, trade name, alternate corporate name or other
like name (each a "Trade Name"), and (b) has not made any filing or application
with or otherwise sought the approval of any Governmental Authority with
respect to the use by the Borrower of a Trade Name in any jurisdiction. The
Borrower has not at any time (i) incurred any under any Trade Name, (ii)
granted any security interest or permitted

39
<PAGE> 45
or suffered any Lien to exist against the Borrower or any portion of its assets
or property, whether real or personal (including, without limitation, any of
the Assigned Collateral) under any Trade Name, (iii) executed or filed any
financing statement as a debtor under the Uniform Commercial Code as in effect
in any jurisdiction under any Trade Name, except pursuant to this Agreement or
the Security Agreement, or (iv) had any judgment entered or rendered against it
under any Trade Name.

ARTICLE VIII

AFFIRMATIVE COVENANTS

SECTION 8.1 Payment of Taxes, etc. Pay and discharge all
taxes imposed upon it or upon its income or profits, prior to the date on which
penalties attach thereto, and all lawful claims, which, if unpaid, might become
a Lien or charge upon any of its assets; provided, however, that the Borrower
shall not be required to pay or discharge any taxes which are being contested
in good faith by appropriate proceedings diligently pursued and for which
adequate reserves have been established.

SECTION 8.2 Preservation of Corporate Existence. Continue to
engage in business of the same general type as now conducted and preserve and
maintain its existence in the jurisdiction of its incorporation, and its
rights, franchises and privileges material to the conduct of its business as
now being conducted, and qualify and remain qualified as a foreign corporation
or entity in each jurisdiction in which such qualification is necessary in view
of its business operations or the ownership of its properties.

SECTION 8.3 Compliance with Laws, etc. Comply with the
requirements of all Applicable Laws of any Governmental Authority.

SECTION 8.4 Inspection Rights. At any time and from time to
time during normal business hours permit the

40
<PAGE> 46
Lenders or any agents or representatives thereof, to examine and make copies of
the Finance Contracts and all records and books of account related to the
Assigned Collateral and the transactions contemplated by the Program Documents
and to visit its properties, and to discuss its affairs, finances and accounts
with any of its authorized agents or officers.

SECTION 8.5 Maintenance of Approvals, Filings and
Registrations. At all times maintain in effect, renew and comply with all the
terms and conditions of all consents, licenses, approvals and authorizations as
may be necessary or appropriate under any Applicable Law (i) for the execution,
delivery and performance of the Program Documents, (ii) to make the Program
Documents legal, valid, binding and enforceable against the Borrower, and (iii)
to conduct its business.

SECTION 8.6 Reporting Requirements. Furnish or cause to be
furnished to the Agent with sufficient copies for each Lender:

(a) (1) as soon as available, but, in any event not
later than ninety (90) days after the end of each fiscal year of the
Parent, a copy of the annual audited consolidated financial statements
for the Parent and its Subsidiaries for such year, including therein
the consolidated balance sheets of the Parent and its Subsidiaries as
at the end of such year and the related consolidated statements of
income and cash flows of the Parent and its Subsidiaries for such
year, or statements providing substantially similar information, in
each case certified without qualification by an independent public
accountant of recognized national standing as fairly representing the
financial position and results of operation of the Parent and its
Subsidiaries as at and for the year ending on its date and having been
prepared in accordance with GAAP; and

(2) as soon as available, but, in any event not
later than ninety (90) days after the end of each fiscal year of the
Borrower, the unaudited balance sheet of the Borrower as at the end of
such year and the related unaudited statement of income and cash flows
of the Borrower for such year, or statements providing substantially
similar information, certified by the chief financial officer of the
Borrower as fairly presenting the financial position and the results
of operations of the Borrower as at and for the year ending

41
<PAGE> 47
on its date and as having been prepared in accordance with GAAP;

(b) (1) as soon as available, but in any event not
later than forty-five (45) days after the end of each of the first
three quarterly periods of each fiscal year of the Parent, the
unaudited consolidated balance sheets of the Parent and its
Subsidiaries as at the end of each such quarter and the related
unaudited consolidated statements of income and cash flows of the
Parent and its Subsidiaries for such quarter and the portion of the
fiscal year through such date, certified by a responsible officer of
the Parent as fairly presenting the financial position and the results
of operations of the Parent and its Subsidiaries in all material
respects as at and for the quarter ending on its date and as having
been prepared in accordance with GAAP (subject to normal year-end
audit adjustments); and

(2) as soon as available, but in any event not
later than forty-five (45) days after the end of each of the first
three quarterly periods of each fiscal year of the Borrower, the
unaudited balance sheet of the Borrower as at the end of each such
quarter and the related unaudited statement of income and cash flows
of the Borrower for such quarter and the portion of the fiscal year
through such date, certified by a responsible officer of the Borrower
as fairly presenting the financial position and the results of
operations of the Borrower as at and for the quarter ending on its
date and as having been prepared in accordance with GAAP (subject to
normal year-end audit adjustments);

(c) concurrently with the delivery of the financial
statements referred to in Sections 8.6(a) and (b) above, a certificate
of (i) a duly authorized officer of the Borrower stating that such
officer has reviewed the terms of this Agreement and the other Program
Documents to which the Borrower is a party and has made, or caused to
be made under his supervision, a review in reasonable detail of the
transactions and condition of the Borrower during the accounting
period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting
period, and that such officer does not have knowledge of the existence
as at the date of such certificate, of any Default or Event of Default
except as specified in such certificate;

42
<PAGE> 48
(d) promptly and in any event within five (5) Business
Days after the same are publicly available, copies of all regular and
periodic financial information, proxy materials and other information
and reports, if any, which the Parent, the Borrower or any of their
respective Subsidiaries shall file with the Securities and Exchange
Commission or any securities exchange;

(e) within fifteen calendar days after each calendar
month and at such other times as any Lender may require, a Monthly
Report prepared by the Borrower as of such calendar month, or at such
time as any Lender may require, as the case may be; and

(f) such other information respecting the Receivables as
the Lenders may from time to time request, and such other information
with respect to the business, condition or operations of the Borrower,
the Parent or any of their respective Subsidiaries, financial or
otherwise, as any Lender may from time to time reasonably request.

SECTION 8.7 Performance of Agreements. Duly and punctually
pay and perform each of its obligations under this Agreement and the other
Program Documents.

SECTION 8.8 Notices. Promptly give notice to the Agent and
each Lender:

(a) of the occurrence of any Default or Event of Default;

(b) of any (i) default or event of default under any
contractual obligation of the Borrower, the Parent or any of their respective
Subsidiaries or (ii) litigation, investigation or proceeding to which the
Parent or any of its Subsidiaries is a party, including any which may exist at
any time between the Parent or any of its Subsidiaries and any Governmental
Authority, which in either case, if not cured or if adversely determined, as
the case may be, could have a material adverse effect on the business,
operations, property or financial or other condition of the Borrower or the
Parent;

43
<PAGE> 49
properties, liabilities, condition (financial or otherwise), results of
operations or prospects of the Borrower, the Parent or any of their respective
Subsidiaries, or upon the ability of the Borrower or the Parent to perform its
respective obligations under this Agreement or any other Program Document to
which it is a party;

(d) of any change to the Borrower's Credit and Collection
Policies with respect to or affecting a material amount of the Eligible
Receivables;

(e) of any notification, whether written or oral, made or
caused to be made by the Borrower to any Obligor affecting the instructions to
such Obligor with respect to the address to which such Obligor is to send, or
place where such Obligor is to make, any payment to be made in respect of the
Receivables; and

(f) of any notification, whether written or oral, made or
caused to be made by the Borrower to any Obligor affecting the instructions to
such Obligor with respect to any matter (other than such matter specified in
(e) above) regarding any payment to be made in respect of a material amount of
the Receivables.

SECTION 8.9 Compliance with Policies and Contracts. Comply
in all material respects with its Credit and Collection Policies in regard to
each Eligible Receivable and each Finance Contract related to such Eligible
Receivable.

SECTION 8.10 Instructions to Obligors. Instruct all Obligors
to cause all amounts to be paid by any Person in respect of any Eligible
Receivable created after the Effective Date to be deposited directly into a
Lock-Box maintained under the Lock-Box Agreement.

SECTION 8.11 Books and Records. Keep, or cause to be kept,
adequate records and books of account, in which complete entries are to be made
reflecting its business and financial transactions in respect of the Assigned
Collateral and its performance under the Program Documents, such entries to be
made in accordance with GAAP as in effect in

44
<PAGE> 50
the United States consistently applied in the case of financial transactions or
as otherwise required by Applicable Laws.

SECTION 8.12 Further Assurances. As from time to time
requested by the Agent or any Lender, at the cost and expense of the Borrower,
execute and deliver to the Agent and each Lender all such documents and
instruments and do all such other acts and things as may be reasonably required
to enable the Agent and each Lender to exercise and enforce its rights under
this Agreement, and record and file and re-record and re-file all such
documents and instruments, at such time or times, in such manner and at such
place or places, all as may be necessary or desirable to validate, preserve and
protect the position of the Agent or each Lender under the Program Documents.
The Agent and each Lender may, upon any extension of this Agreement, request an
opinion of counsel, selected by the Borrower, and approved by the Agent and the
Lenders, with respect to action required to be taken for the protection of the
rights of the Agent and the Lenders hereunder and under the other Program
Documents.

SECTION 8.13 Other Agreements. Comply in all respects with
all indentures, loan or credit agreements and any other agreement, lease or
instrument to which the Borrower is a party.

SECTION 8.14. Audits. The Borrower shall at the request of
the Agent, at its expense, promptly cause an accounting firm or other firm
selected by the Borrower and reasonably satisfactory to the Majority Lenders to
enter the premises of the Borrower and examine and audit the books, records and
accounts relating to the Assigned Collateral and the Borrower's performance
under the Program Documents, as it relates to the Assigned Collateral, permit
such accounting firm to discuss the Borrower's affairs, finances, accounts and
performance under the Program Documents with the Borrower's officers, partners,
employees and accountants, cause such firm to provide the Lenders with a
certified report in respect of the foregoing, which shall be in form and scope
reasonably satisfactory to Lenders, and authorize such accounting firm to
discuss such affairs, finances, records and accounts with representatives of
the Agent and the Lenders; provided, however, that for so long no Default or
Event of Default shall be continuing, the Agent shall not request more than
four such audits in any calendar year.

45
<PAGE> 51
ARTICLE IX

NEGATIVE COVENANTS

The Borrower covenants and agrees with the Agent and each
Lender that, from and after the Effective Date and so long as this Agreement
shall remain in effect or Loans or any other amounts owing under this Agreement
or any other Program Documents shall be unpaid, it shall not, directly or
indirectly:

SECTION 9.1 Use of Proceeds. Use the proceeds of the Loans
for any purpose other than to pay fees and transaction expenses incurred in
connection with the transactions contemplated by the Program Documents and
provide funds for general corporate purposes in accordance with the terms of
this Agreement.

SECTION 9.2 Amendments. Amend, or consent to any amendment,
waiver, supplement or modification of any term or condition of any Receivable,
any Finance Agreement related thereto, or any Lock-Box Agreement in any way
that could materially adversely affect the rights of the Agent or Lenders.

SECTION 9.3 Maximum Credits Outstanding. Permit the
aggregate principal amount of outstanding Loans to exceed the lesser of (A) the
Borrowing Base and (B) the Total Commitment.

SECTION 9.4 Prohibition of Fundamental Changes. Wind-up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time), whether in one or a series of
transactions, all or substantially all of its assets, or permit any of its
Subsidiaries to do any of the foregoing.

SECTION 9.5 Business. Make any change in the character of
its business or operations which could impair the collectibility of any
Eligible Receivable or adversely affect the rights and remedies of the Agent or
the Lenders under the Program Documents.

SECTION 9.6 No Commingling. Deposit or otherwise credit, or
cause or permit to be so deposited or credited,

46
<PAGE> 52
to any Lock-Box cash or cash proceeds other than payments made by a Person in
respect of Assigned Collateral.

SECTION 9.7 Chief Place of Business. The Borrower will not
move its chief executive office or the place where it maintains the Finance
Contracts and other books and records relating to the Assigned Collateral from
the location specified in Section 7.17 or move unless (i) it shall have given
to the Lenders, not less than 45 days prior written notice of its intention to
do so, clearly describing the new location, and (ii) it shall have taken such
action, satisfactory to the Agent and the Lenders, to maintain the security
interest of the Agent and the Lenders in the Assigned Collateral at all times
fully perfected and in full force and effect.

SECTION 9.8. Liens. The Borrower will not contract for,
create, incur, assume or suffer to exist any Lien, security interest, charge or
other encumbrance of any nature upon any of the Assigned Collateral, except in
respect of the Existing Agreement and as provided for in the Security
Agreement.

SECTION 9.9. Changes to Credit and Collection Policies. The
Borrower shall not change its Credit and Collection Policies in any manner
which could materially adversely affect the collectibility of the Eligible
Receivables.

ARTICLE X

EVENTS OF DEFAULT

SECTION 10.1 Events of Default. In case of the happening of
any of the following events (herein sometimes called "Events of Default"):

(a) the principal amount of any Loan or any Note, any
interest payable thereon, the Commitment Fee or any other fees or
expenses related to this Agreement or the transactions contemplated
hereby or any other amount payable under this Agreement shall not be
paid in full on the date due and payable and, in the case of a default
in the payment of interest, Commitment Fee or any other fees and
expenses, such default shall continue unremedied for a period of five
days; or

47
<PAGE> 53
(b) any representation or warranty made or deemed to be
made or reaffirmed by the Borrower, the Parent or any other Person
herein or in any Program Document, certificate, agreement, instrument
or statement contemplated by or made or delivered pursuant to or in
connection herewith, shall prove to have been incorrect when made or
deemed made; or

(c) (i) the Borrower shall fail to perform or observe any
term, covenant or agreement contained in Article IX of this Agreement,
or (ii) the Borrower or the Parent shall fail to perform or observe
any other term, covenant or agreement contained in this Agreement or
any other Program Document and not otherwise constituting an Event of
Default hereunder, and such default shall continue unremedied for a
period of 30 days; or

(d) any Program Document shall, at any time after its
execution and delivery, for any reason cease to be in full force and
effect (unless such occurrence is in accordance with its terms or
after payment thereof) or shall be declared to be null and void or the
validity or enforceability thereof shall be contested by the Borrower
or the Parent, or the Borrower or either Parent shall deny that it has
any or further liability or obligation thereunder; or

(e) the Borrower, the Parent, Titan Indemnity Company or
Titan Insurance Company shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property, (ii) admit in writing its inability, or be generally unable,
to pay its debts as they become due, (iii) make a general assignment
for the benefit of its creditors, (iv) commence a voluntary case under
the Federal Bankruptcy Code (as now or hereafter in effect), (v) be
adjudicated a bankrupt or insolvent, (vi) commence a voluntary case
under, or file a petition seeking to take advantage, of any other law
relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, (vii) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any
allegations, or any petition filed, against it in an involuntary case
under such Federal Bankruptcy Code or other law, or

48
<PAGE> 54
(viii) take any corporate action for the purpose of effecting any of
the foregoing; or

(f) a proceeding or case shall be commenced without the
application or consent of the Borrower, the Parent, Titan Indemnity
Company or Titan Insurance Company of any of them in any court of
competent jurisdiction, seeking (i) the liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of
debts, of the Borrower or the Parent of any of them, (ii) the
appointment of a trustee, receiver, custodian, liquidator, supervisor
or the like of the Borrower or the Parent of any of them or of all or
any substantial part of their respective assets or (iii) similar
relief in respect of the Borrower, the Parent, Titan Indemnity Company
or Titan Insurance Company of any of them under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect,
for a period of sixty consecutive days, or an order for relief against
the Borrower, the Parent, Titan Indemnity Company or Titan Insurance
Company of any or them shall be entered in an involuntary case under
the Federal Bankruptcy Code (as now or hereafter in effect); or any
judgment, writ, warrant of attachment or execution or similar process
shall be issued or levied in respect of an obligation (alleged or
otherwise) of the Borrower, the Parent, Titan Indemnity Company or
Titan Insurance Company against a substantial part of its respective
properties and such judgment, writ, or similar process shall not be
released, vacated, stayed or fully bonded within thirty days after its
issue or levy; or

(g) the Borrower or the Parent shall fail to pay when due
any amount in respect of any in excess of $500,000 in the aggregate
for money borrowed or for the deferred purchase price of property
created, issued, guaranteed, incurred or assumed by such Person or any
other event shall occur or any condition shall exist in respect of any
such the effect of which is to cause (or permit any holder thereof or
a trustee to cause), without giving effect to the giving of notice or
the lapse of time, or both, such to become due prior to its stated
maturity; or

49
<PAGE> 55
(h) the Parent shall not directly or indirectly own 100%
of all of the outstanding Capital Stock of the Borrower; or

(i) the occurrence of and continuation of an Event of
Default as defined in the Titan Credit Agreement; or

(j) the lien of the Security Agreement in favor of the
Collateral Agent shall cease to be a valid assignment of, and valid
and perfected first priority lien upon and security interest in, the
Assigned Collateral, as security for the repayment of the Borrower's
Obligations, or such lien shall cease to be valid as against creditors
of the Borrower; or

(k) a final judgment or judgments for the payment of
money in excess of $500,000 in the aggregate shall be rendered by a
court or courts against the Borrower or the Parent (exclusive of any
judgment amount fully covered by insurance where the insurer has
admitted liability in respect of such judgment amount), and the same
shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured,
within thirty (30) days from the date of entry thereof; or

(l) a Termination Event shall have occurred with respect
to a Plan, resulting in the imposition of liability against the
Borrower or the Parent; or

(m) the Guarantee shall cease to be in full force and
effect or the Parent shall so assert;

then, at any time after the occurrence of such event, the Majority Lenders may
direct the Agent to take one or more of the following actions: (i) direct the
Agent to give notice (which may be telephone notice confirmed in writing) to
the Borrower of the occurrence of an Event of Default, and the date of the
giving of such notice shall become the Credit Expiration Date and each Lender's
obligation to make Loans shall be terminated; (ii) direct the Agent to, by
notice to the Borrower (except that in the case of the occurrence of any Event
of Default described in Section 10.1(e) or 10.1(f), no such notice shall be
required and such termination and acceleration shall be automatic) declare the
unpaid principal amount and interest under the Notes, the Loans and all other
amounts payable to the Lenders and the

50
<PAGE> 56
Agent by the Borrower hereunder to be forthwith due and payable, whereupon such
amounts shall become forthwith due and payable, both as to principal and
interest, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived, anything contained herein or in any
Note to the contrary notwithstanding; (iii) as permitted by the Security
Agreement, direct the Collateral Agent to deliver a Lock-Box Notice to the
Lock-Box Bank and/or direct to Collateral Agent to require that all amounts
payable by the Borrower and the Parent in respect of the Borrower's Obligations
be remitted directly to the Collateral Account; and (iv) any and all other and
further acts and actions which the Agent or the Lenders may take pursuant to
the Security Agreement or under the UCC or other Applicable Law.

ARTICLE XI

FEES

SECTION 11.1 Fees.

(a) As consideration for incurring the obligation to make
the Loans, the Borrower shall pay to the Agent for the account of each Lender a
fee (the "Commitment Fee"), from and including the Effective Date to but
excluding the Credit Expiration Date, at the per annum rate of the applicable
Commitment Fee Percentage on the average daily unused portion of the Total
Commitment. The Commitment Fees are payable in arrears quarterly on the last
Business Day of each of March, June, September and December, commencing
September 30, 1996 and on the Credit Expiration Date.

(b) As further consideration for incurring the obligation
to make the Loans, the Borrower shall pay to the Agent the fees specified in a
separate letter agreement between the Agent and the Borrower, in the amounts
and at the times specified therein.

SECTION 11.2 Expenses. The Borrower shall pay, not later
than five (5) days after its receipt of a statement therefor, all reasonable
out-of-pocket costs and expenses incurred by the Agent and any Lender
(including, without limitation, the reasonable fees and out-of-pocket expenses
of counsel to the Agent) (i) in connection with any waivers, amendments or
extensions with respect to any of the Program Documents and (ii) in connection
with all audits of

51
<PAGE> 57
the Borrower undertaken by the Agent or any Lender under Section 8.14 hereof.
The Borrower will also pay all costs and expenses incurred by the Agent and any
Lender (including the fees and out-of-pocket expenses of counsel) in connection
with the enforcement and protection of the rights of the Agent or such Lender,
as the case may be, in connection with this Agreement and the other Program
Documents.

SECTION 11.3 Invoices for Fees. The Lenders shall from time
to time submit to the Borrower for payment invoices for fees under this
Agreement when the same shall become due and payable and for any costs and
expenses incurred by the Lender in connection with this Agreement and the
transactions contemplated hereby.

ARTICLE XII

INDEMNIFICATION

SECTION 12.1 Indemnification by Borrower. Without limiting
any other rights which the Agent and each Lender and its officers, directors,
employees, agents and affiliates may have hereunder or under Applicable Law,
the Borrower, hereby agrees to indemnify such parties and hold them harmless
from and against any and all damages, losses, claims, liabilities and related
costs and expenses (including attorneys' fees and disbursements) incurred by
any of them arising out of or resulting from the transactions contemplated by
this Agreement and the other Program Documents (other than in respect of any of
the foregoing arising out of the gross negligence or willful misconduct of the
Agent or such Lender, as the case may be), including, without limitation:

(a) the reliance by the Agent or such Lender on any
representation or warranty made by the Borrower or the Parent (or any of their
respective officers) under or in connection with this Agreement or any other
Program Document which was incorrect when made;

(b) the failure by the Borrower or the Parent, as the
case may be, to comply with any covenant set forth in this Agreement or in any
other Program Document to which the Borrower or the Parent, respectively, is a
party;

52
<PAGE> 58
(c) the failure to establish and maintain the lien of the
Security Agreement in favor of the Lenders and the Agent as a valid assignment
of, and valid and perfected first priority lien upon and security interest in,
the Assigned Collateral, as security for the repayment of the Borrower's
Obligations, or the failure of such lien to be valid as against creditors of
the Borrower;

(d) the use of proceeds of the Loans;

(e) the failure to timely file financing statements or
other similar instruments or documents under the UCC of any applicable
jurisdiction or other Applicable Laws with respect to any Eligible Receivable
at any time;

(f) any dispute, claim, offset or defense of any Obligor
to the payment of any Eligible Receivable (including a defense based on such
Eligible Receivable or the related Finance Contract not being a legal, valid
and binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim in respect of the Assigned Collateral;

(g) the commingling of collections on the Assigned
Collateral with other funds of the Borrower or any other Person; or

(h) the failure by the Borrower to comply with any
Applicable Law with respect to any Eligible Receivable, or the nonconformity of
any Eligible Receivable with any such Applicable Law.

ARTICLE XIII

THE AGENT

53
<PAGE> 59
Program Documents, together with such other powers as reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 13.5
and the first sentence of Section 13.6 hereof shall include reference to its
Affiliates and its own audits affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly
set forth in this Agreement and in the other Program Documents, and shall not
by reason of this Agreement or any other Program Documents be a trustee for any
Lender; (b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in any
other Program Documents, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Program Documents, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Program Documents
or any other document referred to or provided for herein or therein or for any
failure by the Borrower or any other Person to perform any of its obligations
hereunder or thereunder; (c) shall not be required to initiate or conduct any
litigation or collected proceedings hereunder or under any other Program
Documents; and (d) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other Program Documents to under any
other documents or instrument referred to or provided for herein or therein or
in connection herewith or therewith, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. The Agent may deem that the
payee of any Note is the holder thereof for all purposes hereunder unless and
until a written notice of the assignment or transfer thereof shall have been
filed with the Agent.

54
<PAGE> 60
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders.

SECTION 13.4 Rights as a Lender. With respect to its
Commitment and the Loans made by it, Dresdner (and any successor acting as
Agent) in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it
were not acting as the Agent, and the term "Lender" and "Lenders" shall, unless
the context otherwise indicates, include the Agent in its individual capacity.
Dresdner (and any successor acting as Agent) and its Affiliates may (without
having to account therefor to any Lender) accept deposits from, lend money to
and generally engage in any kind of banking, trust or other business with the
Borrower or the Obligors (and any of their Affiliates) as if it were not acting
as the Agent, and Dresdner and its Affiliates may accept fees and other
consideration from the Borrower or the Obligors for services in connection with
this Agreement or otherwise without having to account for the same to the
Lenders.

55
<PAGE> 61
respective Commitments), for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement or any other Program Document or any other documents contemplated by
or referred to herein or therein or the transactions contemplated hereby or the
enforcement of any of the terms hereof or 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
party to be indemnified.

SECTION 13.6 Non-Reliance on Agent and Other Banks. Each
Lender agrees that it has, independently and without reliance on the Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and its Subsidiaries
and decision to enter into this Agreement and 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 analysis and decisions in taking or not taking action under this
Agreement or any of the other Program Documents. The Agent shall not be
required to keep itself informed as to the performance or observance by the
Borrower or any Obligor of this Agreement or any of the other Program Documents
or any other document referred to or provided for herein or therein or to
inspect the properties or books of the Borrower or any of its Subsidiaries.
Except for notices, reports and other documents and information expressly
required to be furnished to the Lenders by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial conditions or business of
the Borrower or any of its Subsidiaries (or any of their affiliates) which may
come into the possession of the Agent or any of its Affiliates.

56
<PAGE> 62
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.

SECTION 13.8 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving notice thereof to the Lenders and the Borrower
and the Agent may be removed at any time with or without cause by the Majority
Lenders. Upon any such resignation or removal, the Majority Lenders shall have
the right to appoint a successor Agent. If no successor Agent shall have been
so appointed by the Majority Banks and shall have accepted such appointment
within 30 days after the retiring Agent's giving of notice of resignation or
the Majority Lender's removal of the retiring agent, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent, which shall be a bank
which has an office in New York, New York with a combined capital and surplus
of at least $500,000,000. 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 rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article XIII shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as the Agent.

SECTION 13.9 Consents Under Basic Documents. Without the
prior written consent of the Majority Lenders, the Agent will not consent to
any modification supplement or waiver under any of the Program Documents,
provided that without the prior written consent of each Lender the Agent will
not release any collateral or otherwise terminate any Lien under the Security
Documents, except that no such consent shall be required, and the Agent is
hereby authorized, to release any of property permitted hereunder or to which
the Majority Lenders have consented.

ARTICLE XIV

MISCELLANEOUS

SECTION 14.1 Notices. Except where telephonic (which shall
be confirmed in writing promptly) instructions or notices are authorized herein
to be given, all notices,

57
<PAGE> 63
demands, instructions and other communications required or permitted to be
given under this Agreement shall be in writing and shall be personally
delivered or sent by registered, certified or express mail, postage prepaid,
return receipt requested, or by facsimile (with telephone confirmation of such
transmission), or telegram (with messenger delivery specified in the case of a
telegram), and shall be deemed to be given for purposes of this Agreement on
the date on which such writing is delivered or sent to the intended recipient
thereof in accordance with the provisions of this Section 14.1. Unless
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 14.1, notices, demands, instructions and
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective facsimile
numbers) indicated below, and, in the case of telephonic instructions or
notices, by calling the telephone number or numbers indicated for such party
below:

(a) with respect to the Borrower:

Westchester Premium Acceptance Corporation
Suite 700
1020 N.E. Loop 410
San Antonio, Texas 78209

Attention: Chief Financial Officer
Telephone: (210) 824-4546
Facsimile: (210) 824-3681

(b) with respect to Dresdner or the Agent:

Dresdner Bank AG,
New York and Grand Cayman Branches
75 Wall Street
New York, New York 10005

Attention: Mr. Lloyd C. Stevens
Telephone: (212)429-2229
Facsimile: (212)429-2524

58
<PAGE> 64

with a copy to:

Dresdner Bank AG, New York Branch
75 Wall Street
New York, New York 10005

Attention: Credit Services Department

Bank One Texas, N.A.
105 South St. Mary's Street
San Antonio, Texas 78205
Attention: Mr. Charles T. Bridgman,
Senior Vice President
Telephone: (210) 271-8680
Facsimile: (210) 271-6588

with a copy to:

Bank One Texas, N.A.
1717 Main Street, 4th Floor
Bank One Center
Dallas, Texas 75201
Attention: Mr. James V. Miller
Vice President
Telephone: (214) 290-2309
Facsimile: (214) 290-2332

(d) with respect to NationsBank:

NationsBank of Texas, N.A.
300 Convent Street
San Antonio, Texas 78205
Attention: Mr. D. Kirk McDonald,
Senior Vice President
Telephone: (210) 270-5300
Facsimile: (210) 270-5569

59
<PAGE> 65
acceptance of which is refused shall be deemed to be effective upon the date on
which the same were rejected or refused.

SECTION 14.2 Survival and Termination of Agreement. All
covenants, agreements, representations and warranties made herein and in the
certificates and other documents delivered pursuant hereto shall survive (i)
the making by the Lenders of the Loans herein contemplated, (ii) the execution
and delivery to the Lenders of the Notes, and (iii) the making of any
investigation, and shall continue in full force and effect to the Credit
Expiration Date or so long as any Loan or any amount payable to any Lender or
the Agent in connection with this Agreement or any other Program Document is
unpaid whichever is later, at which time this Agreement shall terminate, it
being expressly understood that the obligations of the Borrower under Sections
Articles V, X and XII hereof shall survive any termination of this Agreement.

SECTION 14.3 Applicable Law. THIS AGREEMENT AND THE NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.

SECTION 14.4 Waiver; Modifications in Writing. No failure or
delay on the part of the Agent or any Lender in exercising any right, power or
remedy hereunder or under the Note or with respect to the Loans shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies provided for herein
are cumulative and are not exclusive of any remedies that may be available to
the Agent or any Lender at law or in equity. No amendment, modification,
supplement, termination or waiver of or to any provision of this Agreement, nor
consent to any departure by the Borrower therefrom, shall be effective unless
the same shall be in writing and signed by the Agent and the Majority Lenders,
except that any amendment, modification, or waiver (i) reducing the principal
amount of, reducing the interest rate borne by, or extending the final maturity
of the Loans, or (ii) reducing the amount of the fees payable pursuant hereto,
or (iii) changing the provisions contained in this Section 14.4 or (iv)
releasing Assigned Collateral, except to the extent the sale of such Assigned
Collateral is permitted by the Security Agreement, shall not be effective
unless evidenced by a writing signed by or on behalf of the Agent and each
Lender. Any waiver of

60
<PAGE> 66
any provisions of this Agreement, and any consent to any departure by the
Borrower from the terms of any provision of this Agreement, shall be effective
only in the specific instance and for the specific purpose for which given. No
notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances.

SECTION 14.6 Successors and Assigns. (a) This Agreement
shall be binding upon and inure to the benefit of each party hereto and its
respective successors and assigns, except that the Borrower shall not assign or
transfer (by operation of law or otherwise) all or any part of its rights or
obligations hereunder without the prior written consent of the Agent and each
Lender.

SECTION 14.7 Sale and Transfer of Loans and Notes;
Participations in Loans and Notes. Each Lender may assign, or sell
participations in, its Loans and Commitment to one or more other Persons in
accordance with this Section 14.7.

SECTION 14.7.1 Assignments. Any Lender,

61
<PAGE> 67
(b) with notice to the Borrower and the Agent, but without
the consent of the Borrower or the Agent, may assign and delegate to any of its
Affiliates or to any other Lender

(each Person described in either of the foregoing clauses as being the Person
to whom such assignment and delegation is to be made, being hereinafter
referred to as an "Assignee Lender"), any fraction of such Lender's total Loans
and Commitment (which assignment and delegation shall be of a constant, and not
a varying, percentage of all the assigning Lender's Loans and Commitment) in a
minimum aggregate amount of $1,000,000; provided, however, that the Agent's
remaining total Loans and Commitment must be in a minimum aggregate amount of
$5,000,000; provided, further that any such Assignee Lender will comply, if
applicable, with the provisions contained in Section 3.1(g)(iii) and further,
provided, however, that, the Borrower and the Agent shall be entitled to
continue to deal solely and directly with such Lender in connection with the
interests so assigned and delegated to an Assignee Lender until written notice
of such assignment and delegation, together with payment instructions,
addresses and related information with respect to such Assignee Lender, shall
have been given to the Borrower and the Agent by such Lender and such Assignee
Lender. In connection with any assignment made under this Section 14.7.1, the
assigning Lender shall pay to the Agent a fee of $3,000. From and after the
date that the Agent accepts such assignment, (x) the Assignee Lender thereunder
shall be deemed automatically to have become a party hereto and to the extent
that rights and obligations hereunder have been assigned and delegated to such
Assignee Lender in connection with such assignment, shall have the rights and
obligations of a Lender hereunder and under the Guarantee, the Security
Agreement and all related documents, and (y) the assignor Lender, to the extent
that rights and obligations hereunder have been assigned and delegated by it in
connection with such assignment, shall be released from its obligations
hereunder and under the Guarantee, the Security Agreement and all related
documents. Within five Business Days after its receipt of notice that the
Agent has accepted an assignment, the Borrower shall executed and deliver to
the Agent (for delivery to the relevant Assignee Lender) a new Note evidencing
such Assignee Lender's assigned Loans and Commitment and a replacement Note in
the principal amount of the Loans and Commitment retained by the assignor
Lender hereunder (such Note to be in exchange for, but not in payment of, that
Note then held by such assignor Lender). Each such Note shall be dated the
date of the

62
<PAGE> 68
predecessor Note. The assignor Lender shall mark the predecessor Note
"exchanged" and deliver it to the Borrower. Accrued interest on that part of
the predecessor Note evidenced by the new Note, and accrued fees, shall be paid
as the Agent shall direct. Accrued interest on that part of the predecessor
Note evidenced by the replacement Note shall be paid to the assignor Lender.
Accrued interest and accrued fees shall be paid at the same time or times
provided in the predecessor Note and in this Agreement. Any attempted
assignment and delegation not made in accordance with this Section 14.7.1 shall
be null and void.

SECTION 14.7.2 Participations. Any Lender may at any time sell to one
or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "Participant") participating interests in
any of the Loans, its Commitment, or other interests of such Lender hereunder;
provided, however, that

(a) no participation contemplated in this Section
14.7.2 shall relieve such Lender from its Commitment or its
other obligations hereunder or under the Guarantee or the
Security Agreement,

(b) such Lender shall remain solely responsible
for the performance of its Commitment and such other
obligations,

63
<PAGE> 69
(e) the Borrower shall not be required to pay any
amount under Section 3.1(g) or Article V that is greater than
the amount which it would have been required to pay had no
participating interest been sold.

The Borrower acknowledges and agrees that each Participant, for purposes of
Section 3.1(g) and Article V, shall be considered a Lender.

SECTION 14.8 Confidentiality. The Lenders shall hold all
non-public information (which has been identified in writing as such by the
Borrower) obtained pursuant to the requirements of this Agreement in accordance
with their customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking practices and in any event
may make disclosure to any of their examiners, Affiliates, outside auditors,
counsel and other professional advisors in connection with this Agreement or as
reasonably required by any bona fide potential or actual transferee,
participant or assignee or as required or requested by any governmental agency
or representative thereof or pursuant to legal process; provided, however, that

(i) to be bound by this Section 14.8; and

(ii) to require such Person to require any
other Person to whom such Person discloses such non-public
information to be similarly bound by this Section 14.8; and

64
<PAGE> 70
(c) except as may be required by an order of a
court of competent jurisdiction and to the extent set forth
therein, no Lender shall be obligated or required to return
any materials furnished by the Borrower or any Subsidiary.

SECTION 14.9 Captions. Captions and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.

SECTION 14.10 Counterparts. This Agreement may be executed
in counterparts which, taken together, shall constitute a single document.

SECTION 14.11 Severability. In case any one or more of the
provisions contained in this Agreement or any Note should be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.

65
<PAGE> 71
The Borrower further irrevocably consents to the service of summons, notice, or
other process relating to any such action or proceeding by delivery thereof to
it by hand or by mail in the manner provided for in Section 14.1 hereof. The
Borrower hereby expressly and irrevocably waives any claim or defense in any
such action or proceeding in either such court based on any alleged lack of
personal jurisdiction, improper venue or forum non conveniens or any similar
basis. Nothing in this Section 14.12 shall affect or impair in any manner or
to any extent the right of the Agent or any Lender to commence legal
proceedings or otherwise proceed against the Borrower in any jurisdiction or to
serve process in any manner permitted by law.

SECTION 14.13 Set-off. The Agent and each Lender (including
any of its branches) is hereby authorized at any time or from time to time,
without notice to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate any and all deposits
(general or special, matured or unmatured, time or demand, in whatever
currency) and any other at any time held or owing by the Agent or such Lender,
as the case may be, to or for the credit or the account of the Borrower against
and on account of the obligations and liabilities of the Borrower to the Agent
or such Lender, as the case may be, under this Agreement or any other Program
Document, irrespective of whether or not the Agent or such Lender, as the case
may be, shall have made any demand hereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.

66
<PAGE> 72
IN WITNESS WHEREOF, the parties hereto and the Agent have
caused this Agreement to be duly executed by their duly authorized officers,
all of the day and year first above written.

WESTCHESTER PREMIUM ACCEPTANCE
CORPORATION,
as Borrower

By: [ILLEGIBLE]
----------------------------
Authorized Signatory

DRESDNER BANK AG, New York and
Grand Cayman Branches, as Lender

By: [ILLEGIBLE]
----------------------------
Authorized Signatory

BANK ONE TEXAS, N.A.,
as Lender

By: [ILLEGIBLE]
----------------------------
Authorized Signatory

NATIONSBANK OF TEXAS, N.A.,
as Lender

By: [ILLEGIBLE]
----------------------------
Authorized Signatory

<PAGE> 73

DRESDNER BANK AG, NEW YORK BRANCH,
as Agent

By: [ILLEGIBLE]
----------------------------
Authorized Signatory

<PAGE> 74
Schedule I
to the Loan Agreement

Booking Offices

DRESDNER AND THE AGENT

Base Rate Lending Office:

Dresdner Bank AG, New York Branch

Eurodollar Lending Office:

Dresdner Bank AG, Grand Cayman Branch

BANK ONE

Base Rate and Eurodollar Lending Office:

San Antonio, Texas

NATIONSBANK

Base Rate and Eurodollar Lending Office:

San Antonio, Texas

<PAGE> 75
Schedule II
to the Loan Agreement

List of Lock-Boxes

Address of Lock-Box
Lock-Box Address Bank and Account No.
---------------- --------------------

NationsBank of Texas, N.A. NationsBank of Texas, N.A.
P.O. Box 841932 P.O. Box 300
Dallas, Texas 75284-1932 San Antonio, Texas 78291
Account No. 7110229203

<PAGE> 76
SCHEDULE III

CREDIT AND COLLECTIONS PROCEDURES

CREDIT

COMPANY RATING

All companies must have an A.M. Best rating of B or better. Any company with
less than a B rating must be approved by management.

DOWN PAYMENT CALCULATION

Subject to all policies being in effect for less than 30 days and having a
standard 10 day cancellation requirement, the following down payments may
be offered:

<TABLE>
<CAPTION>
SUGGESTED MINIMUM
<S> <C> <C>
Pro-Rata Cancellation 20.0% 17.5%
Short-Rate Cancellation 25.0% 22.5%
</TABLE>

The following methods may be used to determine the down payment for policies
which have been in effect for more than 30 days.

Full collateralization - The earnings rate table may be used to
calculate the down payment so the loan is fully collateralized in the
event of cancellation. With this method, the number of payments is
reduced.

Collect past dues - The minimum down payment may be quoted and all past
due payments collected and sent with the contract. (This method is legal
in Texas, but may not be in other states. Only available when finance
charges begin to accrue as of the effective date of the policy.)

SHORT TERM POLICIES

Policies which are effective for less than 12 months are known as "short term".
Although the basic quoting procedures apply to both short term and annual
policies, the short term policies earn at a greater rate. Therefor, a greater
down payment will generally be required. To calculate the down payment for a
short term policy use the following formula:

(Min. down payment %) X 12/(# of months in effect)

LIENHOLDER/REGULATORY AGENCY/THIRD PARTY NOTIFICATION

A lienholder, regulatory agency, or third party insured will usually require
notification prior to cancellation. Since such
<PAGE> 77
notification is an obligation of the insurance company, the premium finance
company does not issue a notice of cancellation to these entities. The presence
of any of these entities will usually require an increased down payment because
the insurance company will not provide notification of the cancellation until
the finance company's notice of cancellation is received. Upon receipt, the
insurance company will generate a cancellation notice which is usually
effective in 30-45 days.

NUMBER OF DAYS REQUIRED TO CANCEL

A 20% down payment is recommended for an annual policy which requires a
standard 10 day notice prior to cancellation. If an annual policy requires more
than 10 days to cancel, the percentages listed below represent the recommended
minimum down payment.

# DAYS REQUIRED FOR CX P/R S/R
<S> <C> <C>
10 20.0 25.0
30 25.0 30.0
45 30.0 35.0

</TABLE>

MINIMUM EARNED PREMIUM

Policies with a minimum earned premium must require a down payment percentage
which is at least equivalent to the minimum earned amount. The minimum earned
amount may be expressed as a percentage or as a specific amount. The suggested
down payment should be 2.5% greater than the minimum earned percentage; however
competitive situations may dictate the down payment reflect only the minimum
earned percentage.

NUMBER OF PAYMENTS

The number of payments permitted should be dictated by the number of months the
policy is effective. Eight or nine payments is considered standard for a
12-month policy. The greater the number of payments, the higher the finance
charge incurred by the insured. Generally, the last payment should be due at
least 90 days prior to the expiration date of the policy.

FEES AND TAXES

Fees should be assumed to be fully earned and not be financed. If taxes are
subject to earning on the standard short-rate or pro rata basis in the event
of cancellation, the taxes must be financed using the down payment percentage
applied to the policy. Any surcharge or tax which is fully earned should not be
financed.
<PAGE> 78
COLLECTIONS

Collection procedures will be applicable to any account that:

A. Has been canceled in excess of 120 days and reflects an outstanding
balance.

1. A Cancellation History Worksheet will be completed on any account
reflecting an outstanding balance in excess of 120 days.

2. Upon completion of the worksheet, specifically identify whether the
balance is due from:

A. Company/General Agent - Any balances due from the Company or GA should
be pursued in accordance with statutory requirements.

B. Agent - Any balances due from the Agent should be specifically
identified on the worksheet. A copy of the worksheet should be
provided to the Marketing Rep for collections. Only the Marketing Rep
should contact the agent on this matter. The review of these accounts
and the respective collection efforts will be the focus of the weekly
Marketing/Collection meetings.

C. Insured - Any balances due from the Insured should be submitted to
Operations Manager.

i. Collection letters will be sent on all accounts.

ii. Accounts with outstanding balances in excess of 90 days after
receipt of gross unearned premium will be subject to write off.

iii. Accounts in excess of $100 will be turned over to outside
collection agency.

B. Has been credited with the gross unearned premium for all policies
and reflects an outstanding balance.

1. A Cancellation History Worksheet will be completed on any account
reflecting an outstanding balance after the gross unearned premium has
been credited.

2. Upon completion of the worksheet, specifically identify whether the
balance is due from:

A. Company/General Agent - Any balances due from the Company or GA should
be pursued in accordance with statutory requirements.

C. Insured - Any balances due from the Insured should be submitted to
Operations Manager.

i. Collection letters will be sent on all accounts.

<PAGE> 79
ii. Accounts with outstanding balances in excess of 90 days after
receipt of gross unearned premium will be subject to write off.

iii. Accounts in excess of $100 will be turned over to outside
collection agency.

Any accounts which are not progressing toward collection will be discussed and
evaluated during the Operations/Collection meeting.

<PAGE> 80
SCHEDULE IV
MONTHLY REPORT
As of: March 31, 1996

<TABLE>
<CAPTION>
RECEIVABLES BORROWING BASE CALCULATION
<S> <C> <C> <C> <C>
A. Balances reflecting no cancellations _________ X 100% ____________________

B. Balances reflecting 10-30 day cancellations _________ X 90% ____________________

C. Balances reflecting 31-60 day cancellations _________ X 50% ____________________

D. Balances reflecting 61-90 day cancellations _________ X 0% ____________________

E. Balances reflecting 91-120 day cancellations _________ X 0% ____________________

F. Balances reflecting over 120 day cancellations _________ X 0% ____________________

G. Ineligible Receivables _________ X 0% ____________________

TOTAL _________ TOTAL ____________________
</TABLE>

<TABLE>
<CAPTION>
CONCENTRATION LIMITS

Total eligible Receivables __________________

* _________________ _________________ 10% LIMIT __________________

* _________________ _________________ 8% LIMIT __________________

Total _________________ 35% LIMIT __________________

</TABLE>
* Ineligible Receivables Deducted

CALCULATION

Borrowings Base Total X 85% ______________________________________________________________

Less: 0
Excess of Concentration Limits -______________________________________________________________

Equals:
Borrowing Base availability =______________________________________________________________

Less:
Amount Outstanding on Line -______________________________________________________________

Equals:
Amount Available to Advance =______________________________________________________________

</TABLE>

As the Chief Financial Officer or the Chief Executive Officer
of Westchester Premium Acceptance Corporation, I certify that the
above calculation is correct.

By: ____________________________________
Printed Name: __________________________
Title: _________________________________

<PAGE> 81
EXHIBIT A
to the Loan Agreement

[Form of Note]

$_______________ August __, 1996

FOR VALUE RECEIVED, on the Credit Expiration Date (as defined
in Section 4.1 of the Loan Agreement hereinafter referred to), the undersigned
hereby promises to pay to the order of [INSERT NAME OF BANK] (the "Lender"),
the principal sum which is the lesser of ____________ ($_______) and the
aggregate unpaid principal amount from time to time outstanding of all Loans
made by the Lender, to the undersigned pursuant to Section 2.1 of the Loan
Agreement, in immediately available funds and in lawful money of the United
States of America, and to pay interest on the unpaid balance of said principal
sum from time to time outstanding, from the date hereof, until the principal
sum shall become due (whether by acceleration or otherwise), in like funds and
money, at the office of the Agent (defined below) as shall be designated in the
Loan Agreement, as provided in said Loan Agreement for Loans made by the Lender
and at the maturity hereof.

This promissory note is the Note referred to in the Loan
Agreement dated as of July 30, 1996 (as the same may from time to time be
amended, the "Loan Agreement"), among the undersigned, [INSERT NAMES OF OTHER
LENDERS], the Lender and Dresdner Bank AG, New York Branch, as agent for the
Lenders (the "Agent"), to which Loan Agreement reference is made for a
description of the rights of prepayment, the Events of Default and the rights
of acceleration of maturity upon the occurrence of an Event of Default. All
advances made by the Lender to the undersigned pursuant to the Loan Agreement
and all payments made on account of principal hereof shall be recorded by the
Lender and, prior to any transfer hereof, endorsed on the grid attached hereto
which is part of this promissory note (provided that any failure by the Lender
to make any such endorsement shall not affect the obligations of the
undersigned under this Note in respect of any such advance).

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

WESTCHESTER PREMIUM ACCEPTANCE
CORPORATION

By:
--------------------------
Authorized Signatory

<PAGE> 82
[REVERSE OF NOTE OR SCHEDULE THERETO]

This Note evidences Loans made by the Lender under Section 2.1
of the Loan Agreement dated as of July 30, 1996, as from time to time amended,
among Westchester Premium Acceptance Corporation, [INSERT NAMES OF OTHER
BANKS], the Lender and Dresdner Bank AG, New York Branch, as agent, in the
principal amounts and on the dates set forth below, subject to the payments and
prepayments of principal set forth below:

<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT MOUNT PAID BALANCE TYPE OF
DATE LOANED R PREPAID OUTSTANDING LOAN
- ---- --------- ---------- ----------- -------
<S> <C> <C> <C> <C>

</TABLE>

<PAGE> 83
EXHIBIT B
to the Loan Agreement

[Form of Certificate]

[WESTCHESTER PREMIUM ACCEPTANCE CORPORATION/
TITAN HOLDINGS, INC.]

Certificate

I, the undersigned, Secretary of [WESTCHESTER PREMIUM
ACCEPTANCE CORPORATION/TITAN HOLDINGS, INC.], a ________ corporation ([the
"Borrower"/the "Parent"]), DO HEREBY CERTIFY that:

1. This Certificate is furnished pursuant to Section
7.3[(e)/(f)] of that certain Loan Agreement dated as of July 30, 1996
(the "Agreement") among the Borrower, Dresdner Bank AG, New York and
Grand Cayman Branches, Bank One Texas, N.A. and NationsBank of Texas
N.A., as lenders, and Dresdner Bank AG, New York Branch, as agent.
Unless otherwise defined herein, capitalized terms used in this
Certificate have the meanings assigned to those terms in the
Agreement.

2. Attached hereto as Exhibit A is a copy of the
Certificate of Incorporation of [the Borrower/the Parent], certified
by the Secretary of State of the State of __________.

3. There have been no amendments to the Certificate of
Incorporation of [the Borrower/the Parent] since __________, 199 1

4. Attached hereto as Exhibit B is a true and correct
copy of the by-laws of [the Borrower/the Parent] as in effect on the
date hereof.

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

1. Insert the date of the Secretary of State's Certificate furnished pursuant
to paragraph 2.

<PAGE> 84
5. Attached hereto as Exhibit C is a true and correct
copy of resolutions duly adopted by the Board of Directors of [the
Borrower/the Parent] on _____________, 1996, which resolutions have
not been revoked, modified, amended or rescinded and are still in full
force and effect.

6. The below-named persons have been duly elected, have duly
qualified as of and at all times since ___________, 19962 (to and
including the date hereof) have been officers of [the Borrower/the
Parent], holding the respective offices below set opposite their
names, and the signatures below set opposite their names are their
genuine signatures.

<TABLE>
<CAPTION>
Name Office Signatures
---- ------ ----------
<S> <C> <C>
[Title]
- ----------------------- ---------------------
[Title]
- ----------------------- ---------------------
[Title]
- ----------------------- ---------------------
</TABLE>

7. There are no proceedings pending for the dissolution
or liquidation of [the Borrower/the Parent].

WITNESS my hand and the seal of [the Borrower/the Parent] this
___ day of ________________, 199_.

-----------------------------
Secretary

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

2. Insert the date next preceding the effective date of adoption of the
resolutions referred to in paragraph 4 above.

2
<PAGE> 85
I, the undersigned, [title] of [the Borrower/the Parent], DO
HEREBY CERTIFY that:

1. [Name of Secretary] is the duly elected and qualified
Secretary of [the Borrower/the Parent] and the signature above is [his/her]
genuine signature.

2. [Each of the Loan Agreement and each other Program
Document to which the undersigned is a party] [the Guarantee] is in existence
and is in full force and effect on the date hereof.

3. The representations and warranties on the part of
[the Borrower/the Parent] contained or reaffirmed and repeated in the [Loan
Agreement and in each other Program Document to which the undersigned is a
party] [the Guarantee] are true and correct at and as of the date hereof as
though made on and as of the date hereof.

WITNESS my hand on this _____ day of ____________, 1996.

----------------------------
Authorized Signatory

<PAGE> 86
EXHIBIT C
to the Loan Agreement

[Form of Loan Request]

Dresdner Bank, New York Branch,
as Agent
[ADDRESS]

Attention: [Name]
[Title]

This Loan Request is delivered to you pursuant to Section 2.3
and Section 6.5 of the Loan Agreement dated as of July 30, 1996 (as it may be
amended, supplemented, restated or otherwise modified from time to time, the
"Agreement") among Westchester Premium Acceptance Corporation (the "Borrower")
and Dresdner Bank AG, New York and Grand Cayman Branches, Bank One Texas, N.A.
and NationsBank of Texas, N.A. (the "Lenders") and Dresdner Bank AG, New York
Branch, as agent. Unless otherwise defined herein or the context otherwise
requires, all capitalized terms used herein will have the respective meanings
assigned to them in the Agreement.

The Borrower hereby requests that Loans be made in the
aggregate principal amount of $___________ on ___________, 199_ as [a
Eurodollar Loan/a Base Rate Loan]. [The Borrower requests that the Interest
Period for the Eurodollar Loan requested hereby be [1/2/3/6] month(s).]

The Borrower hereby affirms that (i) the representations and
warranties of the Borrower set forth in Section 7 of the Agreement are on the
date hereof, and will be on the date of the proposed borrowing, true and
correct as if made on and as of each such date except to the extent any such
representations or warranties relate solely to an earlier date, (ii) no Event
of Default has occurred and is continuing on the date hereof or shall have
occurred and be continuing on the date of the proposed borrowing, and (iii)
after giving effect to the making of the Loans requested hereby, the aggregate
principal amount of all Loans outstanding will not exceed the lesser of (A) the
Borrowing Base and (B) the Commitment.

<PAGE> 87
The Borrower agrees that if, prior to the time that the
borrowing requested hereby is made, the Agent and any matter affirmed herein
shall no longer be true and correct, it will immediately so notify the Agent.
Except to the extent, if any, that prior to the time that the borrowing
requested hereby is made, the Agent and the Lenders shall receive written
notice to the contrary from the Borrower each matter affirmed herein shall be
deemed once again to be affirmed as true and correct as of the date of such
borrowing as if then made.

Please wire transfer the proceeds of the requested
borrowing to the account(s) of the following Persons at the financial
institution(s) indicated below:

------------------
ABA #
-------------
Attention:
--------
$
---------- ------------- --------- ------------------

------------------
ABA #
-------------
Attention:
--------

</TABLE>

WESTCHESTER PREMIUM ACCEPTANCE
CORPORATION

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

2
<PAGE> 88
EXHIBIT D
to the Loan Agreement

[Form of Notice of Conversion or Continuation]

[Dresdner Bank, New York Branch,
as Agent]
[ADDRESS]

Attention: [Name]
[Title]

This Notice of Conversion or Continuation is delivered to you
pursuant to Section 3.1(c) of the Loan Agreement dated as of July 30, 1996 (as
it may be amended, supplemented, restated or otherwise modified from time to
time, the "Agreement") among Westchester Premium Acceptance Corporation (the
"Borrower") and Dresdner Bank AG, New York and Grand Cayman Branches, Bank One
Texas, N.A. and NationsBank of Texas, N.A. (the "Lenders") and Dresdner Bank
AG, New York Branch, as agent. Unless otherwise defined herein or the context
otherwise requires, all capitalized terms used herein will have the respective
meanings assigned to them in the Agreement.

The Borrower hereby requests that on ____________, 199_,

(1) $_________ of the currently outstanding
principal amount of the Loans originally made on __________,
199_ [and $________ of the currently outstanding principal
amount of the Loans originally made on _________, 199_],

(2) all currently being maintained as [Base Rate
Loans/Eurodollar Loans],

(3) be [converted into/continued as] [Base Rate
Loans/Eurodollar Loans].

The Borrower hereby certifies that (i) the representations and
warranties of the Borrower set forth in Section 7 of the Agreement are on the
date hereof, and will be on the date of the proposed [conversion/continuation],
true and correct as if made on and as of such dates except to the extent any
such representations or warranties relate solely to an earlier date, and (ii)
no Default or Event of

<PAGE> 89
Default has occurred and is continuing on the date hereof or shall have
occurred and be continuing on the date of the proposed
[conversion/continuation].

The Borrower agrees that if, prior to the time that the
[conversion/continuation] requested hereby is made, any matter certified to
herein shall no longer be true and correct, it will immediately so notify the
Agent. Except to the extent, if any, that prior to the time that the
[conversion/continuation] requested hereby is made the Agent and the Lenders
shall receive written notice to the contrary from the Borrower, each matter
certified to herein shall be deemed once again to be certified as true and
correct as of the date of such [conversion/continuation] as if then made.

WESTCHESTER PREMIUM ACCEPTANCE
CORPORATION

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

<PAGE> 90
EXHIBIT E
to the Loan Agreement

Contract Date _______

[LOGO] PREMIUM FINANCE AGREEMENT TRUTH-IN LENDING DISCLOSURE
WESTCHESTER PREMIUM ACCEPTANCE CORPORATION ("WPAC")
1020 N.E. LOOP 410, SUITE 700, P.O. BOX 65100, TEL. 210-824-4330
SAN ANTONIO, TEXAS 78265
Producer No.__________ Account No.____________

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------- ---------------------------------------------------------------
INSURED (Name, residence or business address and phone number) PRODUCER (Name, business address and phone number)

- --------------------------------------------------------------------------------------------------------------------------------
POLICY NO. | DATE OF POLICY | POLICY TERM | INSURANCE COMPANY | TYPE OF COVERAGE | PREMIUM
- --------------------------------------------------------------------------------------------------------------------------------
| | | | |
| | | | |
| | | | |
- --------------------------------------------------------------------------------------------------------------------------------
LOAN DISCLOSURES
================================================================================================================================
AMOUNT FINANCED | FINANCE CHARGE | TOTAL OF PAYMENTS | ANNUAL PERCENTAGE
The amount of credit | The dollar amount the credit | The amount you will have | RATE
provided to you or on | will cost you. (See Note 13.) | paid after you have made | The cost of your credit
your behalf. | | |
$ | $ | $ | %
- -------------------------------------==============================------------------------------------=========================
YOUR PAYMENT SCHEDULE WILL BE:
- --------------------------------------------------------------------------------------------------------------------------------
Number of Payments | Amount of Payments | When Payments are Due
- --------------------------------------------------------------------------------------------------------------------------------
| | Date Due | 1st Payment Due | Frequency
- --------------------------------------------------------------------------------------------------------------------------------
| | | |
- --------------------------------------------------------------------------------------------------------------------------------
SECURITY: You are giving a security interest in unearned premiums and loss payment on the insurance policy(ies).
LATE CHARGE: Late payment will incur a late payment charge. (See reverse side.)
PREPAYMENT: If you pay off early you will not have to pay a penalty.
See reverse side of contract for any additional information about nonpayment default, any required repayment in full
before schedule date, prepayment refunds and penalties.
- --------------------------------------------------------------------------------------------------------------------------------
ITEMIZATION OF AMOUNT FINANCED: THE FULL AMOUNT FINANCED WAS PAID TO THE ABOVE REFERENCED INSURANCE COMPANY(IES).
================================================================================================================================
TOTAL OF ALL PREMIUMS $___________________ | ANY MONEY RECEIVED AFTER NOTICE OF CANCELLATION
| HAS BEEN SENT SHALL BE APPLIED TO THE OUTSTANDING
LESS: DOWN PAYMENT $___________________ | INDEBTEDNESS OF THE NOTE BALANCE AND SHALL NOT BE
| CONSTRUED AS A REINSTATEMENT OF THE INSURANCE
EQUALS: PRINCIPAL BALANCE $___________________ | POLICY.
- --------------------------------------------------------------------------------------------------------------------------------
The undersigned INSURED promises to pay WPAC at its address shown above, the amount stated as Total of Payments in accordance
with the payment schedule, both as shown in the Loan Disclosure, and hereby authorizes WPAC to pay the premiums on the
policy(ies) set forth above, subject to the provisions hereinafter set forth.
INSURED:
1. Irrevocably appoints WPAC, attorney in fact of INSURED, with full authority upon default to cancel the policy(ies) above
identified, with full power and whole authority to sign or otherwise execute the policy(ies), lost policy releases, notices
necessary to effect cancellation of the policy(ies) and to collect or receive unearned premiums or loss payments which may
become payable under said policy(ies).
2. Hereby assigns to WPAC as security for the total amount payable hereunder all unearned premiums and all loss payments which
may become payable under the policy(ies) listed above, as to all of which INSURED grants to WPAC as security interests.
3. Agrees that this agreement shall be effective when written acceptance is mailed to INSURED by WPAC. (Note 14.)
4. Agrees to all the provisions on the reverse side of this agreement, in addition to those set out above.
DO NOT SIGN THIS BEFORE YOU READ THE REVERSE SIDE, EVEN IF OTHERWISE ADVISED.
DO NOT SIGN THIS IF IT CONTAINS ANY BLANK SPACES.
YOU ARE ENTITLED TO AN EXACT COPY OF ANY AGREEMENT YOU SIGN.
YOU HAVE THE RIGHT AT ANY TIME TO PAY IN ADVANCE THE UNPAID BALANCE DUE UNDER THIS AGREEMENT AND YOU MAY BE ENTITLED TO A
PARTIAL REFUND OF THE FINANCE CHARGE.

SIGNATURE OF INSURED ____________________________________________________ DATE _________________________________
- --------------------------------------------------------------------------------------------------------------------------------
The undersigned warrants and agrees that (1) This agreement was completed as to all of its provisions and disclosures before it
was signed by INSURED and a copy thereof was delivered to INSURED at the time of signing. (2) The INSURED'S signature is genuine
and INSURED has full power and authority to enter into this transaction; (3) The insurance policy(ies) is/are in full force and
effect and WPAC will be notified promptly of any and all changes in the terms of said policy(ies); (4) The policy(ies) does/do
not require the insurance companies to give more than ten (10) days notice of cancellation, (except fifteen (15) days in PA);
(5) The cash down payment has been paid by INSURED; (6) Any lien it has its subordinate to the lien of WPAC; and (7) It shall
hold WPAC harmless from and indemnify WPAC against any loss resulting from errors, omissions, or inaccuracies of Producer in
preparing this agreement.

SIGNATURE OF PRODUCER ___________________________________________________ DATE __________________________________
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE> 91
EXHIBIT F
to the Loan Agreement

A copy of the Convention Statements
was delivered to the Agent at the closing

<PAGE> 92
EXHIBIT 10.67

PLEDGE AND SECURITY AGREEMENT

Dated as of July 30, 1996

among

WESTCHESTER PREMIUM ACCEPTANCE CORPORATION,
as Borrower

DRESDNER BANK AG, New York
Grand Cayman Branches, as Lender,

BANK ONE TEXAS, N.A., as Lender

NATIONSBANK OF TEXAS, N.A., as Lender

and

DRESDNER BANK AG, NEW YORK BRANCH,
as Agent and Collateral Agent
<PAGE> 93
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Parties and Recitals 1

ARTICLE I

Definitions

Section 1.1 Definitions 2

ARTICLE II

Borrower's Obligations Secured

Section 2.1 Borrower's Obligations Secured Hereby 2

ARTICLE III

Representations, Warranties and Covenants

Section 3.1 Representations and Warranties 3
Section 3.2 Covenants of the Borrower 4
Section 3.3 Possession of Finance Contracts 5

ARTICLE IV

Assignment of Receivables, etc.

Section 4.1 Assignment of Receivables 5
Section 4.2 Borrower's Obligations Absolute; Enforceability by Collateral Agent 6
Section 4.3 Rights of Collateral Agent upon an Event of Default 7
</TABLE>
<PAGE> 94
<TABLE>
<S> <C> <C>
ARTICLE V

Collateral Account

Section 5.1 Establishment and Maintenance 9
Section 5.2 Required Deposits 9
Section 5.3 Applications 10
Section 5.4 Final Distributions 11

ARTICLE VI

The Collateral Agent and the Secured Parties

Section 6.1 Appointment and Powers of Collateral Agent 12
Section 6.2 Successor Collateral Agent 15
Section 6.3 Qualifications of Collateral Agent 16

ARTICLE VII

Miscellaneous

Section 7.1 Execution of Amendments; etc. . 16
Section 7.2 Further Assurances 16
Section 7.3 No Waiver; Cumulative Remedies 17
Section 7.4 Notices, etc. 17
Section 7.5 Costs and Expenses, etc. 18
Section 7.6 Reinstatement 19
Section 7.7 Governing Law; Binding Character; Assignment 19
Section 7.8 Severability of Provisions 19
Section 7.9 Headings 20
Section 7.10 Execution in Counterparts 20
Section 7.11 Entire Agreement 20

Execution 21
</TABLE>
<PAGE> 95
PLEDGE AND SECURITY AGREEMENT

THIS AGREEMENT dated as of July 30, 1996 among WESTCHESTER PREMIUM
ACCEPTANCE CORPORATION (together with its successors and assigns, the
"Borrower"), DRESDNER BANK AG, New York and Grand Cayman Branches ("Dresdner"),
BANK ONE TEXAS, N.A. ("Bank One") and NATIONSBANK OF TEXAS, N.A.
("Nationsbank") (Dresdner, Bank One and Nationsbank, collectively, together
with their respective successors and assigns, the "Lenders" and each a
"Lender"), Dresdner Bank AG, New York Branch, as agent for the Lenders (in such
capacity, together with its successors and assigns, the "Agent") and Dresdner
Bank AG, New York Branch, as collateral agent hereunder (in such capacity,
together with its successors and assigns, the "Collateral Agent").

WITNESSETH:

WHEREAS, the Borrower, the Lenders and the Agent have entered into
that certain Loan Agreement dated as of the date hereof (as amended,
supplemented or otherwise modified, the "Loan Agreement"), providing among
other things for the commitment of the Lenders to make loans to the Borrower;
and

WHEREAS, the Borrower is entering into this Agreement with the
Lenders, the Agent and the Collateral Agent for the purpose of, among other
things, granting to the Collateral Agent for the benefit of itself, the Agent
and the Lenders (collectively, the "Secured Parties") a first lien on and
security interest in the Assigned Collateral (as defined below) for the purpose
of securing all amounts at any time and from time to time owing by the Borrower
to the Secured Parties under or in connection with the Loan Agreement, this
Agreement or any other Program Documents (as such term is defined in the Loan
Agreement).

NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Loans (as defined in the Loan Agreement) to the
Borrower, the Borrower agrees with the Lenders, the Agent and the Collateral
Agent as follows:
<PAGE> 96
ARTICLE I

Definitions

Section 1.1 Definitions. As used in this Agreement and unless the
context requires a different meaning, capitalized terms used herein and not
otherwise defined have the meanings assigned to such terms in the Loan
Agreement.

ARTICLE II

Borrower's Obligations Secured

Section 2.1 Borrower's Obligations Secured Hereby. This Agreement is
made to provide for and secure repayment of the following indebtedness and
liabilities of the Borrower (such indebtedness and liabilities being herein
called the "Borrower's Obligations"):

First, the repayment of all amounts advanced or expended by
the Collateral Agent, in its capacity as Collateral Agent, for the
account of the Borrower hereunder, the payment of all costs and
expenses at any time and from time to time incurred by the Collateral
Agent, in its capacity as Collateral Agent, in connection with the
administration or enforcement of this Agreement or any related
document (including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel employed by the Collateral Agent in
connection therewith), and the payment of all indemnities and other
amounts at any time and from time to time payable hereunder to the
Collateral Agent, in its capacity as Collateral Agent, by the
Borrower,

Second, the repayment of all amounts advanced or expended by
the Agent and the Lenders for the account of the Borrower hereunder or
in connection with the Loan Agreement, and the payment of all costs
and expenses at any time and from time to time incurred by the Agent
and the Lenders in connection with the enforcement of or preservation
of any right under the Loan Agreement or any other Program Document
(including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel employed by the Agent or any Lender in connection
therewith) and any other costs and expenses payable by the Borrower
under or in connection with the Loan Agreement or any other Program
Document,

2
<PAGE> 97
Third, the payment of all indemnities at any time and from
time to time payable to the Lenders and the Agent under or in
connection with the Loan Agreement, this Agreement or any other
Program Document, and

Fourth, the payment of all indebtedness and liabilities,
whether absolute, fixed or contingent, at any time and from time to
time owing by the Borrower to the Lenders and the Agent under or in
connection with the Loan Agreement or any other Program Document
including, without limitation, all amounts payable by the Borrower in
respect of Loans, with interest thereon, and all other amounts at any
time and from time to time owing by the Borrower to the Lenders and
the Agent under or in connection with the Loan Agreement or any other
Program Document on account of fees.

ARTICLE III

Representations and Warranties and Covenants

Section 3.1 Representations and Warranties. The Borrower represents
and warrants to the Collateral Agent, the Agent and the Lenders as of the date
hereof and as of the date of each making of a Loan as follows:

(a) the Borrower reaffirms and repeats its representations and
warranties contained in the Loan Agreement and agrees that the
Collateral Agent, the Agent and the Lenders may rely on such
representations and warranties as though set forth herein in full.

(b)(i) No financing statement listing the Borrower as debtor
(other than any which may have been filed on behalf of the Collateral
Agent or in connection with the Existing Loan) covering any of the
Assigned Collateral has been executed or is on file in any public
office; (ii) at the date of each deposit of funds in the Collateral
Account, the Borrower was, is or will then be the lawful owner of, and
had, has or will then have good title to, such funds, free and clear
of all Liens, rights and interests except the Lien granted

3
<PAGE> 98
pursuant hereto in favor of the Collateral Agent, and (iii) the
Borrower is and will be the lawful owner of, and has and will have
good and marketable title to, all Assigned Collateral, free and clear
of all Liens except the Lien granted pursuant hereto in favor of the
Collateral Agent.

(c) Except with respect to the Existing Loan, the Borrower has
not previously created any security interest in the Assigned
Collateral, the Collateral Account or the funds on deposit therein or
any part thereof.

(d) Upon the termination of the security interests created in
connection with the Existing Loan, all action necessary to protect and
perfect the Collateral Agent's first priority perfected security
interest in the Assigned Collateral, the Collateral Account and the
funds on deposit therein will have been duly and effectively taken.

Section 3.2 Covenants of the Borrower.

(a) The Borrower will comply, in all material respects, with all
Applicable Laws and the decrees and directions of any Governmental Authority
applicable to the Assigned Collateral or any part thereof;

(b) The Borrower will not sell, pledge or mortgage the Assigned
Collateral or create, permit or suffer to exist, and will defend the Assigned
Collateral against, and take such other actions as is necessary to remove, any
Lien, judgment, claim or right in, to or on the Assigned Collateral, and will
defend the right, title and interest of the Borrower in and to the Receivables
and the Assigned Collateral against the claims and demands of all Persons
whomsoever other than the Liens created hereby.

(c) The Borrower will, at its own expense, take such further action
and shall take such steps and execute and deliver such financing statements and
other papers as the Collateral Agent or Agent or any Lender may deem necessary
or appropriate from time to time to protect and perfect the Collateral Agent's
security interest in the Assigned Collateral, the Collateral Account and the
funds on deposit therein. Without limiting the foregoing, the Borrower agrees
to cause the recordation of any necessary UCC-1 financing statements or
assignments in the appropriate recording office of each relevant jurisdiction.

4
<PAGE> 99
Section 3.3 Possession of Finance Contracts. The Borrower shall
retain the Finance Contracts and all other agreements or documents evidencing
the Receivables as custodian, bailee and agent for the Collateral Agent. It is
intended that pursuant to this Section the Collateral Agent shall be deemed to
have possession of the Finance Contracts and related documents for purposes of
Section 9-305 of the UCC. The Borrower shall segregate all Finance Contracts
and related documents relating to the Assigned Collateral separate and apart
from all other documents and shall clearly mark each Finance Contract created
after the date hereof and related document to clearly indicate that such
Finance Contracts are subject to the security interest granted under this
Agreement.

ARTICLE IV

Assignment of Receivables, etc.

Section 4.1 Assignment of Receivables. In order to secure and to
provide for the repayment of the Borrower's Obligations, the Borrower hereby
assigns, conveys and transfers to the Collateral Agent for the benefit of the
Secured Parties and hereby grants to the Collateral Agent for the benefit of
itself and the Secured Parties a security interest in, all of the Borrower's
right, title and interest in, to and under the following:

(i) all Receivables now existing or hereafter arising
including, without limitation, (A) all monies due and to become due
under or in connection with any Receivable, (B) any damages arising
out of or for breach or default in respect of any such Receivable, (C)
all other amounts from time to time paid or payable under or in
connection with any such Receivable, (D) the Finance Contracts and
related agreements and instruments giving rise to the Receivables, and
(E) the right of the Borrower to enforce the rights, remedies, powers,
privileges and claims of the Borrower against the Obligors and the
Producers under or with respect to the Receivables and the related
Finance Contracts;

(ii) the Lock-Boxes, all funds in the Lock-Boxes from time
to time and all claims of the Borrower in and to the funds on deposit
in the Lock-Boxes from time to time;

(iii) all additional property that may from time to time
hereafter be subjected to the grant

5
<PAGE> 100
and pledge hereof by the Borrower or by anyone on its behalf,
including the deposit with the Collateral Agent of additional monies
by the Borrower; and

(iv) all Proceeds (whether or not received by the
Borrower) of any of the foregoing.

The Receivables, the Lock-Boxes, such additional property and all of the
rights, titles, interests, monies, remedies, powers, privileges, claims and
Proceeds therein so assigned pursuant to (i) through (iv) are herein
collectively referred to as the "Assigned Collateral."

Section 4.2 Borrower's Obligations Absolute; Enforceability by
Collateral Agent. The Borrower hereby acknowledges that its obligations under
this Agreement are and shall be absolute and unconditional under any and all
circumstances, including, without limitation, the following circumstances: (a)
any amendment, modification, supplement or waiver of or to any provision of the
Loan Agreement, this Agreement or any other Program Document, or the
illegality, invalidity, irregularity or unenforceability of the Loan Agreement,
this Agreement, any other Program Document, or any Loans made to the Borrower,
or (b) the breach or falsity of any representation or warranty on the part of
any Secured Party or the Collateral Agent contained or reaffirmed and repeated
in this Agreement, the Loan Agreement, any other Program Document, or otherwise
made to any Secured Party or the Collateral Agent under or in connection with
any of the foregoing, or (c) any failure on the part of any Secured Party or
the Collateral Agent to perform or observe any

6
<PAGE> 101
term, covenant or agreement on its part to be performed or observed under the
Loan Agreement, this Agreement, any other Program Document or any other
agreement, instrument or document delivered in connection with any of the
foregoing, or (d) the existence of any setoff, counterclaim, recoupment,
defense or other right or claim which the Borrower may at any time have or have
had against any Secured Party or the Collateral Agent, or (e) the dissolution,
bankruptcy, insolvency or reorganization of the Borrower or any of its
Affiliates or the appointment of a receiver, trustee, custodian or liquidator
for any of the Borrower's or any of its Affiliates' assets, including without
limitation, the Borrower's interest in the Assigned Collateral, or (f) the
existence of any law, rule, regulation, order, writ, judgment, decree,
determination or award purporting in any manner to affect the Loan Agreement,
this Agreement, any other Program Document or any other agreement, instrument
or document executed and delivered pursuant to or in connection with any of the
foregoing, the Loans made to the Borrower, or any obligation of the Borrower
under the Loan Agreement, this Agreement, any other Program Document or any
related document, or (g) any other circumstances whatsoever which would
otherwise constitute an excuse for nonperformance by the Borrower of its
obligations hereunder, whether similar or dissimilar to any of the
circumstances specified in clauses (a) through (f) above.

Section 4.3 Rights of the Collateral Agent upon an Event of Default.
(a) Upon the occurrence of an Event of Default, the Collateral Agent shall have
the right, as the true and lawful agent of the Borrower, with power of
substitution for the Borrower and in the Borrower's name, the Collateral
Agent's name or otherwise, for the use and benefit of the Collateral Agent to
at the direction of the Majority Lenders (i) receive, endorse, assign and/or
deliver any and all notes, acceptances, checks, drafts, money orders or other
evidences of payment relating to the Assigned Collateral or any part thereof;
(ii) demand, collect, receive payment of, give receipt for and give discharges
and releases of all or any of, the Assigned Collateral; (iii) sign the name of
the Borrower on any invoice or similar statement relating to any of the
Assigned Collateral; (iv) send verifications of Receivables to any Obligor
thereon; (v) commence and prosecute any and all suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Assigned Collateral or to enforce any
rights in respect of any Assigned Collateral; (vi) settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Assigned Collateral; (vii) to notify, or to require the

7
<PAGE> 102
Borrower to notify, each Obligor of the Security Interest granted hereby and to
make payment in respect of the Receivables directly to the Collateral Account;
and (viii) to use, sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with all or any of the Assigned Collateral, and to
do all other acts and things necessary to carry out the purposes of this
Agreement, as fully and completely as though the Collateral Agent on behalf of
the Secured Parties were the absolute owner of the Assigned Collateral for all
purposes; provided, however, that nothing herein contained shall be construed
as requiring or obligating the Secured Parties to make any commitment or to
make any inquiry as to the nature or sufficiency of any payment received by the
Collateral Agent, or to present or file any claim or notice, or to take any
action with respect to the Assigned Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby,
and no action taken or omitted to be taken by the Collateral Agent with respect
to the Assigned Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of the Borrower or to any claim or action
against the Collateral Agent or any Secured Party. It is understood and agreed
that the appointment of the Collateral Agent as the agent of the Borrower for
the purposes set forth above is coupled with an interest and is irrevocable.
The provisions of this Section 4.3 shall in no event relieve the Borrower of
any of its obligations hereunder or under any of the other Program Documents to
which it is a party with respect to the Assigned Collateral or any part thereof
or impose any obligation on the Collateral Agent or any Secured Party to
proceed in any particular manner with respect to the Assigned Collateral or any
part thereof, or in any way limit the exercise by the Collateral Agent or any
Secured Party, of any other or further right which it may have on the date of
this Agreement or hereafter, whether hereunder, under the Loan Agreement or by
law or otherwise.

(b) Upon the occurrence of an Event of Default, the Collateral
Agent on behalf of the Secured Parties shall have the right (at the direction
of the Majority Lenders), as the true and lawful agent of the Borrower and in
the Borrower's name, the Collateral Agent's name or otherwise, for the use and
benefit of the Lender, to take control of the Lock-Boxes (by delivery of a Lock
Box Notice to the Lock-Box Bank).

(c) Upon the occurrence of an Event of Default, the Borrower agrees
that the Collateral Agent on behalf of the Secured Parties shall have the right
(at the direction of the Majority Lenders), at the same or different times,

8
<PAGE> 103
with or without legal process and with or without previous notice or demand for
performance, to take possession of the Assigned Collateral and without
liability for trespass to enter any premises where the Assigned Collateral may
be located for the purpose of taking possession of or removing the Assigned
Collateral and, generally, to exercise any and all rights afforded to a secured
party under the UCC or other Applicable Law, including the liquidation or other
disposition of the Assigned Collateral or any part thereof.

(d) Upon the occurrence of an Event of Default, the Borrower
shall, upon the request of the Collateral Agent (given at the direction of the
Majority Lenders), transfer to the Collateral Agent all records, correspondence
and documents (including computer software) requested by the Collateral Agent
and to permit the Collateral Agent to have access to, and to copy, all software
used by the Collateral Agent in the collection, administration or monitoring of
the Receivables. The Borrower shall, in connection with the foregoing,
transfer to the Collateral Agent all of the Borrower's rights in and to each
license with respect to such software.

ARTICLE V

Collateral Account

Section 5.1 Establishment and Maintenance. Concurrently with the
execution and delivery hereof, the Collateral Agent shall establish for the
benefit of the Secured Parties at its offices located at New York, New York, a
separate account entitled the "WPAC Internal Settlement Account", Acct. No.
108248-15 (the "Collateral Account"). The Collateral Account shall be subject
to the exclusive dominion and control of the Collateral Agent and the operation
of which shall be governed by this Article. The Borrower shall have no right
of withdrawal from the Collateral Account.

Section 5.2 Required Deposits. (a) The Borrower agrees that (i) at
the request of the Majority Lenders after the occurrence of an Event of Default
it will remit all amounts owing by it to the Lenders, the Agent and the
Collateral Agent under this Agreement, the Loan Agreement, the Notes and the
other Program Documents directly to the Collateral Account, and will cause the
Parent to remit all amounts payable by it under the Guaranty directly to the
Collateral Account, (ii) after the Collateral Agent's delivery of the Lock-Box
Notice pursuant to Section 4.3(a) hereof cause all amounts remitted to a Lock
Box under the

9
<PAGE> 104
Lock Box Agreement to be deposited directly in the Collateral Account. The
Collateral Agent is hereby irrevocably authorized and empowered, as the
Borrower's attorney-in-fact, to endorse any check or any other instrument or
security presented for deposit in the Collateral Account requiring the
endorsement of the Borrower.

(b) Notwithstanding the foregoing provisions of this Section
5.2, if at any time the Borrower receives any proceeds or payments required to
be deposited in the Collateral Account, all such amounts shall be held by the
Borrower as the agent of and in trust for the Collateral Agent and shall,
forthwith upon receipt by the Borrower, be turned over to the Collateral Agent
for deposit in the Collateral Account in the same form as received by the
Borrower (and, if received in the form of a check, instrument or security
requiring endorsement, duly endorsed on behalf of the Borrower to the order of
the Collateral Agent). If any such check, instrument or security shall not be
so endorsed, the Collateral Agent is hereby irrevocably authorized and
empowered to endorse the same on behalf of the Borrower as its
attorney-in-fact.

Section 5.3 Applications. The Collateral Agent shall
distribute all funds in the Collateral Account in the following order of
priority:

FIRST, to the Collateral Agent in an amount equal to all fees,
costs and expenses owing to the Collateral Agent under this Agreement;

SECOND, to the Agent in an amount equal to costs and expenses
owing to the Agent under the Loan Agreement and the other Program
Documents;

THIRD, to the extent of any funds remaining after application
in accordance with clause FIRST and SECOND, to the Lenders, an amount
equal to the unpaid interest on the Loans then outstanding (whether or
not then due and payable) and, if such monies shall be insufficient to
pay such amounts in full, then ratably (without priority of any one
over any other) to the Lenders in proportion to the unpaid amounts
thereof on the date of distribution;

FOURTH, to the extent of any funds remaining after application
in accordance with clauses FIRST, SECOND and THIRD, to the Lenders, an
amount equal to the unpaid principal on the Loans then

10
<PAGE> 105
outstanding (whether or not then due and payable) and, if such monies
shall be insufficient to pay such amounts in full, then ratably
(without priority of any one over any other) to the Lenders in
proportion to the unpaid amounts thereof on the date of distribution;

FIFTH, to the extent of any funds remaining after applicable
in accordance with clauses FIRST, SECOND, THIRD and FOURTH, to the
Lenders, amounts equal to all other sums which constitute the
Borrower's Obligations, including, without limitation the costs and
expenses of the Lenders and their representatives which are due and
payable as of the date of the distribution, and, if such moneys shall
be insufficient to pay such sums in full, then ratably (without
priority of any one over any other) to the Lenders in proportion to
such sums then due and payable on the date of distribution.

For purposes of determining the application to be made of such monies and other
cash proceeds to any Lender pursuant to clauses THIRD, FOURTH and FIFTH of
Section 5.3 hereof, the Collateral Agent may rely exclusively upon a
certificate or other statement of such Lender as to the amount then owing to
such Lender. For purposes of determining the application to be made of such
monies and other cash proceeds to the Agent pursuant to clause SECOND of
Section 5.3 hereof, the Collateral Agent may rely exclusively upon a
certificate or other statement of the Agent as to the amounts then owing.

Section 5.4 Final Distributions. The Borrower agrees that
upon (i) the termination of the Commitments, and (ii) the final payment in full
of all of the Borrower's Obligations, any funds remaining in the Collateral
Account after the applications set forth in Section 5.3 shall be paid to the
Borrower or its successors or assigns or to whomsoever may be lawfully entitled
to receive the same or as a court of competent jurisdiction may direct.

ARTICLE VI

The Collateral Agent and the
Secured Parties

Section 6.1 Appointment and Powers of Collateral Agent. The
Lenders and Agent hereby appoint the Collateral Agent their agent hereunder,
and hereby authorize the

11
<PAGE> 106
Collateral Agent to take such action on their behalf and to exercise such
rights, remedies, powers and privileges hereunder as are specifically
authorized to be exercised by the Collateral Agent by the terms hereof,
together with such rights, remedies, powers and privileges as are reasonably
incidental thereto. The Collateral Agent may execute any of its duties as
agent hereunder by or through agents or employees and shall be entitled to
retain experts (including counsel) and to act in reliance upon the advice of
such experts concerning all matters pertaining to the agencies hereby created
and its duties hereunder, and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
experts selected by it. The relationship between the Collateral Agent, the
Agent and each Lender is that of agent and principal only, and nothing herein
shall be deemed to constitute the Collateral Agent a trustee for the Agent any
Lender or impose on the Collateral Agent any obligations other than those for
which express provision is made herein. The Agent and each Lender agrees that
the rights and remedies granted to the Collateral Agent hereunder shall be
exercised exclusively by the Collateral Agent, and that neither the Agent nor
any Lender shall have any right individually to exercise any such right or
remedy, except to the extent, if any, expressly provided herein.

Except as required by the specific terms of this Agreement,
the Collateral Agent shall have no duty to exercise any right, power, remedy or
privilege granted to it hereby, or to take any affirmative action hereunder,
unless directed to do so by the Majority Lenders (and shall be fully protected
in acting or refraining from acting pursuant to such directions which shall be
binding on the Lenders), and shall not, without the prior approval of the
Majority Lenders, consent to any material departure by the Borrower from the
terms hereof or of the Assigned Collateral, waive any default on the part of
the Borrower or the Company hereunder or under the Assigned Collateral or
amend, modify, supplement or terminate, or agree to any surrender of, this
Agreement or the Assigned Collateral; provided, that, the Collateral Agent
shall not be required to take any action which exposes the Collateral Agent to
personal liability or which is contrary to this Agreement, any other Program
Document or any agreement or instrument relating to the Assigned Collateral or
Applicable Law.

Neither the Collateral Agent, nor any of its directors,
officers, employees or agents, shall be liable to any Lender or the Borrower
for any action taken or omitted to be taken by the Collateral Agent hereunder,
or in connection herewith, except for its gross negligence or

12
<PAGE> 107
willful misconduct; nor shall the Collateral Agent be responsible to the Agent
or any Lender for the validity, effectiveness, value, sufficiency or
enforceability against the Borrower of this Agreement or any other Program
Document or any document furnished pursuant hereto or thereto or in connection
herewith or therewith, or of the Assigned Collateral (or any part thereof), or
the funds on deposit in the Collateral Account (or any part thereof). Without
limiting the generality of the foregoing, the Collateral Agent: (i) makes no
warranty or representation to the Agent or any Lender and shall not be
responsible to the Agent or any Lender for any statements, warranties or
representations made in or in connection with this Agreement, any other Program
Document or any other document relating to the Assigned Collateral; (ii) shall
not have any duty, except as expressly provided herein, to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement, any other Program Document or any other agreement
or instrument relating to the Assigned Collateral on the part of any party
hereto or thereto or to inspect any books and records relating to the Assigned
Collateral, and (iii) shall not be responsible to the Agent or any Lender for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement, any other Program Document or any other document
relating to the Assigned Collateral.

The Collateral Agent shall be entitled to rely on any
communication (which may be by telegram or telecopy), instrument, paper or
other document or telephonic instruction believed by it to be genuine and
correct and to have been signed, sent or given by the proper Person or Persons.
The Collateral Agent shall be entitled to assume that no Default or Event of
Default shall have occurred and be continuing, unless an officer of the
Collateral Agent has actual knowledge thereof or the Collateral Agent has
received notice from the Agent or the Majority Lenders that the Majority
Lenders consider that such a Default or an Event of Default has occurred and is
continuing and specify the nature thereof. The Collateral Agent may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower and its Affiliates as if it were not the agent of the Secured
Parties.

Each Lender hereby agrees, in the ratio that such Lender's
Commitment under the Loan Agreement bears to the Total Commitment, to indemnify
and hold harmless the Collateral Agent, from and against any and all losses,
liabilities (including, liabilities for penalties), actions, suits, judgments,
demands, damages, costs and expenses of any kind whatsoever (including, without
limitation, fees and

13
<PAGE> 108
expenses of counsel and other experts) incurred or suffered by the Collateral
Agent in its capacity as agent hereunder as a result of any action taken or
omitted to be taken by the Collateral Agent in such capacity or otherwise
incurred or suffered by, made upon, or assessed against the Collateral Agent in
such capacity; provided, that no Lender shall be liable for any portion of any
such losses, liabilities, actions, suits, judgments, demands, costs or expenses
resulting from or attributable to gross negligence or willful misconduct on the
part of the Collateral Agent. Without limiting the generality of the
foregoing, each Lender hereby agrees, in the ratio aforesaid, to reimburse the
Collateral Agent promptly following its demand for any out-of-pocket expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Collateral Agent hereunder and not promptly reimbursed to the Collateral Agent
by the Borrower or by application of the Assigned Collateral. Each Lender's
obligations under this paragraph shall survive the termination of the Loan
Agreement and the discharge of the Borrower's obligations thereunder. The
obligations of the Lenders under this paragraph are several, and no Lender
shall be responsible for the obligation of any other Lender under this
paragraph, nor will the failure of any Lender to perform any of its obligations
under this paragraph relieve any other Lender from the performance of its
obligations under this paragraph.

The Collateral Agent may treat each Lender as the holder of
the Note delivered to such Lender pursuant to the Loan Agreement for all
purposes whatsoever unless and until notice of a transfer or assignment thereof
shall have been given to the Collateral Agent. Any request, authority or
consent of any Lender shall be conclusive and binding on any subsequent
transferee or assignee thereof.

Section 6.2 Successor Collateral Agent. The Collateral Agent
acting hereunder at any time may resign by an instrument in writing addressed
and delivered to the Agent, each Lender and the Borrower, and may be removed at
any time with or without cause by an instrument in writing duly executed by or
on behalf of the Majority Lenders. Subject to the provisions of Section 6.3
hereof, the Majority Lenders shall also have the right to appoint, subject to
the approval of the Borrower, a successor to the Collateral Agent upon any such
resignation or removal by an instrument of substitution complying with the
requirements of applicable law, or, in the absence of any such requirements,
without other formality than appointment and designation in writing. Upon the
making and acceptance of such appointment, the execution and delivery by such
successor Collateral Agent of a ratifying instrument

14
<PAGE> 109
pursuant to which such successor Collateral Agent agrees to assume the duties
and obligations imposed on the Collateral Agent by the terms of this Agreement,
and the delivery to such successor Collateral Agent of the Assigned Collateral
and the funds on deposit and the Collateral Account and documents and
instruments then held by the retiring Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
estate, rights, powers, remedies, privileges, immunities, indemnities, duties
and obligations hereby granted to or conferred or imposed upon the Collateral
Agent named herein, and one such appointment and designation shall not exhaust
the right to appoint and designate further successor Collateral Agents
hereunder. No Collateral Agent shall be discharged from its duties or
obligations hereunder until the Assigned Collateral and the funds on deposit in
the Collateral Account and documents and instruments then held by such
Collateral Agent shall have been transferred or delivered to the successor
Collateral Agent in its capacity as a bank or trust company, until all funds
held in the Collateral Account maintained with the retiring Collateral Agent
shall have been transferred to the new Collateral Account and until such
retiring Collateral Agent shall have executed and delivered to the successor
Collateral Agent appropriate instruments substituting such successor Collateral
Agent as attorney-in-fact of the Borrower for purposes of this Agreement and
assigning the retiring Collateral Agent's security or other interest in the
Assigned Collateral, the Collateral Account and the funds on deposit therein,
to the successor Collateral Agent. If no successor Collateral Agent shall be
appointed, as aforesaid, or, if appointed, shall not have accepted its
appointment, within thirty (30) days after resignation or removal of the
retiring Collateral Agent, then, subject to the provisions of Section 6.3
hereof, the Collateral Agent may appoint a successor Collateral Agent. Each
such successor Collateral Agent shall provide the Borrower, the Agent and the
Lenders with its address, and telephone and telecopy numbers, to be used for
purposes of Section 7.4 hereof, in a notice complying with the terms of said
Section. Notwithstanding the resignation or removal of any Collateral Agent
hereunder, the provisions of this Article shall continue to inure to the
benefit of such Collateral Agent in respect of any action taken or omitted to
be taken by such Collateral Agent in its capacity as such while it was
Collateral Agent under this Agreement.

Section 6.3 Qualifications of Collateral Agent. Any
Collateral Agent at any time acting hereunder must at all times be a bank or
trust company having its principal office in, or acting through a branch or
agency in, the

15
<PAGE> 110
District of Columbia or one of the States located in the continental United
States, be authorized to accept deposits and offer checking account facilities.

ARTICLE VII

Miscellaneous

Section 7.1 Execution of Amendments, etc. No amendment,
modification, supplement, termination or waiver of or to any provision of this
Agreement, nor any consent to any departure by the Borrower from any provision
of this Agreement, shall be effective unless the same shall be in writing and
signed on behalf of the Collateral Agent, the Agent and the Majority Lenders
and the Borrower; provided, however, that any release of the Collateral Agent's
security interest in any portion of the Assigned Collateral and any
modification of this Section 7.1 shall require the approval of all the Lenders.
Any waiver of any provision of this Agreement, and any consent to any departure
by the Borrower from the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific purpose for which
given. No notice to or demand upon the Borrower in any instance hereunder
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances.

Section 7.2 Further Assurances. The Borrower agrees that it
will join with the Collateral Agent in executing and, at its own expense, file
and refile, or permit the Collateral Agent to file and refile, such financing
statements, continuation statements and other documents (including this
Agreement) in such offices as the Collateral Agent may deem necessary or
appropriate and wherever required or permitted by law in order to perfect and
preserve the rights and interests granted to the Collateral Agent hereby, and
hereby authorizes the Collateral Agent to file financing statements and
amendments thereto and continuation statements relative to all or any part
thereof without the signature of the Borrower where permitted by law, and
agrees to do such further acts and things, and to execute and deliver to the
Collateral Agent such additional assignments, agreements, powers and
instruments, as the Collateral Agent may require or deem advisable to carry
into effect the purposes of this Agreement or to better assure and confirm unto
the Collateral Agent its rights, powers and remedies hereunder.

Section 7.3 No Waiver; Cumulative Remedies. No failure on
the part of the Collateral Agent to exercise,

16
<PAGE> 111
and no delay on the part of the Collateral Agent in exercising any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy by the Collateral Agent
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies that may be available to the Collateral Agent,
whether at law, in equity or otherwise.

Section 7.4 Notices, etc. Except where telephonic (which
shall be confirmed in writing promptly) instructions or notices are authorized
herein to be given, all notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto shall be in
writing and shall be personally delivered or sent by overnight courier,
registered, certified or express mail, postage prepaid, return receipt
requested, or by facsimile (with telephone confirmation of such transmission)
or prepaid telegram (with messenger delivery specified in the case of a
telegram) and shall be deemed to be given for purposes of this Agreement on the
date that such writing is delivered or sent to the intended recipient thereof
in accordance with the provisions of this Section. Unless otherwise specified
in a notice sent or delivered in accordance with the foregoing provisions of
this Section, notices, demands, instructions and other communications in
writing shall be given to or made upon the following parties at their
respective addresses (or to their respective telecopy numbers) indicated below,
and, in the case of telephonic instructions or notices, by calling the
telephone number or numbers indicated for such party below:

If to the Borrower:

Westchester Premium Acceptance Corporation
1020 N.E. Loop 410
Suite 700
San Antonio, Texas 78209
Attention: Chief Financial Officer
Telephone: (210) 824-4546
Telecopy: (210) 824-3681

17
<PAGE> 112
If to the Collateral Agent:

Dresdner Bank AG, New York Branch
75 Wall Street
New York, New York 10005
Attention: Mr. Lloyd C. Stevens
Telephone: (212) 429-2229
Telecopy: (212) 429-2524

with a copy to:

Dresdner Bank AG, New York Branch
75 Wall Street
New York, New York 10005
Attention: Credit Services Department

If to the Lenders or the Agent:

To the respective addresses, telephone numbers and telecopy
numbers designated pursuant to Section 14.1 of the Loan
Agreement.

Section 7.5 Costs and Expenses, etc. The Borrower hereby
agrees to reimburse the Collateral Agent, on demand, for all costs and expenses
incurred by the Collateral Agent in connection with the administration and
enforcement of this Agreement and agrees to indemnify and hold harmless the
Collateral Agent and the Secured Parties from and against any and all losses,
liabilities (including liabilities for penalties), actions, suits, judgments,
demands, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) incurred by the Collateral Agent (in its capacity
as Collateral Agent) or any Secured Party hereunder or in connection herewith,
unless such liability shall be due to willful misconduct or gross negligence on
the part of the Collateral Agent, or such Secured Party or its agents or
employees. If the Borrower shall fail to do any act or thing which it has
covenanted to do hereunder or any representation or warranty on the part of the
Borrower contained herein or repeated and reaffirmed herein shall be breached,
the Collateral Agent may, with the consent of the Majority Lenders (but shall
not be obligated to), do the same or cause it to be done or remedy any such
breach, and may expend its funds for such purpose. Any and all amounts so
expended by the Collateral Agent shall be repayable to it by the Borrower, upon
the Collateral Agent's demand therefor. The obligations of the Borrower under
this Section shall survive the termination of this Agreement and the discharge
of the Borrower's Obligations in full hereunder and shall also survive the
termination of the Commitment of any Lender.

18
<PAGE> 113
Section 7.6 Reinstatement. This Agreement shall continue to
be effective, or be reinstated, as the case may be, if at any time any amount
received by the Collateral Agent, the Agent or any Lender in respect of the
Assigned Collateral is rescinded or must otherwise be restored or returned upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or the appointment of an intervenor or conversator of, or trustee or
similar officer for, the Borrower or any substantial part of its respective
properties, or otherwise, all as though such payment had not been made.

Section 7.7 Governing Law; Binding Character; Assignment.
This Agreement shall be governed by and construed in accordance with the laws
of the State of New York. This Agreement shall be binding upon and shall inure
to the benefit of the Borrower, the Agent, the Lenders and the Collateral
Agent, and their respective successors and assigns; provided, however, that the
Borrower shall not assign its rights or obligations hereunder or in connection
herewith or any interest herein (voluntarily, by operation of law or otherwise)
without the prior written consent of the Agent and the Majority Lenders.

Section 7.8 Severability of Provisions. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.

Section 7.9 Headings. Article and Section headings used in
this Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.

Section 7.10 Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute one and the same Agreement.

Section 7.11 Entire Agreement. This Agreement constitutes
the entire agreement among the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings, written
or oral, among the parties.

19
<PAGE> 114
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

WESTCHESTER PREMIUM ACCEPTANCE
CORPORATION,
as Borrower